The 21st Century climate challenge

intensify these pressures. In Ethiopia andMalawi, children are routinely taken outof school to engage in income-generatingactivities. In Bangladesh and India, childrenin poor households work on farms, tend cattleor engage in other tasks in exchange forfood during periods of stress. In Nicaraguain the aftermath of Hurricane Mitch, theproportion of children working rather thanattending school increased from 7.5 to 15.6percent in affected households. 38 It is notonly low-income countries that are affected.Household research in Mexico covering theperiod 1998–2000 shows an increase inchild labour in response to drought.• Health. Climate shocks are a potent threatto the poor’s most valuable assets—theirhealth and their labour. Deterioratingnutrition and falling incomes generatea twin threat: increased vulnerability toillness and fewer resources for medicalBox 2.5Distress sales in Hondurastreatment. Droughts and floods are oftencatalysts for wide-ranging health problems,including an increase in diarrhoea amongchildren, cholera, skin problems and acuteunder-nutrition. Meanwhile, capacity totreat old problems and cope with new onesis hampered by increased poverty. Researchfor this Report shows that in Central Mexicoduring the period 1998 to 2000, childrenunder five saw their chances of falling sickincreasing when they suffered a weathershock: the probability of illness increased by16 percent with droughts and by 41 percentwith floods. 39 During the 2002 food crisisin southern Africa, over half of householdsin Lesotho and Swaziland reported reducedhealth spending. 40 Reduced or delayedtreatment of diseases is an enforced choicethat can have fatal consequences.Forced trade-offs in areas such as nutrition,education and health have consequences thatClimate shocks are a potentthreat to the poor’s mostvaluable assets—theirhealth and their labour2Climate shocks: risk and vulnerability in an unequal worldClimate change will bring with it more intense tropical storms assea temperatures rise. The incremental risks will be borne acrosssocieties. However, poor households with limited risk managementcapacity will suffer the most. Evidence from Central America, whichwill be one of the worst affected regions, shows how storms canerode assets and exacerbate inequality.In contrast to droughts, which emerge as ‘slow-fuse’ crisesover months, storms create instantaneous effects. WhenHurricane Mitch tore into Honduras in 1998 it had an immediateand devastating impact. Data collected shortly after the hurricaneshowed that poor rural households lost 30–40 percent of theirincome from crop production. Poverty increased by 8 percent,from 69 to 77 percent at a national level. Low-income householdsalso lost on average 15–20 percent of their productive assets,compromising their prospects for recovery.Some 30 months after Hurricane Mitch a household surveyprovided insights into asset management strategies in a distresscoping environment. Almost half of all households reported aloss of productive assets. Not surprisingly, especially in a highlyunequal country like Honduras, the value of the loss increasedwith wealth: the average pre-Mitch asset value reported by thewealthiest quartile was 11 times greater than for the poorestquartile. However, the poorest quartile lost around one-third of thevalue of their assets, compared with 7 percent for the wealthiestquartile (see table).In the reconstruction effort, average aid to the richest 25percent amounted to US$320 per household—slightly more thandouble the level for the poorest quartile.Detailed analysis of post-shock asset recovery has drawnattention to the way in which Hurricane Mitch has reinforcedasset-based inequality. When asset value growth rates over thetwo-and-a-half years after Mitch were compared with the predictedtrend based on pre-Mitch data, it emerged that, while both rich andpoor were rebuilding their asset base, the net growth rate for thepoorest quartile was 48 percent below the predicted pre-Mitch trend,whereas for the richest quartile it was only 14 percent below.The rise in asset inequality has important implications.Honduras is one of the most unequal countries in the world, witha Gini index for income distribution of 54. The poorest 20 percentaccount for 3 percent of national income. Asset loss among thepoor will translate into diminished opportunities for investment,increased vulnerability and rising income inequality in the future.Hurricane Mitch devastated the assets of the poorShare of assets lost as a resultof Hurricane Mitch (%)Source: Carter et al. 2005.Poorest25%Second25%Third25%Wealthiest25%31.1 13.9 12.2 7.5Source: Carter et al. 2005; Morris et al. 2001.HUMAN DEVELOPMENT REPORT 2007/2008 87