Water and Poverty

Water-related poverty occurs because people either do not have access to dependable water resources or because of the lack of capacity to use them due their insufficient or degraded land, poor access to market, water-related disasters, and capital or other factor constraints. The purpose of water-related poverty analysis for the Yellow River Basin (YRB) is to determine to what extent irrigation or agricultural water management explains poverty in the YRB in relation to other factors.

Methodology and data

We carried out two types of poverty analysis for the YRB: (1) measured poverty at the basin and sub-basin levels, and (2) assessed the relationship between access to water and poverty. Three poverty measures have been used in our analyses: (1) the headcount index, (2) the poverty gap index, and (3) the squared poverty gap index. All three poverty measures are members of the Foster-Greer-Thorbecke (FGT) class. 

We used the latest international poverty line of $1.25 per day, measured at the recently estimated purchasing power parity (PPP) exchange rate with 2005 as the base year. The  2005 PPP exchange for China is 3.4 yuan per $1.00.[1] 

We used income data from the 2001 Household Income and Expenditure (HIE) surveys conducted by the National Bureau of Statistics of China for poverty analysis. Because we used the PPP exchange rate with 2005 as the base year, we adjusted per capita income data from the 2001 survey for inflation using the consumer price index (CPI) for China, with the base year 2005=100.

Key findings

·       27.2% of the population in the YRB region live below the PPP$1.25 a day poverty line; with a poverty gap of 7.7% and a squared poverty gap (or poverty severity) of 3.3%.

·       Parts of 9 provinces of China belong to the YRB region—Gansu, Henan, Inner Mongolia, Ningxia, Qinghai, Shandong, Shanxi, Shaanxi, and Sichuan. Province-level poverty rates vary widely in the region. The head-count poverty rate (percentage of households living below the $1.25 a day poverty line) varies from only 3.7% in Shandong province in the west to as high as 40.8% in Qinghai province in the east.

·       55.2% of the poor households and 71.1% of non-poor households have access to safe drinking water in the YRB region.

·        Poverty rates are significantly lower in irrigated areas than in non-irrigated areas of the YRB region. While 19.4% of all households living in irrigated villages are poor, the rate is 41.4% in non-irrigated areas.

·        The difference in household access to safe drinking water is large between irrigated and non-irrigated areas. In irrigated villages, 74.6% of the poor households and 78.5% of non-poor households have access to safe drinking water. The rates are only 38.7% for the poor and 52.4% of the non-poor households in non-irrigated villages.

·       Crop yields are significantly higher for households living in irrigated areas than those living in non-irrigated areas. For example, rice yields are 4.9 kg/mu for the non-poor households living in irrigated villages, compared to only 2.2 kg/mu for the non-poor households living in irrigated villages.

·       The variation in crop yields across households living in irrigated villages is much less than that of households living in non-irrigated villages. For instance, the coefficient of variation of wheat yields is 33.3% in irrigated area for the non-poor households, versus 54.5% for the non-poor households in non-irrigated area.

·       Preliminary results of a multivariate analysis (probit regression model) indicate that, the probability of being poor reduces by 11.2% if a household lives in an irrigated village in the YRB region.