Economic Analyses of Drinking Water and Sanitation in Developing Countries

University dissertation from Department of Economics, P.O. Box 7082, S-220 07 LUND, Sweden

Abstract: This thesis focuses on different aspects of household demand, and the determinants of demand, for water and sanitation related inputs fundamental to the households' well-being, i.e. drinking water and toilet facilities. The thesis consists of five chapters, one introductory chapter and four self-contained, essentially empirical, studies. In chapter two, Women's Health Choices and the Effects on Child Health, different aspects of child health and women's health choices for a sample of rural households in Cebu, Philippines are analysed. The approach differs from other studies by introducing the possibility of different health production functions before and after birth - an approach that is well in line with recent research in nutrition and epidemiology. The results indicate that prenatal care and the mother's income/nutritional status have significant effects on birthweight. Smoking by the mother has a significant negative effect on the health of the child after birth, thus implying that passive smoking by the child has important health effects. In addition, the results indicate that the choice of drinking water source and toilet facility has an effect on postnatal child health. The main purpose of chapter three, Household Choice of Drinking Water Source in the Philippines, is to analyse empirically household choice of drinking water source by using a discrete choice approach, i.e. a nested logit model, consistent with utility maximisation. The results show that time cost is an important determinant of household choice of drinking water source, which indicates that households might be more concerned with the distance, as measured by the time cost, to a drinking water source than the type of water source. Thus, due consideration must be given to household time allocation patterns when implementing water supply programmes. In chapter four, A Demand and Welfare Analysis of Sanitation, the welfare implications of, for example, a change in the price of different toilet facilities are analysed. In addition, a comparison of the welfare estimates derived from the conditional logit model and the random parameter/mixed logit model, is undertaken. Overall, the results seem to indicate that households are able to evaluate different toilet facilities based on either their physical characteristics or because households are aware of the positive effects of a better toilet facility, from a health point of view. The signs for the mean compensating variation show that households are better off after price increases and worse off after price cuts. In chapter five, Demand for Water and Sanitation in Bangladesh, potential determinants of household choice of water supply and sanitation-related services for a sample of households in Bangladesh are analysed. The results indicate that the educational level increases the probability that a household will choose a modern toilet facility. This finding is in line with earlier studies and confirms that a low educational level often implies that the understanding of the health benefits of sanitary toilet facilities is limited or even poor. In the case of drinking water source, the results show that there are no choice-specific characteristics that affect choice in any significant way.

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