Nature as an Economic Stepping Stone

Nature has always been a route to wealth, at least for a few. Profit from harvesting timber and fish stocks, from converting grasslands to farm fields, and from exploiting oil, gas, and mineral reserves has created personal fortunes, inspired stock markets, and powered the growth trajectories of nations for centuries. But this scale of natural resource wealth has been amassed mostly through unsustainable means, and the benefits have largely accrued to the powerful. It is the powerful who generally control resource access through land ownership or concessions for logging, fishing, or mining on state lands; who command the capital to make investments; and who can negotiate the government regulatory regimes that direct the use of natural resources. The poor, by contrast, have reaped precious little of the total wealth extracted from nature. But that can change.

Natural Resources Are a Key Determinant of Rural Wealth

Even though they do not currently capture most of the wealth created by natural systems, the livelihoods of the poor are built around these systems. Indeed, natural resources are the fundamental building block of most rural livelihoods in developing nations, and not just during lean times. Chapter 2 offers many examples of the environmental income that both the poor and rich derive from nature.

The ability to efficiently tap the productivity of ecosystems is often one of the most significant determinates of household income. For example, studies show that the key variable explaining income levels for rural households in Uganda is access to land and livestock. In Ugandan villages near Lake Victoria, the key variable explaining wealth is access to fishing boats and gear. Income-wise, these are found to be even more important than other wealth-associated factors such as access to education (Ellis and Bahiigwa 2003:1003).

Beyond Subsistence: Natural Endowments as Capital for the Poor

Ecosystem goods and services—the natural products and processes that ecosystems generate—are often the only significant assets the poor have access to. These natural endowments, if managed efficiently, can provide a capital base—a foundation for greater economic viability, and a stepping stone beyond mere subsistence. Yet the potential of these assets is often overlooked.

Typical commercial evaluation of natural resources tends to undervalue the total array of ecosystem goods and services, which includes not just the crops, lumber, fish, and forage that are the usual focus of exploitation, but also a wide variety of other collectibles, agroforestry products, small-scale aquaculture products, as well as services such as maintenance of soil fertility, flood control, and recreation (Lampietti and Dixon 1995:1-3; Pagiola et al. 2004:15-19). One of the consequences of the difficulty of assigning a monetary value to ecosystem benefits is that it has led to the systematic undervaluation of the assets of the poor and the underestimation of the potential benefits of improved environmental management.

But the potential for strategic management of ecosystems to raise the incomes of the poor is real. In fact, good ecosystem management can become one of the engines of rural economic growth more generally. Experience shows that the poor use several strategies to make their ecosystem assets a stepping stone out of poverty.

Restoring Productivity

Where ecosystems are degraded, it limits their potential as a source of environmental income. Many communities have found that restoring the productivity of local forests, pastures, or fisheries has the opposite effect, raising local incomes substantially. Often this entails a community effort to more carefully control the use of common property areas and even private lands. For example, the village of Sukhomajri in Haryana, India, has gained widespread recognition for its success in raising village incomes through community efforts to restore and maintain the productivity of local forests and farmland. Careful land management and rainwater harvesting produced large gains in agricultural production, tree density, and available water, increasing annual household incomes by 50 percent in five years (Agarwal and Narain 1999:16).

Many other watershed management projects in India have also reported benefits to village residents, including poor families who do not own land. In the Adgaon watershed in Maharashtra, annual days of employment (wage labor) per worker increased from 75 days at the project’s inception to over 200 days after restoration was complete. In Mendhwan Village, laborers found eight months of agricultural work per year after four years of watershed management, compared with only three months before the community began its restoration and management project (Kerr et al. 2002:56).

Marketing Niche Products and Services

One common way to translate ecosystem assets into economic gain is to create or take advantage of niche markets for nontimber forest products, such as bamboo, mushrooms, herbs, and other collectibles. In Nam Pheng village in northwestern Laos, villagers began a cooperative effort in 1996 to expand the market for bitter bamboo and cardamom. They created a coordinated management plan for sustainable harvest of these traditional products, improved the harvest technology, and established a marketing group to both increase sales and obtain higher prices for their wares. By 2001 a day’s harvest of bitter bamboo brought ten times the wages of slash-and-burn cultivation, which had been the villagers’ main livelihood activity (Morris 2002:10-24). (See Table 1.2.)

By 2002, harvesting bitter bamboo and cardamom provided the main source of income for most villagers and the community had made considerable progress toward higher incomes and more secure livelihoods. (See Figure 1.3.) The village poverty rate had fallen by more than half, food security had increased, and the mortality rate for children under five had fallen to zero. In addition, enough community funds from the joint marketing group had been raised to build a school, prompting school enrollment to double, with more than half of the students being girls. While the income potential from bamboo and cardamom is not unlimited, it has clearly provided a stepping stone to larger capital investments, such as livestock, and allowed villagers to diversify their income sources. It has also brought villagers an appreciation of the forest as an economic asset, providing an incentive for long-term care of the forest ecosystem (Morris 2002:10-24).

IIn addition to marketing forest products like bamboo, poor households can find substantial income marketing ecosystem services, such as recreation. In Namibia, communities have successfully tapped the ecotourism trade built around viewing and hunting the area’s springbok, wildebeest, elephants, giraffes, and other animal populations. To accomplish this, the communities have formed legally constituted “conservancies” to regulate the hunting, sightseeing, camping, and other activities that affect local wildlife. The conservancies have generated direct benefits ranging from jobs and training to cash and meat payouts to community members. In 2004, total community benefits reached N$14.1 million (US$2.5 million) in value. Studies have documented that, over the course of 10 years, the conservancies have enhanced the livelihood security of local people while spurring major recoveries in wildlife populations (WWF and Rossing Foundation 2004:v-vi; Vaughan et al. 2003:18-19).

Capturing a Greater Share of the Natural Resource Value

Maximizing environmental income involves not only improved resource management or creation of new markets for nontraditional or underexploited products. It also requires greater attention to marketing traditional products such as fish, so that more of the revenue generated is captured by the fishers themselves in the form of higher prices for their harvests. In Kayar, a community along the coast of Senegal, local fishers worked together to regulate their fish catch, with the idea of stabilizing the catch and insuring a good price at market (Lenselink 2002:43). By limiting the quantity of fish each boat owner could deliver to market each day, they successfully raised fish prices to the point that fishers had surplus income to save. At the same time, fish stocks were better managed by limiting the number of fishers allowed in a given area, the number of fishing trips allowed per day, and the kinds of permissible fishing gear (Lenselink 2002:43; Siegel and Diouf 2004:4, 6). The Kayar fishers made economics and ecosystem management work hand in hand.
(See the case studies in Chapter 5 for other examples of how communities have used better ecosystem management to improve their economic prosperity and reduce poverty.)

The examples described above involved a different understanding of nature’s wealth from the conventional view of large-scale extraction—a different view of what natural wealth is, how it can best be tapped, and who is to benefit from it.

Ecosystem Management as a Basis for Agriculture Growth, Rural Diversification, and General Economic Growth

Making ecosystems work as an economic asset for the poor should be seen not as an isolated goal but part of a larger strategy for rural development. Utilizing the natural assets of the poor is not a “silver bullet” for poverty reduction that can singlehandedly bring wealth to poor families. It is rather part of a general transition of rural economies from subsistence to wealth accumulation, working first to support a more profitable smallscale agriculture and natural resource economy—the current mainstays of rural livelihoods—and eventually to build a complementary rural industrial and service economy (World Bank 2003:xix-xxvi).

Agriculture is a particularly important piece of the rural poverty equation. There is a well-established connection between improvements in small-scale agriculture and poverty reduction. One study in Africa found that a 10 percent increase in crop yields led to a 9 percent decrease in the number of people living on $1 per day (Irz et al. 2001 in World Bank 2003:xix). Indeed, rapid agricultural growth is considered a primary avenue for poverty alleviation (Smith and Urey 2002:71). From the 1960s to the1980s, the Green Revolution’s use of modern seeds and fertilizers, irrigation, better credit, roads, and technical assistance helped bring this kind of rapid agricultural growth to many rural areas, with a corresponding reduction in poverty. For example, from 1965 to 1991—the period of greatest Green Revolution gains—rural poverty rates in India declined from 54 percent of the population to 37 percent (Smith and Urey 2002:17).

But spreading the Green Revolution’s success to the poor families and the marginal lands it has by-passed will require something more than the technocratic approach of those earlier decades. It will also require good ecosystem management by the poor that helps build and retain soil fertility and allows small farmers to harvest and efficiently use water resources. Failure to take this approach has resulted in fertility loss, salinization, and overdrafting of groundwater on many of the Green Revolution farms—environmental problems that have begun to erode productivity gains in many areas (Smith and Urey 2002:10).

Sustained agricultural growth, augmented by other forms of environmental income, from forest products to forage to aquaculture, can help many poor rural families to create an asset base that allows them to begin the transition away from sole dependence on farming and nature-based activities. Research shows that as growth proceeds, agriculture eventually begins to play a less crucial role in the overall development process and subsequently declines as a share of economic output (Timmer 1988:276, 279). Rural residents begin to depend more on rural industry and socalled “off-farm” income, which provide an additional and quicker route out of poverty to complement agriculture.

But even as rural economies slowly diversify, nature will still play an important role. Many rural industries—such as local processing of agriculture or fishing products, crafts production, and ecotourism—will themselves be indirectly dependent on natural resources. They will thus benefit from a sound approach to ecosystem management. For example, when the shrimpprocessing company Aqualma was established in 2000 in a remote corner of Madagascar, it brought permanent jobs to 1,200 rural workers, most of whom had never held a wagepaying job. But Aqualma’s future relies entirely on sound fishing practices that insure a continuing shrimp supply. In other words, a good relationship to ecosystems and environmental income supports many dimensions of rural growth and is beneficial at several points in the economic evolution of the rural poor from subsistence to wealth (World Bank 2003:xxii).