# **1. Introduction**

The world had 1 billion fewer people living in poverty in 2013 compared to 1990 (measured in monetary terms; World Bank, 2016). While poverty remains unacceptably high (using a poverty line of 1.90$/day, 10.7 percent of the world population are still poor<sup>1</sup> ) and challenges remain, these aggregate numbers suggest that significant progress has been made in the past decades. What factors are responsible for the observed decline in poverty headcounts? Human capital formation, economic growth, trade, and institutional strengthening have been suggested as important drivers. Much ink has been spilled on these human development and macro‐economic drivers of poverty reduction (see e.g. Gennaioli et al, 2015). Less emphasis has been placed on the role of the environment in poverty reduction.

Most of the world’s poor live in rural areas and depend heavily on agricultural or environmental income to make a living (Barbier and Hochard, 2016; Olinto et al., 2013). This includes timber and non‐timber forest products; both formally and informally (for an overview, see e.g. Angelsen and Wunder, 2003). Environmental quality is important for both agricultural and environmental income, as healthier ecosystems increase agricultural and environmental yields.

Early empirical studies have identified declining soil fertility and poverty to be related at an aggregate level (Krishna et al., 2006; Barrett & Swallow, 2006). More recently, Barrett and Bevis (2016) find that national GDP per capita is positively correlated with soil nutrient balances in 36 Sub‐Saharan African countries for which data are available. Barbier & Hochard (2016) find that around a quarter of people living in low‐income countries reside on severely degraded land and that a lower share of people on degraded lands is associated with higher economic growth as well as lower poverty. While prior studies all point towards positive relationships, the evidence cannot be interpreted as causal.

The theoretical channels behind the suggested positive relationship are rather intuitive. The most important productive asset determining land productivity for the rural poor is soil, which grows the crops and delivers the ecosystem services that allow for either selling in the market or consumption. There is extensive literature on the relationship between agricultural productivity and soil fertility. For instance, the water storage capability of soil is an important determinant of plant growth (Wong and Asseng, 2006). Louwagie et al. (2009) find that shallow soils, stoniness or chemical issues such as salinity or acidity are negatively correlated with crop yields. There is also a third channel: The topographical conditions of the soil (elevation, steepness, etc.) affect soil erosion and accessibility by humans and machinery (e.g. Duran Zuazo, 2008). For an overview, see Mueller et al. (2010). Thus, we conclude that locations with good soils are likely to have high agricultural potential and thus have absolute advantage in producing high‐value perishable vegetables and other crops.

On the other hand, poor soils may have negative implications for poverty reduction through three mechanisms (Barrett and Bevis, 2016): First, poor and degraded soils have negative effects on agricultural and environmental income. Reduced income on a micro level has not only contemporaneous negative effects on income and poverty on the macro level, but also makes it harder for a household to access nutrients to boost soil productivity in the future. Such links can be self‐reinforcing: poor soil constrains capital accumulation and low capital accumulation inhibits investments in improving soils (Eswaran et al., 1997; Barrett & Bevis, 2015).

> 1 Calculated using the World Bank’s WDI data set for the year 2016.

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