Protected Areas and Poverty: Causal Evidence from India

Protected Areas (PAs) have proliferated in recent decades, especially in developing countries. However, there is often substantial overlap between biodiversity hotspots and incidence of poverty. Furthermore, rural communities... [ view full abstract ]

Protected Areas (PAs) have proliferated in recent decades, especially in developing countries. However, there is often substantial overlap between biodiversity hotspots and incidence of poverty. Furthermore, rural communities in developing countries, often extensively dependent on forests for sustainable livelihoods, bear the cost of global preservation of natural resources. For instance, over 70% of population in India lives in rural areas with some form of direct dependence of households on forest-based natural resources varying between 40-80% in villages. Thus, it is imminent to ask if PAs exacerbate or alleviate poverty. Focussing on IUCN type I and II PAs in India, the objective of this paper is two-fold: (a) to determine if forests are being converted to PAs in regions with greater poverty, and (b) to examine how regions with PAs have performed on inequality and poverty indices over the last three decades as opposed to their counterparts i.e. similar regions but without PAs. Controlling for non-random nature of site selection of PAs, we generate counter-factual districts within states using propensity scores matching method. We estimate Atkinson, Gini and Theil indices using nationally representative systematic consumption data collected by National Sample Survey Organization from 1980 to 2010. We also combine consumption and asset data to determine chronically poor, transient rich and transient poor households. Results of the fixed effects model suggest that districts with PAs have had better economic outcomes than the counter-factual districts. While PAs restrict opportunities for land-use, they generate new incomes by tourism and allied infrastructure development and increasing flows on economically significant environmental services. We posit that our counter-intuitive results are largely driven by tourism-related revenue. An inference of this causality has significant bearings on conservation policies, especially for the developing nations rich in biodiversity but poor in public welfare outcomes.