Forest Income and Rural Livelihoods in West Bengal, India

Abstract

To what extent forests contribute to rural livelihoods in developing countries? To find a plausible answer for this, this article explores whether inclusion of forest income to rural households’ total income accounts reduces poverty and income inequality, and also enables rural households to cope with shocks. To this end, we conducted household surveys in eight forest-dependent villages in the Indian state of West Bengal between August 2016 and August 2017. Using data from 407 sample households, we measured forest income of a household as the aggregate monetary value of resources extracted solely from forest ecosystem and compared this with other economic activities of the households. We calculated poverty indices and Gini coefficient with and without forest income, and we employed regression and Gini decomposition techniques to assess the safety net role and relative contribution of forest income to reducing rural poverty and inequality when compared to other sources of income. We found that the addition of forest income to household accounts significantly reduces measured poverty and inequality. Besides, the sample households, especially the poor, extract more from forests to cope with severe covariate shocks due to greater income certainty and thus adopt forest-dominated coping strategy in time of shocks and crises. The implication is that forest income needs to sustainably flow to the poor along with the development of better safety nets in forested rural areas in order to improve the forest-based rural livelihoods in developing countries like India. JEL Codes: Q23, Q56, Q57