Child-sensitive social protection (CSSP) is heralded as an investment in future human capital, based on the premise that changing poor families’ behaviours can interrupt cycles of poverty reproduction. However, funding for CSSP may come from extractive activities with high environmental costs for the same families that social programmes aim to support. Reflecting on this contradiction in Peruvian Amazonia, the study explores the tensions between State and parental understandings of impoverishment in an Indigenous village impacted by oil extraction. The findings are twofold: (i) although families are sceptical of CSSP’s potential to enhance children’s prospects, they embrace it as a form of compensation for resource dispossession. (ii) CSSP may fail to lift children out of poverty if it overlooks how environmental degradation engenders intergenerational impoverishment. The article makes a case for the adoption of an environmental justice lens into CSPP, emphasising the need for a more holistic understanding of intergenerational poverty.