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Poverty Times #4

How important is environmental income?

Environmental income – the income generated from ecosystem goods and services – is a major constituent of the household incomes of the rural poor. It includes income from natural systems such as forests, grasslands, lakes, and marine waters. It also includes agricultural income – the output of agroecosystems. Researchers often make a distinction between agricultural income and what in this report we term “wild income” – that is, income from less manipulated natural systems like forests and fisheries. There is overlap between the two, as in the use of forest grasses for livestock forage, or forest leaf litter as a soil amendment or crop mulch.

Environmental income can be derived in several distinct ways. Income might accrue to households through direct use of ecosystem services, for instance, by consuming bushmeat and other wild foods, cutting fodder for livestock, using wood products in home construction, or eating produce grown in a home garden. Where markets exist, goods harvested from ecosystems, such as fish, herbs, or fuelwood, can be sold for cash or exchanged for services like school tuition. In addition, communities may charge stumpage fees for providing loggers access to timber, or they may collect taxes or levees from hunters or tourists, or royalties for access to minerals or the use of local species for pharmaceutical research. The income benefits of these public revenues may then be passed on to households in the form of public infrastructure like roads, schools, and clinics, or public services like agricultural extension programs. Ecosystems have several characteristics that make them attractive as a source of income. Environmental resources are renewable, widespread, and they are often found in common property areas where the poor can access them without owning the land. In addition, exploiting natural systems often can be done with little need for investment or expensive equipment, making the cost of entry low—an important consideration for poor families with limited assets.

The importance of environmental income to the poor can be judged at different scales. At the global scale, estimates of nature’s contribution to livelihoods are impressive. For example, the World Bank estimates that 90 percent of the world’s 1.1 billion poor – those living on $1 per day or less – depend on forests for at least some of their income. Agriculture is likewise essential to poor families. Small-scale agriculture – the kind the poor practice – accounts for more than 90 percent of Africa’s agricultural production. In addition, over 600 million of the world’s poo r keep livestock, a critical cash asset for many. The Food and Agriculture Organization estimates that over 90 percent of the 15 million people working the world’s coastal waters are small-scale fishers, most of them poor. That does not count the tens of millions of the poor who fish inland rivers, lakes, ponds, and even rice paddies.

At the national level, environmental income is also important, not only to the poor, but to national economies. Smallscale fisheries, for example, are not only common sources of income for the impoverished but are major contributors to the economies of many nations. In Asia small-scale fisheries contributed 25 percent of the total fisheries production of Malaysia, the Philippines, Thailand, and Taiwan for the decade ending in 1997. In West Africa the importance of small-scale fishing is greater still, constituting three-fourths of the region’s total fish catch. In Indonesia, small-scale fishers are responsible for almost 95 percent of the total marine catch. At the same time, export revenues from smallscale agriculture are vital to many poor nations. In Mali, cotton grown by smallholder farmers generates 8 percent of the nation’s GDP and 15 percent of all government revenues. Some 30 percent of all Malian households grow cotton on small plots, and it is second only to gold as the nation’s most important export.

Source: World Resources 2005: The Wealth of the Poor – Managing Ecosystems to Fight Poverty. Washington, DC: WRI. World Resources Institute (WRI) in collaboration with United Nations Development Programme, United Nations Environment Programme, and World Bank. 2005.