In many countries poor households turn to resource extraction to generate income, manage risk and secure livelihoods. However, this strategy that prevents them from participating fruitfully in other activities and escaping their poverty. This project will document the ways in which natural capital serves as informal insurance and a safety net against income variability and transitory shocks. It will also examine household dependence on natural resources, and how this varies with wealth, gender and market conditions. Finally, it will look at whether income from natural resources can serve as a pathway out of poverty by helping households accumulate physical, financial and human capital.
Income from resource extraction accounts for up to 45% of total income for rural households in some countries. The importance of resource extraction is amplified in the presence of risk, which will likely increase as climate change threatens productivity, especially in marginal agricultural areas.
Improved information about how households use natural resources and their role in income generation and risk management will help governments generate natural resource management policies that will not disadvantage the poor. In addition, researchers will look at the long term sustainability of resource extraction, and will look to inform policies in directions that improve both economic and environmental outcomes. The project will work to highlight ways to ensure that a larger share of resource rents go to local people, and articulate ways to enhance poverty alleviation without increasing environmental degradation.