Income and the Environment in Rural India: Is There a Poverty Trap?

We study the relationships between rural income distributions and changes in environmental conditions in southern, western and central India between 1994-95 and 2000-01. Other than the relatively rich, we find that all income strata benefit from an improved environment, and intermediate expenditure households benefit more than the very poor in absolute terms. Higher median consumption expenditures and "richness" are estimated to increase environmental decline, but we do not find a significant impact of income poverty on local environmental health. The results do not support the "poverty trap" conjecture, with environmental degradation driving expenditure reductions that promote offsetting aforestation (which benefits the poor).