Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1696577326188.pdf (Vanuatu)
HIES 2010 Poverty Analysis 21 June 2011 Prepared for MCA (Vanuatu) Monitoring progress towards achieving income and poverty targets in the transport sector for Rural Efate and East Coast Santo.
Prepared by: Kim Robertson, Poverty Consultant (MCA-V) 2010 HIES Analysis: MCA (Vanuatu) 2 2010 HIES Analysis: MCA (Vanuatu) Table of contents EXECUTIVE SUMMARY ............................................................................................................................................................... 5 Table 1: Population in households below the US$ Poverty Line................................................................................................................. 6 1.
INTRODUCTION ...................................................................................................................................................................... 8 2.
ESTIMATION OF POVERTY LINES AND POVERTY INCIDENCE ............................................................................................................... 11 Table 3: Monthly per capita adult equivalent poverty lines (Vt, $US), 2010 ............................................................................................. 11 Table 4: Proportion of households and population with monthly p.c.a.e expenditure less than the food and basic needs poverty lines .... 12 Table 5: Proportion of households and pop with monthly adult equivalent per capita expenditure less than the adjusted food and basic needs poverty lines ............................................................................................................................................................................... 13 Table 6: Proportion of households with monthly adult equivalent per capita expenditure less than the 'PPP' poverty lines, 2006 and 2010 ............................................................................................................................................................................................................. 13 3.
HOUSEHOLD EXPENDITURE PATTERNS ....................................................................................................................................... 14 Table 7: Total monthly expenditure per capita and per household for MCA areas, 2010 HIES .................................................................. 15 Figure 1: Total monthly household expenditure per capita, 2010 HIES .................................................................................................... 15 Table 8: Total monthly expenditure (VT), estimated population and households for MCA areas, 2010 HIES ............................................. 16 Table 9: Total monthly expenditure (US$), estimated population and households for MCA areas, 2010 HIES ........................................... 16 Figure 2: Total monthly household expenditure (VT), 2010 HIES ............................................................................................................. 17 Figure 3: Total monthly household expenditure (US$), 2010 HIES ........................................................................................................... 17 Total food expenditure .................................................................................................................................................... 18 Table 10: Total monthly food expenditure for MCA areas, 2010 HIES ...................................................................................................... 18 Figure 4: Food expenditure as a proportion of total expenditure for MCA areas, 2010 HIES .................................................................... 18 All expenditure other than food ....................................................................................................................................... 19 Table 11: Total monthly expenditure and proportion of non-food (NF) expenditure (Vt) for MCA areas, 2010 HIES.................................. 19 Table 12: Total monthly expenditure and proportion of non-food (NF) expenditure (US$) for MCA areas, 2010 HIES ............................... 19 4.
CONCLUSIONS ..................................................................................................................................................................... 20 ANNEX 1: MINIMUM AND MAXIMUM EXPENDITURE RANGES, PER CAPITA ADULT EQUIVALENT, CLASS MID POINTS AND NUMBER OF HOUSEHOLDS SAMPLED FOR MCA AREAS, 2010 HIES .......................................................................................... 22 ANNEX 2: METHODOLOGY FOR POVERTY ANALYSIS ................................................................................................................. 23 ANNEX 3: CENSUS 2009 HOUSEHOLDS AND POPULATION FOR RURAL EFATE AND EAST COAST SANTO .................................... 28 Note: throughout this report the national currency of Vanuatu, the Vatu, is shown in its equivalent value in United States dollars (US$) using the exchange rate of $1.00 = Vt 108.
This rate is from the Monitoring and Evaluation Plan Vanuatu Transport Infrastructure Development Program (Revised M&E Plan; Version II: 21 September 2010, Version 2 page 33).
3 2010 HIES Analysis: MCA (Vanuatu) Abbreviations Asian Development Bank Basic Needs Poverty Line Consumer Price Index Enumeration Area Food Poverty Line Household Income and Expenditure Survey Kilo calories ADB BNPL CPI EA FPL HIES Kcal MCA (Vanuatu) Millennium Challenge Account (Vanuatu) MCC P.C.A.E PPP SPC UNDP VNSO Vt Millennium Challenge Corporation Per capita adult equivalent Purchasing Power Parity Secretariat of the Pacific Community United Nations Development Program Vanuatu National Statistics Office Vatu 4 HIES 2010 Poverty Analysis for MCA (Vanuatu) 2010 HIES Analysis: MCA (Vanuatu) Executive Summary Poverty is a multidimensional concept.
It can be applied at the individual, household or national level.

From any geographic perspective, poverty is a multidimensional concept in terms of how it is measured.

It can be measured using changes in per capita incomes, per capita cash incomes, or against poverty lines which are fixed and absolute such as US$ 1.25 a day or relative and changing such as the poverty lines derived from household survey data in this analysis.
Measuring poverty, as with all measurement of social issues, necessarily requires simplification.

Many of the dimensions of poverty outlined above are difficult, or impossible, to quantify.

Even for those features that seem possible to measure, summarising the various dimensions in a single index is highly challenging.

In order to provide a measure of poverty it is necessary to make choices, leading to a simplification of the concept of poverty.
This report uses some of these measures to assess the impact of the Millennium Challenge Account – Vanuatu (MCA-V) road improvement program in rural Efate and the East Coast of Santo (maps with household and population counts are included in Annex 3).
The results of the Household Income and Expenditure Survey (HIES) of 2006 and the Monitoring and Evaluation Plan of the Vanuatu Transport Infrastructure Development Program (Version 2) were used to establish benchmark per capita income and poverty reduction targets for rural Efate and the East Coast of Santo.

These are the impact targets for the road improvement program.
When the monitoring and evaluation plan was designed it was anticipated that the road improvements would be completed in 2009 or early in 2010.

The commencement of the road works was delayed and the roads were not completed until September 2010 in Santo and November 2010 in Efate.

It is anticipated that the final evaluation of the impact of the road on increasing incomes and decreasing poverty will occur in 2012 or two years after the ‘’implementation’ of the completed roads.
The Household Income and Expenditure Survey (HIES) of 2010 was conducted to measure progress towards achieving poverty reduction targets for the Millennium Challenge Account (Vanuatu) (MCA-V).

The final survey data will provide national estimates of per capita income and a range of poverty lines at the national, urban and rural levels when the analysis is completed in late 2011.
The analysis contained here uses the HIES 2010 data for rural Efate and Santo which was checked and edited specifically for the MCA-V.

The 2010 HIES, like that of 2006, was based on a national sample of 10% of private households with sufficient sampling in the areas of rural Efate and East Coast of Santo to provide reliable estimates of income and the incidence of poverty in these areas of interest for the MCA-V.

The 2010 sampling methodology replicated that of 2006 in the program areas.
The HIES survey data was evaluated for rural Efate and East Coast Santo and was considered to be robust and reliable for poverty analysis.

The 2010 HIES data was analysed using the same methods as the 2006 poverty analysis carried out by the Vanuatu National Statistics Office.

The two areas of interest are quite different in terms of socio-economic characteristics.
The southern half of the East Coast of Santo is comprised of large mixed agricultural land holdings (copra, beef etc) and household members generally work in agriculture for subsistence production or mixed subsistence and sale of surplus in all communities along the road with some small businesses serving the communities, mostly small scale retail stores and some tourism related activities.

The cash economy is not extensive.


Rural Efate household members have a number of sources of income including earnings from cash work in local businesses or in the urban centre of Port Vila as well as household business enterprises engaged in tourism, transport, agriculture and so on.

The cash economy is widespread.

The 2010 HIES results indicate that the roads are making a considerable contribution to increasing incomes and reducing poverty in terms of both relative and absolute poverty measures.
The HIES data from 2010 shows increased per capita income from US$ 1,291 in 2006 to US$ 3,248 in 2010 in rural Efate; an increase of a magnitude of two and a half times.

Per capita incomes also increased in the East Coast of Santo by 9% from US$ 2,122 to US$ 2,319 in 2010.

The increase in income in Santo has not been as large as what has occurred in Efate.
There are a number of possible reasons for this including the slower uptake of commercialism and the cash economy in Santo, with traditional economic systems based on traditional agricultural and other custom products, as both assets and the medium of exchange, still predominant.
Other contributing factors are that the urban and peri-urban labour market in Santo has not grown at the same rate as in Efate and the southern half of the road is in private ownership plantation style farming limiting the land available for entrepreneurial activities by private households.
5 2010 HIES Analysis: MCA (Vanuatu) The World Bank ‘dollar a day’ poverty lines provide absolute measures of poverty in East Coast Santo and rural Efate; and are less complex to understand than the relative poverty lines for food and basic needs derived from the HIES survey data.

These measures complement the per capita income measures used by the monitoring and evaluation plan warranting inclusion in this report.
Table 1 contains a series of poverty lines based around those used by the World Bank, with the US$ 1.25 measure adopted in 2008 as the standard in the revision to the $1.08 poverty line.

There was a 69% decrease in the population living on less than US$ 1.25 a day in rural Efate in 2010 compared with 2006, or a decrease of 1,340 people.

In 2006 in the East Coast of Santo 1,060 people were living on less than US$ 3.00 a day which decreased to 310 in 2010.
These results show that incomes are increasing in rural Efate and increased economic activity and associated returns from labour or investment are reaching everyone, not just the wealthy or the elite: the benefits of economic growth do seem to be ‘trickling down’ to benefit the poorest households.

Approximately 1,340 people moved out of poverty between 2006 and 2010 (population numbers taken from Table 1).
In the East Coast of Santo one could only conclude that the prevalent lifestyle of subsistence consumption and the associated traditional economy and transfers between households (particularly gift exchanges) which was evident in 2006 continues in 2010 with increasing economic activity (either traditional or cash) raising household per capita incomes in 2010.
Table 1: Population in households below the US$ Poverty Line Population in households below poverty line East Coast Santo Rural Efate 2006 2010 0 0 110 1,060 2,510 0 0 0 310 770 2006 1,170 1,930 3,210 5,210 7,810 2010 520 600 1,910 3,370 5,850 $1.08 per day $1.25 per day $2.00 per day $3.00 per day $4.00 per day Source: VNSO HIES 2006, 2010.

Purchasing Power Parity (PPP) exchange rates used; see Table 4.
The 2010 HIES results indicate that the roads are making a considerable contribution to increasing incomes when these are measured against poverty lines derived from the survey data – so called ‘relative’ poverty measures.

This first manifests in the poverty lines derived from the survey data.
There has been an increase in the minimum average level of food consumption in East Coast Santo as defined by the poorest 30% of households, shown in the Food Poverty Line (essentially a relative measure of poverty as it is derived from the survey data).

In 2010 the average adult diet in East Coast Santo was valued at Vt 132 or US$ 1.22 a day compared with Vt 123 or US$ 1.14 in 2006, an increase of 7%.
The average adult in the poorest households consumed an average of 2,792 kilo calories a day in 2006 compared with 3,766 kilo calories in 2010.

The increase in consumption was not limited to food, with the ratio of food to non-food expenditure increasing from 30% in 2006 to 70% in 2010.
The generally higher level of consumption in the East Coast of Santo has resulted in a higher incidence of poverty in 2010 when compared with 2006 because the poverty lines are relative measures based on food and non-food consumption in the poorest households.

In 2006 80 people had average incomes below the Basic Needs Poverty Line, increasing to 410 in 2010.
In rural Efate the food poverty line decreased from Vt 144 per average adult per day in 2006 to Vt 133 a day in in 2010 in the poorest 30% of households.

In 2006 on average in the poorest 30% of households an adult consumed 933 kilo calories of food a day which increased to 2,218 kilo calories in 2010 indicating that poor households were consuming more nutritious food.
There are a number of possible reasons for this including the better quality of the HIES data in 2010 compared with 2006 resulting in more information about food expenditure being collected, the consistent application of uniform market prices used to value food produced and consumed in the home and possibly even changes in food consumption towards cheaper more nutritious food produced in the home.
Non-food expenditure increased in rural Efate in 2010 shown by the ratio of food to non-food expenditure increasing from 40% in 2006 to 90% in 2010.

In sum, the 8% decrease in the ‘food’ component of the basic needs poverty line was offset by the 125% increase in the ‘non-food’ component of the Basic Needs Poverty Line.

In rural Efate in 2010 4,960 or 19.1% of the population had average per capita household incomes below the Basic Needs Poverty Line compared with 3,990 or 22.6% in 2006.
6 2010 HIES Analysis: MCA (Vanuatu) In addition to these broad targets the 2012 analysis should take a closer look at the characteristics of ‘poor’ and ‘non poor’ households in comparison with 2006, including the economic activities of household members (labour force participation, business activities within households), sources of household income, types of expenditure and so on to provide more contextual information about the extent of the ‘cash’ and ‘traditional’ economies.
In late 2011 the national poverty lines derived from the HIES will be available and the incidence of poverty in the MCA areas can be compared to the national poverty line and the rural poverty line as well as per capita cash income.

The VNSO is also exploring a number of initiatives in its continuing efforts to improve the quality of the HIES data.
The analysis of the HIES data presented here shows that the formal or cash economy of rural Efate has increased in size and that the returns from investment and labour are impacting in terms of increased per capita incomes and associated declining poverty in the poorest of households.
The Efate ring road is providing a vital artery for rural Efate communities and those on the close offshore islands to increase access to markets and employment opportunities both in the larger rural communities and the main urban centre of Port Vila.

The road is making impacts in terms of increased incomes in rural Efate.

The increase in cash incomes in the East Coast of Santo is nowhere near the same magnitude as in rural Efate.
Economic livelihoods in the East Coast of Santo are more complex with the traditional economy based on subsistence production and gift giving and sharing of surpluses is still prevalent.

A larger proportion of the road is tied up in privately owned commercial agricultural activities in large land holdings which the average person does not benefit greatly from.
Uptake of the opportunities the road presents in terms of participating in the labour market or other entrepreneurial activities in Luganville has not occurred to the same extent as in Efate.

Other survey data shows that business activity in the larger rural communities along the road is increasing, so perhaps the pattern of economic development will be different in the East Coast of Santo.

The HIES in 2012 will shed more light on the pattern of economic development in the East Coast of Santo.

7 1.
7 1.

Introduction 2010 HIES Analysis: MCA (Vanuatu) Background to this analysis The overall objective of the road and infrastructure improvement program in Vanuatu is to reduce poverty and increase incomes in rural areas by stimulating economic activity in the tourism and agricultural sectors through the improvement of transport infrastructure, which is key to economic growth and poverty reduction.
Benefits of the tourism and agricultural sectors include increased roadside enterprise development, traffic counts, household income, household agriculture production and economic activity.

Other more complex benefits to measure include improved access to social services such as health care, education, vocational and capacity training activities.
MCC Funding and additional funding from the New Zealand government was used to rehabilitate or construct priority infrastructure, namely: (i) (ii) Efate - Ring Road.

Upgrade 92.5 km of the Ring Road on Efate, the most populous of Vanuatu’s islands, to a two-lane bitumen seal standard, with improved drainage systems; and Santo - East Coast Road.

Upgrade the 57.2 km road from Luganville to Port Olry on the island of Santo to a two-lane, bitumen seal standard, including associated drainage structures.
The Monitoring and Evaluation Plan of the Vanuatu Transport Infrastructure Development Program details the mechanisms for quarterly and annual reporting on results to track progress and contribute information towards potential needed Program Adjustments for the MCC compact agreement in Vanuatu.

The economic impact of the compact was estimated by forecasting the probable economic value-added benefits of each project relative to the costs, as encapsulated in the Economic Rate of Return (“ERR”).
Expected benefits for each project were identified and quantified by estimating the induced value added impact of (i) reduced transport costs; and (ii) improved reliability of access on economic activity in the tourism and agriculture sectors.

For example baselines for key benefits in household income, including basic household agriculture production and economic activity were established.
The Monitoring and Evaluation Plan of the Vanuatu Transport Infrastructure Development Program states the three indicators to be used to measure the program goal; of which two are directly relevant to this analysis: a) the change in [annual] cash income, used to measure the extent of income earned through participation in the formal economy, whilst taking note of changes within the traditional economy practices within beneficiary populations.

i. ii.
i. ii.

Baseline (2006): Efate: $US 1,291; Santo: $US 2,122 Target (2010): Efate: $US 1,617; Santo: $US 2,711 b) change in poverty, as indicated by an improved standard of living above the most basic needs poverty line.

i. ii.
i. ii.

Baseline (2006): Efate: 37.7%; Santo: 14.6% Target (2010): Efate: 31.2%; Santo : 7.3% Cash income and poverty indicators and targets were developed following the Household Income and Expenditure Survey (HIES) of 2006 as baseline data, and the accompanying poverty analysis that was undertaken after the survey.
Using the HIES 2006, the Vanuatu National Statistics Office (VNSO) developed more reliable measures of cash income, and also established a national poverty line in local currency (Vatu), defined as the “Basic Needs Poverty Line”.

Consequently, baseline poverty and income measures that had not been previously available were established, providing a much-improved measure of high-level Program results (presented as the ‘baseline’ information above).
The 2006 HIES is serving as the primary baseline dataset with the 2010 HIES survey results now providing close-out data for comparison of the two groups (presented as the ‘target’ information above).

8 2010 HIES Analysis: MCA (Vanuatu) The data quality of the 2010 HIES was reviewed prior to the preparation of the 2010 BNPL.

It was found that as in 2006 there were considerable problems with non-response to the parts of the survey with the highest respondent burden: completing the daily expenditure diary.
The 2010 data underwent the same checks and methods used to impute or derive missing diary information as was used in 2006.

The results presented here are for rural Efate and Santo only.

The final HIES dataset for the whole of Vanuatu will be available in late October 2011 when national and other poverty lines will be derived.
The purpose of this paper is to summarise the methodology used to derive the estimates of the incidence of poverty from the HIES 2010, and present an analysis of the incidence of poverty and per capita consumption in the program sites of rural Efate and the East Coast of Santo.

The poverty estimates included are specific to the program site areas and are compared to the targets contained in the M&E Plan.
Results against the M & E Framework Efate: 2006-2015 Actual and Target for Change in Poverty (% Population) 37.7 31.2 19.1 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Santo: 2006-2015 Actual and Target for Change in Poverty (% Population) 14.6 5.2 7.3 2006 2007 2008 Actual 2009 2010 2011 Target 2012 2006 2007 2008 Actual 2009 2010 2011 Target 2012 In the above charts the solid lines are the targets in the monitoring and evaluation plan and the dotted lines are the observed values.
In sum, the analysis of the 2010 HIES data shows that Vanuatu is on track to achieve the targets for poverty reduction in the monitoring and evaluation framework.

Annex 3 contains the household and population counts for the Efate ring road and the East Coast of Santo living in the 5 kilometre zone on either side of the road.
These counts differ somewhat from the HIES of 2010 which is based on units of land called Enumeration Areas which in some cases extend over the 5 km radius because the size is determined by the average of households which VNSO has set to 80.

The HIES data also contains the outer islands of Efate; the population of which rely on the road for transport of goods and services as well as for access to markets and other basic economic and social services.
The Census 2009 maps include a considerable peri-urban population at the southern end of the road around Luganville which was not included in the HIES data analysed here.

However the 2009 Census counts show the distribution of household’s and population in the two islands.

Measuring poverty Poverty is a multidimensional concept.

The concept of poverty is applied at the individual (or household, regional (eg province) and national levels.
From any geographic perspective, poverty is a multidimensional concept.

At the national and province level poverty is linked to a number of factors such as the capacity of the economy, and donor partners, to provide the government administrations with sufficient resources to develop infrastructures, organise public services and implement development programs.
In addition social factors (education and skill levels, health status, vulnerable groups etc) are also key determinants of the capacity of the economy to provide adequate resources to government.

9 2010 HIES Analysis: MCA (Vanuatu) Measuring poverty, as with all measurement of social issues, necessarily requires simplification.

Many of the dimensions of poverty outlines above are difficult, or impossible, to quantify.
Even for those features that seem possible to measure, summarising the various dimensions in a single index is highly challenging.

In order to provide a measure of poverty it is necessary to make choices, leading to a simplification of the concept of poverty.

However measurement of poverty is necessary in order to provide essential information for all programs that aim to reduce poverty.
For example the overall objective of the MCC compact in Vanuatu is to reduce poverty and increase incomes in rural areas by stimulating economic activity in the tourism and agricultural sectors through the improvement of transport infrastructure.
Benefits to the tourism and agricultural sectors from improved transport, in this case roads, include increased roadside enterprise, increased road traffic and potential customers, increased household income from increased economic activity and the returns from labour or business investments, increased household agriculture production and so on.

Other more complex benefits to measure include improved access to social services such as health care, education, vocational and capacity training activities.
Therefore concepts must be simplified.

Two aspects of poverty are more easily quantified than others and are used as the basis for poverty assessment: income and consumption (as measured by household expenditure).

In Vanuatu consumption values have been selected as the basis for attempts to quantify poverty.
The main reason for selecting consumption rather than income as a basis for a poverty index is that discrepancies are often observed between declared income and expenditure, with the declared income being significantly lower than the declared consumption.

Another reason is that this is the standard used in the Pacific region for the analysis of poverty by the Secretariat of the Pacific Community (SPC), United Nations Development Program (UNDP) and the Asian Development Bank (ADB).
The consumption that separates the poor from the rest of the population is called the poverty line.

The first step in calculating a consumption-based index is to assess a level of consumption below which an individual will be defined as poor: the so-called poverty line.
Considerable research has shown that if consumption is divided into two categories, food consumption and non-food consumption, the poorer people are the higher the proportion of their overall consumption that is accounted for by food consumption.

In determining consumption levels that can be used to separate the poor from the non-poor, food consumption is the most significant measure.

Thus a Food Poverty Line (FPL), a minimum level of food consumption, is first calculated.
A non-food minimum allowance is then calculated and added to the food poverty line using the Engels ratio of food to non-food consumption in the lowest 30% of household consumption to produce the total poverty line which is called the Basic Needs Poverty Line (BNPL).

Nutrition is itself a complex subject.

Diet must fulfil a wide range of nutritional needs, such as protein, energy and many micronutrients.

Again, measurement requires simplification.


The choice made in Pacific regional standards is to simplify by focusing on energy intake, measured in terms of calories.

The benchmark adopted is an average 2,100 calories minimum energy requirement per person per day.

There are many possible ways to provide 2,100 calories per day.

In the Pacific typical consumption patterns are identified for broad categories of population in a country using household food consumption (expenditure) per capita.
The population group chosen to derive the model composition of food consumption is the lowest three percentiles for total consumption distribution.

A reference food basket is constructed by taking the average values of the reported quantities consumed for each food item by this population group.

The overall daily calorie intake is then either scaled up or down to achieve a reference food basket with a calorie content of 2,100 and the average price per unit is used to calculate the FPL.
To incorporate non-food expenditure into the construction of the BNPL a minimum allowance for non-food goods was derived based on the typical non-food spending in the lowest three percentiles for total consumption distribution.
An alternative is to use the typical non-food spending of those who can just afford the reference food 10 2010 HIES Analysis: MCA (Vanuatu) basket (± 10% households in food poverty) and are therefore just on the food poverty line; but the incidence of food poverty was too low and the non-food expenditure too variable in the two sites to use this method and the same reference group was used as to derive the FPL; that is, the non-food expenditure of the lowest 30% of households.
Again this is in keeping with standard practice in the Pacific region.

Once a poverty line has been set, a number of summary statistics describing the incidence, depth and severity of poverty may be calculated when per capita household consumption is compared with the corresponding poverty line value.

These include the headcount index (which measures the incidence of poverty), the poverty gap (which measures the depth of poverty) and the squared poverty gap (which measures the severity of poverty).
In general terms those classified as poor are those whose level of per capita household consumption is below the poverty line.

Annex 2 contains the detailed calculations used to derive the Food Poverty Line for the two program sites.

2.

Estimation of poverty lines and poverty incidence The Food Poverty Line (FPL) was been developed using the food expenditure of the lowest three percentile expenditure households (total expenditure p.c.a.e percentiles) of three different areas: 1.
East Coast Santo – the Enumeration Areas (EAs) with access to the East Coast road; 2.

Rural Santo – Espiritu Santo excluding the Luganville urban area (and including the East Coast); 3.

Rural Efate – the island of Efate including outer islands except Ifira and excluding the Port Vila urban area.
The FPLs were derived using the major food items purchased by the lowest three percentile expenditure households with unit prices assigned from the consumer price index market prices for December 2010 and the daily expenditure diary average prices for selected units.

Non-food expenditure was derived using the ratio of food to non-food expenditure in the lowest expenditure households1.
The FPL for East Coast Santo was Vt 3,971 (US$ 36.77); Rural Santo Vt 3,179 (US$ 29.44) and Rural Efate Vt 3,980 (US$ 36.77) (Table 3).

This means that the average adult in the East Coast area of Santo in 2010 needed to consume Vt 3,971 (US$ 36.77) worth of food (both purchased and subsistence production) per month to meet the minimum dietary energy intake of 2,100 Kcal per day.
Table 2: Monthly per capita adult equivalent poverty lines (Vt, $US), 2010 VUV per capita adult equivalent per month 2006 (in 2010 Vatu)1 Rural Santo East Coast Santo Rural Efate 2010 Rural Santo East Coast Santo Food Poverty Line Non-food basic needs factor (% of food) Estimated non-food expenditure Basic Needs Poverty Line Basic Needs Poverty Line A Vt 3,257 3,679 4,309 3,179 3,971 B 0.3 0.3 0.4 0.7 0.7 C=A*B D=A+C (Vt) D=A+C ($US) Vt 890 1,104 1,853 2,154 2,690 Vt 4,147 4,783 6,162 5,333 6,662 $US $38.40 $44.29 $57.06 $49.38 $61.69 Rural Efate Source: VNSO HIES 2006, 2010.
Note 1 the annual average rate of inflation was applied to the 2006 poverty lines to 2010.

US dollar exchange rate is from the M&E Plan Version 2: 108 Vt/USD.

$71.31 3,721 7,702 3,980 0.9 Adding the basic needs expenditure to the FPL gives the monthly Basic Needs Poverty Line (BNPL): Vt 6,662 (US$ 61.69) in East Coast Santo; Vt 5,333 (US$ 49.38) in Rural Santo and Vt 7,702 (US$ 71.31) in Rural Efate.
Using these 1 This ratio was adjusted for Efate to take into account the imputation of food expenditure in the incomplete daily expenditure diaries.

11 2010 HIES Analysis: MCA (Vanuatu) poverty lines gives the incidence of poverty in Table 3.

In all areas the proportion of household expenditure in the lowest three expenditure percentiles increased in 2010 compared to 2006.
This could be as a result of increased access to markets and basic social services and related expenditure for transport and related goods and services.
Table 3: Proportion of households and population with monthly p.c.a.e expenditure less than the food and basic needs poverty lines VUV per capita adult equivalent per month 2006 Rural Santo East Coast Santo Rural Efate 2006 in 2010 Vatu1 Rural Santo East Coast Santo Rural Efate 2010 Rural Santo East Coast Santo Households Population Food Basic Needs Food Basic Needs Rural Efate Source: VNSO HIES 2006, 2010.
Note 1 the annual average rate of inflation was applied to the 2006 poverty lines to 2010.

19.1 17.1 6.3 5.0 These results indicate that households in Santo, including the East Coast, have a diet which provides for average energy needs, whether from cash or ‘own production and consumption’ and because their other essential spending is relatively small the overall incidence of poverty as measured by the BNPL is not significant.
The incidence of poverty in Santo as measured by 2006 poverty lines (in 2010 Vatu) indicates that overall there has been a slight increase in household consumption and of note is the decrease in the incidence of food poverty in 2010 when compared with 2006.

There has been a significant increase in the poverty lines for the East Coast of Santo in 2010 compared with 2006 reflecting a substantial increase in overall consumption, particularly of non-food goods and services.
In 2006 the minimum consumption for food and basic needs (the BNPL) was estimated to be Vt 4,783 (US$ 44.29) per adult equivalent per month (which would be approximately Vt 4,780 (US$ 44.26) in 2010).

From the 2010 HIES the same methods to estimate the minimum consumption required for food and basic needs resulted in a BNPL of Vt 6,662 (US$ 61.69) per adult equivalent per month; the most significant increase in the study areas.
In Rural Efate the diet derived from the HIES was just sufficient to meet daily average adult energy requirements at an estimated average of 2,128 kcal of energy per day and this has resulted in a significant decrease in the incidence of food poverty when compared to the 2006 incidence.

This is reflected in the 2010 incidence of food poverty where 5% of households or 6% of the population of Rural Efate did not have sufficient p.c.a.e expenditure to meet the minimum food energy requirements.
In Efate at the household level the incidence of poverty as measured by the BNPL was 17%, on par with poverty estimates from 2006.

But these households contained fewer people in poverty than in 2006 as the population in households with per capita adult expenditure below the BNPL was 19% in 2010 compared with 23% in 2006.

These results show that poverty, as measured by poverty lines, has decreased in the road catchment area of Rural Efate.
These results indicate that households in Santo have adequate food, either purchased or grown etc, and that their other ‘basic needs’ while relatively modest, compared to rural Efate, are increasing.

The target incidence of 12 2010 HIES Analysis: MCA (Vanuatu) poverty in the Monitoring and Evaluation Plan for 2012 was 31.2% for Efate and 7.3% for Santo: both of these targets have been achieved in 2010.
Table 4: Proportion of households and pop with monthly adult equivalent per capita expenditure less than the adjusted food and basic needs poverty lines VUV per capita adult equivalent per month Rural Santo Poverty Line +20% Poverty Line +50% Poverty Line +100% Non Poor East Coast Santo Poverty Line +20% Poverty Line +50% Poverty Line +100% Non Poor Rural Efate Poverty Line +20% Poverty Line +50% Poverty Line +100% Non Poor Source: VNSO HIES 2010 Households Population Food Basic needs Food Basic needs Table 4 shows that poverty in rural Santo does not increase significantly with an increase in the FPL and BNPL of 20%; the incidence of poverty is only above 10% of the population when the BNPL is increased by 100% or doubled.
In contrast in Rural Efate basic needs poverty is above 30% for the population with a 50% increase in the BNPL.
Table 5: Proportion of households with monthly adult equivalent per capita expenditure less than the 'PPP' poverty lines, 2006 and 2010 Poverty lines (US$ PPP) $1.08 per day $1.25 per day $2.00 per day $3.00 per day Rural Santo 0.2 0.2 3.0 16.5 % households with p.c.a.e expenditure below poverty line 2006 East Coast Santo 0.0 0.0 1.0 10.7 Rural Efate 5.2 8.1 13.5 22.3 Rural Santo 0.0 0.0 0.0 2.1 2010 East Coast Santo 0.0 0.0 0.0 2.7 $4.00 per day PPP exchange rates: 2006 68.6 VUV per $1.00 PPP; 2010 69.7 VUV per $1.00 PPP Source: VNSO HIES 2006, 2010; 2006 PPP exchange rates from www.un.org; 2010 PPP exchange rate VNSO estimate.
36.7 36.4 28.2 6.5 5.7 Rural Efate 1.2 1.5 5.7 11.3 20.2 Finally it is possible to analyse the incidence of poverty according to absolute measures like the World Bank’s ‘dollar a day’ measure.

This was revised in 2008 to $US 1.25 using Purchasing Power Parity (PPP) exchange rates2.

Table 5 shows the incidence of poverty using these absolute poverty lines from the 2006 HIES and the 2010 HIES.

This information is also presented in Table 1 where population living below the poverty lines is included.
In Rural 2 PPP exchange rates are a currency conversion rate intended to assure a common purchasing power over commodities and are therefore internationally comparable.

www.worldbank.org key word search PPP.

13 2010 HIES Analysis: MCA (Vanuatu) Efate the increase in per capita incomes is the most apparent change.

The population living on less than US$ 1.08 (PPP) per day are the poorest of the poor.
The proportion of households in rural Efate with per capita adult equivalent3 total income living on less than this declined by 76% in terms of households and 56% in terms of population (from Table 1).

These results show that incomes are increasing in rural Efate and increased economic activity and associated returns from labour or investment are reaching everyone, not just the wealthy or the elite: the benefits of economic growth do seem to be ‘trickling down’ to benefit the poorest households.
In rural Efate in 2006 8.1% of households or an estimated 1,930 people had per capita incomes below US$ 1.25 (PPP) a day, which decreased to 1.5% of households or 600 people in 2010.

This means that approximately 1,340 people had moved out of poverty between 2006 and 2010 (population numbers taken from Table 1).

Table 5 also shows that the increases in incomes have not been small but have been reasonably large by the incidence of poverty using the US$ 4.00 poverty line.
In 2006 people living in almost two out of every five households (36.7% or 7,810 people) in Rural Efate lived below US$ 4.00 a day.

In 2010 people living in one out of every five households (20.2% or 5,850 people) lived on less than US$ 4.00 a day.

Table 5 shows that there is no extreme poverty in the East Coast of Santo in 2010 nor was there in 2006 with no one living on less than US$ 1.25 per day and only a very small proportion lived on less than US$ 2.00 per day.
One could only conclude that the prevalent lifestyle of subsistence consumption and the associated traditional economy and transfers between households (particularly gift exchanges) which was evident in 2006 continues in 2010 with increasing economic activity (either traditional or cash) raising household per capita incomes in 2010.

The number of people living on less than US$ 3.00 a day decreased from 1,060 in 2006 to 773 in 2010, a decrease of 27% (from Table 1).
In terms of households the decrease was from 10.7% to 2.7%.

There was a large movement of people out of risk to poverty if the US$ 4.00 a day is used as the measure.

In 2006 28.2% of households or 2,510 people were living on less than US$ 4.00 a day which decreased to 5.7% or 770 people in 2010.

3.
3.

Household Expenditure Patterns In terms of expenditure per capita and per household, the highest overall average was recorded in Rural Efate with an average per capita of Vt 28,814 (US$ 266.80) per month or Vt 131,286 (US$ 1,215.61) per household per month.
The median occurs in the 5th percentile and for Rural Santo this was approximately Vt 14,413 (US$ 133.45) per person per month or Vt 61,553 (US$ 569.94) per household per month; for the East Coast part of rural Santo it was slightly higher at Vt 18,428 (US$ 170.63) per person or Vt 69,670 (US$ 645.09) per household and in Rural Efate it was Vt 15,938 (US$ 147.57) per capita and Vt 72,148 (US$ 668.04) per household.
This was mainly because of the much higher incomes in the upper quintile compared with Santo.

Santo had higher per capita and per household income than Rural Efate for the lowest 40% of households as ranked by total expenditure per capita adult equivalent.

Monthly averages for the three regions have been included in US dollars and US dollars using PPP exchange rates in Table 7.
In annual values, the average per capita expenditure in rural Santo in 2010 was US$ 2,071; with the East Coast of Santo having an average per capita of US$ 2,319 and in rural Efate the average was US$ 3,248.

Incomes in rural Efate have exceeded by just over double the 2012 target in the Monitoring and Evaluation Plan of the Vanuatu Transport Infrastructure Development Program while incomes in rural Santo have not yet increased to the target amount of US$ 2,711 for 2012, falling short by 24% in 2010.
There are many possible reasons for this including the delayed starting of the road improvements in East Coast Santo, traditional economic systems, different patterns of land use and land ownership, lower uptake rates in urban and peri-urban labour markets.

3 This is the UNDP scale used to reflect economies of scale to household composition whereby the population is represented by an adult with a value of 1 and every child under the age of 15 years has a value of 0.5.
In a household with 2 adults and 2 children aged under 15 years the population is 4 but the adult equivalent population is 3.

It is the standard population measure used in poverty measurement in the Pacific region.
14 Table 6: Total monthly expenditure per capita and per household for MCA areas, 2010 HIES 2010 HIES Analysis: MCA (Vanuatu) Rural Santo East Coast Santo Rural Efate Expenditure Percentile Average expenditure per capita Average expenditure per h'hold Average expenditure per capita Average expenditure per h'hold Average expenditure per capita Average expenditure per h'hold percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 percentile 10 Average (VT) Average (US) 5,918 8,738 10,631 12,184 14,413 16,535 20,165 24,068 29,575 56,862 18,373 $170.12 36,558 44,866 52,327 65,149 61,553 74,524 84,432 88,838 109,312 222,302 84,174 $779.39 7,104 10,070 10,283 15,421 18,428 16,826 29,210 33,165 42,639 87,718 20,571 $190.47 38,965 48,759 53,628 71,636 69,670 65,404 76,113 107,144 146,950 303,784 86,201 $798.16 3,039 5,705 8,055 12,755 15,938 19,118 26,453 33,807 51,479 155,613 28,814 $266.80 16,507 28,378 36,373 61,035 72,148 99,070 114,771 147,391 214,470 517,045 131,286 $1,215.61 Average (US) Annual $2,071.24 $9,489.08 $2,318.96 $9,717.59 $3,248.27 $14,800.08 Average (US PPP) US dollar exchange rate is from the M&E Plan Version 2: 108 Vt/USD.
PPP exchange rate (2010, VNSO estimate): 69.7 VT per $1.00 PPP $1,883.59 $1,207.66 $1,236.75 $263.60 $413.40 $295.13 Source: VNSO HIES 2010.
Figure 1: Total monthly household expenditure per capita, 2010 HIES Rural Santo East Coast Santo Rural Efate 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 percentile 10 Source: VNSO HIES 2010 The 2010 HIES estimate for total income (as measured by total expenditure) in the Rural Efate area was approximately Vt 735 million a month (US$ 6.8 million), Vt 500 million a month (US$ 4.6 million) in Rural Santo, of which 41% or Vt 204 million (US$ 1.9 million) was within the Santo East Coast area (see Table 7 and Figure 2 over).
15 Table 7: Total monthly expenditure (VT), estimated population and households for MCA areas, 2010 HIES 2010 HIES Analysis: MCA (Vanuatu) Total Households Expenditure Percentile percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 percentile 10 Total Table 8: Total monthly expenditure (US$), estimated population and households for MCA areas, 2010 HIES 585 596 590 601 594 596 591 591 603 598 5,945 Total Expenditure 10,440,465 14,556,791 13,314,960 26,637,448 18,409,255 8,162,164 15,846,554 28,105,139 27,230,192 41,399,309 204,102,278 Total Expenditure 21,379,449 26,740,561 30,883,087 39,136,847 36,556,425 44,400,429 49,935,419 52,537,691 65,929,656 132,954,873 500,454,437 Rural Santo Total Population 3,613 3,060 2,905 3,212 2,536 2,685 2,476 2,183 2,229 2,338 27,238 East Coast Santo Total Population 1,470 1,446 1,295 1,727 999 485 543 847 639 472 9,922 Total Households 268 299 248 372 264 125 208 262 185 136 2,368 Total Expenditure 8,985,701 15,953,901 20,484,594 34,277,588 40,775,995 55,046,243 64,065,881 83,972,469 118,952,286 292,821,732 735,336,390 Rural Efate Total Population 2,957 2,797 2,543 2,687 2,558 2,879 2,422 2,484 2,311 1,882 25,520 Total Households 544 562 563 562 565 556 558 570 555 566 5,601 Expenditure Percentile percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 Total Expenditure $197,958 $247,598 $285,955 $362,378 $338,485 $411,115 $462,365 $486,460 $610,460 percentile 10 $1,231,064 Rural Santo Total Population 3,613 3,060 2,905 3,212 2,536 2,685 2,476 2,183 2,229 2,338 Total Households 585 596 590 601 594 596 591 591 603 598 Total Expenditure $96,671 East Coast Santo Total Population 1,470 Total Households 268 Total Expenditure $83,201 Rural Efate Total Population 2,957 Total Households 544 $134,785 $123,287 $246,643 $170,456 $75,576 $146,727 $260,233 $252,131 $383,327 1,446 1,295 1,727 999 485 543 847 639 472 299 248 372 264 125 208 262 185 136 $147,721 $189,672
 $317,385 $377,556 $509,687 $593,203 $777,523 $1,101,410 $2,711,312 2,797 2,543 2,687 2,558 2,879 2,422 2,484 2,311 1,882 562 563 562 565 556 558 570 555 566 Total Source: VNSO HIES 2010 $4,633,837 27,238 5,945 $1,889,836 9,922 2,368 $6,808,670 25,520 5,601 16 Figure 2: Total monthly household expenditure (VT), 2010 HIES 2010 HIES Analysis: MCA (Vanuatu) Rural Santo East Coast Santo Rural Efate 350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 percentile 10 Figure 3: Total monthly household expenditure (US$), 2010 HIES Rural Santo East Coast Santo Rural Efate $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 percentile 10 Source: VNSO HIES 2010 17 2010 HIES Analysis: MCA (Vanuatu) Total food expenditure In Rural Santo households spent a total of Vt 299 million (US$ 2.8 million) a month on food, including purchased food and that produced and consumed in the home.
Of this the East Coast Santo region contributed Vt 96 million (US$ 0.9 million).

In Rural Efate total monthly food expenditure was Vt 190 million (US$ 1.8 million) a month.

It is not possible to do a detailed analysis of food expenditure because the imputation of the daily expenditure diaries did not differentiate between food and non-food expenditure.
Table 9: Total monthly food expenditure for MCA areas, 2010 HIES Expenditure Percentile percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 Rural Santo East Coast Santo Rural Efate Vatu 16,122,737 US $ $149,285 19,422,118 $179,834 Vatu 6,889,251 8,346,374 US $ $63,789 Vatu 3,128,350 US $ $28,966 $77,281 5,367,606 $49,700 20,517,271 $189,975 8,299,437 $76,847 6,517,317 $60,346 28,393,404 $262,902 15,446,622 $143,024 16,604,981 $153,750 24,590,174 $227,687 10,364,159 $95,964 18,487,105 $171,177 30,724,806 $284,489 34,776,181 $322,002 6,148,339 7,948,211 $56,929 23,936,448 $221,634 $73,595 27,630,718 $255,840 35,457,331 $328,309 13,712,849 $126,971 29,389,481 $272,125 percentile 10 47,906,080 $443,575 40,758,862 $377,397 9,569,678 8,778,643 $88,608 28,034,742 $259,581 $81,284 31,054,561 $287,542 Total Source: VNSO HIES 2010.
298,668,963 $2,765,453 95,503,563 $884,292 190,151,309 $1,760,660 Monthly food expenditure on average represented 60% of total expenditure in rural Santo (compared with 68% in 2006); 47% in the East Coast of Santo (64% in 2006) and 26% in rural Efate (compared with 57% in 2006 and underestimated due to imputation of daily expenditure diaries not separating food and non-food expenditure).

Food expenditure as a proportion of total expenditure was highest in rural Santo (Figure 4).
Figure 4: Food expenditure as a proportion of total expenditure for MCA areas, 2010 HIES 90 80 70 60 50 40 30 20 10 0 Rural Santo Rural Efate Linear (East Coast Santo) East Coast Santo Linear (Rural Santo) Linear (Rural Efate) percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 percentile 10 Source: VNSO HIES 2010.
18 2010 HIES Analysis: MCA (Vanuatu) All expenditure other than food All other expenditure includes gifts given and received and expenditure on housing, household operation and supplies, alcohol, kava and tobacco, clothing and footwear, transport, communications, health, education and other goods and services.

In the East Coast of Santo the proportion for the lowest 40% of households was about 40% and 30% in rural Santo.
For Efate it is not practical to do a detailed analysis of the different types of non-food expenditure because of sampling and non-sampling error because imputation of missing daily expenditure diaries did not differentiate between food and non-food expenditure.

Table 10: Total monthly expenditure and proportion of non-food (NF) expenditure (Vt) for MCA areas, 2010 HIES Rural Santo East Coast Santo Rural Efate Exp.
%ile Total expenditure NF % total exp Total expenditure NF % total exp Total expenditure NF % total exp p 1 p 2 p 3 p 4 p 5 p 6 p 7 p 8 p 9 p 10 5,256,712 7,318,443 10,365,816 10,743,443 11,966,252 13,675,624 15,159,239 17,080,360 25,170,794 85,048,793 Total Source: VNSO HIES 2010.
Table 11: Total monthly expenditure and proportion of non-food (NF) expenditure (US$) for MCA areas, 2010 HIES Exp.
%ile p 1 p 2 p 3 p 4 p 5 p 6 p 7 p 8 p 9 p 10 Total Rural Santo East Coast Santo Rural Efate Total expenditure NF % total exp Total expenditure NF % total exp Total expenditure NF % total exp $48,673 $67,763 $95,980 $99,476 $110,799 $126,626 $140,363 $158,151 $233,063 $787,489 $1,868,384 24.6 27.4 33.6 27.5 32.7 30.8 30.4 32.5 38.2 64 40.3 $32,882 $57,504 $46,440 $103,619 $74,492 $18,647 $73,133 $133,262 $163,523 $302,043 $1,005,544 34 42.7 37.7 42 43.7 24.7 49.8 51.2 64.9 78.8 53.2 $54,235 $98,021 $129,327 $163,635 $206,379 $288,054 $337,363 $505,398 $841,829 $2,423,770 $5,048,010 65.2 66.4 68.2 51.6 54.7 56.5 56.9 65 76.4 89.4 74.1 Source: VNSO HIES 2010.
19 2010 HIES Analysis: MCA (Vanuatu) 4.

Conclusions The 2010 HIES results indicate that the roads are making a considerable contribution to increasing incomes and reducing poverty in terms of both relative and absolute poverty measures.

The HIES data from 2010 shows increased per capita income from US$ 1,291 in 2006 to US$ 3,248 in 2010 in rural Efate; an increase of a magnitude of two and a half times.
Per capita incomes also increased in the East Coast of Santo by 9% from US$ 2,122 to US$ 2,319 in 2010.

The increase in income in Santo has not been as large as what has occurred in Efate.

There are a number of possible reasons for this including the slower uptake of commercialism and the cash economy in Santo, where traditional economic systems based on traditional agricultural and other custom products as both assets and the medium of exchange still predominate.
Other contributing factors are that the urban and peri-urban labour market in Santo has not grown at the same rate as in Efate and the southern half of the East Coast Santo road is in private ownership plantation style farming limiting the land available for entrepreneurial activities by private households.

It is also possible that the later start date of the road improvement program in East Coast Santo is a contributing factor, although it is not possible to verify this from the 2010 HIES data4.
The analysis of the 2010 HIES data for rural Efate and the East Coast of Santo has shown considerable reduction in the incidence of basic needs poverty in both areas.

The general increase in household incomes is evident in that the poverty lines developed from the 2010 survey data using the incomes of the lowest 30% of households are considerably higher than those developed from the 2006 HIES data.
It is also evident in the incidence of poverty when absolute poverty measures are used such as US$ 1.25 a day.

Annual per capita incomes have increased in both areas, but the increase in the East Coast of Santo is not as great as that in Efate and possibly, under prevailing rates of increase, the target of US$ 2,711 cash income will not be achieved.
The analysis of the HIES data presented here shows that the formal or cash economy of rural Efate has increased and that the returns from business investment and labour are impacting in terms of increased per capita incomes and associated declining poverty in the poorest of households.
The Efate ring road is providing a vital artery for rural Efate communities and those on the close offshore islands to increase access to markets and employment opportunities both in the larger rural communities and the main urban centre of Port Vila.

The road is making impacts in terms of increased incomes in rural Efate.

The increase in cash incomes in the East Coast of Santo is nowhere near the same magnitude as in rural Efate.
Economic livelihoods in the East Coast of Santo are more complex with the traditional economy based on subsistence production and gift giving and sharing of surpluses is still prevalent.

A larger proportion of the road is tied up in privately owned commercial agricultural activities in large land holdings which the average person does not benefit greatly from.
Uptake of the opportunities the road presents in terms of participating in the labour market or other entrepreneurial activities in Luganville has not occurred to the same extent as in Efate.

Other survey data shows that business activity in the larger rural communities along the road is increasing, so perhaps the pattern of economic development will be different in the East Coast of Santo.

The HIES in 2012 will shed more light on the pattern of economic development in the East Coast of Santo.
In addition to these broad targets the 2012 analysis should take a closer look at the characteristics of ‘poor’ and ‘non poor’ households in comparison with 2006, including the economic activities of household 4 The Efate road works started approximately 9 months before the Santo East Coast road works and b) that the Efate sections 1-3 were handed over in March 2010, whereas only Section 1 of Santo was handed over at that time.
20 2010 HIES Analysis: MCA (Vanuatu) members (labour force participation, business activities within households), sources of household income, types of expenditure and so on to provide more contextual information about the extent of the ‘cash’ and ‘traditional’ economies.

The VNSO is also exploring a number of initiatives in its continuing efforts to improve the quality of the HIES data.
The VNSO is continuing its efforts to improve the quality and reliability of its household survey data, and the HIES is no exception.

The introduction of a daily expenditure diary for every adult in the household (aged 18 years and over) considerably reduced diary non-response problems compared with 2006.

However diary non-response (mostly partial where a respondent will only complete one week of the two week cycle) was again a problem in 2010 especially in rural Efate.
This was not picked up by the data receipt and processing system which should have ‘flagged’ such households for intervention and checking of the incomplete expenditure diaries and other questionnaires.

The VNSO is continuing to improve its data processing systems with enhanced data checking and quality controls.
21 2010 HIES Analysis: MCA (Vanuatu) Annex 1: Minimum and maximum expenditure ranges, per capita adult equivalent, class mid points and number of households sampled for MCA areas, 2010 HIES p.c.a.e expenditure percentiles and ranges East Coast Santo Rural Santo Rural Efate Minimum Maximum Mid-Point Minimum Maximum Mid-Point Minimum Maximum Mid-Point percentile 1 percentile 2 percentile 3 percentile 4 percentile 5 percentile 6 percentile 7 percentile 8 percentile 9 percentile 10 Total Source: VNSO HIES 2010.
H'holds (n) 44 46 47 47 47 46 47 47 48 50 469 H'holds (n) H'holds (n) HIES Analysis: MCA (Vanuatu) Annex 2: Methodology for poverty analysis Low-cost diet The first step in measuring poverty is the calculation of the Food Poverty Line (FPL).
Two methods are typically used to derive food poverty lines: using “model diets” and using actual food expenditure and consumption patterns of the lowest three decile p.c.a.e households from the daily expenditure diaries.

the lowest For the MCA Vanuatu, the food poverty line was derived from the actual food expenditure and three consumption patterns of expenditure percentile p.c.a.e households from the daily expenditure diaries.
Further research could compare the results from this method with that of the “model menu” to see if there are differences.

Research undertaken in other Pacific countries, the nearest being the Solomon Islands, has shown that there is very little difference in using the “model menu” approach and the actual food expenditure and items from the household expenditure diaries.
Box 1: Step one: the food component To construct a poverty line using the cost-of-basic-needs method, one begins by defining the "basic needs" food bundle.

This is a normative judgment, though some judgments are more defensible than others.

Nutritional requirements for good health are a widely accepted anchor for determining basic food needs.
A defensible approach is to set the food component of the poverty line according to the local cost of a bundle of food goods that meet the pre-determined minimum food-energy requirements in a way that is consistent with prevailing food tastes.

food-energy requirements be determined?

How should Nutritionists have estimated requirements for maintaining body weight when a person is resting, processing food, and doing various activities.
The food-energy requirements needed to maintain each person's actual activity level should not be considered binding when setting poverty lines.

The poorest are often underweight, which often constrains their activity levels.

In such a setting, incorporating existing differences in activity levels (and indeed weights) into sub-group poverty lines will bias the poverty comparison, in that the poverty lines need not be clearly anchored to a fixed standard of living.
A better practice is to use the average food-energy requirement for each age group.

World Bank, 1994 The following section describes the process of how the diet costs taken from the actual survey data have been used to estimate the FPL for this analysis; exactly the same used to derive national estimates.

The food expenditure from the diaries of households in the lowest three expenditure deciles in each of the three sites was analysed, Tables a, b, and c5.
It was observed that 97% of food expenditure was accounted for by 66 items with expenditure over Vt 80,000 in Rural Santo; 90% of food expenditure was accounted for 42 items with expenditure over Vt 80,000 in the East Coast of Santo and 93% of food expenditure occurred for 63 items with expenditure over Vt 50,000 in rural Efate.

These items together with their share in monthly food intake are shown in Columns A and B of the tables.
To get the daily per capita a.e Kcal value and per capita a.e daily cost of these diary expenditure items as the basis for the calculation of the FPL, the following steps were taken: - - - - the reported diary food expenditure values were grossed up to the total recorded food expenditure from the survey for the bottom three expenditure percentile, by the appropriate factor to give a notional total food expenditure based on the listed items, Column C; each item was priced using the CPI prices for Efate and East Coast of Santo with observed prices from the diary used for home produced items not included in the CPI, and the observed diary prices/values for items of own production, Column D; the implied unit volume consumed of each item in the diary was calculated, column E; the Kcal (energy) value from the South Pacific Food Composition Tables was applied to each of the items, column F, to give a total Kcal value for recorded consumption, Column G; 5 The expenditure percentiles were derived for the whole island of Santo, so for the east coast this means that east coast households in the lowest 30% of households in Santo were used.
23 2010 HIES Analysis: MCA (Vanuatu) - - - the daily per capita adult equivalent Kcal consumption values represented by each item was then calculated, Column H; the daily cost of each item according to its share in the overall daily food intake was estimated, Column I; and finally the daily cost of each item according to its Kcal value per day per a.e.

was estimated, Column J.


The pricing of the food items was problematic because the HIES did not collect information about units of items purchased or consumed so it was difficult to determine average prices.

Where possible averages were derived using total expenditure divided by quantity but for many items prices were derived from values observed in the data.

Further research should re-visit the prices used for the food items selected and make adjustments if required.
Summing the daily Kcal values of the expenditure patterns of each region (K) shows that Efate households reported notionally acquiring an average of 2,128 kcal per capita a.e per day compared with 3,766 Kcal for the East Coast of Santo and 5,157 Kcal for rural Santo.

In order to get to the minimum Kcal daily food energy intake these values were deflated to the equivalent of 2,100 Kcal by the ratio of the recorded Kcal value to the minimum (L).
The notional estimated daily cost of the food items (M) is then grossed up also by the factor (L).

This gives the adjusted daily cost of acquiring the minimum 2,100 Kcal per day from the listed items (N).

Finally the daily cost is converted to a monthly value (O).
Thus the cost of acquiring a minimum adult equivalent diet in rural areas in Santo is estimated at VT 106 per day and VT 3,179 per month; for East Coast Santo the costs are VT 132 per day and VT 3,971 per month, and for Rural Efate VT 133 per day and VT 3,980 per month.

These are the Food Poverty Lines used in the analysis, Table 2.
The differences between the regions in the level of the FPL represent the variations in the actual food expenditure patterns and the differences in the prices applied to calculate the cost of the diets.
24 2010 HIES Analysis: MCA (Vanuatu) Table a: Rural Santo estimated food expenditure and daily kilo calorie intake 25 Item A% of food expenditureBTotal Value (month)CPrice per unitDUnit(kg)Implied unit volume consumedEK/Cal per 100gFTotal kcal valueGKcal per day paeHCost per day per calorieIExact calorie value PAEJ13207 Rice 12.417,546,8232501.01,0061231,237,6791650.2033.4811211 Island Taro/ Taro Fiji 11.146,778,073501.04,519994,473,5285950.0530.0711103 Bananas (Cooking)9.805,960,873221.09,03211110,025,1041,3340.0226.4411208 Yam 5.193,155,242901.01,1691151,343,8991790.0814.0011209 Kumala 5.013,050,336451.02,2601292,914,7663880.0313.5311202 Island Cabbage4.182,541,368601.01,41229409,443540.2111.2711203 Manioc 3.732,266,095251.03,0211514,562,4056070.0210.0512101 Beef fresh3.382,057,2925601.0122198242,467320.289.1311231 Water Taro2.921,776,082551.01,07672775,0171030.087.8811110 Mangoes 2.331,418,462801.059158342,795460.146.2913101 Bread (sliced, loaf, square, rolls, French)2.141,298,7702001.0216242523,837700.085.7612304 Other fish2.111,281,6087321.0588147,27260.905.6812201 Chicken/ Local chicken 1.811,102,2926501.057231130,579170.284.8911106 dry Coconut / Copra 1.771,079,131151.02,3982836,786,5339030.014.7911115 Pineapples 1.59965,2501001.032241131,917180.244.2816201 Sugar 1.43870,1122001.0145394571,373760.053.8612311 Tinned Tuna1.34812,6372100.312929093,518120.293.6013105 Cabin Biscuits1.28777,6062500.3104414107,310140.243.4511118 Watermelon & Rock melon 1.24751,4484001.0632415,02921.673.3312202 Chicken (chicken parts) 1.21737,6553751.066209137,040180.183.2711215 Laplap (Yam, banana, manioc, etc..) 1.10669,3705001.04515167,38390.332.9712105 Pork fresh1.04633,2675001.042338142,696190.152.8111112 Paw paws0.98593,461301.065934224,196300.092.6318109 Plate of food/ Take away 0.97588,9173500.3569315,64821.252.6111105 Green Coconut0.88536,816201.089516143,151190.132.3813104 Cream cracker, biscuits, Buns 0.81490,5551160.3141414145,898190.112.1815101 Cooking oil (incl.
salad oil) 0.70424,8272500.857878372,998500.041.8811128 Bread fruit0.68416,518601.0231103238,341320.061.8513209 Flour 0.67405,9081301.0104349363,235480.041.8013206 Noodles 0.61372,688330.13769931,67940.391.6516150 Other beverages n.e.c 0.61371,2581130.41103915,01520.821.6511212 Sugarcane 0.60365,018301.040668275,792370.041.6212303 Reef Fish0.60362,4836101.02013025,75030.471.6112116 Crabs 0.58350,5233501.03310936,38850.321.5511232 Corn 0.55337,090401.0281107300,572400.041.5011206 Cucumber 0.54327,513501.02181226,20130.421.4511125 Other fresh fruits n.e.c 0.53322,162301.035841146,763200.071.4317118 Salt 0.53320,0382251.047213100,990130.111.4211207 Pumpkin 0.51312,303551.01894483,281110.131.3911240 Beans 0.49299,971401.02502254,99570.181.3312117 Freshwater Prawn0.49295,1004001.02510425,57530.381.3112312 Other Tinned Fish 0.42253,5223551.02418243,32560.201.1211132 Ripe Bananas0.41247,650451.0183103188,948250.041.1013106 Doughnuts, Kato0.40242,450400.120243988,696120.091.0811216 Tomatoes 0.39238,875701.01141517,06320.471.0611213 Leaf laplap0.36221,975501.0148NOT EATEN000.000.0012150 Other meat n.e.c 0.36219,3025601.01318323,88830.310.9716206 Peanuts 0.35215,7572001.036568204,250270.040.9612131 Oxford tinned meat 0.33201,3053300.32019213,27420.510.8911225 Chinese Cabbage (white bun) 0.32195,585651.01001515,04520.430.8712305 Crayfish (lobster)0.32193,8084751.0149713,19320.490.8611111 Oranges 0.28167,3534751.012404,69811.190.7411108 Navele 0.22135,7852001.023588133,069180.030.6011228 Capsicum 0.22130,823501.0874740,99150.110.5816202 Twisties, rashuns, chips, bongo 0.20118,907280.114254265,21590.060.5311217 Other fresh vegetables 0.19115,440701.0552111,54420.330.5112350 Other shell fish n.e.c 0.19113,5332501.015446,66110.570.5012250 Other birds0.19112,7686501.0625014,45720.260.5011133 Oranges & Mandarine (local) 0.18110,327601.0614628,19540.130.4911224 Bowl Cabbage0.18106,8381001.036227,83510.450.4711245 Spring onions & other herbs 0.1694,4671001.0316119,20830.160.4215102 Butter/margarine 0.1694,4239000.337156,25110.500.4217106 Peanut Butter0.1590,9131950.41661233,28840.090.4014101 Milk powder0.1483,6986750.441442,38101.170.3711150 Fruits or fruit products n.e.c 0.1483,330451.0626942,59160.070.3711107 Nangai 0.1380,0408001.0358819,61030.140.36Items % total diary food expenditure96.8214,153,764K5,157L2.46MCost per day from diary260NCost per day to meet minimum energy need106OMonthly cost of minimum diet, FPL3,179Kcal p.c.a.e.
per day from diary% of minimum daily energy need 2010 HIES Analysis: MCA (Vanuatu) Table b: East Coast Santo estimated food expenditure and daily kilo calorie intake 26 Item A% of food expenditureBTotal Value (month)CPrice per unitDUnit(kg)Implied unit volume consumedEK/Cal per 100gFTotal kcal valueGKcal per day paeHCost per day per calorieIExact calorie value PAEJ13207 Rice 16.524,114,3542001.0686123843,4432640.1642.8611103 Bananas (Cooking)9.572,382,358321.02,4821112,754,6028610.0324.8211211 Island Taro/ Taro Fiji 8.162,033,308601.01,130991,118,3203490.0621.1811209 Kumala 5.581,390,486551.08431291,087,1083400.0414.4911203 Manioc 4.571,137,478371.01,0251511,547,3804840.0211.8511202 Island Cabbage4.481,115,562761.048929141,892440.2611.6213101 Bread (sliced, loaf, square, rolls, French)3.81948,7102001.0158242382,6461200.089.8812304 Other fish2.58642,6587201.0308124,10080.896.6912101 Beef fresh2.23554,5505601.03319865,358200.285.7812202 Chicken (chicken parts) 2.22553,9733521.053209109,797340.175.7711115 Pineapples 2.11524,9831201.01464159,790190.295.4713105 Cabin Biscuits2.05509,9032400.37141473,299230.235.3111208 Yam 2.00498,8501031.0161115185,656580.095.2011118 Watermelon & Rock melon 1.88469,0404501.035248,33831.884.8916201 Sugar 1.85459,6801951.079394309,596970.054.7912311 Tinned Tuna1.71425,6422050.36929050,177160.284.4311106 dry Coconut / Copra 1.45360,967191.06332831,792,1685600.013.7611128 Bread fruit1.45360,012801.0150103154,505480.083.7511110 Mangoes 1.37340,1021001.01135865,753210.173.5411112 Paw paws1.27317,005401.02643489,818280.123.3011105 Green Coconut1.27315,101251.04201667,221210.163.2816150 Other beverages n.e.c 1.19296,3571050.4943912,84240.773.0912201 Chicken/ Local chicken 1.06262,9037001.01323128,91990.302.7413209 Flour 1.00248,1631301.064349222,074690.042.5915101 Cooking oil (incl.
salad oil) 0.95237,6402500.832878208,648650.042.4813104 Cream cracker, biscuits, Buns 0.93231,9421160.36741468,983220.112.4211231 Water Taro0.86213,265661.01087277,551240.092.2213206 Noodles 0.80199,658300.12229918,66860.362.0812312 Other Tinned Fish 0.70173,9623441.01718230,679100.191.8118109 Plate of food/ Take away 0.65160,8323750.314933,98911.341.6811232 Corn 0.63157,387451.0117107124,744390.041.6412131 Oxford tinned meat 0.62153,8982940.31719211,39140.451.6017118 Salt 0.55137,6702151.02121345,463140.101.4311215 Laplap (Yam, banana, manioc, etc..) 0.52130,3035231.0815112,54040.351.3613106 Doughnuts, Kato0.48120,163400.110043943,960140.091.2511216 Tomatoes 0.45112,255881.043156,37820.591.1711207 Pumpkin 0.45111,193661.0564424,71080.151.1612303 Reef Fish0.42105,8206001.061307,64320.461.1011132 Ripe Bananas0.41102,050561.06110362,566200.051.0616206 Peanuts 0.3894,2282251.01456879,291250.040.9811213 Leaf laplap0.3893,6001001.031NOT EATEN000.000.0011125 Other fresh fruits n.e.c 0.3587,490401.0734129,89290.100.91Items % total diary food expenditure89.5122,291,122K3,766L1.79MCost per day from diary237NCost per day to meet minimum energy need132OMonthly cost of minimum diet, FPL3,971Kcal p.c.a.e.
per day from diary% of minimum daily energy need 2010 HIES Analysis: MCA (Vanuatu) Table c: Rural Efate estimated food expenditure and daily kilo calorie intake 27 Item A% of food expenditureBTotal Value (month)CPrice per unitDUnit(kg)Implied unit volume consumedEK/Cal per 100gFTotal kcal valueGKcal per day paeHCost per day per calorieIExact calorie value PAEJ13207 Rice13.114,062,592301.04,5141235,552,2108210.0220.0311103 Bananas (Cooking)6.111,893,476801.0789111875,7331300.079.3411203 Manioc5.851,814,5661321.0458151691,9181020.098.9513101 Bread (sliced, loaf, square, rolls, French)4.491,390,3932001.0232242560,792830.086.8511209 Kumala4.471,385,1511231.0375129484,240720.106.8311202 Island Cabbage3.531,094,6551321.02762980,164120.465.4012202 Chicken (chicken parts)3.471,075,2028501.04220988,124130.415.3011211 Island Taro/ Taro Fiji3.12966,383641.050399498,291740.064.7611215 Laplap (Yam, banana, manioc, etc..)2.99926,4451781.0173151261,972390.124.5711208 Yam2.54787,990751.0350115402,750600.073.8811106 dry Coconut / Copra2.49772,313301.08582832,428,4943590.013.8112311 Tinned Tuna2.15666,8111950.311429082,639120.273.2911115 Pineapples1.87580,200801.02424199,117150.202.8612101 Beef fresh1.77550,0485001.03719872,606110.252.7113105 Cabin Biscuits1.75543,7362450.37441476,567110.242.6811112 Paw paws1.67518,760801.02163473,491110.242.5611110 Mangoes1.61498,0732001.0835848,14770.342.4616201 Sugar1.60495,4841051.0157394619,748920.032.4412304 Other fish1.49461,0877201.0218117,29130.892.2712201 Chicken/ Local chicken1.48457,9255001.03123170,520100.222.2612312 Other Tinned Fish1.21375,3881951.064182116,787170.111.8513104 Cream cracker, biscuits, Buns1.10339,6122000.35741458,58390.191.6712131 Oxford tinned meat1.03320,4247000.3151929,96111.071.5813106 Doughnuts, Kato0.99307,201400.1256439112,384170.091.5113206 Noodles0.98304,417480.12119917,78930.571.5011105 Green Coconut0.98303,052301.03371653,87680.191.4911225 Chinese Cabbage (white bun)0.86266,3571821.049157,31711.211.3115101 Cooking oil (incl.
salad oil)0.84261,8537500.81287876,635110.111.2915102 Butter/margarine0.81250,4302500.33371559,68690.141.2311128 Bread fruit0.79246,1131001.08210384,499120.101.2118109 Plate of food/ Take away0.79244,8442760.330938,23710.991.2112303 Reef Fish0.76235,2576001.01313016,99130.461.1611132 Ripe Bananas0.72222,781891.08310385,942130.091.1017150 Other Foods n.e.c0.69212,9902761.02625064,20390.111.0511118 Watermelon & Rock melon0.68210,4051601.0442410,52020.671.0412116 Crabs0.67208,1525901.01210912,81820.541.0311232 Corn0.66204,598911.07510779,927120.091.0116101 Soft drinks (lemonade, coke, fanta etc)0.62193,4831400.446436,93310.930.9516202 Twisties, rashuns, chips, bongo0.57175,7381810.13254214,91020.390.8714108 Ice cream0.55171,8387500.481955,95710.960.8512105 Pork fresh0.52162,3335901.0933830,99950.170.8011213 Leaf laplap0.51158,8602001.026NOT EATEN000.000.0012308 Crab kokonas0.51156,9925001.01010210,67520.490.7713209 Flour0.50154,6782001.02634989,971130.060.7616150 Other beverages n.e.c0.46142,1071200.439395,38810.880.7015104 Egg0.46141,505400.1118745,23610.900.7016102 Mineral water0.45140,0751200.4390000.000.0011207 Pumpkin0.45138,3311001.0464420,28930.230.6811231 Water Taro0.41128,050911.0477233,66050.130.6311125 Other fresh fruits n.e.c0.40122,8725001.08413,35801.220.6117106 Peanut Butter0.39121,1381900.42161245,52370.090.6011240 Beans0.37115,241701.0552212,07320.320.5711216 Tomatoes0.36112,4358001.051570305.330.5514101 Milk powder0.36110,3597000.451443,02701.220.5417118 Salt0.34104,1881901.01821338,93360.090.5111224 Bowl Cabbage0.3299,1901821.018223,99710.830.4911111 Oranges0.3298,9451501.022408,79510.380.4911214 Onions and chives0.3195,2471781.0188915,87420.200.4711206 Cucumber0.3092,040561.055126,57410.470.4512150 Other meat n.e.c0.3091,7153211.01018317,42930.180.4511108 Navele0.2782,4851,0001.0358816,16720.170.4116206 Peanuts0.2681,330251.0108568615,940910.000.4013107 Cakes incl.
Pastries, buns0.2681,077480.15643924,71740.110.40Items % total diary food expenditure92.6828,727,417K2,218L1.06MCost per day from diary140NCost per day to meet minimum energy need133OMonthly cost of minimum diet, FPL3,980% of minimum daily energy needKcal p.c.a.e.
per day from diary 2010 HIES Analysis: MCA (Vanuatu) Annex 3: Census 2009 households and population for rural Efate and East Coast Santo MCA EFATE RING ROAD 28 2010 HIES Analysis: MCA (Vanuatu) 29 2010 HIES Analysis: MCA (Vanuatu) VNSO Internal Quality Control Documentation Access database used: Source data workbook: Date data accessed: Data assessment: W:\DATA\ECONOMIC\Surveys\HIES\2010 HIES\Databases\MCA-Interested- Areas\WorkingDatabase.mdf 1.
All workbooks, databases and associated working files are stored in the VNSO ‘stats data’ server in folder \DATA\ECONOMIC\Surveys\HIES\2010 HIES\Databases\MCA-Interested- Areas\.

2.

The HIES database: MCA-Interested Areas.mdb.

3.

All HIES data used in the Excel workbooks has the same query name as in the Access Database MCA-Interested Areas.mdb.

Poverty analysis: qry_hhold_monthly_poverty_analysis.xls; Charts_M&E_Targets.xls.
Food poverty line workbooks: VU_POV_FPL_DIET(MCA)_2010.xls; CPI_Dec_2010_Prices.xls.

Imputed rent workbook: qry_hhold_monthly_exp_rent_imp_WKG.xls.

4.

5.

6.

Household sample weights prepared by the Poverty Consultant: Detailed working is contained in HIES_2010_weights.xls in W:\DATA\ECONOMIC\Surveys\HIES\2010 HIES\Sampling.

7.

Documentation for checking and editing undertaken is in HIES_output_doco.doc.

Friday 17 June Data final for MCA Interested Areas.
This document: W:\DATA\ECONOMIC\Surveys\HIES\2010 HIES\Databases\MCA-Interested-Areas\2010_MCA_Analysis.docx 30