Small Area Estimation of Poverty

Preface and AcknowledgementsThis report is a collaborative effort of Governmentof Nepal-Central Bureau of Statistics (CBS), and TheWorld Bank Group. It presents the result of small areaestimation techniques to further improve and extendthe sample survey estimates of poverty. The NepalLiving Standard Survey III presented the estimatesof poverty for 12 analytical domains only. However,the demand for poverty estimates for administrativeregions smaller than an analytical domain is increasingbut implementing a sample survey which providesestimates at this great detail is prohibitively expensive.In this context, an advanced and cost effective statisticaltechnique called Small Area Estimation (SAE) provedto be a boon for Nepal. This method gives estimatesof poverty for smaller areas by mixing the results oflatest results of living standard survey and PopulationCensus.The CBS and its development partners (The WorldBank and the World Food Program) published ilakalevel poverty maps in 2006 using the SAE techniquecombining NLSS 2003-04, NDHS 2001 and Census2001. Village Development Committee (VDC) levelpoverty estimates are highly demanded by planners,researchers and development partners. This reportpresents the poverty estimates at subilaka level(target area) using SAE technique. The report containspoverty incidence (p0 or FGT0), poverty gap (p1or FGT1) and squared poverty gap (p2 or FGT2) foreach of 75 districts, 976 Ilakas and 2344 target areasincluding all municipalities individually. Though allVDC level poverty estimates are not produced becauseof imprecise nature of such estimates with smallsample number of households inhabiting same VDC,confidence intervals are provided for all 3973 VDCsand municipalities.From the World Bank, the general direction wasprovided by Vinaya Swaroop, Sector Manager andTahseen Sayed, country Manager, Nepal. PeterLanjouw, Marleen Marra, Prem Sangrula and SrinivasanThirumalai (Task Team Leader) worked with a team ofCBS staff.CBS staff from the Household Survey, Population, Dataprocessing & GIS and Prices sections worked togetherto produce the report under the general guidanceof Bikas Bista, Deputy Director General of CBS. Thecore team of CBS staff comprised of Dilli Raj Joshi,Devendra Karanjit, Jay Kumar Sharma and GyanendraBajracharya (Directors), Dinesh Bhattarai, Lok BahadurKhatri, Bed Prasad Dhakal, Binod Saran Acharya, BikasMalla, and Tulsi Paudel (Statistics Officers).GIS help for creation of new shapes and visualizationwas ably provided by Brian Blankespoor (The WorldBank). Chris Gerrard, and Minh Cong Nguyen(The World Bank) helped immensely with Tableaucustomization for developing the online query tool. Theteam would like to thank peer reviewers Professor ChrisElbers, Professor Pushkar Bajracharya, T.S. Bastola andMaria Eugenia Genoni. Also, the team would like tothank the participants of the review meeting held at theNational Planning Commission and a meeting attendedby researchers and policy makers in Nepal.The full report and the online query and visualizationtool can be accessed from the website of the CBS athttp://www.cbs.gov.np. Also, the entire report andoffline query tool is available in the CD attached withthis book.Uttam Narayan MallaDirector GeneralCentral Bureau of Statisticsiii