Throughout much of human history, poverty was often defined as inadequate income to buy a minimum amount of goods and services. For example, the World Bank defines the extreme poverty line as earning less than $2.15 per person per day.1 But poverty is also understood more broadly as insufficient basic capabilities to live in dignity. As stated by the United Nations Committee on Economic, Social and Cultural Rights:
”Poverty may be defined as a human condition characterized by sustained or chronic deprivation of the resources, capabilities, choices, security, and power necessary for the enjoyment of an adequate standard of living and other civil, cultural, economic, political and social rights.”2
The multidimensional nature of poverty has led to the development of indexes that combine multiple indicators into a single number. One example is the Multidimensional Poverty Measure (MPM) published by the World Bank.3 The MPM is composed of six indicators: consumption or income, educational attainment, educational enrollment, drinking water, sanitation, and electricity. The indicators are mapped into three dimensions of well-being: income, education, and basic infrastructure services. Note the inclusion of access to electricity is an explicit recognition of the fundamental connection of energy–and especially electricity–to well-being.
The broad geography of poverty mirrors other indicators of well-being. Countries in sub-Saharan Africa, Southeast Asia, and Latin America have the highest poverty rates. More than three-quarters of the populations in the Democratic Republic of the Congo, South Sudan, Chad, Niger, and Somalia live in poverty as defined by the MPM. Note that in high-income regions such as the United States and northern Europe, poverty is much lower but has not been eliminated. The MPM index for Sweden in 2020 indicates that 1 in 40 people live in poverty there.
A striking relationship exists between the MPM and energy use per capita. Extreme rates of poverty are associated with extremely low levels of energy use per capita (1- 10 GJ per capita). In these countries, there is insufficient energy to support a productive economy, build and operate good schools and hospitals, and supply clean water and clean cooking infrastructure.
However, relatively modest increases in energy use per capita are associated with dramatic decreases in poverty. In most countries where energy use per capita has reached 30 to 40 GJ per capita, poverty rates are in the single digits. One does not have to reach the rate of per capita energy use seen in Canada, France, or Australia to diminish poverty.
But poverty rates and energy use per capita do not always move together. For example, Zambia (12.2 GJ/capita) and Ghana (11.9 GJ/capita) use about the same amount of energy use per capita, but the poverty rate in Zambia is 65% compared to 23% in Ghana. Similarly, the poverty rates in El Salvador (4.3%) and Brazil (5.6%) are similar, but the average Brazilian (59 GJ/capita) uses more than twice as much energy as the average El Salvadorian (25 GJ/capita).
Beyond 40 to 50 per capita, increasing energy use does not affect poverty reduction. In the span of 40 to 700 GJ per capita per capita, there are dozens of countries with poverty rates below 5% of the population.
The data also reveal the same phenomenon of diminishing returns that we saw in the case of the Human Development Index and the Legatum Prosperity Index. At very low levels of energy use per capita, increases in energy use generate big leaps in poverty reduction. After a certain point, increases in energy use are associated with increasingly smaller reductions in poverty. Beyond 40 to 50 GJ per capita, increasing energy use does not affect poverty reduction. In the span of 40 to 700 GJ per capita per capita, there are dozens of countries with poverty rates below 5% of the population.
1 This wage is measured in terms of purchasing power parity (PPP), a rate of currency conversion that equalizes the purchasing power of different currencies by eliminating the differences in price levels between countriesLink
2 Poverty and the International Covenant on Economic, Social and Cultural Rights: statement adopted by the Committee on Economic, Social and Cultural Rights on 4 May 2001 https://digitallibrary.un.org/record/452397?ln=en
3 The Multidimensional Poverty Measure, World Bank, Link
