Impact of HIVAIDS on Agriculture: Macro and MicroEconomics Analyses

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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 societys 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
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 SurveysWho does AIDS affect?

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

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Household SurveysChange 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 Africas economic decline is closely
linked to its agricultural problems
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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?
• Lets 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