FAO unveils improved method of measuring rural poverty

The majority of the world poor live in rural areas, but it is difficult to obtain reliable and harmonized information on their numbers and conditions.

To help fill this gap in the fight against world hunger, the Food and Agriculture Organization of the United Nations (FAO) has published a report in collaboration with the Oxford Poverty and Human Development Initiative (OPHI), which presents an innovative Rural Multidimensional Poverty Index. (R-MPI).

The R-MPI extends existing methods for measuring rural poverty by looking more closely at the capabilities of rural people: food security, the quality of their nutrition; their education and their standard of living. Furthermore, FAO and OPHI added two key aspects that affect the lives of rural dwellers in particular: access (or lack thereof) to suitable agricultural assets and exposure to environmental and other risks and social protection.

“Although a variety of poverty measures already exist and are commonly used, harmonized information on rural poverty, which could inform a robust and homogeneous measurement, is less available.

The R-MPI includes innovative indicators on the adequacy of agricultural asset ownership, rural social protection and risk exposure. In the application proposed in the report, the R-MPI makes use of innovations in the risk dimension, combining household surveys with geospatial data”, said FAO Chief Economist Máximo Torero Cullen at the launch of the report.

The R-MPI is based on the notion that a single dimension, such as household income, does not accurately capture poverty in rural areas. It is now widely recognized that hardship means much more than an empty bank account.
That notion is reflected in the Global Multidimensional Poverty Index (MPI), which was launched in 2010 by the United Nations Development Program and OPHI and covered 109 countries and 5.9 billion people in 2021.

The R-MPI, which extends the reach of the global MPI, also includes an innovative combination of geospatial and survey data that quantify the risks of exposure of rural inhabitants to droughts, floods or heat waves.

“The launch of this innovative rural MPI is an important first step in shaping the data environment and discussion on how to continue advancing the understanding of rural poverty with the goal of ending it in all its forms and dimensions,” he said. Sabina Alkire, Director of OPHI.

The usefulness of this new tool is illustrated in the joint FAO-OPHI report, which tested the index using recent household surveys in Ethiopia, Malawi, Niger and Nigeria.

The report shows how the R-MPI captures additional and different information compared to other measures, both monetary and multidimensional, that do not include rural specificities. The included dimensions proved to be statistically efficient. The overlap between monetary and non-monetary deprivations is significant. However, the R-MPI captures more. In Malawi, for example, up to 14 per cent of the rural poor identified by the R-MPI were not identified as poor by the monetary metric.

The R-MPI was also field-tested, specifically in 64 rural areas of Malawi. Community members were asked to review the dimensions included in the R-MPI, based on their life experience, and define, in their own words, rural hardship and poverty. Although most of the dimensions turned out to be considered crucial, others, such as mood or physical appearance, also emerged. While not all of these can be easily obtained in large-scale surveys, important lessons were learned about the limitations of monetary metrics and the importance of adapting measurement to rural contexts.

All of this is not just about producing more data. More precise identification of who the extreme poor are, where they live, and what specific constraints prevent them from escaping poverty in rural areas can play a crucial role in crafting more targeted policies to address rural poverty and hunger.

FAO is helping countries design and enacts policies that address the condition of poor and small-scale farmers, improving their livelihoods and enhancing their resilience and ability to escape extreme poverty. The R-MPI can help as a guidance tool for policymakers and as a monitoring tool for projects and programs seeking to address rural poverty.