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Beating the poverty trap

Authors: Hochrainer-Stigler S, Pflug GC, Mechler R

Publication Year: 2011

Reference: Options (IIASA, Laxenburg, Austria), Winter 2011/2012

www.iiasa.ac.at/Options

Abstract

People unable to escape from poverty without external help are caught in what's commonly termed a "poverty trap." Even people who are not extremely poor can be forced into a state of inescapable poverty by extreme events like floods or drought. Disaster microinsurance can offer resources for poor households to overcome the immediate impacts of natural disasters, but recent IIASA research shows that microinsurance, when integrated with additional adaptive measures, is much more effective than microinsurance alone in preventing people from falling into a poverty trap in the first place.