Poverty – Inequality – Environment

In September 2015, the world leaders assembled at the United Nations Sustainable Development Summit to adopt the 2030 Sustainable Development Agenda, the next step beyond the UN’s Millennium Development Goals (MDGs). The new agenda includes 17 new targets, known as the Sustainable Development Goals (SDGs). The SDGs are more ambitious compared to the MDGs aiming for economic, social and environmental sustainability. The first target, Goal 1, emphasises on poverty, highlighting that poverty is one of the most complex and multidimensional issues that need to be tackled. Theodore Schultz at his Nobel prize award in economics in 1979  suggested ’’ Most of the people in the world are poor, so if we knew the economics of being poor, we would know much of the economics that really matters’’.

While early literature has generally focused in the interaction between inequality and economic growth in order to address poverty, recent literature proposes a richer, multidimensional approach which includes economic, environmental, social, political, and cultural dimensions in the equation (Alkire and Santos 2010; Woldehanna 2011). More specifically, the World Commission on Environment and Development highlighted that “Poverty is a major cause and effect of global environmental problems. It is therefore futile to attempt to deal with environmental problems without a broader perspective that encompasses the factors underlying world poverty and international inequality.” (WCED 1987). That being said, environmental, economic and social development go hand in hand and they should be encountered as interdependent phenomena.

Poverty & Environment 

The environment is strongly related to the welfare and well-being of poor people. Poor population rely on natural resources and small-scale activities such as fishing, activities in the forest, agriculture, livestock and as a result they are vulnerable to climate change impacts and shocks such as floods, earthquakes and droughts (Felbermayr and Gröschl 2014; Skidmore and Toya 2002). Since 2005 the United Nations Development Programme (UNDP) and the United Nations Environment Programme (UNEP) work together on the Poverty-Environment Initiative (PEI), aiming to help countries to integrate poverty – environmental objectives into their development policies. To place this simply, the relationship between poverty and the environment lies in the abundance of environmental assets and their marginal change. Changes in land cover, forest area, agriculture, biodiversity, water and soil have an impact on poverty either implicitly or explicitly. However, while environmental degradation has certainty a significant impact on the livelihood of poor people, it is not uncommon the statement that governments, with the acquiescence of local population, tend to degrade the environment on the altar of economic development. This is the case of the so-called downward spiral, as degraded resources tend to reduce further the income and the welfare of the poor and vice versa (Dasgupta and Mäler 1995; Durning 1989; Ekbom and Bojö 1999). Consequently, the poverty-environment nexus is a very dynamic and complex concept where the direction of causality and whether poverty enhances environmental degradation or vice versa is quite uncertain.

The dependency of the poor population on natural resources and environment make them vulnerable, increasing their difficulty to adapt both from an economic and environmental perspective  (Cavendish 1999; Gupta and Mitra 2004). According to IPCC reports, the Least Developed Countries (LDCs) are highly affected by the constant environmental stress as they demonstrate low adaptive capacity due to their dependency on climate-vulnerable sectors (e.g. agriculture), undermining the livelihood of low-income masses. Adaptation, together with mitigation of climate change impacts, are the key elements for the LDCs’  resiliency. Therefore, is of great importance, the understanding of the economic value of the ecosystem services and their relevant impact on well-being as it can lead to more efficient adaptation and mitigation strategies.




Alkire, Sabina, and Maria Emma Santos. 2010. “Acute Multidimensional Poverty: A New Index for Developing Countries.”

Cavendish, William. 1999. “Empirical Regularities in the Poverty- Environment Relationship of African Rural Households.”

Dasgupta, Partha, and Karl-Göran Mäler. 1995. “Poverty, Institutions, and the Environmental Resource-Base.” Handbook of development economics 3: 2371–2463.

Durning, Alan B. 1989. Poverty and the Environment: Reversing the Downward Spiral. Worldwatch Paper 92. ERIC.

Ekbom, Anders, and Jan Bojö. 1999. Poverty and the Environment: Evidence of Links and Integration Into Country Assistance Strategy Process. Citeseer.

Felbermayr, Gabriel, and Jasmin Gröschl. 2014. “Naturally Negative: The Growth Effects of Natural Disasters.” Journal of Development Economics 111: 92–106.

Gupta, Indrani, and Arup Mitra. 2004. “Economic Growth, Health and Poverty: An Exploratory Study for India.” Development Policy Review 22(2): 193–206.

Skidmore, Mark, and Hideki Toya. 2002. “Do Natural Disasters Promote Long‐run Growth?” Economic Inquiry 40(4): 664–87.

WCED. 1987. “Our Common Future: Report of the World Commission on Environment and Development.”

Woldehanna, Tassew. 2011. “Measuring Multidimensional Poverty: Capabilities, Deprivation, and Social Exclusion in Rural and Urban Ethiopia.”


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