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. This distinction means that these two income streams are often counted and analyzed separately. Wild income deserves special attention, since it is often the element that is not accurately accounted for in most considerations of rural livelihoods. But both agricultural and wild income are important to an accurate assessment of the dependence of the poor on ecosystems for income. In addition, 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 (Cavendish 2000:1980). 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.

Important at Every Scale

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 (World Bank 2002:1). 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 (Spencer 2001:1). In addition, over 600 million of the world’s poor keep livestock, a critical cash asset for many (IFAD et al. 2004:1).

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 (FAO 2002 in Kura et al. 2004:35). (See Table 2.1.)

At the national level, environmental income is also important, not only to the poor, but to national economies. Small-scale 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 (Kura et al. 2004:38). In West Africa the importance of small-scale fishing is greater still, constituting three-fourths of the region’s total fish catch (Kura et al. 2004:39). In Indonesia, small-scale fishers are responsible for almost 95 percent of the total marine catch (FAO 2000a:2). (See Figure 2.1.)

At the same time, export revenues from small-scale agriculture are vital to many poor nations. In Mali, cotton grown by small-holder 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 (Tefft 2004:1).

Assessing environmental income at the household level is the most difficult, but also the most valuable in judging how much of a factor nature-based income is in the lives of the poor and whether it can be increased or at least made more secure. Household surveys have been used for decades to measure income and consumption patterns, but they have not traditionally assessed what portion of this income was from natural resources (Cavendish 2000:1980). As a result, the kind of comprehensive data needed to quantify the dependence of the poor on environmental income has been scarce, increasing the tendency of policymakers to minimize the environment in their poverty prescriptions.

In recent years, researchers have begun to fill this breach with quantitative studies of environmental income at the village and household level. While the amount and dependence on environmental income differs depending on the ecosystem, the community, and other social and economic factors, these studies have confirmed that environmental income is near-universally important to poor households.

Estimating the Importance of Wild Income

William Cavendish’s study of 30 villages in the Shindi ward of Zimbabwe in the late 1990s provides a careful look at how the poor make use of nature-based income. Cavendish’s survey of nearly 200 households excluded farm income, concentrating on wild income from forests and other natural sources, particularly common areas in the public domain. He found that this kind of environmental income constituted over 35 percent of total household income. It was not usually obtained from one source, but many small sources combined. Households derived direct subsistence value from collecting firewood, consuming fruits and berries, and browsing their livestock. They received cash income from the sale of materials, fruits, medicines, or meat they had collected or hunted. They even derived some income from small-scale gold panning. Cavendish also found that the dependence of households on environmental income decreased as their average incomes rose. Although the poor tended to get more of their total income from the environment, the rich still made heavy use of natural products for income (Cavendish 2000:1979, 1990, 1991).

Other studies confirm Cavendish’s general findings. Research in South Africa found communities regularly using between 18 and 27 wild products, the most valuable again being fuelwood, construction wood, wild fruits and herbs, and fodder (Shackleton et al. 2000a:2). Quantities consumed per household can be substantial. Average annual usage figures of 5.3 metric tons of fuelwood, 104 kg of edible fruits, 58 kg of wild vegetables, and 185 large poles for house construction and fencing are typical in rural South Africa (Shackleton and Shackleton 2004:658; Shackleton et al. 2000a:2).

Subsistence use represents the greater part of the value of these natural products to households. Home use of wild products brings a direct reduction in cash expenditures of households— a form of income that is essential to the survival of the very poor. Estimated cash equivalents for subsistence use of wild products ranged from US$194 to US$1,114 per year over a series of seven studies in South Africa—a significant income fraction (Shackleton et al. 2000a:2).

But wild products can be a considerable source of cash income. In the Indian state of Kerala, residents in the Wayanand district sell wild foods such as honey and mushrooms, along with coveted gooseberries and other medicinal plants, earning an annual average of Rs. 3,500 (US$75) per household (Shylajan and Mythili 2003:109, 112-113). Likewise, medicinal-plant vendors in rural South Africa bring in significant cash, with a mean annual income of 16,700 rand (US$2,680) (Botha et al. 2004). At the other end of the scale, rural charcoal makers in Kenya sell a 30-35 kilogram bag of charcoal for a mere 280 Ksh (US$3.50) to middle men who transport it to Nairobi for cooking fuel (Kantai 2002:16). (See Table 2.2.)

Gauging the importance of wild income to a poor family’s total income is difficult, of course, because the amount of such income is highly variable across families and across the seasons. In general, however, wild income tends to be more an auxiliary source rather than the main income source for most poor families. But there are many exceptions to this rule. For example, in some alpine villages in the Western Himalayas, wild income provides around 70 percent of household income, mostly from grazing of sheep and goats and the collection of medicines and herbs (Asher et al. 2002: 20). If markets—such as tourists—are handy, wild income can be impressive. A skilled wood carver using native materials in Namibia, for example, can earn as much as US$1,800 per year by plying the tourist trade. In general, however, wild income contributes more modestly to total income, providing perhaps 15-40 percent of family income, if current studies are any guide (Shylajan and Mythili 2003:100-102; Cavendish 2000; Beck and Nesmith 2001).

Although the value of many wild products seems small when considered in isolation, their aggregate value can be substantial, and their contribution to rural economies crucial. In South Africa, Shackleton has estimated the value of wild products extracted by households in the savanna biome alone at 8 billion rand (US$1.3 billion) per year—a figure that works out to about R750-1,000 (US$120-160) per hectare of accessible land. That compares favorably with the economic productivity of cattle ranching and plantation forestry in these areas. In fact, when collection and sale of wild products is compared head to head with other rural employment options, it often proves to be more lucrative. In Nigeria, research shows that returns on labor are 3-4 times higher for harvesting and selling woodland products than for agricultural wage labor (Shackleton et al. 2001:583; Shackleton and Shackleton 2004).

Unfortunately, the size and importance of these economic contributions often goes unnoticed. Such transactions belong to the informal economy, and are generally unaccounted for in official economic statistics.

Adding in Agricultural Income

Income from wild products is only a part of the environmental income equation. Agricultural income is just as crucial. Only when income from agriculture is combined with the income from wild products do we begin to get a clear idea of how important ecosystem goods and services are as a source of rural livelihoods.

A study of households (rich and poor) in the Masvingo Province in southeastern Zimbabwe provides a good example of how agricultural income complements wild income and how it compares with other income sources such as wages and remittances. As Figure 2.2 shows, agricultural income—from crops and home gardens—contributed 30 percent of total household income (cash and subsistence income combined). Livestock rearing—a modified form of agriculture that relies on wild forage—contributed another 21 percent. Wild products from woodlands contributed 15 percent. Together, these elements of environmental income sum to 66 percent of total income. In other words, goods and services from ecosystems contribute twothirds of family incomes in rural Zimbabwe. The remaining 34 percent came from wage labor, income from home industries, and remittances. For the poorest of these rural households, dependence on these different kinds of environmental income is even higher, providing a full 70 percent of total income when combined (Campbell et al. 2002:89-95).

The balance between agricultural income and wild income varies by location, with agriculture supplying more income in some areas, and wild income more in others. For example, a recent survey in the Jhabua district of Madhya Pradesh, India, found that agriculture provided 58 percent of total income of the poorest families, with livestock and wild income providing another 12 percent. In this district, farming is the main occupation, with over 90 percent of the workforce employed in agriculture. But families in Jhabua also supplement their incomes with livestock-rearing and collection of various forest products, such as wood fuel, fodder, tendu leaves, and mahua flowers (Narain et al. 2005:6, 14). (See Figure 2.3.)