Chronic and Transient Poverty in the Philippines

1. Chronic and Transient Poverty in the Philippines Celia M. Reyes 20 February 2012 Philippine Institute for Development Studies www.pids.gov.ph

2. Outline of presentation • Impact of Shocks • Estimates of chronic and transient poverty • Programs to address chronic and transient poverty

3. Shocks • Natural • Typhoons • Flood • Earthquakes, etc. • Man-made • Global financial crisis • Food and fuel price shocks, etc.

4. 2011 Top 10 Philippine Destructive Tropical cyclone Source of Data: National Disaster Risk Reduction and Management Council (NDRRMC)

5. Typhoons Ondoy and Pepeng

6. How do natural calamities impact households? Table 1. Impact of natural calamities (% of households)

7. How do natural calamities impact households? Table 2. Impact of natural calamities, amount (in Php)

8. Food-related coping strategies are common responses to flooding/typhoon as food is often hardly hit by these type of shocks Source of basic data: CBMS Survey, 2011

9. Exposure to natural shocks may lead to poverty for some households especially those who are vulnerable. Source of basic data: CBMS Survey, 2011

10. Man-made Shocks

11. Global Financial Crisis Simulation Results: Impact Through Remittances Source: Reyes, C., Sobrevinas, A. and de Jesus, J. (2010). The Impact of the Global Financial and Economic Crisis on Poverty in the Philippines, in C.M. Reyes and Baris, M. Jr., (eds.), Monitoring the Impacts of the Global Crisis at the Community Level (pp. 79-167), Manila, Philippines.

12. Global Financial Crisis Simulation Results: Impact Through Domestic Employment (Wage Reduction) Source: Reyes, C., Sobrevinas, A. and de Jesus, J. (2010). The Impact of the Global Financial and Economic Crisis on Poverty in the Philippines, in C.M. Reyes and Baris, M. Jr., (eds.), Monitoring the Impacts of the Global Crisis at the Community Level (pp. 79-167), Manila, Philippines.

13. Global Financial Crisis Major Household Coping Strategies: Food-related Source: CBMS Census 2009

14. Global Financial Crisis Major Household Coping Strategies: Education Source: CBMS Census 2009

15. Global Financial Crisis Major Household Coping Strategies: Health Source: CBMS Census 2009

16. Global Financial Crisis Major Household Coping Strategies: Tapping Various Fund Sources and Seeking Additional Sources of Income Source: CBMS Census 2009

17. Food and Fuel Price shocks 1,828,392 2,277,265 • The food and fuel price shocks in 2008 resulted in an increase in the magnitude and proportion of poor • Headcount Index, Poverty Gap Index, Poverty Severity index increased INDICATOR Direct Estimation Based on CPI Estimation Based on I-O Tables % increase in general prices 4.1 5.2 Proportionof poor HHs (%) 2.0 2.5 Magnitude of poor (popn) Headcount Index 2.7 2.2 Poverty Gap Index 0.9 1.1 Poverty Severity Index 0.5 0.6 Note: Poverty measures are based on poverty indices from the Foster, Greer and Thorbecke (FGT) (1984) class; Source of basic data: 2006 FIES, NSO

18. Food and Fuel Price shocks Major Household Coping Strategies Source: Reyes, C., Sobrevinas, A., Bancolita, J. and de Jesus, J. (2011). Analysis of the Impact of Changes in the Prices of Rice and Fuel on Poverty in the Philippines, in C.M Reyes and A.B. Sobreviñas (eds.), Impact of Rising Prices of Food and Fuel on Poverty (pp. 99-206), Manila, Philippines.

19. Poverty Trends

20. Poverty incidence among families did not change significantly during the period 2003-2009.

21. The number of poor families has risen from 3.2 million to 3.9 million from 2003 to 2009.

22. Poverty incidence is 15 times higher in Caraga compared to NCR 2.6 - 12.0 12.1 – 20.9 21.0 – 30.2 30.3 – 39.8

23. Poor families concentrated in Regions VII, V, VIII 50,000 – 160,000 160,001 – 220,000 220,001 – 250,000 250,001 – 420,000

24. Luzon accounts for the greatest proportion of the poor families • Luzon – 37 percent • Visayas – 27 percent • Mindanao – 36 percent

25. The poverty incidence has worsened in 2006 2003 2006 2009 2.6 – 12.0 12.1 – 20.9 21.0 – 30.2 30.3 – 39.8

26. Chronic and Transient Poverty

27. Sources of data • Family Income and Expenditure Surveys of 2003, 2006 and 2009 • The same families were monitored during the period to generate panel data for 6516 families • Unweighted

28. Who are the chronic & transient poor? • The chronic poor are those that are consistently income poor during the period under study • The transient poor refer to those who are classified as poor during a given point in time but were previously non-poor for at least one year during the period under study

29. Who are the non-poor? • The never poor are those that are consistently non-income poor during the period under study • The previously poor refer to those who are classified as non-poor during a given point in time but were previously poor for at least one year during the period under study

30. Distribution of Families in 2009

31. Movements in and out of poverty 2003 2006 2009 62.0 % NNN - Never poor 67.9 % 5.6 % NNP - Transient poor 76.9 % 4.6 % NPN - Previously poor 9.2 % 4.6 % NPP - Transient poor 5.4 % PNN - Previously nonpoor 7.5 % 2.1 % PNP - Transient poor 23.1% 4.4 % PPN - Previously poor 15.6 % LEGEND: 11.1 % PPP - Chronic poor Income nonpoor Income poor

32. Dynamics of poverty • Only 47% of those who are classified as poor in 2009 are chronic poor, or consistently poor during the period 2003 to 2009. • 47 out of every 100 poor families were consistently poor . • 53 out of every 100 poor families were not poor previously.

33. Dynamics of poverty • 81 % of those who are classified as nonpoor in 2009 are never poor, or consistently nonpoor during the period 2003 to 2009. • 81 out of every 100 non-poor families were consistently nonpoor . • 19 out of every 100 non-poor families were not poor previously.

34. Geographic distribution of the chronic and transient poor, 2003-2009

35. Distribution of subgroups by area,2003-2009

36. Comparison of Chronic Poor, Transient Poor and Non-poor, 2003-2009

37. Comparison of Chronic Poor, Transient Poor and Non-poor, 2003-2009

38. Comparison of Chronic Poor, Transient Poor and Non-poor, 2003-2009

39. Chronic and Transient poor among agricultural families

40. Agricultural losses from Typhoons Ondoy and Pepeng • Total damages P18.4 billion: crops, livestock infrastructure • P6.8 billion from Ondoy • P11.7 billion from Pepeng • Subsector Damages: • P14.4 billion - palay • P625 million - corn • P211 million - fisheries • P56 million - poultry and livestock • P402 million - high value commercial crops • P2.752 billion – irrigation facilities Source: DA’s Central Action Center (DACAC) from 7 regions of Luzon

41. Poverty status of agricultural families by type of crop (HH head)

42. Distribution of families headed by palay growers

43. Distribution of families headed by corn growers

44. Distribution of families headed by coconut growers

45. Distribution of families headed by banana growers

46. Distribution of families headed by sugarcane growers

47. Distribution of chronic poor (agri- HH, crop growers) by crop type

48. Some Possible Programs

49. Recommendations • Continue to generate panel data to have greater understanding of chronic and transient poverty • Identify appropriate programs to address chronic and transient poverty • Improve targeting scheme for these programs

50. Thank you