Market mechanisms for allocating clean water: Experimental evidence from India
December 15, 2021 - December 14, 2023
Core Funding Area:
Individual Freedom and Free Markets
*A Grant DOI (digital object identifier) is a unique, open, global, persistent and machine-actionable identifier for a grant.
Director: Fiona BurligInstitution: The University of Chicago
Much of the developing world lacks access to safe and clean water. These challenges are exacerbated by a warming climate, increasing heat exposure, and reducing groundwater availability. Solving the water access problem in low-income countries requires overcoming a combination of limited infrastructure and significant poverty. Decentralized private markets supplying small amounts of drinking water at low prices could play an increasingly important role in bringing clean water to the poor. Notwithstanding the potential usefulness of such water markets, little is known about:
- The most efficient ways to provide clean water to households.
- The variation of consumer demand with price.
- The health and socio-economic benefits of clean water.
This project aims to explore these three questions in the context of rural India, and will partner with clean water delivery service, Spring Health.
A randomized controlled trial will be used to provide empirical evidence on households’ willingness to pay for clean water and the efficacy of three different free-market mechanisms for allocating clean water to homes. The experiment will involve setting up private markets in about 120 villages in Odisha, one of India’s poorest states. Villages will be randomly assigned to different market-based treatments, including varying prices, incentives for water conservation, and tradeable water allocations. Data on water sales at the household level will be collected and two extensive field surveys of all treatment villages, as well as a control group, will be conducted. These field surveys will include household health and productivity measures and provide evidence on the social benefits of improved clean water access.
This project, led by Fiona Burlig at the University of Chicago, will directly contribute to our understanding of how the free market can promote human health and well-being. The results will lead to both new information on the optimal design of private markets and novel measures of household welfare from clean water.
Opinions expressed on this page, or any media linked to it, do not necessarily reflect the views of Templeton World Charity Foundation, Inc. Templeton World Charity Foundation, Inc. does not control the content of external links.