Mapping poverty in rural China: how much does the environment matter?

A recently developed small area estimation technique is used to geographically derive detailed estimates of consumption-based poverty and inequality in rural Shaanxi, China. These estimates may be helpful for targeting since there is wide variability in poverty rates within Shaanxi but low levels of inequality within most counties and townships. We also investigate whether including environmental variables in the equation used to predict consumption and poverty improves upon typical approaches that only use household survey and census data. Ignoring environmental variables appears likely to produce targeting errors.