Research Activities Under the Project

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• Research Activities Under the Project
• Rural Markets, Natural Capital and Dynamic
  Poverty Traps in East Africa
• Presentation to BASIS CRSP Technical Committee
• October 11, 2002
• College Park, MD
• Chris Barrett, Cornell University
• and
• Festus Murithi, Kenya Agricultural Research
  Institute
• on behalf of the project team

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Contemporary Poverty Reduction Strategies in East
Africa

• The PRSP process is focusing government, donor
  and civil society efforts on poverty persistence.
• Efforts particularly directed at chronic poverty
  and vulnerability in rural areas. Thus, PRSP in
  Kenya based heavily on KRDS (Kenya Rural
  Development Strategy) and new Malagasy government
  has made rural poverty reduction is top priority.
• Soils degradation and market access widely viewed
  as most important limiting factors in improving
  agricultural productivity and rural incomes

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Contemporary Poverty Reduction Strategies in East
Africa

• Effective, policy-relevant research must
  therefore target the core question of poverty
  persistence in rural areas, with special
  attention to market access and soils
  degradation/rehabilitation.
• Our BASIS CRSP project aims to integrate
  research, training and outreach activities to
  address this need.

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Toward A Theory of Poverty Traps

• Existing, largely macro-level theories of poverty
  traps (new growth theory)
• The multidisciplinary literatures on livelihoods
  and on technology adoption point toward an
  alternative approach that seems especially
  well-suited to rural Africa and our cases in
  Kenya and Madagascar.

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Toward A Theory of Poverty Traps

• Opportunity set mappings/ density plots
• (conditional on quality-adjusted productive
  assets)

Labor
T3
T4
T2
T1
Land
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Toward A Theory of Poverty Traps

• Activity choice and productivity/income
  differences

Output/Income
T4
T3
T2
T1
Ex Ante Assets
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Toward A Theory of Poverty Traps

• Implied wealth dynamics distinct classes emerge

Dynamic eqln
Wealthti
Non-Poor
T4
W3
Chronically Vulnerable
Chronically Poor
T3
T2
W2
T1
W1
Wealtht
Poverty line
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Implied causality of poverty traps

• Four key sources of poverty traps
• Meager stocks of productive assets
• Rudimentary production/processing technologies
  and nonfarm opportunities
• Weak markets and nonmarket institutions
• Risk exposure and limited risk management
• Research design implication Need household-level
  data to establish asset/income/productivity
  dynamics, measures of shocks, livelihood strategy
  choice, and market access

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Empirical Tasks

• Project objective 1
• Describe welfare and resource dynamics
  empirically
• What is happening over time to the poor? Who
  climbs out of poverty? Who is trapped in poverty?
• What is happening to the natural resource base on
  which the poor in particular depend for rural
  livelihoods?

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Empirical Tasks

• Project objective 2
• Test four hypotheses about poverty traps in East
  Africa
• (i) High return production strategies (e.g.,
  livestock) exhibit increasing returns at low
  production levels, with a minimum efficient scale
  of production beyond the means of the poor
  lacking adequate financing.
• (ii) Poor market access creates significant
  fixed costs to market participation, giving
  larger producers net price advantages and
  inducing poorer producers in areas of weak market
  access to opt out of markets in favor of
  low-return self-sufficiency.

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Empirical Tasks

• Project objective 2 (continued)
• (iii) Poorer households lacking access to capital
  to finance productive investments may be unable
  to undertake lumpy investments, regardless of
  their expected returns
• (iv) Risk and subsistence constraints impede
  long-term investment for asset accumulation and
  productivity growth among poorer, more risk
  averse households.

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Empirical Tasks

• Project objective 3
• Use dynamic process modeling methods to replicate
  observed patterns and then to explore how the
  existence of poverty traps conditions natural
  resource conservation, particularly soil quality
  dynamics that affect future agricultural and
  labor productivity and food security.       
• The soil said to man, take good care of me,
  else when I get hold of you I wont let your soul
  go free.
• -Kipsigis proverb

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Empirical Tasks

• Project objective 4
• Through bioeconomic model simulations and both
  qualitative and quantitative empirical work,
  identify and document effective policies,
  technologies and programs to combat dynamic
  poverty traps in this setting.
• Examples
• - new agroforestry technologies
• - restocking herds after droughts
• - contract farming schemes that address multiple
  
• factor market failures

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Preliminary evidence

• Objective 1 Describing welfare/resource dynamics
• Examples herd dynamics in northern Kenya
• land transitions in western Kenya

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Preliminary evidence

• Objective 2 Explaining observed poverty traps
• Increasing returns and minimum efficient scales
  of adoption
• i) SRI adoption in Madagascar
• ii) Education and nonfarm
• earnings in C/W Kenya
• iii) Herd mobility in N Kenya

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Preliminary evidence

• Objective 2 Explaining observed poverty traps
• Market access
• Market access comparisons from
• - central-western Kenya
• - south-central highlands Madagascar
• (education, nonfarm, dairy cattle,
• market access, vertical integration
• of input/output marketing systems)

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Preliminary evidence

• Objective 2 Explaining observed poverty traps
• Access to finance
• SRI adoption in Madagascar
• Education in rural Kenya
• (N/W Kenya in particular)
• Microfinance in northern Kenya
• Irrigation investments

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Preliminary evidence

• Objective 3 Bioeconomic modeling tool
• CLASSES model prototype near completion. Short
  course begun in Kenya in June and will complete
  this month in Ithaca.
• NSF Biocomplexity project will enrich and extend
  CLASSES significantly in the Kenya sites

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Thank you!We welcome your comments and
suggestions on this project