# **Natural Capital, Ecological Scarcity and Poverty** Edward B. Barbier<sup>1</sup>

# **Introduction**

Much discussion is occurring in the international community about policy strategies for promoting a transition to a green economy, or “green growth” (Barbier and Markandya 2012; Hallegatte et al. 2011; OECD 2011; UNEP 2011). A typical definition is that “green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies” (OECD 2011, p. 9). However, if such a goal is to have relevance for low and middle-income economies, it must also be compatible with the most important development objective for these countries, which is poverty alleviation (Dercon 2011). But 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 – green or otherwise – for much of the developing world.

The purpose of this paper is to argue the case for a new strategy for overcoming the pervasive problem of ecological scarcity and poverty in many rural areas of developing economies. To make the case for such a strategy, the paper first reviews the evidence on the location of the rural poor, and especially their concentration in ecologically fragile and remote areas. Economies with large shares of their population in such locations not only have high incidence of rural poverty but also are generally poorer. This evidence suggests that tackling this structural problem of the geographical clustering of impoverished households in marginal and remote areas with poorly integrated and functioning markets should become more of a focus for development policies.

However, management of natural capital is not sufficient for eradicating persistent rural poverty in developing economies. To understand why, the paper explores the typical conditions of the “asset-less” poor in remote and ecologically fragile areas. The poorest rural households have very few productive assets, except land and unskilled labor, yet permanent migration is rare. Given the lack of ownership of assets, and the tendency of poor households in remote areas to stay where they are located, their livelihoods are often dependent on exploiting the surrounding environment and its ecological services for survival. But if access to outside markets and jobs is inadequate, the land available 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 reliance on improvements to natural capital as an effective pathway

> 1 Department of Economics and Finance, University of Wyoming, Laramie, WY 82071; ebarbier@uwyo.edu. Paper prepared for the World Bank’s Green Growth Project and based on a presentation at the inaugural conference of the World Bank’s Green Growth Knowledge Platform (GGKP), “Green Growth: Addressing the Knowledge Gaps.” January 12-13, 2012, Mexico City, Mexico.  I am grateful for the assistance and guidance provided by Urvashi Narain and Michael Toman.

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