I. I Movement toward private property rights institutions has been … · 2013-03-23 · SPRING...

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SPRING CLEANING: RURAL WATER IMPACTS, VALUATION, AND PROPERTY RIGHTS INSTITUTIONS * MICHAEL KREMER J ESSICA LEINO EDWARD MIGUEL ALIX P ETERSON ZWANE Using a randomized evaluation in Kenya, we measure health impacts of spring protection, an investment that improves source water quality. We also estimate households’ valuation of spring protection and simulate the welfare impacts of alternatives to the current system of common property rights in water, which lim- its incentives for private investment. Spring infrastructure investments reduce fecal contamination by 66%, but household water quality improves less, due to recontamination. Child diarrhea falls by one quarter. Travel-cost based revealed preference estimates of households’ valuations are much smaller than both stated preference valuations and health planners’ valuations, and are consistent with models in which the demand for health is highly income elastic. We estimate that private property norms would generate little additional investment while impos- ing large static costs due to above-marginal-cost pricing, private property would function better at higher income levels or under water scarcity, and alternative in- stitutions could yield Pareto improvements. JEL Codes: C93, H75, O13, Q25, Q51. I. INTRODUCTION Movement toward private property rights institutions has been called critical to successful economic development (De Soto 1989; North 1990). Yet social norms and formal laws often create communal property rights in natural resources. In Islamic law, for * This research is supported by the Hewlett Foundation, USDA/Foreign Agri- cultural Service, International Child Support, Swedish International Develop- ment Agency, Finnish Fund for Local Cooperation in Kenya, google.org, the Bill and Melinda Gates Foundation, and the Sustainability Science Initiative at the Harvard Center for International Development. We thank Alicia Bannon, Jeff Berens, Lorenzo Casaburi, Carmem Domingues, Willa Friedman, Francois Gerard, Anne Healy, Jonas Hjort, Jie Ma, Clair Null, Owen Ozier, Camille Pannu, Changcheng Song, Eric Van Dusen, Melanie Wasserman, and Heidi Williams for excellent research assistance, and we thank the field staff, especially Poly- carp Waswa and Leonard Bukeke. Jack Colford, Alain de Janvry, Giacomo DiGiorgi, Esther Duflo, Pascaline Dupas, Liran Einav, Andrew Foster, Michael Greenstone, Avner Greif, Michael Hanemann, Danson Irungu, Ethan Ligon, Steve Luby, Chuck Manski, Enrico Moretti, Kara Nelson, Aviv Nevo, Sheila Olmstead, Ariel Pakes, Judy Peterson, Pascaline Dupas, Rob Quick, Mark Rosenzweig, Elisabeth Sadoulet, Sandra Spence, Duncan Thomas, Ken Train, Chris Udry, Dale Whittington, and many seminar participants have provided helpful comments. Opinions presented here are those of the authors and not those of the Bill & Melinda Gates Foundation or the World Bank. All errors are our own. c The Author(s) 2011. Published by Oxford University Press, on behalf of President and Fellows of Harvard College. All rights reserved. For Permissions, please email: journals. [email protected]. The Quarterly Journal of Economics (2011) 126, 145–205. doi:10.1093/qje/qjq010. 145

Transcript of I. I Movement toward private property rights institutions has been … · 2013-03-23 · SPRING...

Page 1: I. I Movement toward private property rights institutions has been … · 2013-03-23 · SPRING CLEANING 149 infrastructure investment incentives, providing a rationale for why communal

SPRING CLEANING: RURAL WATER IMPACTS,VALUATION, AND PROPERTY RIGHTS INSTITUTIONS∗

MICHAEL KREMER

JESSICA LEINO

EDWARD MIGUEL

ALIX PETERSON ZWANE

UsingarandomizedevaluationinKenya, wemeasurehealthimpacts ofspringprotection, an investment that improves source water quality. We also estimatehouseholds’ valuation of spring protection and simulate the welfare impacts ofalternatives tothe current system of common property rights in water, which lim-its incentives for private investment. Spring infrastructure investments reducefecal contamination by 66%, but household water quality improves less, due torecontamination. Child diarrhea falls by one quarter. Travel-cost based revealedpreference estimates of households’ valuations are much smaller than both statedpreference valuations and health planners’ valuations, and are consistent withmodels in which the demand for health is highly income elastic. We estimate thatprivate property norms would generate little additional investment while impos-ing large static costs due to above-marginal-cost pricing, private property wouldfunction better at higher income levels or under water scarcity, andalternative in-stitutions couldyieldParetoimprovements. JEL Codes: C93, H75, O13, Q25, Q51.

I. INTRODUCTION

Movement toward private property rights institutions hasbeen called critical to successful economic development (De Soto1989; North 1990). Yet social norms and formal laws often createcommunal propertyrights innatural resources. InIslamiclaw, for

∗This research is supported by the Hewlett Foundation, USDA/Foreign Agri-cultural Service, International Child Support, Swedish International Develop-ment Agency, Finnish Fund for Local Cooperation in Kenya, google.org, theBill and Melinda Gates Foundation, and the Sustainability Science Initiative atthe Harvard Center for International Development. We thank Alicia Bannon,Jeff Berens, Lorenzo Casaburi, Carmem Domingues, Willa Friedman, FrancoisGerard, Anne Healy, Jonas Hjort, Jie Ma, Clair Null, Owen Ozier, Camille Pannu,Changcheng Song, Eric Van Dusen, Melanie Wasserman, and Heidi Williamsfor excellent research assistance, and we thank the field staff, especially Poly-carp Waswa and Leonard Bukeke. Jack Colford, Alain de Janvry, GiacomoDiGiorgi, Esther Duflo, Pascaline Dupas, Liran Einav, Andrew Foster, MichaelGreenstone, AvnerGreif, Michael Hanemann, Danson Irungu, Ethan Ligon, SteveLuby, Chuck Manski, Enrico Moretti, Kara Nelson, Aviv Nevo, Sheila Olmstead,Ariel Pakes, Judy Peterson, Pascaline Dupas, Rob Quick, Mark Rosenzweig,ElisabethSadoulet, Sandra Spence, DuncanThomas, KenTrain, Chris Udry, DaleWhittington, and many seminar participants have provided helpful comments.Opinions presented here are those of the authors and not those of the Bill &Melinda Gates Foundation or the World Bank. All errors are our own.

c© The Author(s) 2011. Published by Oxford University Press, on behalf of President andFellows of Harvard College. All rights reserved. For Permissions, please email: [email protected] Quarterly Journal of Economics (2011) 126, 145–205. doi:10.1093/qje/qjq010.

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example, the sale of water is generally not permitted (Faruqui,Biswas, and Bino 2001), and in societies from tsarist Russia tocontemporary west and southern Africa, land is periodically real-locatedamongfamiliesbasedonassessmentsofneed(e.g., Bartlett1990; Fafchamps and Gavian 1996; Adams, Sibanda, and Turner1999; Peters 2007). Some argue that communities can developeffective institutions for addressing collective action problemsaround common property resource use (Ostrom 1990).

InKenya,bothsocialnormsandlawmakemanywatersources,includingnaturallyoccurringsprings, commonpropertyresources(Mumma 2005). This potentially discourages private investmentin water infrastructure, such as the spring protection technologywe examine in this article. Protection seals off the source of aspring andthus reduces water contamination. On the other hand,communal property rights in water also limit static inefficienciesdue to exploitation of local market power.

This article makes four main contributions. First, we providewhat to our knowledge is the only evidence from a randomizedimpact evaluation on the health benefits of a source water qualityintervention, a significant area of government and donor invest-ment in developing countries. Second, we provide among the firstrevealed preference estimates of the value of child health gainsand a statistical life in a poor country. Our estimates fall far be-low those typically used by public health planners in assessingcost effectiveness andsuggest that thedemandforhealthis highlyincome elastic, as arguedby Hall andJones (2007). Third, we con-tribute tothe literature on the valuation of environmental ameni-ties, providing evidence on the relationship between revealed andstated preference valuations for water interventions. Finally, wecombine data from our randomized experiment with structuraleconometric methods like those used by Berry, Levinsohn, andPakes (1995)andothers1 toexploretheimplications ofalternativeproperty rights regimes in natural resources, shedding light onthe role of social norms andinstitutions in economicdevelopment.

Policy makers have called for more investment in water in-frastructure in less developed countries to provide cleaner water

1. Todd and Wolpin (2006) use experimental data to validate a structuralmodel of educational investment. We donot have sufficient nonexperimental vari-ation in property rights institutions toconduct an analogous exercise. Instead, wecombine experimental parameter estimates with a structural model of water in-frastructureinvestment toexplorethewelfareimplications of alternativepropertyrights institutions.

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and reduce waterborne diseases such as diarrhea, whichaccounts for nearly 20% of deaths of children under age five eachyear (Wardlaw et al. 2009). Progress toward the sole quantifiableenvironmental Millennium Development Goal is currently mea-sured by the percentage of population living near improved watersources, such as protected springs. Yet there is controversy aboutthe health value of improvements that fall short of piping treatedwater into the home. In the absence of evidence from randomizedtrials, several influential reviews argue based on nonexperimen-tal evidence that improving source water quality through infras-tructure investments may have limited health impacts becausediarrhea is affected more by the quantity of water available forwashing than by drinking water quality (Curtis, Cairncross, andYonli 2000); improvedwatersupplyhas little impact without goodsanitation and hygiene (Esrey et al. 1991; Esrey 1996); and wateris recontaminated in transport and storage (Fewtrell et al. 2005).

As the first (to our knowledge) randomized evaluation of asource water quality investment, the data used in this article al-low us to isolate the impact of a single intervention affecting thequality but not quantity of water and to assess child health im-pacts.2 We find that spring protection greatly improves waterquality at the source and is moderately effective at improvinghouseholdwaterquality. Diarrhea amongyoungchildrenintreat-ment households falls by nearly one quarter.

The next part of this article focuses on the valuation of envi-ronmental amenities. In our study area, most households choosefrom multiple local water sources. The intervention we study gen-erates exogenous variation in the relative desirability of alterna-tive sources, and we explore how household water source choicesrespond to these water quality improvements.3 A discrete choicemodel, in which households trade off water quality against

2. Two prospective studies of source water quality interventions find posi-tive child health impacts (Huttly et al. 1987; Aziz et al. 1990) but do not men-tion if treatment was randomly assigned. Samples were only five villages each.Watson (2006) finds combined water and sanitation interventions reduced mor-tality among Native Americans. Bennett (2009) argues that municipal waterinvestments create private disincentives to invest in sanitation.

3. Related papers include Madajewicz et al. (2007), who find considerable re-sponsiveness to information on arsenic contamination in household water sourcechoices in Bangladesh. Whittington, Mu, and Roche (1990) and Mu, Whittington,and Briscoe (1990) each study water source choice in rural Africa. However, nei-ther considers water quality, and they rule out multiple drinking water sources,which we find to be empirically important.

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walking distance to the source, generates revealed preference es-timates of household valuations of better water quality. Basedon household reports on the trade-offs they face between moneyand walking time to collect water, estimated mean annual valua-tion for spring protection is US$2.96 per household. Under somestronger assumptions this translates to an upper bound of $0.89onhouseholds’ meanwillingness topaytoavert onechilddiarrheaepisode, and $769 on the mean value of averting onestatistical childdeath, or $23.68 toavert the loss of one disability-adjusted life year (DALY). These estimates fall far below thevalues typically used in health cost-effectiveness analyses in low-income countries, where investments that prevent the loss ofone DALY for less than $100 or $150 are often assumed to beappropriate.

We believe that the evidence in this article can be interpretedas indicative of relatively low willingness to pay for preventivehealthamongthepoorinless developedcountries, consistent withotherrecent work, whereas theprecisevaluationestimates shouldbeviewedas somewhat morespeculative. Thelinkbetweenspringprotectionandchilddeath—a relativelyrareoccurrencewithmul-tiple possible causes—may be quite difficult for households todiscern in practice. The valuation of child health may also dif-fer systematically from adult health (see Davis 2004; Deaton,Fortson, and Tortora 2009).

Stated preference methodologies, such as contingent valua-tion, arewidelyusedbut controversial (seeDiamondandHausman1994; Carson et al. 1996; Whitehead 2006; Whittington 2010).We find that although stated preference methods also suggestfairly low valuation, they exceed the revealed preference valua-tion (which exploits experimental variation in water source char-acteristics) by a factor of two.

Finally, we simulate the impact of alternative social normsand property rights institutions. We show that a social plannermaximizing welfare as captured by our revealed preference esti-mates would protect far fewer springs than a social planner whovalued health at the levels typically used by public health pol-icy makers. Using the household water demand system derivedfrom the revealed preference valuations, we find that at currentrural Kenyan income levels, a freehold private property rightsnorm would yield lower social welfare than existing communalrights because the static losses from spring owners pricing abovemarginal cost outweigh the dynamic benefits of greater water

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infrastructure investment incentives, providing a rationale forwhy communal water norms have historically been so durable inrural Africa. However, we estimate that as demand for clean wa-ter rises—for instance, at moderately higher income levels, or ifwater were scarcer—private property norms would yield highersocial welfare than common property, suggesting the role that un-derlying economic conditions might play in the evolution of in-stitutions. Allowing spring owners to charge for protected springwateronlyif theyprovidecontinuedfreeaccess tounprotectedwa-ter generates a Pareto improvement relative to existing commu-nal property norms. Public investment could potentially generatesubstantial increases in welfare.

The article is organized as follows: Section II describes theintervention and data. Section III presents spring protection im-pacts on water quality and child health. Section IV discusses theeffect of protection on water source choice and estimates the will-ingness to pay for spring protection. Section V presents socialwelfare under alternative institutions, and the final sectionconcludes.4

II. SPRING PROTECTION INTERVENTION AND DATA

This section describes the intervention, randomization intotreatment groups, and data collection.

II.A. Spring Protection in Western Kenya

Spring protection is widely used in nonarid regions of Africatoimprove water quality at existing spring sources (Mwami 1995;Lenehan and Martin 1997; UNEP 1998). Protection seals off thesource of a naturally occurring spring and encases it in concreteso that water flows out from a pipe rather than seeping from theground, where it is vulnerable to contamination when people dipvessels to scoop out water and when runoff introduces human oranimal waste into the area. Because spring protection technologyhas no moving parts, it requires far less maintenance than otherwater infrastructure, such as pumps. Naturally occurring springsare an important source of drinking water in our study area inrural Busia and Butere-Mumias districts of Kenya’s Western

4. A supplementary online appendix contains details on the randomizationprocedure (appendix I), data and measurement issues (appendix II), and the prop-erty rights simulations (appendix III), as well as additional tables and figures.

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Province. Approximately43% ofrural westernKenyanhouseholdsusesprings fordrinkingwater, andover90% haveaccess tosprings(DHS 2003). Our survey respondents report that springs are theirmainsourceofwater: 72% ofall watercollectiontrips aretosprings.Thenext most commonsourceareshallowwells (at 13%), followedbyboreholes (7%), andsurfacewatersources suchas rivers, lakes,andponds (5%). Over 81% of all water collection trips in the previ-ous week are to sources the respondents used for drinking water(as opposed to other household needs).

Most springs in our study area are located on private land.In Kenya, property rights to land and other natural resources aregoverned by a combination of traditional customary law and for-mal legal statutes (Mumma 2005). Not only does custom requirethat private landowners allow public access to water sources ontheir land, but under Kenyan law local authorities can “where,in the opinion of the Authority the public interest would be bestserved” order water source owners to make water available “toany applicant so long as the water use of the owner of the worksis not adversely affected.” In practice, landowners in our studyarea are expected tomake spring water available toneighbors forfree. This implies that spring owners have weak incentives to im-prove water sources, as they are unable to recoup the costs of anyinvestment via the collection of user fees.

This study is based on a randomized evaluation of a springprotection project conducted by a nongovernmental organization(NGO), International Child Support (ICS). As implemented byICS, spring protection included infrastructure construction, in-stalling fencing anddrainage, andorganizing a user maintenancecommittee. Thespringprotectioninfrastructurecost anaverageofUS$956 (s.d. $85), with some variation depending on landcharac-teristics. All communities contributed10% of project costs, mainlyin the form of manual labor. After construction, the committeesare expected to undertake routine maintenance, including simplepatching of concrete, cleaning the catchment area, and clearingdrainage ditches. These maintenance costs are roughly $32 peryear, and are typically covered by local contributions, althoughfree rider problems in collecting these funds are common.

II.B. The Study Sample and Assignment to Treatment

Springs for this study were selected from the universe of lo-cal unprotected springs. The NGO first obtained Kenya Ministry

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of Water and Irrigation lists of all local unprotected springs inBusia and Butere-Mumias districts. Technical staff then visitedeach site to determine which springs were suitable for protection.Springs known tobe seasonally dry were eliminated, as were siteswith upstream contaminants (e.g., latrines, graves). From the re-maining suitable springs, 200 were randomly selected (using acomputer random number generator) to receive protection. Per-mission for protection was received from the spring landowner inall but two cases.

ICS planned for the water quality improvement interven-tion to be phased in over four years due to financial and ad-ministrative constraints. Although all springs were eventuallyprotected, for our analysis the springs protected in round 1(January–April 2005) and round 2 (August–November 2005) arecalled the treatment springs and those that were protected laterare the comparison group. Figure I summarizes this timeline.To address concerns about seasonal variation in water qual-ity and disease, all springs were stratified geographically andby treatment group and then randomly assigned to an activity“wave” grouping; all project activities and data collection wereconducted by wave.5

Several springs were unexpectedly found tobe unsuitable forprotection after the baseline data collection and randomizationhadalreadyoccurred. Thesesprings, whichwerefoundinboththetreatment and comparison groups, were dropped from the sam-ple, leaving 184 viable springs. Identification of the final sampleof viable springs is not relatedtotreatment assignment: when theNGO was first informedthat somesprings wereseasonallydry, all200 sample springs were revisited to confirm their suitability forprotection. Inonly10 amongthefinal sampleof 184 viablespringsdid treatment assignment differ from actual treatment (e.g., be-cause landowners refused to allow protection, or the governmentindependently protected comparison springs); these springs areretained in the sample and we conduct an intention-to-treat

5. One survey round took place each year from 2004 through 2007, for a totalof four rounds in the panel. Within each round, the sample was randomly dividedinto three separate waves, yielding representative samples of communities andhouseholds surveyed during the same period of the year, todeal with any possibleseasonality. Controls forsurveywaveandformonthof year/seasonarethus closelyrelated.

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FIGURE IRural Water Project Timeline 2004–2007

analysis throughout. Table I presents baseline summary statis-tics for the treatment and comparison groups.

A representative sample of households that regularly usedeach sample spring was selected at baseline. Survey enumerators

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interviewed users at each spring, asking their names as wellas the names of other household users. Enumerators elicitedadditional information on spring users from the three to fourhouseholds located nearest to the spring. Households that werenamed at least twice among all interviewed subjects were desig-nated as “spring users,” and the spring they use is denoted their“reference spring.” The number of household spring users variedfrom 8 to 59 with a mean of 31. Seven to eight households perspring were randomly selected from this spring user list for thehouseholdsample we use. In subsequent surveys, over 98% of thissample was found to actually use the spring at least sometimes;the few nonusers were nonetheless retained in the analysis. Thespring user list is reasonably representative of all households liv-ing near sample springs. In a census of all households living nearnine sample springs, 71% of households living within a 20-minutewalk from the source were included in the original spring userslists, with even higher rates of inclusion (77%) for those house-holds within a 10-minute walk from the spring.

II.C. Data Collection

Waterqualitywas measuredat all samplesprings andhouse-holds using protocols based on those used at the U.S. Environ-mental Protection Agency (EPA). The water quality measure weuse is contamination with E. coli, an indicator bacterium that iscorrelated with the presence of fecal matter, as measured by thenatural log of the most probable number (MPN) of colony-formingbacteria per100 ml ofwater. Thehouseholdsurveygatheredbase-line information about childdiarrhea andanthropometrics, moth-ers’ hygiene knowledge and behaviors (handwashing), householdwater collection and treatment behavior, and socioeconomic sta-tus. The target survey respondent was the mother of the youngestchild living in the home compound(where extendedfamilies oftenco-reside), oranotherwomanwithchild-careresponsibilities if theyoungest child’s mother was unavailable.

A first follow-up round of water quality testing at the springand in homes, spring environment surveys, and householdsurveys was completed three to four months after the firstround of spring protection (April–August 2005). The secondroundofspringprotectionwas inAugust–November2005, andthesecond follow-up survey one year later (August–November 2006).The third follow-up survey took place five months later

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(January–March 2007). The main analysis sample consists of 184springs and 1,354 households with baseline data and at least oneround of follow-up data. Attrition was modest: 95% of baselinehouseholds were surveyed in at least two of the three follow-upsand 80% were surveyed in all three follow-up rounds. Attritionis not significantly related to spring protection assignment: theestimated coefficient on treatment is 0.012 (s.e. 0.018). The char-acteristics of households lost over time are statistically indistin-guishable from those that remain.

An intervention providing point-of-use (POU), or in-home,chlorination products was launched before the third follow-upsurvey (2007) in a random subset of households. Due to possibleinteractions with spring protection, the third follow-up survey forthis subset of households is excluded from the analysis. The POUintervention is studied in Kremer et al. (2008).

II.D. Baseline Descriptive Statistics

Table I presents baseline summary statistics for springs(panel A), households (panel B), and children under age three(panel C). For completeness, we report statistics for all springsand households with baseline data (collected prior to randomiza-tion into treatment groups) even if they were dropped from theanalysis because the spring was later found unsuitable for pro-tection, although results are almost unchanged with the slightlysmaller main sample (see Appendix Table A.I). There is no sta-tistically significant difference between baseline water quality attreatment versus comparisonsprings (panel A). Usingwaterqual-ity designations drawn from EPA standards, most spring water isof moderate quality and only about 5–6% of samples are of highquality. Householdwateris somewhat morelikelytobehighqual-ity prior to spring protection in the treatment group (and the dif-ference, though small, is significant at 95% confidence), but thereis no significant difference in the proportion of moderate- or poor-qualitywater(panel B). A Kolmogorov–Smirnovtest cannot rejectequalityofbaselinehomewaterqualitydistributions forthetreat-ment and comparison groups (p-value = 0.24).

Household water quality is somewhat better than spring wa-ter quality at baseline: the average difference in ln E. coliMPN/100 ml is 0.51 (s.d. 2.63; results not shown). This likelyoccurs for at least two reasons. First, many households collectwater from sources other than the sample spring: only half of

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the households get all their drinking water from their spring atbaseline, and overall nearly one third of water collection tripsare to other sources. Second, at baseline 25% of households re-port that they boiled their drinking water yesterday. However,it is worth noting that even in those households, both adults andchildren often drink some unboiled water; for instance, youngchildren are commonly given water to drink directly from thehousehold storage container. Moreover, the correlation betweenhousehold water contamination and self-reported boiling is low,raisingthepossibilityof social desirabilityreportingbias. Finally,some households may chlorinate their water. Following a 2005cholera outbreak, the government distributedfree chlorine andinthe first follow-up(2005) survey, 29% of households reportedchlo-rinating their water at least once in the past six months, thoughby the second follow-up survey (when more time had passed sincethe outbreak) just 8% of households reported chlorinating theirwater in the past week.

Water quality tests were also conducted at the two mainalternative sources near each sample spring during the thirdfollow-up (2007). Protected springs have the least contaminatedwaterof all sourcetypes withaverageln E. coli MPN/100 ml = 2.3,followed by unprotected springs, boreholes, shallow wells, lakes/ponds, and rivers/streams with 3.6, 4.1, 5.2, 6.0, and 7.0,respectively.

Respondents are well informed about the relative desirabil-ity of different types of water infrastructure but only imperfectlyabout the cleanliness of individual sources. The proportion of re-spondents statingthat asourceis “veryclean”or“somewhat clean”is highest for protected springs, the objectively cleanest sourcetype, at 92%, followed by boreholes (87%), unprotected springs(75%), shallow wells (73%), lakes/ponds (31%), and streams/rivers (14%). Yet the correlation between E. coli levels at watersources and household perceptions of source water quality (on a1–5 scale with 1 = very clean and 5 = very unclean) is just 0.12(s.e. 0.02), though this rises to 0.19 (s.e. 0.02) when conditioningonhouseholdfixedeffects. This is just underhalf thecorrelationofactual E. coli counts across successive survey rounds (0.46). Thismoderate correlation of objective E. coli counts over time is pre-sumably due both to measurement error and fluctuation in truecontamination.

Most other household and child characteristics are similaracross the treatment and comparison groups (Table I, panels B

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andC). Averagemother’s educationis sixyears, less thanprimaryschool completion. Approximately four children under age 12 re-sideintheaveragecompound. Waterandsanitationaccess is fairlyhighcomparedtomanyotherpoorcountries as about 85% ofhouse-holds report having a latrine, and the mean walking distance(one-way) to the closest local water source is 9 minutes (median5 minutes). A fairly high 20% of children in the comparison grouphaddiarrhea in the past week at baseline, as did23% in the treat-ment group.

III. SPRING PROTECTION IMPACTS ON WATER QUALITY AND

HEALTH

This section discusses estimation and spring protection im-pacts on water quality and child health.

III.A. Estimation Strategy

Equation 1 illustrates an intention-to-treat (ITT) estimatorusing linear regression.

(1) WSPjt = αt + φ1Tjt + XSP′

j φ2 + (Tjt ∗ XSPj )′ φ3 + εjt.

WSPjt is the water quality measure for spring j at time t (t ∈ {0,

1, 2, 3} for the four survey rounds) and Tjt is a treatment indica-tor that takes on a value of 1 after spring protection assignment(i.e., for treatment group 1 in all follow-up survey rounds and fortreatment group 2 in the second and third follow-ups; see FigureI). XSP

j are baseline spring and community characteristics (e.g.,water contamination) and εjt is a white noise disturbance termthat is allowed to be correlated across survey rounds for a spring.Random assignment implies that φ1 is an unbiased estimate ofthe ITT spring protection effect. In some specifications we exploredifferential effects as a function of baseline characteristics, cap-tured in the vector φ3. Survey round and wave fixed effects αt

are also included to control for time-varying factors affecting allgroups, as are the variables used to balance the randomizationinto treatment groups (see Bruhn and McKenzie 2008; Supple-mentary Appendix I). Estimates of the local average treatmenteffect (LATE; Angrist, Imbens, and Rubin 1996) are very similarto the ITT estimates as assignment differs from actual treatmentfor few springs.

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SPRING CLEANING 161

III.B. Impact of Protection on Spring Water

Spring protection dramatically reduces fecal contaminationof source water. The average reduction in ln E. coli across allfour rounds of data is −1.07, corresponding to a 66% reduction(Table II, regression 1). These estimated effects are robust to in-cluding baseline contamination controls, and protection does notlead to a significantly larger proportional reduction where ini-tial contamination was highest (regression 2). There is substan-tial mean reversion in water quality across survey rounds, likelyreflecting both measurement error and transitory water qualityvariation.6 There is no evidence of differential treatment effectsby baseline hygiene knowledge (the average among local springusers), average local sanitation (latrine) coverage, or education(regression3). Protectedsprings areratedbyenumerators as hav-ingsignificantlyclearerwater(regression4) but not greaterwateryields (regression 5), consistent with spring protection improvingwater quality but not quantity. Communities maintain protectedsprings better than unprotected springs: protected springs alsohave better fencing and drainage and less fecal matter and brushin the vicinity (not shown).

III.C. Home Water Quality Effects

We use a regression analogous to Equation (1) to estimatethe impact of spring protection on home water quality. We con-trol for baseline household characteristics in some specifications,includingsanitationaccess, respondent’s diarrheaknowledge, wa-terboiling, anironroof indicator, years of education, andthenum-ber of children under age 12, and we also allow for differentialtreatment effects as a function of these characteristics. Regres-sion disturbance terms are clustered by spring.

Theaveragereductioninln E. coli contaminationat thehomeis −0.27 (Table III, regression 1), or roughly 24%, considerablysmallerthantheimpacts onsourcewaterquality. For“solesource”households, thosewhousedonlywaterfromtheirreferencespringin the pretreatment period, home water quality should be unam-biguously better after treatment because they still rely mainly onthe spring and its quality improves after protection. For baseline“multisource” water users in our data, who were roughly on the

6. For evidence on mean reversion, note the downward slope of the nonpara-metric plot in Appendix Figure I.A.

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162 QUARTERLY JOURNAL OF ECONOMICST

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SPRING CLEANING 163

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164 QUARTERLY JOURNAL OF ECONOMICS

TABLE IIISPRING PROTECTION HOUSEHOLD WATER QUALITY IMPACTS (2004–2007)

Notes. Estimated using ordinary least squares. Huber–White robust standard errors (clustered at thespringlevel) arepresented, significantlydifferent than0 at * 90%, ** 95%, *** 99% confidence. MPN stands for“most probable number”colony-forming units (CFU) per 100 ml. Survey roundandwave fixedeffects includedinall regressions but not reported, as areall variables usedtobalancetheinitial randomizationintotreatmentandcomparisongroups. Additional control variables are: numberofchildrenunder12 livinginthehome, homehas iron roof indicator, iron roof density within spring community. When differential treatment effects arereported in column (3), we also include interactions of these control variables with the treatment (protected)indicator (not shown in the table). Baseline spring water quality, latrine density, diarrhea prevention score,and mother’s education are de-meaned. The−0.27 effect in column 1 is equivalent to a 24% reduction in E.coli fecal coliform units per 100 ml.

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SPRING CLEANING 165

margin between using their reference spring and other sources,springwaterwill becombinedinthehomewithwaterof unknownquality from other sources, and endogenous source choice couldthus cause home water quality to increase or decrease after pro-tection depending on whether these alternative sources arecleaner or dirtier than the spring. The point estimates of contami-nation reductions are slightly smaller for multisource households(regression2), as predicted, but wecannot reject equal impacts forsole- and multisource users.7

Usingthecomparisonhouseholds, wealsononexperimentallyestimated the relationship between the use of different watersource types andhouseholdwater quality. Note that we donot ex-pect a simple microbiological relationship between source waterquality and home water quality following storage because bacte-ria bothgrowanddieoffovertime, wheretheextent of growthanddeathmaydependonstorageconditions. Conditional oncollectingsome spring water, comparison households that chose to obtainwater from protected springs have significantly better home wa-ter quality: making all water collection trips to protected ratherthan unprotected springs is associated with a 0.44 drop in ln E.coli MPN/100 ml contamination (s.e. 0.18), or roughly 37% (notshown), substantially larger than the more reliable experimentalestimates in Table III. Other nonexperimental approaches—suchas including detailed controls for respondent education, boilingand at-home chlorination (and interaction terms), or employingdistance to the protected source as an IV for use (point estimate0.46)—also differ substantially from the experimental estimate(not shown).

7. Random assignment of springs to protection implies that we might poten-tially avoid both omitted variable bias and also reduce attenuation bias (due tomeasurement error in water quality) by estimating the correlation between sourceand home water quality in an instrumental variables (IV) framework in the sole-source users subsample, with assignment to protection as the IV for spring waterquality. Sole-source users couldbe useful for estimating the passthrough of sourcewater quality gains to the home if these households almost exclusively used thesample spring for drinking water in all periods. Unfortunately, water use patternsare not static across our four years of data: in the first follow-up survey, 70% ofcomparison group baseline sole-source spring users remained sole-source users,but only 26% remained sole-source users in all three follow-ups. This “churning”could be due to changes in other water options over time (as other sources im-prove or deteriorate, often by season), or variation in water collection costs due toevolving household composition. Regardless of the cause, baseline sole- and mul-tisource user status becomes less meaningful over time, making it infeasible toreliably estimate passthrough in this way.

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166 QUARTERLY JOURNAL OF ECONOMICS

Wefindnoevidenceof differential treatment effects as a func-tion of household sanitation, diarrhea prevention knowledge, ormother’s education (Table III, regression 3). This runs counter toclaims that source water quality improvements are much morevaluable when sanitation access or hygiene knowledge are also inplace, although the relatively large standard errors on these in-teraction terms argue for caution in interpretation. Home watergains are smaller for households that report boiling their water,as expected if boiling and spring protection are substitutes.

Spring protection could potentially generate spillover bene-fits for other water sources or households due to hydrological in-terconnections, the infectious nature of diarrheal diseases, andreductions in the number of people using alternative sources. Totest forthis, weconsidertheeffect of thenumberof nearbytreatedsprings (located within 1, 3, or 6 km) on spring water quality.8

Because we also control for the total number of nearby springs(protected or not), we thus exploit variation induced by the springprotection experiment to identify spillover effects, in a mannerrelated to Miguel and Kremer (2004). For springs we find littleevidence of externalities in water quality: the coefficient estimateon treatedsprings within 3 km is small at−0.004 (s.e. 0.086), andsimilar results hold for springs at other distances (not shown).

On the other hand, there are positive spillovers on house-hold water, and although we cannot completely rule out the pos-sibility of some hydrological or epidemiological externalities, theeffects appear to be mainly driven by some comparison house-holds switching to use nearby protected sources. Households liv-ing near treatment springs are those that appear to benefit most.At baseline, 15.4% of comparison households get at least some oftheir drinking water from protectedsprings, whereas in follow-uprounds, this percentage rises to 24.5%. Some of this increase isdue to the secular increase over time in spring protection fundedby donors or government, but much is due to comparison house-holdtrips tooursampletreatment springs. Wequantifytheextentof this use and simultaneously estimate the effect of the fractionof trips to protected springs on home water quality in an IV spec-ification, using both the treatment assignment of a household’sown reference spring as well as the number of springs assigned to

8. Springs are often located in close proximity. Sample springs have an aver-age of 1.2 other springs within 1 km and 9.2 within 3 km. There are no significantbaseline differences in the total number of nearby springs within 1, 3, or 6 km forthe treatment versus comparison groups (not shown).

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SPRING CLEANING 167

treatment located within 1 km of the home as instruments. Theprotection of springs located farther than 1 km from the home didnot significantly affect the fraction of trips to protected springs,and thus we focus on the 1 km densities.

The first-stage relationship is strong, as presented in supple-mentary Appendix Table A.II. The treatment assignment of ahousehold’s reference spring increases the fraction of trips topro-tected springs by 69.0 percentage points (s.e. 1.6 percentagepoints), as expected, and the number of protected springs within1 km of the household is also associated with significantly moretrips toprotected springs (6.6 percentage points, s.e. 1.2) but onlyamonghouseholds inspringprotection“comparison”communities.This is reasonable because households in treatment communitiesalready greatly increased their use of their now-protected refer-ence spring, whereas households in comparison communitiesshiftedincreasinglytoothersprings. A Waldestimationprocedureallows us torecover the LATE of increasedprotectedspring wateruse on home water quality (column 2). Focusing on our preferredspecification from Table III, the estimated effect of the fraction oftrips to a protected spring source on the log of home water con-tamination is −0.430 (s.e. 0.165, column 2 of Appendix Table II).

This suggests that if thereis aroughlylinearimpact ofgreaterprotected spring water use, then shifting from zero trips to 100%of trips toprotected springs would reduce home water contamina-tion by roughly 40%. Thus, even complete switching to protectedsources would only reduce home water contamination by slightlyless than half (0.43 in ln E. coli) of the total reduction in contami-nation at the source, which is 1.04 (from Table II). Recontamina-tion of drinking water in storage andtransport is likely toaccountfor the difference between these two figures.

III.D. Child Health and Nutrition Impacts

We estimate the impact of spring protection on child healthand anthropometrics in Equation (2),

(2) Yijt = αi + αt + φ1Tjt + Xij′φ2 + (Tjt ∗ Xij) ′φ3 + uij + εijt.

The main dependent variable is an indicator for diarrhea inthe past week. The coefficient estimate, φ1, on the treatmentindicatorTjt captures thespringprotectioneffect. Weincludechildfixed effects (αi) and survey round and month fixed effects (αt) insome specifications. We also explore heterogeneous treatment ef-fects as a function of child and household characteristics, Xij.

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168 QUARTERLY JOURNAL OF ECONOMICS

Spring protection significantly reduces diarrhea for childrenunder age three at baseline or born since the baseline survey. Inthe simplest specification taking advantage of the experimentaldesign, diarrheaincidencefalls by4.5 percentagepoints (standarderror 1.2, Table IV, regression 1). The estimated impact is similarin a probit specification (−4.4 percentage points, s.e. 2.0, regres-sion 2), and a linear specification with child and survey monthfixed effects (−4.5 percentage points, s.e. 2.3, p-value = 0.05, re-gression 3). In our preferred specification with month and childfixedeffects andgender-specificagepolynomial controls, thepointestimate is −4.7 percentage points (s.e. 2.3, regression 4). On acomparison group average of 19% of children with diarrhea in thepast week, this is a drop of one quarter. We conclude that themoderate reductions in householdwater contamination causedbyspring protection were sufficient to meaningfully reduce diarrheaincidence.9

Although the estimated reduction in diarrhea remains neg-ative for boys, the effects are driven mainly by girls (Table IV,regression 5). For girls the estimated reduction is 9.0 percent-age points. This finding is surprising because baseline diarrhearates are similar for boys and girls in our sample, and differentialgender impacts are rarely found in the related epidemiology liter-ature; a decisive explanation remains elusive and further investi-gation is warranted.10

Interactions with baseline latrine coverage, diarrhea knowl-edge, and education are not significant (regression 6), in line withthe lack of additional water quality gains for such households. Ef-fects are similar in the second and third years after protection,and also across baseline sole-source and multisource households

9. Using children in comparison households in a nonexperimental analysisusing the same controls as in Table IV (columns 3 and 4), we once again findthat nonexperimental andexperimental estimates differ sharply. Households thatchoose toobtain water from protected springs donot have significantly lower diar-rhea than other households: the coefficient on the fraction of water collection tripstoprotected springs is 0.007 (s.e. 0.041). Using the sample of comparison children,we also find no evidence that water quality, as measured by E. coli at either thehousehold or source, significantly impacts diarrhea. This may occur because wa-ter quality measures are noisy, leading to attenuation bias, and because currentquality is measured in the survey while diarrhea is for the prior week.

10. A speculative possibility is that if male infants are generally weaker thanfemales, as suggested by some studies, then any given health improvement re-quires a larger increase in health inputs for males; we thank a referee for thispoint. Unlike Jayachandran and Kuziemko (2009), we donot find differential gen-der breastfeeding.

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SPRING CLEANING 169

TA

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170 QUARTERLY JOURNAL OF ECONOMICS

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SPRING CLEANING 171

(not shown). Protection effects donot differ significantly by monthof year (rainy versus dry season) nor by child age up through fiveyears (not shown).

There are no statistically significant impacts on child weightbut impacts are positive and marginally significant for body massindex (BMI) in the three follow-up surveys (Table IV, regressions7–10). Wedonot findevidenceofdifferential effects at points alongthe child weight and BMI distributions using quantile regression(not shown). There is some suggestive evidence that spring pro-tection produces a small reduction in diarrhea among childrenages 5–12: in a specification equivalent to regression 1 in TableIV, the point estimate is −1.7 percentage points (standard error0.5 percentage points, not shown), on a base rate of 4.1%, thoughtheeffect is not significant whenthefull set of controls is included.Thereis noevidencethat springprotectionimprovedschool atten-dance in this age group, nor is there evidence of diarrhea impactsfor adults (not shown).11

Because some comparison households also choose to obtainwater from protectedsprings, as documented, these estimates arelikely to understate the true impact of using protected spring wa-ter on diarrhea incidence, and thus we apply the IV approachused to estimate home water quality impacts. Focusing on ourpreferred sample and controls from column 4 of Table IV, the IVestimate of the effect of the fraction of household water trips toprotected springs is a 6.0-percentage-point reduction in diarrhea(Supplementary Appendix Table A.II, p-value = 0.101), a reduc-tion of nearly one third of baseline levels if households were toswitch from zero to 100% use of protected spring water.

III.E. Estimating Water Transport, Storage, and TreatmentBehavior Changes

Theoretically the estimated effects of spring protection onhousehold water quality and diarrhea could reflect not onlythe direct impact of improved source water but also indirect ef-fects on water transport, storage, or home treatment behaviors.

11. We collected information on infant mortality in our household sample, andalso from a somewhat larger sample of households with the assistance of localvillage elders who kept a diary of local infant births and deaths. However, giventherarityof childdeathevents andlimitedsamplesizes, inneithersampleis theresufficient statistical power to detect moderate infant mortality treatment effectsat traditional confidence levels (not shown).

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172 QUARTERLY JOURNAL OF ECONOMICS

Empirically, however, there were no significant changes in waterhandlingortreatment behaviors (Table V, panel A) asidefromtheincreased use of protected springs, discussed shortly. There arealsonochanges in diarrhea knowledge or in a direct hygiene mea-sure, fecal contamination on respondents’ hands (panel B).

Households do change their choice of water sources substan-tially in response tospring protection. We already discussedsomeof the implications of endogenous source choice for estimatinghousehold water quality impacts. Recall that each household inour data set is linked to a particular spring (their “reference”spring) in the baseline user list. The potential for differential im-pacts among users of this reference spring arises because pro-tected spring use should increase more among multisource usersthan sole-source users (who are already at 100% usage). As pre-dicted, assignment tospring protection treatment leads togreateruse of the reference spring for those households not previouslyusing it exclusively: treated households increase the fraction ofwater collection trips to their reference spring by 21 percentagepoints if they were multisource users at baseline (Table V, panelC). Underlyingthis increaseduseof protectedsprings are increas-ingly positive perceptions about their quality: respondents attreated springs were 22 percentage points more likely to believethe water is “very clean” during the rainy season, with somewhatsmaller effects in the dry season. There is no significant effect onthe total number of trips made to water sources in thepast week, further indication that the intervention didnot changewater quantity used.

IV. VALUING CLEAN WATER

This section uses a travel cost model of water source choiceto estimate revealed preference spring protection valuations, andcompares them to two stated preference approaches. We arguethat households’ valuation of health is smaller than typically as-sumed by public health planners, but consistent with Hall andJones’s (2007) estimates of high income elasticity of demand forhealth.

IV.A. A Travel Cost Model of Household Water Source Choice

Let the valuation of water from source j be Zj, which couldreflect both health and nonhealth attributes, such as the ease of

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SPRING CLEANING 173

TA

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174 QUARTERLY JOURNAL OF ECONOMICS

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SPRING CLEANING 175

water collection. Spring protection at source j in time t (Tjt) con-tributes an additional benefit βi to household i’s indirect utility.Denote household i’s cost of time per minute as Ci > 0. Thusthe cost household i bears to make an additional water trip tosource j is CiDij, whereDij is thehousehold’s round-tripdistancetothe source. Households make multiple water collection trips, andeach tripis affectedby unobservedfactors, including the weather,which household member is collecting water, the expected queue,othererrands thewatercollectorneeds toundertake, ortheirmoodthat day. Household i’s indirect utility from one water collectiontrip to source j at time t is:

(3) uijt = βiTjt + Zj − CiDij + eijt,

where eijt is an i.i.d. type I extreme value error term. Household ichooses source j over an alternative k if its benefits outweigh anytravel costs, namely, when βi(Tjt − Tkt) + (Zj − Zk)−Ci(Dij −Dik)+ (eijt − eikt)> 0. Focusing on those households on the margin be-tween choosing two sources conceptually allows one toestimatehouseholds’ valuations. Theadditional travel cost house-holds choose to incur is a revealed preference measure of theirwillingness to pay for spring protection.12

More generally, given a set of characteristics Xijt for individ-ual i and spring j in trip t, where these include the protection sta-tus ofthespringandthewalkingtimetoeachpotential local watersource, as before, theprobabilityhousehold i chooses source j fromamong alternatives h ∈ H in trip t (yijt = 1) can be represented inthe conditional logit formulation (McFadden 1974):

(4) P(yijt|X)=exp(X ′ijtB)∑

hexp(X ′ihtB)

≡ ρijt.

The ratio of the coefficient estimate on the treatment (springprotection) indicator tothe coefficient estimate on walking time to

12. Wefollowmost of thediscretechoice literature inassuminga constant util-itybenefit fromeachadditional triptoawatersource. Althoughdecliningmarginalbenefits from each additional trip to a clean source is plausible if water quality ismore important for some uses (like drinking) than others, we find no evidencefor it in our data. To illustrate, there is no significant difference in valuation ofspring protection (from Table VI, later) for households with different baseline us-age of their reference spring: with spring protection valuation as the dependentvariable, the coefficient estimate on an indicator for baseline sole source use is0.84 (s.e. 1.06), and, in a separate regression, the coefficient on the proportion ofcollection trips to the reference spring is 1.71 (s.e. 1.14, results not shown).

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176 QUARTERLY JOURNAL OF ECONOMICS

a source delivers the value of spring protection in terms of min-utes spent walking. We also allow the households’ time costs andvaluation of spring protection to vary as a function of the numberof children in the household, and household sanitation, hygieneknowledge, andeducation, byincludinginteractions betweenthemandthetreatment indicatorandthewalkingtimeterm. Givenourdata, note that the predicted probabilities do not vary by trip t.

After estimating the conditional logit (which does not allowfor parameter heterogeneity across households), we follow Berry,Levinsohn, and Pakes (1995), Train (2003) and others in explic-itly estimating heterogeneity using a mixed logit model with ran-dom coefficients on spring protection and walking distance in thehousehold indirect utility function. This requires the impositionof more structure on the distribution of preferences. Choice prob-abilities are:

(5) P(yijt|X)=∫

Bρijtf (B)dB,

where y, X, B, and ρ are defined as before, and f (∙) is the mixingdistribution, which we take to be the normal distribution for thespring protection coefficient and the triangular distribution (con-strained to be nonnegative) for the distance coefficient, althoughresults arealmost unchangedif thetriangulardistributionis usedfor the spring protection coefficient instead(not shown). Bayesiannumerical methods maximize the log-likelihood to estimate themeanandstandarddeviationofthesedistributions andallowbothfor household specific taste parameter estimates, as well as arbi-trary correlations of spring protection valuation andwalking timedisutility across households.13

We use data from the third follow-up survey, which asked re-spondents for the universe of water sources they could potentiallychoose and the number of trips made to each in the last week.The subscript t denotes a single water collection trip. The medianrespondent used two water sources in the last week and 65% ofrespondents named available alternatives that they chose not touse.

13. We use simulated maximum likelihood methods in the mixed logit esti-mation to obtain posterior distributions for the two variables with random coeffi-cients (the spring protection indicator and the walking time tothe source), as wellas household specificpreference parameters. The household specificestimates areobtained conditioning on actual household choices to generate a posterior distri-bution for each household (see Train 2003, chap. 11).

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SPRING CLEANING 177

IV.B. Estimating Willingness to Pay for Spring Protection

The conditional logit analysis yields a large, negative, andstatistically significant effect on the round-trip walking distancetowater source (measuredin minutes) term, at−0.055 (s.e. 0.001,Table VI, regression 1) and a positive statistically significant ef-fect on the treatment (protected) indicator term (0.51, s.e.0.051).14 Other terms in the regression indicate that streams,rivers, and wells are less preferred than nonprogram springs (theomitted source category), and there are only minor differencesin tastes for program (sample) springs, nonprogram springs, andboreholes. Thedistancetotheclosest watersourceis weaklycorre-lated with a range of household characteristics, including the dis-tance to the second closest source (not shown), alleviating someconcerns about omitted variables bias in the estimation of howwalking time affects choice.15

One issue with the interpretation of this result is possiblemeasurement error and attenuation bias in the reported distancewalking variable. The correlation across survey rounds in the re-ported walking distance to the reference spring is moderate, at0.38. In addition to simple recall error, the variation in reportedwalking time may be due to variation in travel time, dependingon the weather and thus the condition of the path to the spring,whether the collector is accompanied by a child, and the respon-dent’s health or energy that day. To approximately correct forclassical measurement error in this term, we inflate its coefficientto−0.055/0.38 = −0.145 and use this correction in what follows,although the correction estimated in a Monte Carlo simulation issimilar at 0.3 (not shown).

The inclusion of terms for measured E. coli contamination(available at a subset of alternative water sources) as well as thehousehold’s perception of waterquality at each source reduces thecoefficient estimate on the spring protection indicator to near 0(Table VI, regression 2), consistent with the possibility that

14. In Table VI, we exploit variation in spring protection status in referencesprings, but estimated spring protection valuations are nearly identical usingthevariationintheprotectionof nonreferencesprings inducedbytheprogram: theestimatedcoefficient on protection of nonreference springs is 0.53, nearly identicalto the 0.51 estimate in column 1 of Table VI. We focus on protection of referencesprings to maintain consistency throughout.

15. We do not find significant differences at traditional confidence levels be-tweenthehouseholds intheTable VI estimationsamples andthefull samplealonga wide range of observable characteristics (not shown).

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178 QUARTERLY JOURNAL OF ECONOMICS

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SPRING CLEANING 179

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180 QUARTERLY JOURNAL OF ECONOMICS

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SPRING CLEANING 181

households’ greater valuation of protected springs is almost en-tirely due to the impact of protection on water quality, ratherthan also being influenced by other factors, such as the reducedneedtobenddown tocollect water or faster collection times. How-ever, a specification that includes objective E. coli contaminationas an explanatory variable but excludes perceived water qual-ity (for which respondents might give self-justifying answers thatare endogenous to their actual choices) reveals that although thecoefficient estimate on the spring protection indicator falls byhalf, it remains positive and statistically significant, at 0.27 (s.e.0.07, regression not shown). Taking these results together, it isdifficult to definitively pin down the magnitude of the amenityvalue attached to spring protection beyond improved waterquality.

One might conjecture that households have an incorrect viewof the health impacts of spring protection at baseline, and thattheirbehaviorwouldshift overtimeas they learnmoreabout trueimpacts. However, valuations are nearly identical for householdswith one additional year of experience with spring protection duetothe phase-in of treatment (results not shown), although we can-not rule out that one additional year is insufficient for substantiallearning about true impacts.

Households with young children could potentially have bothgreater time costs of walking tocollect water (due tothe demandsof child care or carrying a child) and also greater benefits of cleanwater, sincetheepidemiological evidencesuggests that youngchil-dren experience the largest health gains. Empirically, householdswith more children under age three at baseline find additionalwalking distance tobe more costly, as predicted, and the estimateis large and significant at 99% confidence (Table VI, regression3). The coefficient on the interaction between the treatment in-dicator and households with child under three is positive, sug-gestingsomewhat greaterpreferenceforspringprotection, but theeffect is not significant. Given the walking time effect, however,willingness to walk for protection actually falls slightly for eachadditional child under age three in a household.

Household valuations of spring protection rise with latrineownership (perhaps reflecting underlying household taste for in-vesting in health) and with mother’s years of schooling (TableVI, regression 4), with the latter result suggesting that school-ing investments for mothers might translate into greater childhealth investment. However, the choice of protectedsprings is not

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182 QUARTERLY JOURNAL OF ECONOMICS

significantly affected by baseline respondent diarrhea preventionknowledge (in the household survey), or by stated knowledge of adirect linkbetweencontaminatedwateranddiarrheal disease(notshown). Asset ownership does not affect the taste for protection,nor does child gender (but recall that health gains appear concen-trated among girls), and including higher order walking distancepolynomial controls does not substantivelychangetheresults (notshown). Although replacement models of child valuation mightsuggest that oldermothers placegreatervalueonchildhealthandlife, because the costs of giving birth to another child are likely torise with age, spring protection valuations donot differ by motherage (not shown).

The ratio of the two main coefficient estimates can be com-puted for each household in the mixed logit analysis to yieldthe valuation of spring protection in terms of minutes of walkingtime(Table VI, regression5 andTable VII, panel A). Usingtheav-erage number of trips per week tosample springs, over the courseof a year the mean value of spring protection for a household is32.4 work days, with considerable dispersion in valuations.16

IV.C. Comparing Revealed versus Stated Preference WaterValuations

This subsection compares our revealedpreference spring pro-tection valuations to two different stated preference approaches,stated ranking and contingent valuation. The stated ranking ap-proachasks respondents torankordertheirpotential watersourceoptions rather than relying on information on actual householdwater trips. This ranking is performed sequentially in thesurvey, withthehighest rankedsourceeliminatedfromthechoiceset at each subsequent question. These data are then analyzedin the discrete choice travel cost framework already described.In comparing the results from this exercise to revealed prefer-ence valuation estimates, we note that stated preference valua-tionestimates areexpectedtocapturebothuseandnonusevalues,and thus should be higher than the strictly use value estimatescaptured by revealed preference. Although some people may de-rive positive value from knowing that an additional water source

16. The median value of spring protection in the mixed logit analysis is some-what lower, at 18.5 work days (not shown), and this is similar to the median val-uation in the conditional logit specification. This strengthens our main finding ofquite low valuation for spring protection among most households in this setting.

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SPRING CLEANING 183T

AB

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VII

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184 QUARTERLY JOURNAL OF ECONOMICS

alternative exists, even if they are not using it, we expect nonusevalues to be low in our setting.

Estimated stated ranking valuation for spring protection ismuch higher than the revealed preference estimate. The magni-tudeofthecoefficient estimateondistancewalkingfalls to−0.033,whereas that on spring protection rises to 0.96 (Table VI, regres-sion 6). Using the same attenuation bias correction for walkingdistance as before, the mixed logit estimate is almost twice aslarge as the revealed preference value, with a willingness to payfor one year of spring protection at 56.2 work days (Table VI, re-gression 7, and Table VII, panel B). Comparing the analogouscolumns in Table VI (regressions 1 and 6) suggests social desir-abilitybias mayalsobeaffectingthestaterankingresults. Theco-efficient estimates on several unimproved sources many Kenyansgenerally think of as unclean (e.g., streams, ponds) are far morenegative in the stated ranking case than in revealed preference,and the spring protection estimate is more positive.

The second stated preference method is contingent valuation(CV). Households inprotectedspringcommunities wereaskedhowmuch they would be willing to pay per year to keep their springprotected. The CV questions were only asked of households inthe treatment group because they have firsthand experience withspring protection. In the final wave of the survey, respondentswere first askedif they wouldbe willing topay either 500 or 1,000Kenyan shillings (US$7.14 or $14.29, respectively), followed bya question that emphasized the expenditure trade-off (in otherwords, the goods they would be giving up by spending that muchonspringprotection), andthenwereaskedif theywouldbewillingto pay the next higher amount, also with emphasis on the expen-diture trade-off.17

Nearly all households said they were willing to pay $7.14 forone year of spring protection, and the majority of households saythey are willing topay twice that ($14.29) even after being walkedthrough the expenditure trade-offs (Table VII, panel C). The useof the expenditure trade-off prompt reduces willing to pay sub-stantially (by 11–14 percentage points), indicating that these CVresults are sensitive toquestion framing. Valuations are alsosen-sitive to the starting value: those respondents randomly chosen

17. See Supplementary Appendix A.II for the exact survey question wording.As is sometimes the case with contingent valuation, the unusual nature of thehypothetical posed may have made accurate valuation difficult for respondents.

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to be asked whether they valued a year of spring protection at500 Kenyan shillings have mean willingness to pay that is twiceas high ($23.91) as those respondents first asked about a value of250 Kenyanshillings ($12.62). If weassumespringprotectionval-uations are normally distributed and use a maximum likelihoodapproach to find the normal distribution that best fits the data,the mean willingness to pay overall is $17.64 (s.d. $13.09).

To move from walking time to monetary values for the re-vealed preference and stated ranking cases, we need toknowhowhouseholds value water collection time. We do this in two ways,the first based on survey evidence on the time-money trade-off,and second by making assumptions using local wages. In the firstapproach, we asked a subset of subjects (surveyed after the round3 follow-upsurvey)about theirwillingness towalkadditional min-utes to access a protected spring. As before, we implemented thisusing a closed-end format, offering respondents discrete valuechoices foradditional minutes walked. Wethendidthesamethingin terms of willingness to pay money, the standard CV questions.We derive water collectors’ time value by dividing their statedmonetary valuation for spring protection by their walking timevaluation.18 As we only had the matched monetary and walkingtime CV data for a subset of 104 respondents, we next regressedthe estimated monetary value of water collectors’ time on a setof household characteristics (e.g., education, number of children,and asset ownership) in this subsample and then use theseestimatedcoefficients topredict time values for the entire sample.The resulting mean value of time is about $0.088 per eight-hourwork day, or about 7% of the wage those carrying water wouldhave earned for local agricultural labor, given that the averagecasual labor wage in western Kenya is US$0.89 over a 5.63-hourday (Suri 2009), or $1.26 per 8-hour day.19

18. We know only the bounds on household time valuation due to the closed-end nature of the CV questions. We address this by fitting normal distributionsto both the monetary and walking time distributions, and assigning individualsthe median value in the interval of the distribution defined by the bounds. For in-stance, amongthosewillingtowalk10 but not 15 additional minutes toa protectedspring, the median value is 12.61 minutes.

19. This local wage rate likely overstates the true value of time for multiplereasons, including workers’ needtotravel long distances towork, andthe fact thatagricultural work labor is not always available, being concentratedin certain peakseasons. Jeuland et al. (2009) estimate household demand for cholera vaccines inMozambique using a travel cost method and find that the opportunity cost of timewas approximately 28% of the mean hourly wage.

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186 QUARTERLY JOURNAL OF ECONOMICS

FIGURE IIHousehold Revealed Preference and Stated Preference Valuations of One Year of

Spring Protection (2007)The revealedpreference estimates are from the mixedlogit results in Table VI,

regression 5, and the stated preference ranking results are from the mixed logitresults in Table VI, regression 7. The contingent valuation data are presented inTable VII, panel C.

Combining these household-level estimated time values withour revealed preference mixed logit estimates, the mean valua-tion for a year of access to protected spring water is only $2.96(Table VII, panel A). The analogous stated ranking estimate isnearly double at $4.96 (panel B). The estimated distributions forthe three valuation approaches (in Figure II) indicate not onlythat stated preference methods exaggerate household willingnessto pay for environmental amenities in a rural Kenyan setting butthat the revealed preference approach yields less variable val-uations. One plausible explanation for the dispersion in statedpreference methods is that many respondents fail to introspectcarefully in unusual hypothetical exercises and thus their result-ing answers are far “noisier” than in the revealedpreference case,where they face real time costs.

Becauselimitedtime-incomesubstitutionpossibilities arefre-quentlyencounteredempirically (Larson1993; McKean, Johnson,and Walsh 1995), other authors also focus on a range of timevalues below the individual wage, often 25–50% of the average

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SPRING CLEANING 187

wage as a starting point (Train 1999). We thus also present re-vealed preference valuations using 25% of the average local ca-sual labor wage or $0.32 per eight-hour work day (in Table VII),but although valuation levels shift upward, they remain far be-low the contingent valuation figures. Note that the ratio of statedranking to revealed preference valuations is unchanged becauseboth are scaled up by the same value of time.

IV.D. Implications for Health Valuation

Under the assumption that households are aware of the rela-tionship between spring protection and diarrhea, combining theresults from Tables IV and VI yields an upper bound on the will-ingness to pay to avert child diarrhea. The bound will be tight tothe extent that households’ valuation of spring protection is en-tirely due to its impact on real and perceived child health, ratherthan also being due to other spring protection amenities (waterclarity, ease of collection, or health gains other than child diar-rhea); if these other factors are important, actual willingness topay toavert child diarrhea will be lower than our estimates. Notethat to the extent that people in comparison springs switch totreatment springs in response to the program, we will underes-timate both the impact on health and the valuation of spring pro-tection, but to a first-order approximation, both underestimateswould be of the same magnitude, so we would not necessarily un-derestimate health valuations.

If households have difficulty identifying the links betweenspringprotectionanddiarrhea, ordiarrhea andmortality, wemaynot correctly estimate the valuation of child health using this ap-proach. In a context in which there are multiple environmentalchannels forthetransmissionof fecal–oral diseases (e.g., lowratesof handwashing and open defecation, particularly by children), itis plausible that the benefits of an improvement along only one di-mension are difficult for households toassess. A 20% reduction indiarrhea prevalence, while biomedically important, might implya change from five diarrhea cases per year tofour cases for a typi-cal child, which wouldbe difficult for a parent todetect. Similarly,the cause of death is difficult to link to diarrhea alone; indeed, forchildrenthereis oftenendogenous feedbackbetweendiarrhea andmalnutrition.

Spring protection averts an average of (0.047 diarrhea cases/child-week)* (1.3 childrenage3 andunder/household)* (52 weeks/year) = 3.2 diarrhea cases per household-year. Using our mean

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spring protection householdvaluation of 32.4 work days (from themixed logit), this corresponds to a willingness to pay of 10.1 workdays percaseofchilddiarrheaaverted. Underthefurtherassump-tionthat springprotectionreduces diarrheamortalitybythesameproportion as diarrhea incidence, this yields an upper bound onthe valuation of a statistical life of 8,742 work days or 35 workyears (at 250 work days per year). This bound will again be tightif households’ valuation of diarrhea reduction is entirely due toitsimpact of mortality.20

Using the household time values derived from our surveys,and returning to the ITT health impacts estimated in Table IV,theupperboundonthevalueof avertingonecaseof childdiarrheais a mere US$0.89 (= $0.088 * 10.1 working days), andon avoidinga childdiarrhea deathis $769 (= $0.088 * 8,742 workingdays). Us-ing Monte Carlo methods, we estimate a 95% confidence intervalranging from $555 to$1,281. Using the same parameter values toconvert diarrhea cases toDALYs as usedin the calculations of thevalue of a statistical life and disability weights proposed by Lopezet al. (2006), the $769 figure corresponds toan upper boundon thevalueofavertingoneDALY ofabout $23.68. Usingthehighertimevalue (25% of the average western Kenyan wage) translates into$2,715 per averted child diarrhea death and $83.61 per DALY.These latter figures are likely to be upper bounds on true valu-ations because water is collected by women and young childrenwho are likely to have much lower than average wages.

This revealed preference bound on the willingness to pay perDALY averted is far below the cost-effectiveness cutoffs usuallyusedinanalyses of healthprojects inless developedcountries. Forexample, the 1993 World Development Report identified healthinterventions that cost less than $150 per DALY as “extremelycost effective” (World Bank 1993), and others have used a thresh-old of $100 per DALY (Shillcutt et al. 2007). Sachs (2002) has ar-gued for setting health cost effectiveness thresholds per DALYat levels corresponding to countries’ gross domestic product percapita, whichforKenyawouldbeover$400, nearly20 times higherthan our preferred estimate. Although an important source of

20. There are 5.69 deaths per 1,000 children under age five each year in Sub-Saharan Africa (Lopez et al. 2006, table 3B.7). With roughly 4.9 annual diarrheaepisodes per African child under age five (see Kirkwood 1991), 1.16 deaths fromdiarrhea would be averted for each 1,000 diarrhea cases eliminated if mortality isproportional to morbidity.

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uncertainty in our valuations is the conversion from the value oftime to monetary value, it is worth noting that even if our pre-ferred time values were quadrupled, the implied valuation ofhealth andlife wouldstill fall belowthose typically usedby publichealth planners.

These value of life estimates are also far below the estimatedvalue of a statistical life in the United States and other rich coun-tries (using hedoniclabor market approaches), where values typi-cally range from $2 to$7 million (Viscusi and Aldy 2003). Studiesfrom two poorer countries (India and Taiwan) yield estimates onthe order of $0.5–1 million, although they are difficult to comparetooursamplebecausetheyrelyondata forurbanfactoryworkers.Deaton, Fortson, and Tortora (2009) also find low values of life inAfrican samples using a subjective life evaluation approach. Weare unaware of hedonicvalue of statistical life estimates from thepoorest less developed countries.

Our revealed preference estimate of the value of health isconsistent with models in which there is a high income elasticityof demand for health, and thus where households’ valuation onlife in less developed countries is very low. Hall and Jones (2007)use US$3 million to $6 million as benchmarks for the value of lifein the United States. In a calibration of their model (using datafrom UNDP 2007), in which the value of a year of life is roughlyproportional to per capita annual consumption raised to the con-stant relative risk aversion utility function curvature parameter(which Hall and Jones suggest plausibly takes on a value of two),the value of a statistical life in Kenya ranges from $953 to$2,711.If per capita consumption in our rural study site is only four fifthsof the Kenyan national average, this range becomes $477 to$1,603, accommodating our revealed preference estimate of $769.

Establishing the ideal way toconduct welfare analysis here isimportant but beyondthescopeofthis article, andthus wepresenta variety of approaches in Section V. We first present results fol-lowing the conventional “neoclassical” approach of valuing livesaccording to households’ own revealed preference measures. Wethen consider the case of a social planner with a $125/DALY valu-ation (whom we call “paternalistic,” for convenience). This may beappropriate, forexample, if theplannervalues avertingchilddiar-rhea more than other forms of household consumption, if childrenreceive less weight in the household welfare function than in theplanner’s welfare function, or if households consider only privatebenefits of reducing diarrhea and ignore disease externalities.

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Using higher spring protection valuations might alsobe appropri-ate if households systematically underestimate the health bene-fits or if they are subject to time inconsistency problems.

V. SIMULATING ALTERNATIVE PROPERTY RIGHTS NORMS AND

INSTITUTIONS

Under Kenyan law, local authorities can require landownerstoallowneighbors access towaterontheir land. Inourstudyarea,local social norms also prevent spring owners from charging forwater. Perhaps partially as a result of these common propertyrights, virtually no springs are privately protected in our studyarea. Social norms regardingwaterrights inthestudyregiondateto precolonial times, when there were no centralized kingdoms inthe area and the key local sociopolitical unit was the kinship clan(Were 1967, 1986). In the colonial and postindependence eras,administrative boundaries were typically set to at least roughlycorrespond to clan boundaries, with the region settled by a clantypically being an administrative unit called a sublocation.

In this section, we determine the socially optimal level ofspring protection under the alternative assumptions that thesocial planner takes household revealed preference valuations asgiven, or that the social planner values child health at levelssimilartothoseassumedbyhealthplanners workinginpoorcoun-try contexts, andthen estimate social welfare under various prop-erty rights norms and institutions. We abstract from the costs ofenforcing property rights, focusing on the narrower question ofwhat outcomes social norms would produce if they were costlesslyimplemented. This discussion should thus be taken as an analy-sis of the welfare impacts of alternative social norms and insti-tutions and not necessarily an exploration of short-run Kenyangovernment policy options, because there may be significant en-forcement and transactions costs not considered here, as well asother costs in the transition to new institutions. Here we presentthe main results; the full results, including technical details, arein Supplementary Appendix C.

V.A. Impacts of Alternative Property Rights Norms

We consider the impact of alternative water property rightssocial norms and institutions when households endogenouslychoose among multiple local water sources, trading off source

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quality, walking distance, and water price, and spring ownerschoose whether to invest in spring protection based on profitabil-ity. We start by treating the marginal cost of providing spring wa-ter as 0 because water flows out of the ground without a pump,user congestion is minimal, and unused water simply flows away.Private property rights allow spring owners to charge for accessto spring water, providing an incentive to invest in protection,but also introduce a static distortion in water source choice, sincethe marginal cost of providing spring water is 0. Charging posi-tive water prices can thus lead households to choose springs thatwould be less preferred based on walking time and water con-tamination, the factors that are socially efficient for them toconsider.

We simulate the following game. At s = 0, the property rightsregime is chosen. At s = 1 profit-maximizing spring owners withina subgroupsimultaneouslydecidewhethertoprotect theirspring.At s = 2 spring owners simultaneously set water prices with fullknowledge of each household’s water source choice set and pref-erences, including their distance to each source. At s = 3 house-holds choose water sources to maximize utility given protectiondecisions and prices.21 We solve the model backward. The Nashequilibrium solution is a vector of protection and price decisionsforeachspringandconsumptiondecisions forall households, suchthat consumption decisions are optimal given protection andprices, andprotectionandprices areoptimal foreachspringownergiven other springs’ prices and protection decisions.

Household demand parameters derived from the revealedpreference mixed logit results (in Table VI, column 5) allow us tocompute the number of water collection trips made toeach spring,

21. We ignore any water consumption utility gains for spring owners becausethey would not necessarily live locally or consume spring water. We also incorpo-rate demand from new household users postprotection using information from ahousehold user census, as described in Supplementary Appendix C. A householdcensus conducted at a subset of nine springs suggests that protection increasesthe number of user households by 22% when the water is free. We find in thecensus that many new users live a greater distance from the spring than base-line users. The welfare gains to protection for these new households are presum-ably smaller, since they preferred an alternative source to the reference springat baseline. For a useful approximation of the welfare gains for this group, weassume that their consumer surplus is uniformly distributed between 0 and thevaluation of the baseline user household that lives farthest from each spring(in our data), as might be the case if households live at a continuum of dis-tances from the spring but their underlying taste for clean water is otherwise thesame.

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as well as other sources respondents listed in the household sur-vey when asked about potential alternative drinking watersources, as a function of the price and protection status of eachsource.22

Rather than solve the model for the entire area, we considersubgroups of uptofour contiguous springs within the same sublo-cation. Spring owners’ profits are equivalent to the net presentvalue of revenues, minus an indicator variable for the protectionstatus of the spring times $1,305, the estimated discounted costof spring protection construction and maintenance over the esti-mated15-year lifespan of a protectedspring in this region. We as-sume that neither spring owners nor planners can prevent resaleof water, so pricing is linear in the quantity collected and thereis no price discrimination. To determine the Nash equilibriumchoice of protection with multiple springs, we estimate best re-sponses toall possible protection/nonprotection combinations andsearch for a fixed point. When considering the impact of changingproperty rights norms for springs on private land, we hold con-stant policies for other water sources. In the rural Kenyan set-ting, there is typically open access through public paths to riversand lakes and most boreholes are sunk on public property, suchas schools or market centers, so water collection is free at theseplaces.

Household utility and social welfare are expressed in U.S.dollar values on a per spring basis, normalizing social welfare to0in the benchmark “status quo” case with common property rightsto water and no spring protection (Table VIII, row 1 in panels Aand B).23 We first consider the problem of a neoclassical socialplanner maximizing the utility of households as indicated by re-vealed preference, and then a paternalistic social planner valu-ing each DALY averted from spring protection at $125, roughlyfive times our preferred estimate of households’ average revealed

22. Results presented are averages from 10 runs of the simulations, eachwith an independent draw of household preference parameters (from the re-vealed preference mixed logit results). We generally considered springs locatedwithin one kilometer of each other to be part of the same subgroup, although insome cases springs at a slightly greater distance from each other were groupedtogether.

23. We generally do not present results on a per capita basis because thenumber of users can change with protection, but for a rough sense of per capitagains, recall that the average baseline number of household spring users is 31and households contain an average of 6.6 members, for roughly 200 persons percommunity.

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valuation. We assume both planners are constrained to allowhouseholds to make their own water collection choices based onrevealed preference. We then consider the equilibrium under var-ious forms of propertyrights andtwonon-budget-balancingmech-anisms, public provision and vouchers.

V.B. Social Planner and Property Rights Simulation Results

The neoclassical social planner protects 29% of springs, typi-cally those with many baseline householdusers (Table VIII, panelA, row2). The net social gain across all springs (protectedandun-protected) is $349 per spring, or roughly $1.75 per capita. The pa-ternalistic social planner would protect 74% of springs (panel B,row 2).

Freehold property rights are somewhat analogous to patentsin this analysis, because they spur potentially productive invest-ments but induce staticdistortions as spring owners have marketpower in setting prices, given the travel costs households facein water collection. Under freehold private property, only 5% ofspring owners findit profitable toprotect their spring (Table VIII,panel A, row 3). The net present value of profits per spring owneris $417 and the average price charged per water collection tripis $0.0027. For a household with typical water consumption, thisis equivalent to $4.49 per year, about a week’s wages. Freeholdprivate property rights substantially reduce social welfare rel-ative to the communal property status quo, with a loss of $91per spring. The dynamic gains from spring protection are smallbecause few springs are protected, but static losses are largefrom households walking farther or choosing dirtier sourcesto avoid paying for spring water. The proportion of householdtrips to rivers and streams, the dirtiest sources, increases by38% relative to common property, and as a result averagefecal contamination as measured by E. coli in collected waterincreases by 26 log points (from 4.66 to 4.92). Average walkingtime per collection trip also rises from 11.6 to 12.9 minutes,and this amounts to over 100 extra hours per household eachyear.

Freehold property rights lead to both under- and over-protection. Though only 13% of the springs that would beprotected by a neoclassical social planner are protected underprivate property, some springs the planner would not protectget protected. The inability of spring owners to capture the

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194 QUARTERLY JOURNAL OF ECONOMICS

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SPRING CLEANING 195

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full consumer surplus of potential users due to heterogeneity invaluations leads to under-protection, but a rent-stealing effectcan lead to over-protection, as spring owners do not considerthe negative impact of spring protection on owners of competingnearby springs.24

It is also worth considering other private property rights in-stitutions beyond the stylized extremes of common property andfreehold private property, because actual social norms are oftenmore complex. Locke (2002 [1689]) argued that people acquireproperty rights in land when they mix their labor with it, for ex-ample, by clearing land or planting a crop. This element of prop-erty rights is common in rural Africa andelsewhere. For example,in Ghana actively farming a plot is critical to securing propertyrights (Goldstein and Udry 2005). A “Lockean” property norm inour context would only permit spring owners to charge positiveprices if they had invested in spring protection.25

Under Lockean property rights, spring owners’ continuedinability toprice discriminate and thus capture the full consumersurplus from protection leads to under-protection, as in the free-hold private property case. On the other hand, the possibilitythat protecting a spring allows owners to capture not just thevaluation on spring protection but also part of the surplus fromconsuming unprotected water could lead to over-protection. Thesimulations suggest Lockean private property rights yield some-what higher investment than freehold private property althoughthere is still substantial under-protection: 12% of owners nowfindit profit maximizing to invest in spring protection (Table VIII,panel A, row 4). Although social welfare remains lower than thestatus quo, Lockean rights are marginally better than freeholdprivate property: the social welfare loss per community is only$43, average fecal contamination increases by just 4 log points,

24. We do not present paternalistic social planner welfare for the freehold orLockean cases in Table VIII, panel B because they are not directly comparable tothecommunal propertyoutcomes; seeSupplementaryAppendixC fora discussion.Note that an alternative policy, which we donot consider, could make transfers tohouseholds so valuation of life would be increased. We thank a referee for thispoint.

25. Historically, some legal systems seem to have evolved from common prop-erty for water toward the Lockean norm. For instance, despite the fact that watersales are discouraged by several hadith (see Caponera 2006), certain Islamiclegaltraditions evolved to allow the builders of wells and irrigation canals to chargefor access tothe water made available by their investments (Mawardi 1900–1901,p. 316; Wansharisi 1909, p. 285).

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and average walking time rises slightly. Yet with both fecalcontamination and walking time increasing, a paternalistic plan-ner would still likely prefer common property to Lockeannorms.

A “modified Lockean” regime under which spring ownerscould charge for water from protected springs as long as they alsoallowed free access to unprotected water from the spring gener-ates a Paretoimprovement over the common property status quo.In our setting, a system of modifiedLockean property rights couldbe achieved simply by requiring owners who protect springs toallow some water to flow out of the pipe and away from the pro-tectedspring, where it becomes a pool of unprotectedspringwaterexposed to the environment that anyone can access. The avail-ability of free unprotected spring water shields households fromthe utility losses experienced under the other private propertycases, and spring owners cannot be worse off than under commonproperty.

Under modified Lockean property rights, 2% of springs areprotected(TableVIII, panel A, row5). Sevenpercent of thespringsa neoclassical social planner wouldprotect are protected, whereasonly1% ofsprings theplannerwouldnot protect areprotected(notshown). Although this is far from attaining the social optimum, itincentivizes spring owners to perform some beneficial protectionwhile leaving no households worse off. The paternalistic plannerwould also prefer this modified Lockean system to common prop-erty. Although average ln(E. coli) levels are the same to two deci-mal places in Table VIII, they are in fact lower by 0.003 under themodified Lockean system.

Public funding, either through direct government provisionor vouchers, performs much better than the budget-neutral prop-erty rights norms already considered. A hypothetical governmentthat has access only to distortionary taxation that creates a 30%deadweight loss, that knows onlythedistributionofpreferences inthe population but not individual householdpreferences, andthatseeks to maximize welfare protects 22% of springs (Table VIII,panel A, row 6), including 12% of springs a social planner wouldnot protect. The welfare gain per spring is $130, less than the$349 gain attained by a social planner, due to the tax distortionand the misallocation of protection across springs due to policymakers’ limited information on households’ preferences. A gov-ernment that values health gains from protection at $125/DALYwouldprotect 71% of springs (panel B, row6), coming much closer

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tothecorrespondingsocial plannerthananyofthebudget-neutralapproaches.

Finally, suppose the government provides households withvouchers that they can pay to spring owners, and spring ownerscan then exchange these vouchers for a fixed payment fromthe government. We assume the government restricts springowners from charging top-up fees to water users (so households’ex post decisions on which water sources to use are efficient),and sets the voucher payment taking into account the laternoncooperative protection decisions of private spring owners,once again knowing only the distribution of water preferencesin the entire population but not the preferences of individualhouseholds, which we assume local spring owners do know. Wefind that the optimal voucher price is $0.0012 per trip to aprotectedspring (much less than the price chargedunder freeholdprivate property), and social welfare gains per spring underwater vouchers are $124. Eleven percent of spring owners protecttheir springs (Table VIII, panel A, row 7), still short of thesocial optimum, but there is less misallocation of protectionbecause spring owners with better information on local demandmake decisions on spring protection: only 3% of the samplesprings the social planner would not protect get protected here(not shown in the table). This policy improves social welfaresubstantially relative to the budget-neutral cases, and socialwelfare is comparable to government investment. A policy makerwith health valuation at $125/DALY sets a uniform voucher priceof $0.0032 (panel B, row 7), nearly three times higher than theprevious price level, and as a result 46% of spring owners chooseprotection. Both government cases perform much better than anybudget-neutral property rights system under both neoclassicaland paternalistic social planners.

V.C. The Determinants of Optimal Property Rights Institutions

Although our simulations suggest that communal propertyrights deliver higher welfare than freehold private property, theyalso suggest that freehold property rights could yield higher wel-fare if income were even moderately higher than current ruralKenyan levels, if technological progress allowedprovision of cleanwater at lower cost, or if water became increasingly scarce. Underthe Hall and Jones (2007) claim that the income elasticity of de-mand for health is roughly 2, and taking into account that both

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the opportunity cost of travel time and the labor costs of springprotection and maintenance increase proportionally with risingincome (but that the costs of the materials usedtoprotect springs,i.e., piping, do not),26 we estimate that if income increased by10%, freehold private property rights would become preferable tocommon property norms. This implies that rural western Kenyais currently very near the income threshold above which privateproperty norms yield higher social welfare than communal norms(and may already have crossed the threshold given the modelinguncertainty inherent in the simulation). If this finding that pri-vate property rights become optimal at higher income levels holdsmore broadly, it could help explain the strong cross-sectional re-lationship documented between institutions and income levels,and suggests it would be risky to assume that causality alwaysruns from stronger property rights protection to higher incomelevels (as also noted by Demsetz 1967; North 1990; among oth-ers). An analogous argument implies that if new technologiesemerged that provided clean water at lower cost, or if popula-tion density were higher, thus increasing the social benefits ofspring protection, freehold property would again likely becomemore attractive, because the benefits of encouraging investmentwould rise.

It thus seems likely that communal property norms for wa-ter were in fact socially optimal when they emergedin precolonialKenya, a historical period when incomes were much lower, thespring protection technology was costlier, and populationdensity—and thus water contamination levels and the number ofpotential users amongwhomtosharefixedinvestment costs—waslower.

Water extraction at springs could impose negative externali-ties on others, for instance, by lowering the local water table. Thisis in contrast to local rivers, streams, ponds, and lakes, wheremost water would have flowed away or evaporated. Assumingthat neither household water users nor spring owners take intoaccount the negative social costs of water collection at springs,positive water pricing at springs can lead households to collectwater in a less socially costly way. However, our simulationssuggest that private property would not become efficient in our

26. Using information on actual contractor costs in western Kenya, we esti-mate that materials constitute roughly 25% of the cost of spring protection andmaintenance, and labor costs account for 75%.

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context unless the extra social cost of water collection at springs(relative to streams or rivers) was very high, at twice the pricethat landowners charge for water in equilibrium (in Table VIII),thus constitutingasubstantial fractionofhouseholdincome. Moregenerally, allowing for positive pricing couldalsobe more efficientif water collection at springs imposes other social costs, for exam-ple, by interfering with the privacy of the landowners who livenear spring sites.27 Our results are in line with Demsetz’s (1967)classic discussion, which argues that private property rights be-come socially optimal, and thus are more likely to emerge, asnatural resources become increasingly scarce.

VI. DISCUSSION AND CONCLUSION

Spring protection dramatically improved source water qual-ity in a rural African setting, reducing fecal contamination bytwo thirds and both home water contamination and child diar-rhea by one quarter. By capitalizing on changes in water sourcechoice in response to spring protection, we develop revealed pref-erence estimates of willingness topay for improvedwater quality.Because of the experimental research design, these travel cost es-timates are not subject to many typical econometric concerns andcan be used to validate the reliability of stated preference esti-mates. Revealed preference estimates of spring protection valu-ation are far below stated preference estimates and, assumingpeople understand the effect of spring protection on health, im-ply valuations of only US$23.68 per DALY, roughly one fifth ofthe valuations typically used by public health planners. The es-timated valuations are consistent with models such as Hall and

27. Supplementary Appendix III presents the details. We thank Robert Barrofor suggesting this exercise. When water collection imposes costs on landowners,it is easy to show that private property rights become socially optimal as thiscost becomes sufficiently high. Under communal property, higher collection costslead to increasingly large social losses, with costs borne by landowners. However,under private property, landowners have the option of setting arbitrarily highprices, and thus are able to limit collection trips to their springs. For sufficientlyhighcollectioncosts, privatepropertyrights strictlydominatecommunal property,once usage costs are so high that they dominate the loss in utility experiencedby households diverted from springs to other, less desirable source types.Charging for water could also reduce total water consumption, an importantissue in areas where water is scarce. However, this is not a pressing concernin our Kenyan study area. We do not find an impact of walking distance towater sources on the quantity of household water used in our sample (notshown).

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Jones (2007), in which the elasticity of demand for health is muchgreater than 1.

Using structural econometric methods in tandem with thespring protection experiment, we carry out counterfactual simu-lations toexaminetheconsequences of alternativepropertyrightsnorms for water. Existing social norms allowing communal accesstonaturallyoccurringsprings yieldhighersocial welfarethanpri-vate property norms in this setting, providing a rationale for whycommunal water rights have been so historically durable in thisrural African region. Simulations suggest that private propertybecomes more attractive than communal norms when water isscarce or health valuations reach a sufficient level that freeholdpropertyrights canspurinvestment, whichappears likelytooccurwith moderate increases in incomes above current rural Kenyanlevels.

The property rights simulations abstract away from trans-action costs in collecting water user fees, but these are likely tobe large under private property norms. Many historical analysesof movements from common property to private property insti-tutions, such as British land enclosures (Allen 1982), may wellfind they are associated with increased social welfare. Yet this isnot inconsistent with arguments that common property institu-tions are in fact sometimes optimal in other contexts. If healthvaluations rise with income, and there are substantial costs toshifting tonewproperty rights institutions, then if income followsa stochastic process, societies may only elect to change propertyrights norms at income levels far above those at which such shiftsappear statically efficient. Such changes could also be delayed inpracticeif political institutions makeit difficult for“winners”fromthe new property rights to credibly compensate “losers,” or theycan only be undertaken with the consent of supra-majorities.

Our property rights simulations suggest that even at currentKenyan income levels, new institutions and policies could poten-tially be layeredontoexisting common property norms toimprovesocial welfare, including government provision or vouchersthrough which the government pays spring owners based on thenumber of water users, or by allowing spring owners to chargefor improvedwater while maintaining access tounimprovedsites,what we call the modified Lockean approach. In our setting, thegovernment of Kenya and foreign aid donors are in fact protect-ing increasing numbers of springs over time while maintainingcommonpropertyaccess. Theanalysis inthis articlesuggests their

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approach is reasonable given current technology and householdpreferences.

HARVARD UNIVERSITY, BROOKINGS INSTITUTE, AND NATIONAL

BUREAU OF ECONOMIC RESEARCH

WORLD BANK

UNIVERSITY OF CALIFORNIA, BERKELEY, AND NATIONAL BUREAU

OF ECONOMIC RESEARCH

BILL AND MELINDA GATES FOUNDATION

SUPPLEMENTARY MATERIAL

Supplementary material is available at The Quarterly Jour-nal of Economics online.

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