# **3 Data, methods and poverty classification**

## **3.1 The PEN data set**<sup>**7**</sup>

<mark>PEN is a large collaborative research project, coordinated by the Center for International Forestry Research (CIFOR).</mark><sup>8</sup> <mark>PEN was a network of primarily PhD students, doing fieldwork and data collection in a predetermined format and standardized questionnaire. PEN represents the largest quantitative, global-comparative research project on forests and rural livelihoods to date.</mark> The surveys covered a 12 month period, with village surveys and household surveys at the beginning and the end of the survey period collecting basic <mark>household-level variables (demographics, assets, income sources, social capital), and village-level data (demographics, markets, institutions, natural resource endowments)</mark> (see Figure 1). The core of the data collection was, however, four quarterly household income surveys, covering all household incomes using one or three months recall periods, depending on the regularity of the income source. The data collection was done in 20052009, with close to 70% of the surveys conducted in 2006 and 2007.

The case study selection by the PEN partners was to some degree opportunistic. Study sites were to be selected within tropical or sub-tropical regions of Asia, Africa or Latin America, and in close proximity to forests. The sample is considered to be “representative of smallholder-dominated tropical and sub-tropical landscapes with moderate-to-good access to forest resources” (Angelsen et al. 2014: 3). Natural variation was ensured through a deliberate selection of villages within study sites to reflect variation in important characteristics (e.g., market access and tenure), and by random sampling of households within selected villages. Larger PEN study area with distinct geographical sub-areas were split into “sites”, yielding a total of 59 sites, 334 villages and 7,978 households with complete income data. In the analysis of this paper, the sample is smaller (7,329), as some variables that we used to predict income were missing for some households.

The PEN guidelines emphasize that households’ subsistence extraction and production (i.e., in addition to extraction/production that generates cash income) should be included in total income. Key sectoral incomes are defined as follows: _Agricultural income_ is split into _crop_ and _livestock_ income. Income is defined as the gross value (quantity produced multiplied by price) minus the costs of purchased inputs (e.g., fertilizers, seeds, tools, hired labor, marketing costs). Following the standard income definition, the value of family labor should not be deducted. Crop income comes from cropping on land categorized as agriculture, and agroforestry. Livestock income comes from products (including the sale of live animals) and services (e.g., rented-out horsepower), but excludes non-realized incremental changes in stock values, which are captured in the value of assets. Livestock also includes fish-farming (aquaculture).

_Forest income_ is income from resources extracted in forest areas, using the FAO definition: “forests are lands of more than 0.5 hectares, with a tree canopy cover of more than 10%, where the trees should be able to reach a minimum height of 5 meters _in situ_ , and which are not primarily under agricultural land use” (FAO 2000). This includes both primary and secondary forests, native and exotic species, natural and planted forests, as well as closed and open forests. In some analyses, a distinction is made between income from _natural forests_ and from _plantations_ . Forest income also includes direct payments for forest-based environmental services, e.g., carbon credits or profits from community-based forest ecotourism.

> 7 This section draws heavily on Angelsen et al. (2014).

> 8 For further information, see <u>http://www1.cifor.org/pen</u>

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