The Real Inequality Gap: Rural Poverty

Edward B. Barbier

As attention in comparatively rich countries continues to focus on the problem of growing inequality – the so-called 1% versus the 99% debate – it is easy to forget the most important equity problem facing the world today.  This is the continuing problem of rural poverty in developing countries, and especially the tendency of the very poor in these countries to be concentrated in the most ecologically fragile, remote and marginal rural areas.  At the recent  Mount Holyoke Conference “Development in Crisis: Changing the Rules in a Global World”, I referred to this problem as the key challenge facing environmental sustainability and poverty eradication in the developing world.

We are not talking small numbers here.  Since 1950, the estimated population in developing economies on “fragile lands” has doubled.  These fragile environments are prone to land degradation, and consist of upland areas, forest systems and drylands that suffer from low agricultural productivity, and areas that present significant constraints for intensive agriculture. Today, nearly 1.3 billion people – almost a fifth of the world’s population – live in such areas in low and middle income economies.  Almost half of the people in these fragile environments (631 million) consist of the rural poor, who throughout the developing world outnumber the poor living on favored lands by 2 to 1.

In addition, around 430 million people in developing countries live in remote rural areas.  These are locations with poor market access, requiring five or more hours to reach a market town of 5,000 or more.  Of the rural populations in such remote regions, nearly half are found in less favored areas, which are semi and semi-arid regions characterized by frequent moisture stress that limits agricultural production.  Again, people in remote rural regions tend to be some of the poorest in the developing world.

To put these numbers in perspective, the total population in the richest countries of the world is around 850 million.  In contrast, as noted above, 1.3 billion people live in the fragile environments in developing countries, and 430 million people inhabit remote rural areas.

Thus, the biggest development challenge of the 21st century is to deal with the problem of what is often referred to as the spatial poverty trap by many researchers, including those at the World Bank and the Chronic Poverty Research Centre in the UK.  As Kate Bird and colleagues at the CPRC have pointed out, geographic pockets of poverty, marginalization and disadvantage are continuing to hold back economic development globally.  As I show in my Mount Holyoke conference paper, low and middle income economies with large shares of their population in remote and ecologically fragile locations not only have high incidence of rural poverty but also are generally poorer.

The clustering of rural populations in less-favored areas and fragile environments is also likely to continue into the foreseeable future, given current rural population and poverty trends in developing economies. Although from 1981 to 2005 the number of extreme poor globally declined from 1.9 billion to 1.4 billion, current development policies are not winning the war on poverty in the rural areas of low and middle income countries.

First, despite rapid global urbanization, the rural population of developing regions continues to grow, at just over 1.0% per year in recent decades.  Second, around three-quarters of the developing world’s poor still live in rural areas, even allowing for the higher cost of living facing the poor in urban areas. In general, about twice as many poor people live in rural than in urban areas in the developing world.  As a consequence, rural populations in poor countries are growing, rural poverty is endemic, and substantial spatial poverty traps are widespread.

Overcoming such spatial poverty traps and alleviating rural poverty in many developing economies will therefore require a much more robust strategy than current global economic development efforts.  Specific policies need to be targeted at the poor where they live, especially the rural poor clustered in fragile environments and remote areas. This will require involving the poor in these areas in payment for ecosystem services, targeting investments directly to the rural poor, reducing their dependence on exploiting environmental resources, and tackling their lack of access to affordable credit, insurance, land, and transport.  Where possible, efforts should be made to boost rural employment opportunities, especially for those poor households dependent on outside labor employment.

Such a strategy will not be cheap to deliver.  To pay for it, the international community must implement new financial mechanisms, such as financial transactions taxes and other innovative instruments.  That is why, in a recent comment for Nature, I argued that at the forthcoming United Nations Conference on Sustainable Development, ‘Rio+20’, in June 2012, the global community should focus on finding new ways to raise funds for environment and development initiatives rather than simply thinking of more initiatives to spend money on.  Taxing financial transactions or trade in arms, tobacco and fuel, or earmarking contributions from sovereign wealth funds and international financial facilities are all promising and innovative ways for financing a new global development strategy to target the world’s poorest populations.

Otherwise, the most glaring and deleterious inequality gap in the world economy will continue simply to expand, and in the near future, may become an intractable problem to solve.

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