Publication: Is Natural Capital a Complement to Human Capital?: Evidence from 46 Countries
The environment has long been the foundation of human flourishing, but its continued degradation is threatening to reverse recent development gains, especially in human health. This paper analyzes the possible complementarity between natural and human capital by linking high-resolution deforestation data with health outcomes for 0.7 million children across 46 countries. Forest loss is often a consequence of economic activities that may confer market and other benefits. At the same time, it can adversely affect the provision of forest ecosystem services and reduce the associated socioeconomic and environmental benefits for rural communities. The net effect is thus ambiguous. The paper focuses on the hydrological services provided by forests and exploits quasi-random variation in deforestation upstream to assess the impacts on waterborne disease outcomes for rural households downstream. The results not only indicate increases in diarrheal disease incidence among children under 5 years old, but also offer new evidence of early-life exposure to deforestation on childhood stunting, a well-known indicator of later-life productivity. A case study for Peru shows similar results for diarrheal disease, but a weaker effect of forest loss on stunting. The paper concludes that maintaining natural capital has the potential to generate meaningful improvements in long-run human capital.
Link to Data Set
“Damania, Richard; Kim, Hyungju; Viotti, Leonardo; Zaveri, Esha; Onder, Stefanie; Pantoja, Chrissie. 2023. Is Natural Capital a Complement to Human Capital?: Evidence from 46 Countries. Policy Research Working Papers; 10617. © World Bank, Washington, DC. http://hdl.handle.net/10986/40665 License: CC BY 3.0 IGO.”
Other publications in this report series
PublicationStages of Diversification Redux(2024-02-22)The existing literature on development and economic diversification finds an inverted-U function between these two variables, whereby economies diversify as they grow up to a point, after which they start specializing. This paper contributes to this literature by investigating the stages of diversification over the course of development during the past 57 years. The paper emphasizes the trajectories of resource-rich and resource-poor countries, an issue that has not been covered by the extant literature. In addition, the paper studies the stages of diversification across three dimensions, namely employment, value-added, and exports. Additionally, it examines the relationship for services. Non-parametric estimations suggest a U-shaped curve between measures of economic concentration and per capita income levels, which is in line with existing evidence. However, these patterns are mainly driven by between-country rather than within-country variation, a finding that had been ignored in the existing literature. Diversification patterns also differ across resource-rich and resource-poor countries: Employment and value added in resource-rich countries are on average more concentrated at low levels of development while in resource poor countries, they are more concentrated at high levels of development. In contrast, at all levels of development, exports are more concentrated in resource-rich countries. PublicationCosts of Health Care Associated Infections from Inadequate Water and Sanitation in Health Care Facilities in Eastern and Southern Africa(World Bank, 2024-02-21)In Sub-Saharan Africa, health care facilities face critical challenges in water supply, sanitation, and hygiene services; health care waste management; and environmental cleanliness. With coverage below 50 percent, these deficiencies pose significant health risks to patients and health care workers, contributing to health care–associated infections. Meta-analyses and individual studies estimate rates of health care–associated infections in Sub-Saharan Africa at between 13 and 30 percent of hospital admissions, impacting patients, families, and health care providers. Rising antimicrobial resistance further exacerbates health outcomes and costs. In Eastern and Southern Africa, an estimated 3.1 million health care–associated infections in 2022 incurred over 320,000 excess deaths, costing at least US$6 billion, or 1.14 percent of combined gross domestic product in 2022. Investing in comprehensive water supply, sanitation, and hygiene and health care waste management can yield substantial benefits, with a benefit-cost ratio of 5.8 for all economic costs. Beyond preventing health care–associated infections, improved cleanliness and infrastructure are crucial for patient satisfaction, impacting future health care–seeking behavior and health care worker job satisfaction. Sub-Saharan African countries should prioritize infrastructure investment, budget allocation, staffing, and behavioral improvements to enhance the quality of health care and mitigate these pressing challenges. PublicationHow Large Are the Economic Dividends from Closing Gender Employment Gaps in the Middle East and North Africa ?(World Bank, 2024-02-20)This paper quantifies the gains in gross domestic product per capita from closing gender employment gaps in the Middle East and North Africa, using three neoclassical growth models. The paper starts with baseline impacts from the Gender Employment Gap Index, which suggests that in the long run, gross domestic product per capita would be around 50 percent higher in the typical economy in the region if gender employment gaps were closed (mean 54 percent, median 49 percent). However, the gains are heterogeneous, ranging from less than 10 percent in Qatar to more than 80 percent in the Republic of Yemen. The paper then explores short-term gains, when capital is fixed (or adjusts slowly), and gains in the medium-term, with sluggish implementation of reforms using the Long Term Growth Model, which roughly halves the gains (and lowers the gains by more than half in resource-rich countries). Finally, the paper incorporates the effects of changes in the skill distribution in a model incorporating capital-skill complementarities in production. Because gender employment gaps in the Middle East and North Africa tend to be larger among the unskilled, closing these gaps reduces average skill levels, moderating long-term gains by 5-10 percentage points. However, if women in the Middle East and North Africa continue the current trend toward greater educational attainment, the gains will be greater than in the baseline. All three models—the Gender Employment Gap Index, the Long Term Growth Model, and capital-skill complementarities—point to large increases in gross domestic product per capita from closing gender employment gaps. PublicationPresumptive Tax on Small and Microenterprises with a Gender Lens in Ethiopia(World Bank, 2024-02-20)Governments often use simplified business tax systems, such as presumptive tax regimes, to register and tax small and microenterprises. Despite concerns about how such regimes could disproportionately affect female-owned and low-revenue entrepreneurs, there is a lack of empirical analysis examining the tax burden. The presumptive tax in Ethiopia has a complex assessment system, where the tax liabilities are determined according to the activity type and turnover (99 activities and 19 turnover bands), and some activities do not have a tax-free threshold. This paper uses two rounds of data in the Ethiopian Socioeconomic Surveys and the tax code to analyze the equity and gender implications of the presumptive tax on small and microenterprises by imputing the effective tax rates. There are three key findings. First, the effective tax rates are higher for businesses in the lowest quartile at 4.3 percent of turnover compared to 1.5 percent for businesses in the highest quartile, using the most recent survey, resulting in a regressive system. Second, male-owned businesses tend to operate in sectors without a tax-free threshold and are more likely than female-owned businesses to face higher tax rates. Third, the effective tax rates are high for businesses in food and beverage services, which is female-dominated, and for transit services, which is male-dominated, due to the lack of a tax-free threshold for these sectors. The study finds that an alternative presumptive tax system with a single tax rate on turnover and an exemption for all low-revenue businesses would be simpler for tax assessment and more progressive. PublicationThe Gendered Impact of the COVID-19 Crisis on the Iranian Labor Market(World Bank, 2024-02-15)Despite sizable government interventions to sustain the economy, in the first year of the pandemic (2021/22), approximately 1 million jobs were lost in the Islamic Republic of Iran, and labor force participation contracted by 3 percentage points. Iranian women were the most affected: two out of three jobs lost between 2019/20 and 2020/21 were previously held by women. The gendered impact of the crisis contributed to widening Iranian women’s disadvantage in the labor market. Most importantly, the gains in female labor force participation that had slowly accumulated since 2011 vanished. Consistent with what is observed in other countries, women with young children were the most affected by the crisis. The combined effect of school closures and unequal intra-household allocation of care responsibilities, associated with prevailing gender norms, pushed Iranian women with children out of the labor force. Whether or not these trends will be reversed as the management of the COVID-19 pandemic is normalized and the economy recovers from the crisis remains an important policy question.