Physical Capital

Physical capital comprises the basic infrastructure and producer goods needed to support livelihoods.

• Infrastructure consists of changes to the physical environment that help people to meet their basic needs and to be more productive.

• Producer goods are the tools and equipment that people use to function more productively.

The following components of infrastructure are usually essential for sustainable livelihoods:

• Affordable transport;

• secure shelter and buildings;

• Adequate water supply and sanitation;

• Clean, affordable energy; and

• Access to information (communications).

Infrastructure is commonly a public good that is used without direct payment. Exceptions include shelter, which is often privately owned, and some other infrastructure that is accessed for a fee related to usage (e.g. toll roads and energy supplies). Producer goods may be owned on an individual or group basis or accessed through rental or ‘fee for service’ markets, the latter being common with more sophisticated equipment.

Infrastructure – such as roads, rails and telecommunications – are key to the integration of the remote areas where many of the poor live. Not only are people able to move between rural and urban areas more easily if the transport infrastructure is good, but they are also more likely to be better informed about opportunities (or the lack of them) in areas to which they are thinking of migrating, either temporarily or permanently.

Development of physical capital must be led by demand from the intended users. Without a perceived need for the service it is unlikely that the required infrastructure maintenance will be carried out, meaning that the service is likely to become unsustainable.