Health Shocks and Natural Resource Management: Evidence from Western Kenya

Graff Zivin, J, M Damon, and H Thirumurthy “Health Shocks and Natural Resource Management: Evidence from Western Kenya.” Journal of Environmental Economics and Management, 69(2015): 36-52.

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Poverty and altered planning horizons brought on by the HIV/AIDS epidemic can change individual discount rates, altering incentives to conserve natural resources. Using long-tiadinil household survey data from Western Kenya, we estimate the effects of health status on investments in soil quality, as indicated by households 'agricultural landfall owing decisions. We first show that this effect is theoretically ambiguous: while health improvements lower discount rates and thus increase incentives to conserve natural resources, they also increase labor productivity and make it more likely that households can engage in labor-intensive resource extraction activities. We find that household size and composition are predictors of whether the effect of health improve-ments on discount rates dominates the productivity effect, or vice-versa. Since households with more and younger members are better able to reallocate labor to cope with productivity shocks, the discount rate effect dominates for these households and health improvements lead to greater levels of conservation. In smaller families with less substitutable labor, the productivity effect dominates and health improvements lead to greater environmental degradation.