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Impact of HIV/AIDS on Agriculture: Macro- and Micro-Economics Analyses

Joel Negin

Economics of Food and Agriculture

April 20th, 2004

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Background

• Based on the stats and my time working in the HIV/AIDS field in South Africa and Botswana, it is clear that the epidemic is wreaking havoc on lives and economies in the region

• HIV/AIDS is not only a medical issue:

– It impacts social networks, families, businesses, labor, household decisions, government policy, security

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Rural agriculture has been dismissed in many of the economic growth models

• Traditional growth models see agriculture as something that is quickly moved out of and is not seminal to the economic growth of a developing nation– But from 1950s, economists have seen agriculture

as the lagging sector, a source of “surplus” labor as formalized by W.A. Lewis (1954) and others. Growth models focused on savings and investment, then on innovation and on institutions, both mainly non-farm.

– The puzzling persistence of extreme poverty may lead to a rediscovery of farm productivity as an engine of non-farm growth

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The impact of HIV/AIDS on GDP Growth

• A number of people have tried to assess the impact of HIV/AIDS on macro-economic growth

And yet, they have generally assessed that HIV/AIDS will not have a major impact of GDP growth

• “There is more flash than substance to the claim that AIDS impedes national economic (income) growth,” Bloom and Mahal

• “Our results have shown that letting the HIV/AIDS prevalence rate grow without control would have macroeconomic impacts that are non-negligible,” Robalino, Voetberg, and Picazo

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The impact of HIV/AIDS on GDP Growth• “AIDS prevalence increased more in those countries with

characteristics that are associated with slower growth, and not, apparently, to AIDS itself having an independent negative influence on economic growth.” – Bloom and Mahal

Source: Bloom and Mahal, “Does the AIDS epidemic threaten economic growth?”, Journal of Econometrics

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The Demographic Transition

•The “demographic transition” is society’s shift from high to low birth & death rates, and then having more working-age adults

•How will AIDS impact the “demographic transition”?

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Population size with and without AIDS, Botswana

Source: “Impact of AIDS,” United Nations Secretariat, Population Division

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Population growth rate will slow faster with AIDS

Source: “Impact of AIDS,” United Nations Secretariat, Population Division

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Drop in labor force will have an impact on economies

Source: “Impact of AIDS,” United Nations Secretariat, Population Division

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Child Dependency

0

10

20

30

40

50

60

70

80

90

100

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

No.

of c

hild

ren

(0-1

4)pe

r 10

0 ad

ults

(15

-59)

E. Asia S. Asia Sub-Sah. Africa Whole World

Source: UN Population Division, World Population Prospects: The 2000 Revision

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If Macroeconomic studies are not successfully analyzing the impact of the epidemic, how should we

assess the impact of HIV/AIDS• Agriculture and rural economies are not really taken into account in

macroeconomic growth studies– “AIDS-related output losses, income losses, and medical

expenditures will be relatively low, corresponding to the relatively low productivity, earnings, and utilization of medical services among the poor,” Bloom and Mahal

• The poor are underrepresented in macroeconomic measures such as GDP– Yet, it is the poor and rural and those involved in agriculture who

are most impacted by the HIV/AIDS epidemic

MICROECONOMIC HOUSEHOLD STUDIES

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Household Surveys

• So we move into microeconomic studies to try to understand the impact the epidemic is having on the ground– “From an economic point of view, the primary

impact of the disease manifests mainly among individual economic agents, i.e. individuals and households,” Booysen and Bachmann

– Takes us back to the liminal decisions people have to make

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Rural Household Decision Making from• Dercon and Krishnan.

– Poor households cannot or do not allocate nutrition within the household leading to increased vulnerability for poor women

– Households are not pareto-efficient

• Fafchamps and Quisumbing– Education increases income– With AIDS, women are forced to leave school to care for

ailing family members, less likely to go to school

• Rwanda Household study of how households cope with illness– Sell assets, renting land – short-term responses but hurt

long-term survival prospects

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Household Surveys:Who does AIDS affect?

•Yamano and Jayne, “Measuring the Impacts of Prime-Age Adult Death on Rural Households in Kenya”:

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Household Surveys:Change in Crop Cultivation

• Yamano and Jayne:

– Male head of HH death leads to a 68% reduction in net value of HH crop production

– Female head of HH death causes decline in cereal cultivation while male death leads to reduction in cash crops

Source: Yamano and Jayne, “Measuring the Impacts of Prime-Age Adult Death on Rural Households in Kenya.”

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Nutrition and HIV

• People who are HIV positive have greater nutritional needs (proteins, etc.) while being able to work less– Cycle of needing

more, working / contributing less

– Need higher nutrition foods but higher nutrition foods need more labour

Source: Gillespie, Haddad, and Jackson, “HIV/AIDS, Food and Nutrition Security,” International Food Policy Research Institute

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Rural areas and women are most affected

• Less health care infrastructure• Loss of adult labor, skills, and intergenerational

learning• People coming home to die increases number of

dependents in the home

• Women are most impacted… access to land, to resources, time, money, dependents– Studies have documented that rural women

work 12-13 hours a week more than men – Women comprise about 47 per cent of the

total agricultural labor force

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Impact of HIV/AIDS on Households

Source: “Impact of AIDS,” United Nations Secretariat, Population Division

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Impact of HIV/AIDS on Agriculture

Source: “Impact of AIDS,” United Nations Secretariat, Population Division

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Conclusion: Africa’s economic decline is closely linked to its agricultural problems

FAO Index of Net Food Output per Capita, 1961-2000

80

90

100

110

120

130

140

150

160

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

World E SE Asia South Asia Sub-Sahara

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Conclusion

• HIV/AIDS is destroying sustainability of rural agriculture and livelihoods– If Sachs is right about Malthusian trap…– If the article in week 11 by Gollin, Parente and

Rogerson on the need for a minimum consumption level of food for economic growth is right…

– Can Africa overcome its agricultural problems without addressing the scourge of AIDS?

HIV/AIDS is going to create a poverty trap for developing countries in sub-Saharan Africa

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Policy Prescriptions• Women-only community organizations,

savings groups• Increase security of land tenure• Give subsidies to families that take in

orphans• Agricultural technology to increase yields• Encourage women to farm cash crops, not

just cereals• Give access to credit to families who lose

head of household• Provide ARVs – what will this do?

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Additional Thoughts

• Where are the studies on the economic impact of malaria or measles in Africa?

– Is there too much focus on AIDS?

– Let’s use this understanding of the impact of poverty and disease on micro- and macro-economics to address health more generally

• Clinics, physicians, research, drugs, political will