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Environmental Dependence and Economic Vulnerability in Rural Nepal

Author

Listed:
  • Resham Thapa-Parajuli

    (Central Department of Economics, Tribhuvan University, Kirtipur 44618, Nepal)

  • Sanjeev Nhemhafuki

    (Central Department of Economics, Tribhuvan University, Kirtipur 44618, Nepal)

  • Bipin Khadka

    (Central Department of Economics, Tribhuvan University, Kirtipur 44618, Nepal)

  • Roja Pradhananga

    (Central Department of Economics, Tribhuvan University, Kirtipur 44618, Nepal)

Abstract

This article examines the relationship between environmental income dependence and household vulnerability in rural settings. Using household-level livelihood data from the Poverty Environment Network (PEN) dataset of Nepal, we construct a household vulnerability index and analyze its relationship with environmental dependence, measured as the share of environmental income in total income, while controlling for other variables. The findings reveal that higher environmental dependence significantly increases household vulnerability. In contrast, household debt helps mitigate vulnerability by providing financial support and enabling productive investments. However, high dependency ratios and exposure to shocks exacerbate vulnerability by limiting income generation and destabilizing livelihoods. Policy measures such as promoting economic diversification and social safety net programs could reduce environmental dependence and mitigate household vulnerability in rural Nepal. Furthermore, providing timely access to credit during hardships and addressing unforeseen shocks could enhance household resilience.

Suggested Citation

  • Resham Thapa-Parajuli & Sanjeev Nhemhafuki & Bipin Khadka & Roja Pradhananga, 2025. "Environmental Dependence and Economic Vulnerability in Rural Nepal," Sustainability, MDPI, vol. 17(6), pages 1-22, March.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:6:p:2434-:d:1609263
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    References listed on IDEAS

    as
    1. Cesar Calvo & Stefan Dercon, 2005. "Measuring Individual Vulnerability," Economics Series Working Papers 229, University of Oxford, Department of Economics.
    2. Angelsen, Arild & Jagger, Pamela & Babigumira, Ronnie & Belcher, Brian & Hogarth, Nicholas J. & Bauch, Simone & Börner, Jan & Smith-Hall, Carsten & Wunder, Sven, 2014. "Environmental Income and Rural Livelihoods: A Global-Comparative Analysis," World Development, Elsevier, vol. 64(S1), pages 12-28.
    3. Philip Antwi-Agyei & Andrew Dougill & Evan Fraser & Lindsay Stringer, 2013. "Characterising the nature of household vulnerability to climate variability: empirical evidence from two regions of Ghana," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 15(4), pages 903-926, August.
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