World Bank Group | Brief May 2012

At a glance

+ There has been substantial progress since the Earth Summit in Rio 1992 in addressing poverty and gender inequality, yet large pockets of poverty remain and even larger populations are vulnerable to becoming poor.

+ Climate change, natural hazards, and environmental degradation are growing sources of vulnerability.

+ Continued improvement in prosperity, opportunity, and security will require efforts on a broad front and include scaling up measures to make development more inclusive, equitable, and resilient.

The challenge

There has been much progress since Rio 1992 in reducing poverty. Preliminary estimates by the World Bank indicate that the proportion of the world population living on less than $1.25 a day in 2010 had fallen to less than half of its value in 1990—meaning that the poverty goal of the Millennium Development Goals has been achieved before the 2015 deadline. A near doubling in the real per capita GDP of developing countries was the single most important factor in the drop in poverty over these two decades. Moreover, conditions for girls and women around the world have also improved dramatically, and women have made unprecedented gains in rights, education, health, and access to jobs and livelihoods. However, the war on poverty has not been won and many challenges remain. Around 1.3 billion people still live on less than $1.25 a day, with the majority in emerging economies. In addition, a large number of people remain vulnerable to falling into poverty when disaster or misfortune strikes. These are people on low incomes with little or no protection against loss of income or assets, whether due to disease, conflict, or climatic or economic shocks. Many gender disparities remain,

most notably a large disparity in the rate at which women and men die: female deaths in excess of male deaths account for an estimated 3.9 million women each year in low- and middle-income countries.

Conflict and societal fragility is a source of vulnerability. While the toll from conventional warfare has declined, conflicts among non-state actors have soared and more than 1.5 billion people live in countries affected by violent conflict or very high levels of criminal violence. The incidence of crime and violence has also increased in many countries, sometimes linked to organized crime and smuggling of illicit drugs. These new forms of fragility threaten to undermine development gains and destabilize nations and regions.

Climate change, natural hazards, and environmental degradation are further drivers of vulnerability. Severe environmental degradation reduces the rate of economic growth and disproportionately affects the poor, including sometimes minority groups depending on degraded resources. Women often bear the major costs of coping with dwindling resources of water and firewood. The health of the poor in urban centers of developing countries is often adversely affected by pollution, water-borne diseases, and other environmental hazards, while the continued use of solid biomass fuels for cooking undermines the respiratory health of women and infants. Drought, flood, and other climatic shocks are leading sources of vulnerability and hard for communities to protect against using traditional informal approaches. With anthropogenic climate change causing more extreme climate events, the incidence and severity of climate-related disasters will grow in the future unless adequate adaptation responses are taken.

High and rising inequality in income and wealth can itself undermine growth and poverty reduction, not least by creating greater space for crime and social strife. A particularly problematic form of inequality occurs when entire regions or

Poverty, Equity, and Sustainable Development

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World Bank Group | Brief May 2012

opportunities, and voice. Reducing differences in education and health, agency, and access to economic opportunities between women and men.

+ Nuturing institutions to tackle situations of fragility, considering both more effective policing and informal, societal institutions.

Environmental and climate policies cannot be considered in isolation from poverty and equity considerations. Climate and environmental concerns are no longer the exclusive concern of environment ministries but of government as a whole, including ministries of finance, economy, and development which are responsible for raising and allocating public revenues and the design of fiscal instruments to address the externalities and other market failures that give rise to environmental problems. Environmental problems and policies to address them both have implications for poverty and income distribution, and it is important to analyze these effects and to consider interventions to mitigate any adverse impacts. For example, many countries are finding that setting up targeted social protection programs can help them reform wasteful, polluting, and poorly targeted energy subsidies.

References and suggested readings

Banerjee, Abhijit, and Esther Duflo. 2011. Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. New York, NY: PublicAffairs.

Collins, Daryl, Jonathan Morduch, Stuart Rutherford, and Or-landa Ruthven. 2009. Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton, NJ: Princeton University Press.

Mansuri, Ghazala,and Vijayendra Rao. Forthcoming. “Local-izing Development: Does Participation Work?” Policy Research Report, Development Research Group. Washington, DC: World Bank.

World Bank. 2010. World Development Report 2011: Conflict, Security, and Development.

World Bank. 2011. World Development Report 2012: Gender Equality and Development.

World Bank. 2012. Resilience, Equity and Opportunity: The World Bank’s Social Protection and Labor Strategy 2012–2022.

groups of people are excluded from the gains of development, causing resentment, poverty traps, and polarization along ethnic or regional fault lines. Such polarization is subject to exploitation by political actors and is often a factor when tensions erupt into violent conflict. In the wake of the Arab spring, there is growing concern in many countries about the impacts of social exclusion on political stability.

The future we want

A socially sustainable pattern of development combines greater security with continued improvement in prosperity and the ability to participate fully in economic and social life for both women and men irrespective of race, caste, ethnicity, disability status, and region of origin in ways that respect planetary boundaries. How do we get there?

There is no magic bullet. Anti-poverty policies are continuously evolving and subject to active debate and experimentation in academic and policy fora. Countries’ approaches to addressing poverty and equity are shaped by their social values, views on what is affordable, and institutions already in place. Regardless of choice of policy mix, it is important to integrate poverty and sustainable development policies into countries’ overall development strategies.

Despite country differences, a number of approaches have been commonly used in many countries and found to be effective in addressing poverty, including

+ Protecting access and affordability of basic services such as health, education, and water and sanitation consumed by the poor.

+ Encouraging participation, empowerment, and voice. Ensuring that intended users and beneficiaries are heard and their wishes respected in the design and execution of policies and programs.

+ Establishing accountability mechanisms to give users a say in how public services are run and what standards of quality are provided.

+ Promoting resilience by offering a wider menu of risk management options to vulnerable people and communities, including social safety nets, social insurance, microfinance, labor protection, and disaster risk reduction interventions.

+ Ensuring climate change mitigation and adaptation policies promote social resilience by involving stakeholders and looking for ways to channel benefits to poorer communities.

+ Addressing inequality and social exclusion, in particular with regard to basic services, access to economic