1. 1 Impact of HIV/AIDS on Agriculture: Macro- and Micro-Economics Analyses Joel Negin Economics of Food and Agriculture April 20 th, 2004

2. 2 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

3. 3 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

4. 4 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

5. 5 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

6. 6 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”?

7. 7 Population size with and without AIDS, Botswana Source: “Impact of AIDS,” United Nations Secretariat, Population Division

8. 8 Population growth rate will slow faster with AIDS Source: “Impact of AIDS,” United Nations Secretariat, Population Division

9. 9 Drop in labor force will have an impact on economies Source: “Impact of AIDS,” United Nations Secretariat, Population Division

10. 10 Child Dependency 0 10 20 30 40 50 60 70 80 90 100 19501960197019801990200020102020203020402050 No. of children (0-14) per 100 adults (15-59) E. AsiaS. AsiaSub-Sah. AfricaWhole World Source: UN Population Division, World Population Prospects: The 2000 Revision

11. 11 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

12. 12 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

13. 13 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

14. 14 Household Surveys: Who does AIDS affect? Yamano and Jayne, “Measuring the Impacts of Prime-Age Adult Death on Rural Households in Kenya”:

15. 15 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.”

16. 16 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

17. 17 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

18. 18 Impact of HIV/AIDS on Households Source: “Impact of AIDS,” United Nations Secretariat, Population Division

19. 19 Impact of HIV/AIDS on Agriculture Source: “Impact of AIDS,” United Nations Secretariat, Population Division

20. 20 Conclusion: Africa’s economic decline is closely linked to its agricultural problems

21. 21 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

22. 22 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?

23. 23 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