Improved Source, Improved Quality? Estimating the Water Quality Gains from Groundwater Expansion in Rural India

To reduce waterborne disease from unsafe drinking water supplies, the Government of India expanded protected drinking water sources throughout its rural areas. An increase in the supply of improved drinking water sources may reduce private expenditure on water quality enhancing behaviors, and negligibly affect water quality. Using cross-sectional data from a 1998 survey in rural India, I detect and quantify the effect of improved drinking water sources on water quality. A household production function explains that improvements in source quality will reduce demand for in-home water treatment, and limit the quality benefits from improved sources. Hydrological data that exogenously measure the price and supply of improved sources empirically predict household demand for an improved source. I then estimate demand for in-home treatment using a variety of discrete choice models to examine the sensitivity of estimates to model specification. An improved source reduces the probability of in-home treatment between 0.37 and 0.47, with households shifting from chemical treatment and boiling to no treatment. Counterfactual estimates suggest that these behavioral choices offset coliform abatement from improved sources by 6.5 percent or 105 coliform counts per 100 ml. ∗Yale University. Email: [email protected]. I am extremely grateful to Sheila Olmstead for her support and advice. I would also like to thank Michael Boozer, Robert Mendelsohn, Erin Mansur and Robert Repetto for their time and comments. Achyuta Adhvaryu, Reena Badiani, Rahul Deb, Joshua Lustig, Maher Said, Steven Wallander, Juliana Wang and participants at the Yale Environmental Economics Seminar provided many helpful suggestions. All remaining errors are my own. This has been funded in part by the United States Environmental Protection Agency (EPA) under the Science to Achieve Results (STAR) Graduate Fellowship Program (FP 91690401), the Heinz Fellowship for Environmental Scholars and the V. Kann Rasmussen Foundation grant. EPA has not officially endorsed this publication and the views expressed herein may not reflect the views of the EPA.