How valuable are environmental health interventions? Evidence from a quasi-experimental evaluation of community water projects1

Abstract: The Millennium Development Goals reflect the world’s collective hope and resolve to reverse a particularly pernicious, pervasive, and persistent set of problems in much of the world: high rates of diarrhea (the number one killer of small children), insufficient water and sanitation, and seemingly unsafe and myopic behaviors. Environmental health policies related to water and sanitation (W&S) must address the usual efficiency criteria (e.g., externalities), but also significant equity concerns. Health, time, and energy costs fall disproportionately on the poor, women and children. While there is an extensive literature on the appropriate theoretical model for evaluating welfare impacts, these have been rarely used in estimating gains from environmental health interventions both because adequate data for such evaluations are scarce and because few practitioners have explored how the textbook elegance of these models correspond to field realities. Thus, our paper uses a large-scale community-demand-driven (CDD) water supply project to (a) describe the challenges of welfare estimation using revealed preference data on multiple inputs and outputs, and (b) showcase a unique combination of propensity-score ‘pre-matching’ and rich panel data for estimating welfare impacts of a multi-dimensional environmental health project. Three years after project initiation, we found that the CDD project had had a significant impact on reported use of taps (13 % increase) and toilets (7 % increase). Diarrhea incidence fell significantly durin