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# How Environmental Degradation Impoverishes the Poor

## Summary and Keywords

Globally, around 1.5 billion people in developing countries, or approximately 35% of the rural population, can be found on less-favored agricultural land (LFAL), which is susceptible to low productivity and degradation because the agricultural potential is constrained biophysically by terrain, poor soil quality, or limited rainfall. Around 323 million people in such areas also live in locations that are highly remote, and thus have limited access to infrastructure and markets. The households in such locations often face a vicious cycle of declining livelihoods, increased ecological degradation and loss of resource commons, and declining ecosystem services on which they depend. In short, these poor households are prone to a poverty-environment trap. Policies to eradicate poverty, therefore, need to be targeted to improve the economic livelihood, productivity, and income of the households located on remote LFAL. The specific elements of such a strategy include involving the poor in paying for ecosystem service schemes and other measures that enhance the environments on which the poor depend; targeting investments directly to improving the livelihoods of the rural poor, thus reducing their dependence on exploiting environmental resources; and tackling the lack of access by the rural poor in less-favored areas to well-functioning and affordable markets for credit, insurance, and land, as well as the high transportation and transaction costs that prohibit the poorest households in remote areas to engage in off-farm employment and limit smallholder participation in national and global markets.

# Introduction

In developing economies, many of the rural poor—who are growing in number—are increasingly concentrated in ecologically fragile and remote areas (Barbier, 2010). This particular structural feature of underdevelopment remains a paramount obstacle to any transition to sustained economic growth for much of the developing world. It is also raising concerns about whether environmental degradation is further impoverishing the poor.

However, management of natural capital is not sufficient for eradicating persistent rural poverty in developing economies. To understand why, this article explores the typical conditions of the assetless poor in remote and ecologically fragile areas. The poorest rural households have very few productive assets except land and unskilled labor, and yet permanent migration is rare. Given their lack of ownership of assets, as well as their tendency to stay where they are located, poor people in remote areas often depend on exploiting the surrounding environment and its ecological services for their livelihood and survival. But if access to outside markets and jobs is inadequate, the available land is unproductive, and the surrounding environment becomes degraded, then income opportunities remain poor and the surplus available for investing in land improvement or other asset acquisition also are negligible. In short, these poor households are prone to a poverty-environment trap (Barbier, 2010).

Overcoming such constraints and alleviating rural poverty will require a much more robust strategy than simply relying on making improvements to natural capital as an effective pathway out of poverty. 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 a variety of measures, including involving the poor in these areas in paying 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 that depend on outside labor employment. These measures can complement other actions to improve poor people’s livelihoods by increasing their economic mobility, including migration out of low-return agriculture and the informal sector.

# Rural Poverty and Remote Less-Favored Agricultural Land

A number of studies of the spatial location of populations in marginal areas indicate that the rural poor of developing economies are most dependent for their livelihood on less-favored land and areas.1 Of particular concern is remote less-favored agricultural land (LFAL), which is susceptible to low productivity and degradation because its agricultural potential is constrained biophysically by terrain, poor soil quality, or limited rainfall, and which also has limited access to infrastructure and markets (Barbier & Hochard, 2014; Pender & Hazell, 2000; World Bank, 2008).2

CGIAR (1999) estimated that nearly two-thirds of the rural population of developing countries—almost 1.8 billion people—live on marginal agricultural land, forest and woodland areas, and arid zones. By applying national rural poverty percentages, CGIAR (1999) determined that 633 million poor people live on such land (also summarized in CAWMA, 2008). A subsequent analysis by the World Bank (2003) estimated that nearly 1.3 billion people in 2000—almost a fifth of the world’s population—lived on less-favored land in developing regions, and concluded that since 1950, the estimated population in developing economies on marginal lands may have doubled. The World Bank (2008) further estimated that around 430 million people in developing countries in 2000 lived in rural areas with limited market access, and nearly half (49%) of these populations were located in arid and semiarid regions characterized by frequent moisture stress that limits agricultural production. Around 27% of the land area of sub-Saharan Africa and 11% of South Asia are identified as marginality hotspots of both marginal agricultural land and limited market access and infrastructure (Graw & Husmann, 2014).

Using a variety of global spatially referenced data sets, Barbier and Hochard (2014) estimated the extent of rural poverty in remote LFAL in 2000 and 2010 (see Table 1). Following the classification of Pender and Hazell (2000) and World Bank (2008), LFAL consists of irrigated land on terrain with greater than 8% median slope; rainfed land with a length of growing period (LGP) of more than 120 days but on terrain with either greater than 8% median slope or poor soil quality; semiarid land (land with LGP 60–119 days); and arid land (land with LGP < 60–119 days). Following Nelson (2008), market access is defined as less than five hours of travel to a market city with a population of 50,000 or more.

Barbier and Hochard (2014) estimate that globally, around 1.7 billion people, or approximately 36% of the rural population, can be found on LFAL (see Table 1). Almost all the rural population on marginal land (about 1.5 billion) is located in developing countries and consists of over 35% of the total rural population. However, this share varies considerably by region. For example, East Asia and the Pacific has both the largest number of people on less-favored agricultural land (709 million) and nearly half the rural population located on such land. Middle East and North Africa has 50 million people on marginal land, which is just over one-fifth of its rural population.

The rural population on marginal lands of developing economies also tends to be concentrated in remote areas. Around 323 million people in developing countries live in locations with remote LFAL, and these people comprise around 22% of the rural population on marginal land in developing countries that is also in remote locations (Barbier & Hochard, 2014; also see Table 1). The regions with the largest share of rural population in marginal and remote areas are sub-Saharan Africa (29%), East Asia and Pacific (24%), and South Asia (16%). These three regions also tend to have the highest incidence of national poverty. Across all developing countries, from 2000 to 2010, the rural population on remote LFAL increased by 12%. The regions with the greatest expansion in rural population on remote marginal lands over 2000–2010 are sub-Saharan Africa (33%), South Asia (17%), and Latin America and the Caribbean (16%).

As indicated in Figure 1, the average poverty rate is higher in developing countries with greater shares of their rural population on remote LFAL. For example, the average 2000–2012 poverty rate is over 45% in countries with more than 10% of their rural population on remote LFAL in 2010, whereas it is just under 35% in countries with a 3% share or less of rural population. For countries with 5%–10% of their rural population located in remote LFAL, the poverty rate is over 40%.

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Figure 1. Rural population on remote LFAL and in poverty. Share (%) of rural population located on remote LFAL (average 8.8%, median 6.9%), which is LFAL with limited market access (i.e., located in remote areas). Market access is identified as less than five hours of travel to a market city with a population of 50,000 or more, as defined by Nelson (2008). 98 countries, of which 18 (0–3%), 20 (3%–5%), 28 (5%–10%), 20 (10%–15%) and 13 (> 15%) on remote LFAL.

Population below $2 a day is the percentage of the population living on less than$2 a day at 2005 international purchase power parity (PPP) prices. For 8 countries, the poverty headcount ratio is at national poverty line (percentage of population). Across all countries, the average poverty rate was 40.9%, and the median 35.4%.

Low- and middle-income (or developing) countries are economies with 2013 per capita income of $12,745 or less. Source: World Bank, World Development Indicators, available from http://databank.worldbank.org/data (Barbier & Hochard, 2014). Table 1. Rural Population on LFAL, Remoteness, and Poverty (2010) Population in 2010 (millions) Remote LFAL Population Rural Population on LFAL % Remote 2000–2010 Change National Poverty Headcount National Poverty Gap Developing Country 1,499.7 21.5 11.9% 20.63% 6.30% East Asia and Pacific 709.4 24.4 5.1% 12.48% 2.82% Europe and Central Asia 97.7 12.6 3.3% 0.66% 0.21% Latin America and Caribbean 109.2 13.5 15.5% 5.53% 2.89% Middle East and North Africa 50.4 14.2 5.6% 2.41% 0.55% South Asia 309.7 16.0 16.6% 31.03% 7.09% Sub-Saharan Africa 223.2 29.4 32.9% 48.47% 20.95% Developed 166.9 5.9 ‒2.7% World 1,666.6 19.9 11.4% Notes: LFAL consists of irrigated land on terrain greater than 8% median slope; rainfed land with a length of growing period (LGP) of more than 120 days, but either on terrain greater than 8% median slope or with poor soil quality; semiarid land (land with LGP 60–119 days); and arid land (land with LGP < 60–119 days). Market accessibility was used to identify remote areas using Nelson (2008), as released by the Global Environment Monitoring Unit of the Joint Research Centre of the European Commission. Market access is identified as less than five hours of travel to a market city with a population of 50,000 or more. See Barbier and Hochard (2014) for further details. Poverty data from PovcalNet, the online tool for poverty measurement developed by the Development Research Group of the World Bank (retrieved from http://iresearch.worldbank.org/PovcalNet/). “Poverty headcount” is the percentage of population with consumption or income per person below the$1.25/day poverty line. “Poverty gap” is the mean distance below the $1.25/day poverty line as a proportion of the poverty line. Developing countries are all low- and middle-income economies with 2012 per capita income of$12,615 or less.

Source: World Bank, World Development Indicators, retrieved from http://databank.worldbank.org/datab (Barbier & Hochard, 2014).

# Key Environmental and Economic Conditions

Many poor households on remote LFAL undertake a range of activities in order to cope financially and reduce the risks associated with high economic dependency on a single activity (Ahmed, Vargas Hill, & Naeem, 2014; Barbier, 2010; Barbier, López, & Hochard, 2016; Debela, Shively, Angelsen, & Wik, 2012; López-Feldman, 2014; Narain, Gupta, & van ’t Veld, 2008; Pingali, Schneider, & Zurek, 2014; Wunder, Börner, Shively, & Wyman, 2014). Because land in such regions is abundant but poor in quality, limited in productivity, and prone to degradation, land is one of the few productive assets owned by the rural poor, and almost all households engage in some form of agriculture (Ahmed et al., 2014; Banerjee & Duflo, 2007; Barbier, 2010; Gerber, Nkonya, & von Braun, 2014). However, as the productivity of landholdings tends to be limited, households often seek additional income from off-farm agricultural labor or in unskilled paid work or occupations outside of agriculture (Ahmed et al., 2014; Banerjee & Duflo, 2007; Carter & Barrett, 2006; Holden, Shiferaw, & Pender, 2004; Jansen et al., 2006; Pascual & Barbier, 2007; Shively & Fisher, 2004; Takasaki, Barham, & Coomes, 2004). When household members do engage in outside employment, they tend to migrate only temporarily and for short distances, and thus they mostly seek work opportunities locally. Permanent migration over long distances for work is rare for most poor rural households (Banerjee & Duflo, 2007). Consequently, given their lack of substantial assets and their tendency to stay where they are located, many poor people on remote LFAL also often depend on their surrounding natural environment.

In many developing regions, poor households in remote LFAL rely on natural resources, such as grasslands for fodder, wild plants and hunted animals, and collected fuelwood and other wood and nonwood products, both as a supplement to consumption needs and income and as part of overall insurance and coping strategies for avoiding the income and subsistence losses associated with natural disasters and other shocks (Angelsen et al., 2014; Battacharya & Innes, 2013; Carter, Little, Mogues, & Negatu, 2007; Debela et al., 2012; Hallegatte et al., 2015; López-Feldman, 2014; McSweeney, 2005; Narain, Gupta, & van ’t Veld, 2008; Takasaki et al., 2004; Vedeld, Angelsen, Bojö, Sjaastad, & Kobugabe Berg, 2007; Wunder et al., 2014). A synthesis of 51 case studies from 17 developing countries found that income from fuelwood, wild foods, fodder, and environmental resources comprised on average 22% of the overall income of the rural poor, with off-farm employment comprising 38% and agriculture 37% of household income (Vedeld et al., 2007). A comparative analysis of nearly 8,000 households across 24 developing countries found that 28% of household income came from the surrounding environment of forests and wildlands, which was about the same as crop income, and this share was even higher for the poorest households (Angelsen et al., 2014).

Such cross-country evidence is consistent with specific country case studies that show that poor households on remote LFAL attempt to diversity their income sources among three principal activities: agriculture, local off-farm work, and exploitation of natural resources from the surrounding environment. Moreover, when outside sources of income are limited or unavailable, there is a tendency to rely more on environmental income. In remote areas of rural Uganda, poorer households attempt to diversify their income sources from the use of forests and outside employment; however, when the latter sources are lacking, there is more exploitation of natural resources, especially among those households with below-average and poor-quality landholdings (Debela et al., 2012). In rural Mexico, the poor rely more on natural resource extraction than wealthier households as an income-generating activity, and they especially depend on such extraction for subsistence. In addition, poor households in isolated villages have fewer outside employment alternatives to resource extraction (López-Feldman, 2014).

Similar interactions between limited productivity from agricultural land, lack of local employment opportunities, and dependence on environmental income have been found for poor households in resource-poor areas of El Salvador; Ethiopia, Honduras, India, Malawi, Peru, and the Philippines (Battacharya & Innes, 2013; Coxhead, Shively, & Shuai, 2002; González-Vega, Rodríguez-Meza, Southgate, & Maldonado, 2004; Holden et al., 2004; Jansen et al., 2006; Narain et al., 2008; Shively & Fisher, 2004; Takasaki et al., 2004). Cross-country evidence also suggests that, for poor households on remote LFAL, “forests and other wildlands are ‘options of last resort,’ which people only select as their primary safety net response when shocks are particularly severe and when, due to adverse household and village conditioning factors, they do not have any easier way out,” such as additional income from local off-farm employment (Wunder et al., 2014, p. S39).

To summarize, a number of key economic and environmental characteristics of poor households on remote LFAL are beginning to emerge from empirical studies in developing countries. Agricultural land in such areas may be sufficiently abundant that even poor households have landholdings and perform agricultural activities, but the poor biophysical productivity of such land limits its usefulness. As a consequence, most households seek to diversify their sources of income and subsistence by seeking off-farm work from local employment opportunities and exploiting natural resources in the surrounding environment for subsistence and additional income. If there are constraints on the availability of outside employment opportunities, however, households may have to rely even more on environmental sources of income. Consequently, an important trade-off may emerge in allocating available labor that is not engaged in agricultural production between seeking off-farm employment locally and exploiting natural resources. Such a trade-off may be even more relevant for households with extremely poor agricultural land and in isolated geographic locations.

# Poverty-Environment Traps

Because the assetless poor tend to be concentrated in less-favored rural areas and fragile environments that are located far from market centers, such populations are highly vulnerable to poverty traps. A poverty trap is characterized by self-reinforcing patterns of chronic or persistent poverty (Barrett & Swallow, 2006; Kraay & McKenzie, 2014). There is mounting evidence that remote LFAL in developing countries may be significant poverty traps.3 Such traps may occur because production on these lands is prone to low yields and soil degradation, while lack of access to markets and infrastructure may constrain the ability of poor households to improve their farming systems and livelihoods or restrict off-farm employment opportunities. Consequently, in their review of the empirical evidence on poverty traps in developing countries, Kraay and McKenzie (2014, p. 143) conclude: “The evidence most consistent with poverty traps comes from poor households in remote rural regions.” Similarly, the World Bank (2008, p. 49) found that “the extreme poor in more marginal areas are especially vulnerable” and “one concern is the existence of geographical poverty traps.”

As a result, two types of poverty traps can ensue for rural population on remote LFAL. First, poor households located in fragile environments are vulnerable to a poverty-environment trap, which is a self-reinforcing pattern of excessive allocation of household labor to production from marginal agricultural land and resource commons, leading to overuse and environmental degradation that perpetuates low or even declining labor productivity in these activities, and thus eventually, consumption falling to subsistence levels (Barbier, 2010). Second, if the assetless poor are also located in remote areas, then the geographical isolation of these rural communities and local markets can reinforce conditions that create a spatial poverty trap. As described by Barrett (2008), this geographical isolation substantially raises the costs of agricultural commerce and crop production in remote markets, distorts or insulates these markets from economywide policy changes, and thus discourages smallholder market participation.

For example, to illustrate the poverty-environment trap, Barbier (2010) considers a representative rural household living on remote LFAL. As a consequence, the household lacks access to formal or well-functioning markets for credit, capital, land, and insurance. Thus, members of the household may participate in two broad types of economic activity: (a) production activities that rely on the natural resource endowment available to the household, including any common-property resources or land for agriculture; and, if they choose, (b) any outside paid employment that can be found locally.

The household labor allocation choices of the poor rural household are shown in Figure 2a. The horizontal axis depicts the total labor allocated by the household to both production activities and outside employment, with L representing total household labor, l0 being labor allocated to production activities, lw being labor devoted to paid work, and $L−l0−lw$ being the remaining unallocated household labor, which can be broadly categorized as “leisure.”4 For a given quantity and quality of the natural resource endowment available to the household, N0, the marginal value to the household of allocating labor to its own production activities, $VMPl(N0)$, is downward sloping because of the decreasing marginal productivity of labor, whereas the marginal cost of this allocation in terms of foregone leisure,$MCl$, is upward sloping because of decreasing marginal utility of leisure. Where these two curves intersect determines the reservation wage wR of the household, which is the value of its labor that just ensures that the optimal hours engaged in paid work is zero.

This existence of a reservation wage is important to the household labor allocation decision, as the household will engage in outside employment only if the market wage received exceeds the household’s reservation wage. If the wage for paid work is less than or equal to the reservation wage, then the household will not participate in the labor market. For example, as shown in Figure 2a, if the market wage w for hiring labor is equal to the reservation wage, the household would not allocate any labor to outside employment, $lw=0$. Instead, lR household labor would be involved in production activities and the remaining $L−lR$ labor would be devoted to leisure. On the other hand, as shown in Figure 2a, if the household is offered a wage rate in outside employment higher than its reservation wage, $w>wR$, then the household would reduce both its labor allocated to production activities and to leisure in order to engage in outside employment. The household will devote l0 labor to production activities, lw to paid work, and $L−l0−lw$ to leisure.

However, for its production activities, the household relies on agriculture and collecting or harvesting products from resource commons. As we have seen, agriculture on marginal lands is prone to land degradation, and many resource commons are subject to overexploitation due to uncontrolled access or under threat from development activities. Such impacts will eventually cause the quantity and quality of the natural resource endowment available to the household to decline, from N0 to N1 (see Figure 2a). The result is a fall in labor productivity, and thus also in the household’s reservation wage. The household now will allocate only l1 labor to its own production activities, and much more labor will be devoted to outside employment. Leisure will be unaffected.

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Figure 2. The household poverty-environment trap.

But there are likely to be many poor households facing problems of environmental degradation from farming marginal lands and exploiting natural resources found in the commons or open access locations. If there are large numbers of households seeking outside employment, the supply of labor for paid work could exceed demand. The market wage for hired labor will decline. For some households, the wage rate will fall to the level of the reservation wage or even lower. These households now would stop seeking outside employment opportunities and instead allocate all their labor to production activities and leisure. The danger for these households is that if this process degenerates into a vicious cycle, then the dynamics of a poverty-environment trap may ensue (see Figure 2b). The vicious cycle of the poverty-environment trap can be even worse for the household if the land and environmental degradation problems are widespread in the region and affect many households. In that case, the large numbers of households seeking outside employment will force the market wage down to subsistence levels very quickly. As shown in Figure 2b, the vicious cycle can easily lead to such a downward spiral. Falling wages for outside work will force the household to reallocate more of its labor to production activities. This is clearly a suboptimal labor allocation, as it is devoting excess labor to production and resource extraction. There is a further danger to the household, however. By putting too much labor into production activities, the household is likely to further overexploit common resources and degrade its marginal lands for agriculture. As indicated by Figure 2b, the result is even more decline in the labor productivity of the household in agricultural and resource activities, continuing misallocation of labor, and a deepening poverty-environment trap.

When the assetless poor are located in ecologically fragile areas located far from major urban centers and markets, the poverty-environment trap also can be reinforced by a spatial poverty trap (Barrett, 2008; Graw & Husmann, 2014; Gollin & Rogerson, 2014; Jalan & Ravallion, 2002; Pender, 2008; Pender & Hazell, 2000; Pingali et al., 2014; World Bank, 2008). In such cases, the geographic isolation of poor rural communities dependent on much smaller and remote local markets discourages widespread smallholder participation in markets, reduces outside employment opportunities for the assetless poor, and thus fosters the prevalence of poverty in the remote region. Adapting the analysis of Barrett (2008), Figure 3 illustrates this type of poverty trap that emerges from the concentration of poor rural communities in remote regions with isolated markets.

As Barrett (2008) argues, the key characteristic of remote regions is that although they may contain active markets that exchange local produce, the geographical isolation of these markets limits their integration with larger regional, national, or even global markets. In effect, there is a substantial transaction cost in the form of intermarket costs of commerce that afflicts local, remote markets. For example, as shown in Figure 3, suppose that PB is the border-equivalent price for an agricultural product prevailing in the major markets of a developing economy. However, because of the transaction cost of commerce, τ‎, the actual price prevailing in a geographically isolated local market is much higher [$PR=PB+τ(GR,QR)$]. This transaction cost is influenced by the availability and quality of public infrastructure and services in the remote region, GR, such as roads, extension services, and communications, and also by the scale of the local market, QR. Because larger markets have lower intercommerce costs, τ‎ declines as local market transactions increase in size.

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Figure 3. The geographic isolation of remote rural markets.

Figure 3 depicts the market equilibrium in a small, remote market with poor access to public infrastructure and services. The resulting large transaction cost of intermarket commerce ensures that the market is restricted to local supply and demand and that the resulting price is well above PB. Consequently, the substantial transaction cost acts as a barrier both to the integration of the remote rural market with major agricultural markets and to the transmission of price changes from economywide policies to the isolated region, “hence the frequent ineffectiveness of trade, exchange rate, and other macro level policies in stimulating either smallholder market participation or significant improvements in rural producers’ welfare” (Barrett, 2008, p. 304).

By restricting smallholder market participation in the remote region, such a spatial poverty trap also reinforces the dynamics of the household poverty-environment trap (see Figure 2). If small, isolated markets constrain the commercial opportunities and returns of smallholders capable of becoming net sellers of agricultural products, these households will have lower returns to their landholdings and also be discouraged from hiring additional agricultural labor. Having less return to land will discourage the smallholders from investing in improvements to their land that boost agricultural productivity and make it less vulnerable to soil erosion and other forms of land degradation. Less hiring of agricultural labor will further depress the off-farm employment opportunities and wages on which local resource-poor households depend. The result is that the type of poverty-environment dynamics depicted in Figure 2b is more likely to occur.

# Toward a New Poverty Eradication Strategy

To summarize, a distinct geographic pattern of natural resource use and rural poverty has emerged in developing economies. Many low- and middle-income economies display a high concentration of large segments of the population in fragile environments and in remote areas with poor market access and rural poverty. Moreover, there appears to be a correlation of this pattern of resource use with poor economic performance: those developing countries that are highly resource dependent and whose populations are concentrated in fragile environments and remote areas tend not only to have high incidence of rural poverty, but also are some of the poorest economies in the world.

To eradicate such persistent problems of geographically concentrated rural poverty in developing economies will require a new poverty eradication strategy. Such a targeted strategy for the rural poor in remote and less-favored areas will require the following components:

• Provide financing directly, through involving the poor in paying for ecosystem service schemes and similar incentive mechanisms that enhance the environments on which the poor depend.

• Target investments directly to improving the livelihoods of the rural poor, especially aimed at improving the productivity of their existing privately owned agricultural and resource activities, thus reducing their dependence on exploiting common environmental resources.

• Improve access of the rural poor in less-favored and remote areas to well-functioning and affordable markets for credit, insurance, and land.

• Reduce the high transportation and transaction costs that prohibit the poorest households in remote areas to engage in off-farm employment and to integrate with larger markets.

• Provide effective institutions and governance in support of poor communities’ use of common pool resources.

If policies are to be targeted to improve both rural livelihoods and protect the fragile environments on which many poor people depend, such a strategy must take into account many important factors influencing households’ behavior, including lack of income opportunities; lack of access to key markets for land, labor, and credit; and the availability and quality of natural resources, including land, to exploit (Barbier, 2010). In addition, policies need to address the lack of access of the rural poor in less-favored areas to well-functioning and affordable markets for credit, insurance, and land, as well as the high transportation and transaction costs that prohibit the poorest households in remote areas to engage in off-farm employment, which are the major long-run obstacles to financial success (Barbier et al., 2016). As discussed previously, such problems lie at the heart of the poverty trap faced by many poor people in remote and less-favored areas (Barbier, 2010; Barrett, 2008; Gollin & Rogerson, 2014). For example, Carter and Barrett (2006, p. 195) note that the existence of a poverty trap threshold “depends on the degree to which the household is excluded from intertemporal exchange through credit, insurance, or savings, whether formally or through social networks. A household with perfect access to capital over time and across states of nature would not face a critical threshold.” Similarly, Shively and Fisher (2004, p. 1366) maintain that “policies to reduce deforestation should focus on increasing returns to off-farm employment, strengthening rural credit markets, and ensuring farmers have secure tenure over existing agricultural land.”

As Barrett (2008, p. 306) argues, “better integration of local markets into broader global markets limits the losses suffered by smallholders too poor to afford new technologies, increases the gains enjoyed by those farmers who do adopt improved production technologies, and increases the incentives to invest in adoption of new technologies.” Thus, improving market integration for the poor may depend on targeted investment in a range of public services and infrastructure in remote and ecologically fragile regions, such as extension services, roads, communications, protection of property, marketing services, and other strategies to improve smallholder accessibility to larger markets. For example, for poor households in remote areas of a wide range of developing countries, the combination of targeting agricultural research and extension services to poor farmers and investments in rural road infrastructure to improve market access appears to generate development and poverty alleviation benefits (Ansoms & McKay, 2010; Bellon et al., 2005; Cunguara & Darnhofer, 2011; Dercon 2009; Dillon, Sharma, & Zhang, 2011; Emran & Hou, 2013; Müller & Zeller, 2002; Yamano & Kijima, 2010). In Mexico, poverty mapping was found to enhance the targeting of maize crop-breeding efforts to poor rural communities in less-favorable and remote areas (Bellon et al., 2005). In the Central Highlands of Vietnam, the introduction of fertilizer, improved access to rural roads and markets, and expansion of irrigation dramatically increased the agricultural productivity and incomes (Müller & Zeller, 2002).

Because they face higher transaction and transportation costs, poorer households in remote locations are less likely to participate in off-farm employment. Yet, as discussed previously, when off-farm employment opportunities are available in remote areas, they can reduce conditions fostering the poverty-environment trap faced by poor households (Ansoms & McKay, 2010; Barbier, 2010; Coxhead et al., 2002; González-Vega et al., 2004; Pascual & Barbier, 2007; Shively & Fisher, 2004). For example, in Colombia, high-input, intensified, highly mechanized cropping on the most suitable land, as well as expansion in cattle grazing, have drawn labor from more traditional agriculture, so that “areas of marginal land are slowly being abandoned and left to revegetate” (Etter, McAlpine, & Possingham, 2008, p. 17). Investments in expanded market opportunities, improving market access, and expanding public infrastructure and services, including rural education and health services, seem to be important factors in both reducing the barriers to poor households’ participation in off-farm opportunities and expanding their supply.

# Conclusion

The continuing geographical concentration of the rural poor in ecologically fragile and remote areas remains one of the biggest development challenges facing many low- and middle-income economies. As this article argues, the result is two interacting poverty traps that inhibit widespread rural development: a poverty-environment trap at the household and community levels and a spatial poverty trap for isolated regions and their local markets. That such poverty traps remain an important obstacle to progress in alleviating rural poverty is evident from recent trends. For example, according to the World Bank (2008, p. 49), “the extreme poor in more marginal areas are especially vulnerable, and until migration provides alternative opportunities, the challenge is to improve the stability and resilience of livelihoods in these regions.”

Thus, how environmental degradation impoverishes the rural poor located in remote, resource-poor regions is through a vicious cycle of declining livelihoods, increased ecological degradation, loss of resource commons, and declining ecosystem services on which the poor depend (Barbier, 2010). That is why addressing this vicious cycle calls for a new policy strategy that does not just focus on improving natural capital in general, but attempts to address the key elements that are the root cause of the poverty-environment and spatial poverty traps. To be effective, such a pro-poor strategy needs to target the rural poor where they are geographically concentrated—in remote and ecologically fragile areas.

As indicated in this article, considerable advances have been made in recent years in mapping the geographical location of the poor and assessing how poverty-environment and spatial poverty traps emerge. Such tools and analysis are now helping to guide and direct policy interventions to overcome these geographical dimensions to rural poverty in the developing world (see Higgins, Bird, & Harris, 2010, for a review). More concerted efforts are required to expand the lessons learned from such studies into a more comprehensive strategy to alleviate rural poverty throughout the developing world.

First, there is a need for better data on the spatial location of the rural poor. Of particular interest is determining the extent to which the rural poor in specific developing countries are concentrated in remote and fragile environments compared to other locations (Barbier & Hochard, 2014). Determining geographical clusters of the rural poor is extremely important to the design of the appropriate policies, given the evidence presented here that the spatial poverty trap of remoteness tends to reinforce the poverty-environment trap faced by poor households in ecologically fragile areas. For example, Ansoms and McKay (2010) identify clusters of poor rural households based on poverty, livelihood, and environmental profiles, including the soil quality and amount of cultivated land and the remoteness of each individual household’s location. For households in resource-poor but centrally located regions, policies should aim to improve access to off-farm employment opportunities and small-scale entrepreneurship, while for households in remote regions, the priority should be to enhance access to markets by improving rural road infrastructure and to increase availability of educational and health services. Finally, for relatively resource-rich households, the policy emphasis should be to reduce resource degradation, enhance market-oriented agriculture, and provide better access to insurance, credit, and other market services.

In addition, assessments of the various policy mixes and investments targeted to the rural poor need to determine not only the benefits of such targeted improvements for increasing the incomes of households in fragile and remote areas, but also whether such investments are cost effective. Such analyses should also shed light on what type of delivery mechanism may be more appropriate—for example, a proxy means test that distributes benefits based on the consumption and wealth characteristics of each household, or community-based methods where beneficiaries are identified by the community or its leaders (Alatas, Banerjee, Hanna, Olken, & Tobias, 2012).

The scale of the impacts of the various implemented policies and investments also requires evaluation. Did household and community incomes increase sufficiently to alleviate chronic poverty in the wider region? How much improvement to the surrounding natural environment resulted from these efforts? Assessing the scale of these effects is important to determine the overall effectiveness of the policies, but it also may identify follow-up actions. For example, policies aimed at addressing property rights weakness, lack of access to research and extension or affordable credit, and the availability of off-farm employment could have a measurable impact on reducing regional poverty, but less of an influence on the management of common resources, such as forests, grazing land, and watersheds, or on protected areas.

Finally, a policy strategy targeted at improving the livelihoods of the rural poor located in remote and fragile environments must be assessed against an alternative strategy, which is to encourage greater out-migration from these areas. As pointed out by Lall, Selod, and Shalizi (2006, p. 48), rural development is essentially an indirect way of deterring migration to cities, yet because of the costliness of rural investments, “policies in developing countries are increasingly more concerned with influencing the direction of rural to urban migration flows—e.g. to particular areas—with the implicit understanding that migration will occur anyway and thus should be accommodated at as low a cost as possible.”

Rarely, however, are the two types of policy strategies—investment in poor rural areas and targeted outmigration—directly compared. In addition, only recently have the linkages between rural out-migration, smallholder agriculture, and land use change and degradation in remote areas been analyzed (Gray, 2009; Greiner & Sakdapolrak, 2012; Mendola, 2008, 2012; VanWey, Guedes, & D’Antona, 2012). Another important emerging area of research is to examine the economic choices made by poor rural households to migrate to remote and environmentally poor frontier regions as opposed to urban areas (Barbier, 2012; Carr, 2009; Caviglia-Harris, Sills, & Mullan, 2013). Researching such linkages will become increasingly important to understanding the conditions under which policies to encourage greater rural out-migration should be preferred to a targeted strategy to overcome the root causes of the poverty-environment and spatial poverty traps in remote and fragile areas.

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## Notes:

(1.) See, for example, Barbier (2010); Barbier and Hochard (2014); CAWMA (2008); CGIAR (1999); Fan and Chan-Kang (2004); Graw and Husmann (2014); Pender (2008); Pender and Hazell (2000); Pingali et al. (2014) and World Bank (2003, 2008).

(2.) Throughout this chapter, the terms marginal and less-favored agricultural lands (LFAL) are used interchangeably to refer to all agricultural lands that face biophysical constraints, such as steep terrain, poor soil quality, or limited rainfall, that limit their potential agricultural productivity. In addition, a subset of these lands may be located so far from market towns and cities in terms of travel distance that the agricultural potential of these lands may be constrained by limited access to infrastructure and markets. This is what is meant by “remote” LFAL.

(3.) See, for example, Barbier (2010); Barrett (2008); Barrett and Bevis (2015); Battacharya and Innes (2013); Coomes et al. (2011); Coxhead et al. (2002); Emran and Hou (2013); Fan and Chan-Kang (2004); Fan and Hazell (2001); Gerber et al. (2014); Gollin and Rogerson (2014); González-Vega et al. (2004); Holden et al. (2004); Jalan and Ravallion (2002); Lang et al. (2013); and Zhang and Fan (2004).

(4.) In this context, leisure includes all other uses of household labor, such as rest, educational activities, looking after the elderly or children of the household, chores, and food preparation.