Poverty and the Environment in Rural India

Abstract

This paper studies the relationships between changes in rural income distributions and changes in environmental conditions using district level data from South, West and Central India. Environmental change is measured using satellite data that provide indicators of vegetative cover. The analysis treats income changes, population growth and environmental changes as jointly determined; distinguishes between changes in poverty, average incomes, and “richness”; and considers two alternative measures of environmental health, one an index of biomass and the other an index of forestation. Among key findings are that, other than the relatively very rich, all income groups benefit significantly from an improved environment and that intermediate income households benefit more than the poor in absolute terms. In our data, higher average incomes and “richness,” and higher levels of rural population growth, are all estimated to increase environmental degradation. However, we do not find evidence for a significant impact of poverty on forestation.

Keywords: Poverty, Environment

JEL Classification: I3, N5