## 2.2.2 Poverty line used in HNAP analysis

Another source of poverty over-estimation in the HNAP report’s methodology is related to the definition of the poverty line. The poverty line used in HNAP analysis is $1.90, converted in local currency using the 1USD: 3200 SYP exchange rate prevailing at the time of the survey. This approach implies a poverty line of 6,080 SYP per person per day.

Despite the fact that the report uses the “extreme poverty” terminology – the approach deviates substantially from the one that underlines extreme poverty estimation. The $1.90 extreme poverty line in fact is defined in 2011 PPPs terms.<sup>16</sup> Used as a benchmark to compare poverty across low income countries and to obtain global poverty estimates, the $1.90 value is obtained as an average of LIC national poverty lines, all expressed in PPP values. The correct approach for using the $1.90 international poverty line corresponding to extreme poverty should have been to first use 2011 PPP value<sup>17</sup> to convert 1.90 US dollars in local currency (SYP) and then express it in 2021 prices using CPI inflation over the 2011-2021 period. Following the correct approach leads to a 2021 value of the $1.90 2011 PPP extreme poverty line of 1,537,153 SYP per person per day, which would be approximately one-fourth the value of the poverty line used in the HNAP report. The incorrect use of the international poverty line implies that the 98 percent extreme poverty estimation provided in the HNAP report is grossly over-estimated.

# 3 Poverty estimation using the HNAP 2022 Demographic and WASH Household Survey

The analysis of data from the HNAP 2021 Demographic and WASH survey revealed severe limitations in the design of both the household income and expenditure module which limit the possibility to use these data for poverty measurement.<sup>18</sup> In particular, both income and expenditure modules fail to capture the value of in-kind assistance and the value of household own production in agriculture. In-kind assistance and own-production of food are likely to be sizeable in Syria, particularly in areas most affected by conflict where markets are disrupted and incidence of humanitarian assistance more consistent. As a result, welfare aggregates based on either income or expenditure provide a very poor proxy of welfare that does not allow to consistently rank households from poorest to richest.

Based on the analysis of the HNAP 2021 Demographic and WASH survey, the team collaborated with the HNAP team to improve the design of the instruments for the 2022 summer round of the survey. Results of this engagement are described in the sections below.

> 16 Purchasing power parities (PPPs) are used in global poverty estimation to adjust for price differences across countries. PPPs are price indices published by the International Comparison Program (ICP) that measure how much it costs to purchase a basket of goods and services in one country compared to how much it costs to purchase the same basket of goods and services in a reference country, typically the United States. PPP conversion factors are preferred to market exchange rates for the measurement of global poverty because the latter overestimate poverty in developing countries, where non-tradable services are relatively cheap (a phenomenon known as the Balassa-Samuelson-Penn effect). The ICP updates PPP data periodically. For example, in the last three ICP rounds, PPPs were released for the 2005, 2011 and 2017 reference years. The 2017 PPPs are currently used to convert household welfare aggregates, expressed in local currency units in 2017 prices, into a common internationally comparable currency unit.

> 17 The revised 2011 PPP value for Syria is 22.26 (see Jolliffe et al. 2022, Table B.3). 18 See Section 2.2.1.