Nepal | October 16, 2019

Quake likely to push 982,000 people back into poverty

Rupak D Sharma
  • Nepal’s poverty rate stood at 24.8 per cent in 2013
  • Around 26.5 per cent of the population residing in quake-affected rural areas are categorised as ‘poor’
  • The earthquake will end up pushing 700,000 to 982,000 people — 2.5 to 3.5 per cent of the population — into poverty in 2015
Sources of income of the poor and vulnerable household in affected regions. Photo: Source: WB Staff calculations from NLSS III, 2010/11

Sources of income of the poor and vulnerable household in affected regions.
Source: WB Staff calculations from NLSS III, 2010/11

KATHMANDU: The devastating earthquake of April 25 and subsequent aftershocks have threatened to erode some of the gains made in fighting absolute poverty.

Up to 982,000 more people residing in quake-affected areas are likely to slip back into the trap of poverty because of loss of assets and income-generating opportunities.

This has exposed the pitfall of the poverty reduction drive launched by the government: ‘the high degree of vulnerability’, says a World Bank report, which was extended to the National Planning Commission to supplement the Post Disaster Needs Assessment.

The districts ravaged by the earthquake are not the poorest in the country. Around 26.5 per cent of the population residing in quake-affected rural areas are categorised as  ‘poor’. This figure is equivalent to national poverty rate. On the other hand, only 9.7 per cent of the population living in quake-affected urban areas live below the poverty line.

Yet, what is worrying is that many, especially those in rural areas, are living on the edge of the poverty line.

Nepal’s poverty rate stood at 24.8 per cent in 2013. This means around a quarter of the population in that year was living on less than $1.25 a day. But if the international poverty line of $1.25 a day was raised to $2 a day at that time, 57.3 per cent of the population would have been categorised as ‘poor’.

“What this means is that a large proportion of Nepali households are just a sickness, a bad monsoon or natural disaster away from slipping back into poverty,” says the WB report.

Considering this, the earthquake will end up pushing 700,000 to 982,000 people — 2.5 to 3.5 per cent of the population — into poverty in 2015-16, adds the report.

These people will turn poor because of loss of houses, income-generating opportunities, productive assets such as seeds and livestock; and durable assets such as assorted household items ranging from basic kitchen utensils to jewellery.

Of the people who fall back into poverty, roughly 50 to 70 per cent are likely to hail from rural central hills and mountains where overall vulnerability was very high prior to the earthquake, says the report.

It is estimated that almost 66 per cent of these rural vulnerable groups were earning a living through self-employment in agriculture sector, another 12 per cent through off-farm wage work, and three per cent through wage work in agriculture sector.

“The earthquake is likely to have obliterated all these livelihood channels, particularly for those with limited access to other forms of assets and credit markets,” says the report. Also, the need to rebuild their own houses is likely to keep many away from the labour market, leading to slowdown in non-farm activities.

Remittances from foreign migrants could help mitigate these short-term impacts, says the report. But there is a limitation to this, as foreign migration in quake-affected rural districts is lower, particularly among poor and vulnerable households, adds the report, which also highlights problems of deterioration of water and sanitation services, disruption of schools and health services, and possible hike in food insecurity that are likely to further worsen the poverty situation.


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