It is often difficult to assign a monetary value to the ecosystem goods and services on which the poor rely. Some have a market value when sold, but many are consumed locally or at home, and do not enter into the formal economy. In effect, the poor exist in an informal, and often unrecognized, economy. This has led to the systematic undervaluation of the assets of the poor and the underestimation of the potential benefits of sound ecosystem management.

Several studies have tried to delineate this “other economy” of the rural poor. A recent World Bank analysis, for example, found that the poor derive, on average, one-fifth of their household income from forests, mostly from nontimber products like wild foods, fuel, fodder, and thatch grass (Vedeld et al. 2004:27-29). Regretfully, much of the economic value of forests to the poor is missed in official state accountings of the forest economy.

Kenya is a typical example. By official estimate, the formal forest sector only generates about $2 million in earnings per year for sawn timber, pulp, and other industrial wood products. This is dwarfed by the value of the informal forestry sector, which contributes some $94 million in value to rural households in the form of charcoal, fuelwood, and the panoply of other forest products. And this does not include the recreational value of forests for leisure and tourism, which could come to $30 million or so. Since so much of this forest value accrues to the informal sector, most of its value is missed (Mogaka et al. 2001:17).

This undervaluation causes decision-makers to assign a lower priority to intact forest ecosystems as an economic asset than they should. For example, in spite of their place in rural livelihoods, woodfuels are generally not seriously considered in rural development plans and poverty reduction strategies, even though they provide the majority of the energy requirements of poor families on every continent (Arnold et al. 2003:25; IEA 2002:27).

A similar situation exists with small-scale fisheries. Despite the unquestioned importance of coastal and inland fisheries to the poor, small-scale fisheries are also an overlooked resource in most poverty alleviation strategies (Béné 2003:949). Again, this reflects the fact that fisheries income for the poor frequently escapes official notice, since fish are often locally consumed, and often at home. A survey in four rural Cambodian provinces found that, even though three-fourths of households engage in fishing as a primary or secondary occupation, fully half of them never sell any fish in the open market (Degen et al. 2000:1, 20).

If programs to alleviate poverty continue to undervalue the assets of the poor and misunderstand the dynamics of the informal economy, they will remain only partially effective. Better valuation and accounting of wild income, as well as income from home-based agriculture, is part of any sensible strategy to incorporate environmental income into poverty reduction programs.