This document summarizes a study on breaking the cycle of poverty through sustainable environment and natural resource management in Malawi. The study found that unsustainable natural resource use costs Malawi over $191 million annually, equivalent to 5.3% of GDP, with major costs coming from soil degradation, unsustainable forestation, fisheries and wildlife. This level of degradation is preventing wealth creation and exacerbating poverty. The government of Malawi has responded by incorporating sustainability into policies around agriculture, forestry, budgeting and climate change communication.

1. Breaking the Vicious Cycle of Poverty through
Sustainable Environment and Natural Resources
Management in Malawi: Lessons Learnt from
the UNDP-UNEP Poverty Environment Initiative
Anand Babu Prakasam , Michael Mmangisa,
Moa Westman and David Smith

2. Outline of Presentation
• Introduction
• Scope of the paper
• Findings of Economic Analysis of ENRM
• Government Policy response
• Conclusion

3. Introduction
• About 80% of Malawians depend on renewable natural
resources for subsistence and income
• Malawi is heavily dependent upon natural resources
including land, soils, forests, water, fisheries and air for
economic growth and poverty alleviation
• The agriculture sector (35-40% of the GDP and 90% of the
country’s export earnings and over 80% of the total labour
force) is reliant on the natural resources sector

4. Introduction
• ENRM concerns in Malawi include deforestation and
unsustainable use of forests, pollution, loss of
biological diversity and land degradation
• Compounded by increased climate and weather
variations
• Negatively affecting the performance of sectors such
as water, agriculture and energy
• Impacts the poor (especially on women and
vulnerable groups) that depend more on natural
resources for their livelihood

5. Scope of the study
• The paper draws on findings from the “Economic
Analysis of Sustainable Natural Resources
Use in Malawi,” from 2011 by Yaron et al
• Highlights why the poverty-environment nexus and the
sustainable management of natural resources is
instrumental for Malawi’s achievement of poverty
reduction
• Focuses on government policy and budget options for
the promotion of sustainable ENRM for socio-economic
benefit from these resources can be
increased

6. Objectives of the Economic Study
• Provide evidence on the costs and benefits of natural
resource management
• Examine the link between natural resource
management  poverty reduction, economic well-being
& development
• Assess net benefits of key interventions that
encourage sustainable natural resource use

7. Key Findings
NR Sector Official
Statistics
Additional
contribution
identified
Total share
of GDP
Sources of new evidence
Forestry 1.8% 4.3% 6.1% BEST (2009) – charcoal & firewood
Fisheries 4.0% - 4%
Wildlife - 2.7% 2.7% WTTC (2009) – nature-based tourism
Total 5.8% 7.0% 12.8%

8. Unsustainable NR use costs Malawi >$191m annually!
Equivalent to 5.3% of GDP in 2007
Annual NR sector & source of cost – base case cost (2007 prices)
MK Million US$ Million % of
GDP
Soils: 8,988 65 1.9%
On-site impact on agriculture 7,540 54 1.6%
Off-site impact on hydropower 1,433 10 0.3%
Off-site drinking water treatment 15 0 0.0%
Forests: 12,983 93 2.4%
Unsustainable roundwood (excl fuelwood) 3,100 22 0.4%
Unsustainable fuelwood 6,089 44 1.2%
Flood prevention (indicative only) 232 2 0.2%
Indoor air pollution 3267 23 0.7%
Outdoor air pollution - WB 2002 327 2 0.2%
Fisheries: 3,906 28 0.8%
Unsustainable use (lower bound) 3,906 28 0.8%
Wildlife: 665 5 0.1%
Poaching loss (indicative only) 665 5 0.1%
Total 26,573 191 5.3%

9. Financial Implications of this loss
• Malawi is losing significantly!
– US$191m/year, equivalent to 5.3% of GDP in
2007
– More than allocation to key ministries in 2009
• Education: $175.3 million
• Health: $163.6 million

10. Unsustainable NR use is using up Malawi’s
wealth
Adjusted Net Savings (ANS)
= green accounting rate of national wealth creation
= national saving + human capital formation – depletion of
natural capital – degradation of natural capital
o WB estimate = 12.24% of GNI
o WB/Authors = 7.14% of GNI
o Thus, environmental and natural resource degradation
implies that wealth is being created more slowly
o The addition to human capital (educational expenditure) is
outweighed by natural resource degradation

11. Implications for poverty: yield loss
o Recall: Yield loss due to soil degradation = $54m p.a.
o Conservatively, this reduces agricultural yields by 6%
o Other studies document higher losses e.g. 8-25% p.a. (Bishop,
1995)
o Reduced food security for the poor
o Increased fertiliser usage for the less poor
o Benin et al (2008) argue:
o 6% improvement in agricultural yields during 2005-2015,
would increase overall GDP growth from 3.2% to 4.8% p.a.
 proportion in poverty falling to 34.5% by 2015 i.e. the
incidence of poverty falls 12.5% resulting in 1.88 million
people being lifted above the poverty line by 2015

12. Losing national income from NR degradation
leads to higher poverty
• Benin et al (2008) consider GDP growth of
4.2% p.a. above the baseline case.
– Over 2004 – 2015, the proportion in poverty
would be halved from its 1990 level – to 25.2%
• If the lost economic value from
unsustainable resource use each year
across all ENRM sectors (≡ 5.3% of GDP)
was converted into economic growth, the
impact on poverty would be even greater

13. Government of Malawi Policy Responses to
Natural Resources Management
• Justification for CC, ENRM in the MGDS II
• Incorporation of sustainability indicators in Sustainable
Land and Water Management pillar of the ASWAp
• Revised the NFAP highlights decent work as EAFA to
ensure poverty-environment links
• Ecosystems and community based approach for the
revised National Forestry Policy
• Emphasis of the PSIA and EIA for all extractive projects
in the national budget guidelines
• NECCCS emphasises communication of economic
benefits for sustainable ENRM

14. http://www.unpei.org
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