Identifying Policy Options to Accelerate Poverty Reduction

Jun 15, 2017

Overcoming Poverty in Malawi through Sustainable Environment and Natural Resource Management: Identifying Policy Options to Accelerate Poverty Reduction

Lilongwe, June 15, 2017: The Government of Malawi through the Ministry of Finance, Economic Planning and Development with financial and technical support from the UNDP-UNEP Poverty-Environment Initiative launched a report titled “Overcoming Poverty in Malawi through Sustainable Environment and Natural Resource Management: Identifying Policy Options to Accelerate Poverty Reduction”.

This report presents insights from a series of investigations to explore the poverty-environment connection in Malawi and to identify sustainable pathways for poverty reduction by quantifying poverty and environment linkages.

The report identifies policy options to accelerate poverty reduction through the more sustainable use of the Environment and Natural Resources (ENR) in Malawi. It demonstrates how unsustainable ENR use and environmental degradation impact on poverty levels. And the converse is true. The report also explores how sustainable ENRM would significantly contribute to poverty reduction and inclusive economic growth.

Agriculture is key to poverty reduction. Investigations into the linkages between the agriculture sector and national income per capita growth show that, in the long run, positive changes in agriculture have significant positive poverty reduction effects. This is evidenced by the fact that a 1 percent (US$1,000,000) increase in agriculture value-added will likely increase GDP per capita by 2.3 percent (US$6) or GDP increase of US$90 million.

“The agricultural sector alone accounts for 30% of the Gross Domestic Product and about 90% of the country’s export earnings. In addition, it is estimated that about 80% of the total labor-force is employed in the agricultural sector. This makes the country highly vulnerable to impacts of climate change and environment and natural resource degradation,” expressed UNDP Deputy Resident Representative, Ms. Claire Medina. “Any unsustainable use of the country’s abundant natural resources means that the performance of the overall economy would be greatly affected given that agriculture with its high multiplier effects, due to the backward and forward linkages it has with the other sectors of the economy, is the driver of other sectors and is the key to the fight against poverty and food insecurity,” she continued as she spoke to the participants at the launch.

She stated that from the findings of the study, Malawi can significantly reduce poverty and the vulnerability of people to food insecurity by increasing budgeting and public expenditures to the most important sectors of the economy including the environment and natural resources.

The Government of Malawi (GoM) was encouraged to re-prioritize public expenditure in such a way that more resources are allocated to the ENR sector (ENR sector covers environment and climate change, land, agriculture, forestry, fisheries, water and wildlife). Efficient resource allocation to ENR-sector institutions should help address challenges such as income poverty, land and water degradation, sedimentation and siltation of water courses, deforestation, depletion of fish stocks and wildlife management.

Mr. Ben Botolo, Secretary to the Treasury, noted that the results from this study linked well and indeed complemented the findings of the Public Expenditure Review on Environment and Disaster Risk Management (PEER) which the Ministry worked on also with the support of the UNDP-UNEP PEI, together with other stakeholders, in 2015. 

He also stated that the findings supported GoM’s efforts to decentralize Environment and Natural Resources Management (ENRM) services to councils. Decentralization offers a better mechanism for improving service delivery.

The findings show that a 1 percent increase in expenditure in the ENR sector leads to 0.43 percent increase in per capita Gross Domestic Product (GDP). This means that, for every US$300,000 increase in ENR expenditure, there is an additional increase in GDP per capita of US$1.1 or an additional increase in overall GDP by US$17 million based on a population of 15 million individuals.

The study adopted a multidimensional definition of poverty that includes: incomes, productivity, food security, health and access to water.