African evidence on the relation of poverty, time preference and the environment

It is typically argued in the economics literature that the poor operate wi th a higher rate of time preference than their wealthier counterparts. The poor, it is suggested, have a higher rate of time preference because they a re more concerned about present survival than they are about saving for the future. Such thinking is also central to the economic growth for environme ntal conservation and the poverty induced environmental degradation argumen ts. According to these assertions, wealth allows people to consider the fut ure and invest in environmental conservation; and poverty leaves people wit h no alternative but to exploit the environment so that they may feed their families today. Evidence from the food security and famine early warning f ields suggests that households in many African contexts behave quite to the contrary. During periods of food shortage, poor households will often unde rtake extreme measures in the present, including depriving the family of ne eded calories, in order to preserve productive capital for the future. such as a plough. oxen or seed stock. This evidence suggests that poor African households may, in fact, have very low rates of time preference. This calls into question our general assumptions about discount rates for developing countries, for which rates of time preference are a theoretical determinant . (C) 2001 Elsevier Science B.V. All rights reserved.