Poverty, risk and informal insurance in remote Papua New Guinea

Abstract

This thesis examines aspects of poverty, risk and coping mechanisms in remote rural Papua New Guinea. The three essays draw on a unique cross sectional data set, collected in February 2012, from a study area in Obura Wonenara District in Eastern Highlands Province. The essays contribute to filling a gap in the literature on poverty in Papua New Guinea, which, to date, has had limited household studies of poverty in remote areas, and has largely neglected the role of a range of risks and their relationships to poverty as well as the role of informal insurance networks in responding to different kinds of risks. The essays also add to the scarce international literature on poverty in remote locations, and extend the international literature on informal insurance by studying both inter-household and intra-household transfers, and examining the extent of external support networks. The results show that the study area households face extraordinarily high levels of risks and are very weakly networked. Geospatial factors interact with inadequate government services, low levels of human capital, a lack of markets and underdeveloped family and social capital to contribute to the community members living in poverty, with limited household assets. Even those with higher asset levels are likely to be animal-based protein deficient. Multiple market failures mean that coping mechanisms are limited and there is an excessive reliance on consumption-reducing strategies. Households are too poor to enter into extensive informal insurance networks, which are underdeveloped both between and within households. Only a handful of households have potential insurers outside of the study area. The poorest within the study area are relatively geographically disadvantaged,more food insecure, more exposed to serious risk, more reliant on consumption reducing strategies and less insured through social networks. However, while relative poverty within the study area is certainly real, the main conclusion from the research is that nearly all of the people living in the study area are poor and extremely vulnerable to suffering from irreversible harm due to malnutrition.