Sub-Regional Workshop for the North Pacific: Integrating MDGs into National Development Strategies and Budgets

1. Sub-Regional Workshop for the North Pacific:Integrating MDGs into National Development Strategiesand Budgets DEFINITION AND TRENDS OF POVERTY AND HARDSHIP IN THE PACIFIC Pohnpei, Federated States of Micronesia 26 – 29 June 2007 David Abbott Regional Macroeconomic and Poverty Reduction Advisor UNDP Pacific Centre, Suva, Fiji david.abbott@undp.org www.regionalcentrepacific.undp.org.fj

2. Defining Poverty • Poverty has many characteristics: • Material Poverty • Low income • Low consumption/expenditure • Non-Material Poverty • Lack of economic opportunities • Poor health and nutrition • Poor education and/or illiteracy • Poor housing and social environment, including access to efficient cost-effective energy sources • Social exclusion and/or discrimination • Vulnerability and insecurity • Lack of freedom, empowerment and participation

3. Defining Poverty:A Suggested Pacific Definition Poverty = Hardship “An Inadequate Level of Sustainable Human Development”, manifested by: - a lack of access to basic services (eg Education, Health, Transport and Communications); - a lack of opportunities to participate fully in the socio-economic life of the community (employment, economic activities); and - a lack of adequate resources (including cash) to meet the basic needs of the household or customary obligations to the extended family, village community and/or the church”. Meeting cultural and family commitments, (Tuvalu - Fakalavelave or Fakamolemole; Fiji - kerekere; Samoa - faalavelave; Kiribati - bubuti; Vanuatu and PNG - Wantok), have been cited in many other countries as amongst the primary causes of cash shortages in households, thereby constraining their ability to meet normal day-to-day basic needs expenditure.

4. Pro-poor Policy: The Millennium Development Goals • 1.Eradicate extreme poverty and hunger • 2.Achieve universal primary education • 3.Promote gender equality and empower women • 4.Reduce child mortality • 5.Improve maternal health • 6.Combat HIV/AIDS, malaria & other diseases • 7.Ensure environmental sustainability • 8.Develop a global partnership for development

5. Measurement of Poverty and Hardship Quantitative Indicators Poverty Lines and Incidence Millennium Development Goals Other country-specific indicators Household Characteristics of the poor Qualitative & Participatory Assessments - community level Define hardship and poverty Identify causes and characteristics Understand people’s perceptions Poverty of Opportunity Access to Basic Services Gender & other Social Issues Identify Priorities of the People Capacity Building Poverty analysis Policy development Incorporating MDGs into national development strategies Formulation of strategies for pro-poor equitable growth and hardship alleviation Policy Co-ordination Resource allocation Participation and Consultation Improving Understanding of Hardship and Poverty

6. Why Measure Poverty • Objectives of Measuring and Analysing Poverty • identify the poor (objectively or subjectively) • quantify the nature of poverty • understand the causes and characteristics • design alleviation interventions • measure effectiveness of interventions • Assessing the Impact of Policies on the Poor • Economic growth • Pro-poor budgeting and social expenditure • Other targeted interventions

7. Poverty and Policy • Poverty analysis can identify: • who are the poor and disadvantaged • why are they poor • housing conditions and household assets • household characteristics, including energy use and access to water and sanitation • age, gender and educational attainment of households • employment status and income sources of households • proportion of expenditure on food and non-food basic needs • proportion of food produced from own resources, food security, nutritional status

8. Poverty: A Vicious Circle • Poverty Can Be Self-perpetuating • unemployment or low income leads to a • poor diet and frequently • poor health resulting in an impaired ability to concentrate or work • this results in • poor educational attainment and lack of skills • these conditions together • limit ability to take advantage of opportunities, • and lead to • unemployment • low income • social exclusion, and thus • perpetuate the cycle • Pro-poor policies required to break this cycle

9. Poverty and Hardship as Policy Focus • Poverty Alleviation is now a primary policy focus • Governments are committed to achieving MDGs • Need for better understanding of the extent of poverty and hardship • Policy development based on analysis and facts • Targeted interventions • Measured outputs and outcomes • Poverty Reduction Strategies • Equitable, pro-poor growth • Pro-poor and gender sensitive budgets

10. Measurement of Poverty IncidenceNational Poverty Lines • A Poverty Line is a threshold level of income, consumption/expenditure, welfare or some other measure of living standards; • Can be defined either: • relative to some measure of welfare over the whole population • poverty line would be set relative to a specific level of consumption; e.g. 50% (EU) or 60% (UK) of median (or mean) household income • or in absolute terms as the minimum cost of a reference standard of living • how to determine and measure the reference level • Expenditure/consumption or income • Defined basket of goods • nutrition, welfare, utility • Food Energy Method • Cost of Basic Needs Method • US$1 or US$2 per day (MDG 1)

11. Issues of Data Quality forMDG 1 • Household survey data of variable quality, especially for older surveys • sample frames and enumerator follow-up • measurement of subsistence production • variance between income and expenditure estimates • Surveys not originally designed with poverty analysis as primary objective • Analysis often done many years after survey completed • PPP indices not yet available - but by end 2007

12. Quantifying National Poverty Lines and Poverty Incidence • Original estimates of National Poverty Lines and poverty incidence for • FSM, Kiribati, Samoa, Tonga, Tuvalu, Fiji, Solomon Islands • On-going/planned support for analysis of current/new surveys • Kiribati, FSM, RMI, Palau, Cook Islands, Nauru, Vanuatu • others as required

13. Latest Available Data on Poverty Incidence

14. Urban-Rural Comparisons of Poverty Incidence

15. Indicators of Poverty and Inequality • Inequality • Poverty measures focus on the situation of those at the bottom of the distribution • Inequality is a broader concept and measures the relative well-being across the whole population • Distribution of consumption (or other variables) can be shown graphically • frequency distribution - bar chart • cumulative frequency distribution - cumulative bar chart • Lorenz Curve

16. PDMCs Survey Year % Share of Income/Consumption L20 H20 Fiji Islands 2002/03 7.4 41.8 Micronesia, Fed. States of 1998 3.6 55.5 Papua New Guinea 1996 4.5 56.5 Samoa 2002 6.2 45.3 Solomon Islands 2005/06 6.7 46.5 Tonga 2002 4.9 47.5 Tuvalu 2004/05 10.0 36.5 Distribution of Income/Consumption

17. Non-Food Basic Needs % of Food Expenditure Fiji 2002/03 Samoa 2002 Tonga 2001 FSM 1998 Tuvalu 2004/05 National 131 52 108 76 70 Urban 192 67 130 75 143 Rural 115 36 92 68 52 Lowest Quintile Households Non-Food/Food Expenditure

18. Tonga Tuvalu Fiji Samoa FSM 2001 2002/03 2002/03 2002 1998 Income Expenditure Income Income Income National 0.42 0.26 0.34 0.44 0.51 Urban 0.41 0.26 0.35 0.44 0.48 Rural 0.39 0.19 0.31 0.40 0.30 Gini Coefficients of Selected PICs

19. Participatory Assessments of Hardship • Ten countries • Kiribati, FSM, RMI, PNG, Fiji, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu • More than 170 communities, including • traditional leaders • focus groups • women’s, youth and other community groups • individuals

20. People Experiencing Hardship • Unemployed and landless • Children: orphans and those living with relatives • Youth: uneducated; teenage couples • Women: widows; single mothers • Men: widowers; elderly without support • People: “own nothing”; no education or skills; no support from relatives • Families: large and landless families (internal migrants)

21. PDMC Basic Social Services Income Opportunities Governance & Participation Others Kiribati    • Outer island development Marshall Islands    • Improve outer islands transport Micronesia, Fed. States of    • Address excessive kava drinking Papua New Guinea    • Strengthen enforcement of law & order Samoa    • Access to housing assistance Tonga    • Coordination among community groups Tuvalu    • Provision of sports facilities for youth Vanuatu    • Resolution of land disputes Priorities of the People From the PAH

22. Thank You David Abbott Regional Macroeconomic and Poverty Reduction Advisor UNDP Pacific Centre david.abbott@undp.org regionalcentrepacific.undp.org.fj