Water Works: The Economic Impact of Water Infrastructure

Type Working Paper - Harvard Environmental Economics Program, Discussion Paper
Title Water Works: The Economic Impact of Water Infrastructure
Issue 12-35
Publication (Day/Month/Year) 2012
URL http://heep.hks.harvard.edu/files/heep/files/dp35_meeks.pdf
Billions of hours are spent each year on water collection in developing countries. This paper explores whether improvements in water technology enable changes in household time allocation patterns and, thereby, productivity gains. To do so, it exploits differences in the timing of shared public water tap construction across Kyrgyz villages to provide evidence on the extent to which such changes in time allocation are aided by access to better water infrastructure, a technology that decreases the labor intensity of home production. Households in villages that receive this labor-saving technological improvement are, on average, 15% more likely to be within 200 meters of their water source. This, in turn, reduced the time intensity of home production activities that are impacted by water, such as bathing, going to the doctor, and caring for children. Village-level incidence of acute intestinal infections amongst children fell by 30%. Although adults themselves show no signs of improved health, they benefit from the reductions in time spent caring for sick children. These reductions in the time intensity of home production allowed for greater time allocated towards leisure activities and market labor, specifically work on the household farm. As a result, average production of cash crops (specifically, cereals such as wheat and barley) increased by 645 kilograms per household per year. The labor supply and productivity estimates imply a rate of return to labor valuing approximately $0.43/hour, which mirrors the hourly wage for farm labor. Taken together, these results suggest that the main channel of influence through which productivity gains were realized was increased labor supply in an environment where the classic separation of household production and consumption activities appears to hold.

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