The term ‘poverty trap’ is used in economics to define the vicious cycle of poverty that does not allow the poor to escape poverty. People caught in poverty traps cannot earn or save...
The term ‘poverty trap’ is used in economics to define the vicious cycle of poverty that does not allow the poor to escape poverty. People caught in poverty traps cannot earn or save enough capital to improve their living conditions and keep falling in this whirlpool of poverty.
Many factors such as political instabilities, financial crises, natural calamities and conflicts accelerate this downward fall. Poverty traps have long-term negative impacts on future generations.
For example, when a person with a clerical job and with four children is fired from his/her job due to an economic recession, his/her first priority will be to feed his/her family from the savings s/he kept for rainy days. As a result, this person cannot afford the education of his/her children due to inadequate resources. The only hope to improve his/her living conditions by educating his/her children is lost now. The person falls downward and remains trapped in poverty permanently.
Every natural calamity creates new victims to enter into the poverty trap besides reducing the chances of the already trapped poor to come out of it. The current floods in Pakistan have widened the already existing inequalities in the country, affecting more than 33 million people. According to the Pakistan government and the UN, more than a million houses have been either demolished or damaged, 8.3 million acres of crops destroyed, and 735,000 livestock lost. Pakistan is already facing financial crunches in the form of the high prices of petrol and basic food items and an extremely unstable exchange rate of the dollar. This disaster that has inundated one-third of the country has forced millions into poverty traps.
The floods have washed away crops of cotton, rice, onions, vegetables, sugarcane, and wheat, which is an alarming situation for small farmers. Poor farmers who used to rely on one of these cash crops to bear the expenditure of their families for an entire year and to grow the new crop for the next season are left with no capital. This situation will push these people further down in the poverty trap.
Also, health problems generated by the floods have increased the risk for the poor to remain stuck in poverty traps. The floods have been followed by an outbreak of many water-borne diseases like dengue, malaria, and diarrhoea. According to official reports, the floods have destroyed close to 900 health facilities.
These health problems have added more financial burden on the poor, making it impossible for them to improve their living conditions. The lack of nutritional food for poor kids and pregnant women will give rise to issues of stunting and slow cognitive development at later stages. It will reduce the ability of children to grow normally, get an education, improve their living standards and break the vicious cycle of the poverty trap.
Education plays an important role in helping people avoid the poverty trap or come out of it. The current floods have displaced millions of people and demolished the infrastructure of educational institutions. This situation will produce another unfavourable condition for the poor to enter poverty traps. The struggle to earn enough and educate children to change the destiny of future generations will be compromised, thus reducing their chances to get away from poverty.
There are several suggestions to minimize the threats of poverty traps created by the current catastrophe. They include planned structural changes and the availability of enough capital to help the poor break away from or dodge poverty traps. Governments should introduce crop insurance for natural calamities in agricultural and climate-hit countries like Pakistan. The farmers should also be taught adaptive techniques to deal with climate-led disasters. More research projects should be launched to study and guide farmers on the best ways to grow crops in extreme climate events.
The targeted cash transfer and subsidy to the poor affected by calamity can also help them fulfil their basic needs. Government-backed relief strategies can include tax reliefs on utility bills and discounts on basic grocery items. The identification of the flood victims is an important challenge for economically hit countries like Pakistan.
The government can also launch projects to avoid the educational loss of people in flood-affected areas to protect them from poverty traps. The arrangements of free-of-cost tele-education and portable classrooms in the flood-affected areas can solve this issue. Also, the provision of health insurance and access to free health services can also save them from falling into poverty traps.
Countries that have been identified as the rich polluters should compensate poor countries in the form of relaxations in debt and import/export and transfer of cash.
The writer is a graduate in public policy from University of Oxford.