Environmental Dependence and Economic Vulnerability in Rural Nepal
Abstract
1. Introduction
2. Materials and Methods
2.1. Household Vulnerability Index
2.2. Household Vulnerability and Environmental Dependence
2.3. Sources of Data and Variables Used
3. Results and Discussion
3.1. Nature of the Household Vulnerability
3.2. Environmental Dependence and Vulnerability
3.3. Discussion
4. Conclusions and Recommendations
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
Appendix A
Appendix B. Diagnostic Test Results
Appendix B.1. Lagrange Multiplier Test-(Honda) Time Effects Test
Appendix B.2. F Test for Individual Effects
Appendix B.3. Lagrange Multiplier Test-(Breusch-Pagan)
Appendix B.4. Hausman Test
Model | Time FE Test | BP-LM Test | Hausman Test | |||
---|---|---|---|---|---|---|
Normal | p-Value | Chi² | p-Value | Chi² | p-Value | |
1 | 16.731 | 2.2 | 11.208 | 0.0008 | 0.9993 | 0.3175 |
2 | 16.741 | 2.2 | 11.141 | 0.0008 | 0.9938 | 0.6084 |
3 | 16.828 | 2.2 | 7.670 | 0.0056 | 4.4754 | 0.2145 |
4 | 16.864 | 2.2 | 0.277 | 0.5989 | 3.8450 | 0.4274 |
5 | 17.081 | 2.2 | 1.504 | 0.2201 | 8.4915 | 1.0000 |
6 | 14.916 | 2.2 | 1.504 | 0.2201 | 7.8704 | 1.0000 |
7 | 14.930 | 2.2 | 1.504 | 0.2201 | 3.2437 | 1.0000 |
Year | 2006 | 2009 | 2012 | ||||||
---|---|---|---|---|---|---|---|---|---|
District | Chitwan | Kaski | Mustang | Chitwan | Kaski | Mustang | Chitwan | Kaski | Mustang |
Human Capital | |||||||||
hhh_age | 50.36 (14.15) | 50.14 (14.57) | 52.89 (13.52) | 52.13 (13.75) | 52.00 (13.39) | 54.12 (13.78) | 52.24 (17.20) | 53.52 (13.71) | 55.24 (14.17) |
hhh_edu | 3.08 (4.06) | 6.29 (4.97) | 3.05 (3.98) | 2.93 (4.06) | 6.07 (5.23) | 2.94 (3.78) | 2.91 (4.33) | 6.91 (5.07) | 2.90 (4.08) |
max_hh_edu | 8.44 (3.91) | 10.76 (2.90) | 7.64 (3.32) | 9.70 (3.63) | 11.18 (3.94) | 8.04 (3.93) | 9.89 (4.44) | 11.91 (4.03) | 8.22 (3.87) |
Physical Capital | |||||||||
implements | 4660.32 (11,275.51) | 14,057.03 (16,860.40) | 10,360.32 (19,629.35) | 10,153.80 (23,970.96) | 30,700.04 (46,128.42) | 15,135.16 (25,508.99) | 22,165.29 (38,089.26) | 48,959.03 (70,582.61) | 21,466.58 (27,566.06) |
livestock | 18,532.68 (15,428.31) | 26,573.08 (20,411.58) | 80,387.77 (224,589.10) | 43,936.83 (39,679.86) | 35,690.11 (35,760.04) | 56,165.26 (178,639.73) | 38,993.71 (34,330.39) | 34,635.85 (39,306.64) | 34,114.52 (39,335.73) |
land | 2027.47 (6367.27) | 1187.00 (1013.02) | 2940.39 (2789.36) | 915.91 (765.38) | 1491.41 (2060.26) | 2235.09 (3738.40) | 1041.46 (1136.88) | 1374.96 (2253.95) | 1921.22 (1892.77) |
Social Capital | |||||||||
hh_caste | 0.58 (0.50) | 0.89 (0.32) | 0.49 (0.50) | 0.66 (0.48) | 0.98 (0.14) | 0.58 (0.50) | 0.50 (0.50) | 0.86 (0.50) | 0.59 (0.42) |
Financial Capital | |||||||||
bank_saving | 879.58 (2661.50) | 9663.83 (26,812.59) | 31,897.65 (79,933.66 ) | 1911.63 (6126.69) | 11,937.72 (31,025.90) | 24,536.06 (59,338.85) | 11,953.55 (31,763.88) | 25,410.64 (66,932.36) | 48,051.24 (104,495.00) |
jewellery | 0.00 (0.00) | 0.00 (0.00) | 31,662.91 (67,846.57) | 4396.88 (6965.54) | 20,485.87 (16,594.27) | 38,598.35 (79,440.96) | 21,477.20 (23,620.48) | 51,605.95 (48,463.66) | 54,132.35 (112,328.06) |
Livelihood | |||||||||
n_livelihoods | 4.81 (0.97) | 4.72 (0.91) | 4.56 (0.93) | 4.93 (1.02) | 4.74 (0.91) | 5.11 (0.84) | 4.60 (0.98) | 4.78 (0.90) | 4.60 (0.98) |
Household Vulnerability | |||||||||
HVI | 0.61 (0.05) | 0.62 (0.04) | 0.64 (0.05) | 0.61 (0.05) | 0.62 (0.04) | 0.63 (0.05) | 0.61 (0.05) | 0.62 (0.05) | 0.63 (0.05) |
Year/ District | 2006 | 2009 | 2012 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Chainpur | Hemja | Kunjo | Lete | Chainpur | Hemja | Kunjo | Lete | Chainpur | Hemja | Kunjo | Lete | |
HVI | 0.62 (0.05) | 0.62 (0.04) | 0.65 (0.04) | 0.63 (0.05) | 0.61 (0.05) | 0.62 (0.04) | 0.64 (0.04) | 0.63 (0.05) | 0.61 (0.05) | 0.62 (0.05) | 0.64 (0.05) | 0.62 (0.05) |
Dependent Variable: Household Vulnerability | ||||
---|---|---|---|---|
(1) | (2) | (3) | (4) | |
Env. Dependence | 0.108 *** | 0.141 *** | 0.141 *** | 0.141 *** |
(0.013) | (0.014) | (0.014) | (0.014) | |
Dependency ratio | 0.009 *** | 0.009 *** | 0.009 *** | |
(0.003) | (0.003) | (0.003) | ||
Shock | 0.0002 | 0.0002 | 0.0002 | |
(0.004) | (0.004) | (0.004) | ||
Debt | −0.004 ** | −0.004 ** | −0.004 ** | |
(0.002) | (0.002) | (0.002) | ||
Constant | 0.683 *** | 0.694 *** | 0.694 *** | |
(0.007) | (0.008) | (0.008) | ||
Year-fixed effects | No | Yes | Yes | Yes |
District-fixed effects | No | Yes | Yes | Yes |
VDC-fixed effects | Yes | Yes | Yes | Yes |
Observations | 1245 | 1245 | 1245 | 1245 |
0.049 | 0.183 | 0.183 | 0.174 | |
Adjusted | 0.048 | 0.177 | 0.177 | 0.168 |
Dependent Variable: Household Vulnerability | |||||||
---|---|---|---|---|---|---|---|
(1) | (2) | (3) | (4) | (5) | (6) | (7) | |
Env. Dependence | 0.106 *** | 0.104 *** | 0.103 *** | 0.128 *** | 0.131 *** | 0.131 *** | 0.140 *** |
(0.014) | (0.014) | (0.014) | (0.014) | (0.014) | (0.014) | (0.014) | |
Dependency ratio | 0.009 *** | 0.009 *** | 0.008 ** | 0.008 ** | 0.008 ** | 0.009 *** | |
(0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | ||
Shock | 0.005 | 0.005 | 0.005 | 0.005 | 0.0002 | ||
(0.004) | (0.004) | (0.004) | (0.004) | (0.004) | |||
Debt | −0.006 *** | −0.004 * | −0.004 * | −0.004 ** | |||
(0.001) | (0.002) | (0.002) | (0.002) | ||||
Year-fixed effects | No | No | No | No | Yes | Yes | Yes |
District-fixed effects | No | No | No | No | No | Yes | Yes |
VDC-fixed effects | No | No | No | No | No | No | Yes |
Observations | 1245 | 1245 | 1245 | 1245 | 1245 | 1245 | 1245 |
0.047 | 0.053 | 0.054 | 0.075 | 0.076 | 0.076 | 0.174 | |
Adjusted | 0.044 | 0.050 | 0.050 | 0.071 | 0.071 | 0.071 | 0.168 |
Variable | Description | Expected Sign (+/−) |
---|---|---|
HH head’s educational attainment | HH head’s educational attainment enhances access to information, improves decision-making, and increases income opportunities, enabling better risk management and resilience, thereby reducing household vulnerability [27,29,60,61]. | Higher educational level (−) |
Highest educational attainment by an HH member | Family members with higher education levels contribute to increased HH income, improved access to resources and better adaptive capacity, thereby reducing overall household vulnerability [28,29,37]. | Maximum (−) |
Implements Value | The total value of implements (Cars, Trucks, Motorbike, Plough, etc.) reflects household assets that enhance mobility, productivity, and income opportunities, reducing vulnerability by improving resilience and market access [27,61]. | Higher Value (−) |
Livestock Value | Total value of livestock (all types) in Rs. serves as a key household asset, providing income, food security, and a financial safety net, thereby reducing vulnerability and enhancing resilience [28,60]. | Higher Value (−) |
Land area | The total area of land owned by the household (sq. m) represents a crucial asset that supports livelihood, food security, and income generation, enhancing economic stability and reducing vulnerability [28,61]. | Greater land area (−) |
HH Caste | Households belonging to the largest caste in the village (=1) indicate social positioning and access to community resources, networks, and opportunities, potentially reducing vulnerability through social capital and support systems [28,62]. | Largest caste (−) |
Bank saving | Household savings in banks or recognized financial institutions enhance financial security, facilitate access to credit, and improve resilience to economic shocks, reducing household vulnerability [63]. | Greater saving (−) |
Jewellery | Household savings in the form of non-productive assets serve as a financial reserve, providing liquidity during emergencies, but with limited income-generating potential compared to productive assets [64]. | Greater value (−) |
Livelihood | The count of livelihoods of the household represents the household’s economic diversification. A higher number of income sources enhances financial stability, reduces dependency on a single sector, and improves resilience to economic shocks, thereby lowering vulnerability [28,37]. | Diversified (−) |
Variable | Description | Expected Sign (+/−) |
---|---|---|
Environmental Dependence | The ratio of Environmental Income to Total Income of the Household Reflects a household’s reliance on natural resources for livelihood. Higher environmental dependence is expected to increase household vulnerability, as it indicates greater exposure to environmental risks, resource depletion, and economic instability, making households more susceptible to shocks [8,65]. | Greater dependence (+) |
Dependency Ratio | Ratio of Dependent to Working Adult Members of the Household Represents the economic burden on working members. A higher dependency ratio increases household vulnerability by straining resources, limiting savings, and reducing the household’s ability to cope with financial shocks [29,34,66,67]. | Higher ratio (−) |
Debt | Total Household Debt (Rs.) Indicates financial obligations that may constrain household resources. Higher debt levels increase vulnerability by reducing disposable income, limiting investment in productive assets, and heightening financial stress during economic shocks [68]. | Higher value of debt (−) |
Shock | Indicates whether the household has faced adverse events. Experiencing shocks increases vulnerability by disrupting income, depleting assets, and weakening the household’s ability to recover and build resilience [61,69,70]. | Experienced shock (+) |
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Variables | Construct |
---|---|
HHH_age | Household head age in years |
HHH_edu | Education attainment of household head |
Max_hh_edu | Highest educational attainment by a household member |
Durables | Total monetary value of durables goods such as: Car; Trucks; Motorbike; Plough etc. owned by the household (in NRs.) |
Livestock | Total value of livestock (of all types) in Rs. |
Land | Total area of land owned by the household in sq. m |
HH_caste | Household belonging to the biggest caste in the village (=1) |
Bank_saving | Households savings kept in banks or other recognized financial institutions |
Jewellery | Households’ saving in the form of non-productive assets, such as Jewellery. |
N_livelihoods | Count of livelihoods of the households |
Variables | Construct |
---|---|
env_dependence | This environmental dependence variable is considered one of the key factors contributing to household vulnerability. It is measured as the ratio of environmental income to the total income of each household. |
dependency_ratio | The ratio of total dependent family members to working adult members in the household is calculated. The dependent group includes children under 15 years and senior citizens over 60 years. |
debt | The amount of outstanding debt of a household, measured in rupees. |
shock | The survey asks about various shocks experienced by the household, including crop failure, illness, the loss of an adult family member, land dispossession, livestock depletion, loss of other assets, unemployment, and expenses from significant social events. This is a binary indicator, where 1 represents a household experiencing shocks and 0 otherwise. |
Year/ District | 2006 | 2009 | 2012 | ||||||
---|---|---|---|---|---|---|---|---|---|
Chitwan | Kaski | Mustang | Chitwan | Kaski | Mustang | Chitwan | Kaski | Mustang | |
HVI | 0.62 (0.05) | 0.62 (0.04) | 0.64 (0.05) | 0.61 (0.05) | 0.62 (0.04) | 0.63 (0.05) | 0.61 (0.05) | 0.62 (0.05) | 0.63 (0.05) |
Year | 2006 | |||
---|---|---|---|---|
District | Chitwan | Kaski | Mustang | Mustang |
VDC | Chainpur | Hemja | Kunjo | Lete |
HVI | 0.62 (0.05) | 0.62 (0.04) | 0.64 (0.05) | 0.64 (0.05) |
env_dependence | 0.13 (0.19) | 0.16 (0.20) | 0.40 (0.23) | 0.29 (0.23) |
dependency_ratio | 0.66 (0.62) | 0.73 (0.76) | 0.88 (0.85) | 0.69 (0.63) |
debt | 12,234.42 (19,246.56) | 25,896.24 (47,371.72) | 17,792.57 (19,055.29) | 31,217.37 (69,576.58) |
shock | 1.75 (1.66) | 0.55 (1.07) | 2.48 (1.24) | 1.97 (1.2) |
Year | 2009 | |||
HVI | 0.61 (0.05) | 0.62 (0.04) | 0.64 (0.04) | 0.63 (0.05) |
env_dependence | 0.14 (0.23) | 0.13 (0.15) | 0.19 (0.30) | 0.21 (0.59) |
dependency_ratio | 0.58 (0.56) | 0.63 (0.63) | 0.77 (0.64) | 0.68 (0.69) |
debt | 18,249.69 (36,642.37) | 46,654.49 (72,705.08) | 14,887.21 (16,156.9) | 20,616.94 (41,324.71) |
shock | 0.24 (0.65) | 0.59 (0.96) | 0.65 (1.00) | 1.16 (1.14) |
Year | 2012 | |||
HVI | 0.61 (0.05) | 0.62 (0.05) | 0.64 (0.05) | 0.62 (0.05) |
env_dependence | 0.15 (0.20) | 0.14 (0.25) | 0.78 (3.16) | 0.27 (0.25) |
dependency_ratio | 0.51 (0.60) | 0.53 (0.57) | 0.77 (0.82) | 0.49 (0.56) |
debt | 37,221.48 (87,094.30) | 64,572.68 (133,587.15) | 24,507.84 (33,242.18) | 19,864.55 (27,238.68) |
shock | 0.77 (1.01) | 0.31 (0.66) | 0.35 (0.72) | 0.24 (0.59) |
Dependent Variable: Household Vulnerability | |||||||
---|---|---|---|---|---|---|---|
(1) | (2) | (3) | (4) | (5) | (6) | (7) | |
Env. Dependence | 0.108 *** | 0.106 *** | 0.104 *** | 0.129 *** | 0.132 *** | 0.131 *** | 0.141 *** |
(0.013) | (0.013) | (0.013) | (0.014) | (0.014) | (0.014) | (0.014) | |
Dependency ratio | 0.010 *** | 0.010 *** | 0.008 *** | 0.009 *** | 0.008 ** | 0.009 *** | |
(0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | ||
Shock | 0.009 ** | 0.009 ** | 0.009 ** | 0.005 | 0.0002 | ||
(0.004) | (0.004) | (0.004) | (0.004) | (0.004) | |||
Debt | −0.006 *** | −0.004 * | −0.004 * | −0.004 ** | |||
(0.001) | (0.002) | (0.002) | (0.002) | ||||
Constant | 0.683 *** | 0.678 *** | 0.675 *** | 0.667 *** | 0.665 *** | 0.675 *** | 0.694 *** |
(0.007) | (0.007) | (0.007) | (0.007) | (0.008) | (0.009) | (0.008) | |
Year-fixed effects | No | No | No | No | Yes | Yes | Yes |
District-fixed effects | No | No | No | No | No | Yes | Yes |
VDC-fixed effects | No | No | No | No | No | No | Yes |
Observations | 1245 | 1245 | 1245 | 1245 | 1245 | 1245 | 1245 |
0.049 | 0.057 | 0.060 | 0.080 | 0.081 | 0.086 | 0.183 | |
Adjusted | 0.048 | 0.055 | 0.058 | 0.077 | 0.077 | 0.081 | 0.177 |
Dependent Variable: Household Vulnerability | |||||||
---|---|---|---|---|---|---|---|
(1) | (2) | (3) | (4) | (5) | (6) | (7) | |
Env. Dependence | 0.106 *** | 0.104 *** | 0.103 *** | 0.128 *** | 0.132 *** | 0.131 *** | 0.141 *** |
(0.014) | (0.013) | (0.014) | (0.014) | (0.014) | (0.014) | (0.014) | |
Dependency ratio | 0.009 *** | 0.009 *** | 0.008 *** | 0.008 *** | 0.008 ** | 0.009 *** | |
(0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | ||
Shock | 0.006 | 0.006 | 0.006 | 0.005 | 0.0002 | ||
(0.004) | (0.004) | (0.004) | (0.004) | (0.004) | |||
Debt | −0.006 *** | −0.004 * | −0.004 * | −0.004 ** | |||
(0.001) | (0.002) | (0.002) | (0.002) | ||||
Constant | 0.684 *** | 0.679 *** | 0.677 *** | 0.669 *** | 0.666 *** | 0.675 *** | 0.694 *** |
(0.008) | (0.008) | (0.008) | (0.008) | (0.008) | (0.009) | (0.008) | |
Year-fixed effects | No | No | No | No | Yes | Yes | Yes |
District-fixed effects | No | No | No | No | No | Yes | Yes |
VDC-fixed effects | No | No | No | No | No | No | Yes |
Observations | 1245 | 1245 | 1245 | 1245 | 1245 | 1245 | 1245 |
0.047 | 0.054 | 0.056 | 0.076 | 0.077 | 0.086 | 0.183 | |
Adjusted | 0.046 | 0.052 | 0.053 | 0.073 | 0.073 | 0.081 | 0.177 |
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Thapa-Parajuli, R.; Nhemhafuki, S.; Khadka, B.; Pradhananga, R. Environmental Dependence and Economic Vulnerability in Rural Nepal. Sustainability 2025, 17, 2434. https://doi.org/10.3390/su17062434
Thapa-Parajuli R, Nhemhafuki S, Khadka B, Pradhananga R. Environmental Dependence and Economic Vulnerability in Rural Nepal. Sustainability. 2025; 17(6):2434. https://doi.org/10.3390/su17062434
Chicago/Turabian StyleThapa-Parajuli, Resham, Sanjeev Nhemhafuki, Bipin Khadka, and Roja Pradhananga. 2025. "Environmental Dependence and Economic Vulnerability in Rural Nepal" Sustainability 17, no. 6: 2434. https://doi.org/10.3390/su17062434
APA StyleThapa-Parajuli, R., Nhemhafuki, S., Khadka, B., & Pradhananga, R. (2025). Environmental Dependence and Economic Vulnerability in Rural Nepal. Sustainability, 17(6), 2434. https://doi.org/10.3390/su17062434