Valuing Access to Drinking Water in India, with Fiona Burlig

Notable Quotes

• Lack of access to clean drinking water poses serious health risks: “We see close to two billion cases of diarrhea worldwide caused by lack of access to clean drinking water. Perhaps more seriously, drinking contaminated water is one of the leading causes of child mortality around the world. So, lack of access to clean water has these really massive and devastating health consequences. Of course, that lack of access is concentrated … in low- and middle-income countries.” (4:25)
• Private companies are seizing an opportunity in the market for clean water: “Private water delivery … is really taking off around the developing world. We’re seeing that the government isn’t providing clean water in lots of places, so the market is starting to fill a gap.” (18:09)
• Access to clean water could increase by combining public and private efforts: “It’s not obvious whether the state is actually going to do a better job at [providing clean water] than the private firms … At the end of the day, what we want is clean water getting into people’s houses. If a combination of private and public actors is able to deliver that, then we’re delighted.” (21:06)

Top of the Stack

• “The Value of Clean Water: Experimental Evidence from Rural India” by Fiona Burlig, Amir Jina, and Anant Sudarshan
• Development Impact blog from the World Bank

The Full Transcript

Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Daniel Raimi.

Today, we talk with Dr. Fiona Burlig, an assistant professor at the Harris School of Public Policy at the University of Chicago.

Along with a couple of coauthors, Fiona recently published a working paper focused on access to clean drinking water in India. Specifically, the paper describes an experiment where the authors worked with a private company to provide different levels of subsidies to households to access clean water using an innovative delivery system.

Access to clean water is obviously hugely important, and this study provides new evidence about how this new form of delivery might increase the public's willingness to accept and pay for this essential service.

In today's episode, Fiona will help us understand how many people around the world lack access to clean water, what technologies are available to provide it, and what the study found about people's desire to access this new water delivery mechanism. Stay with us.

Fiona Burlig from the University of Chicago, welcome to Resources Radio.

Fiona Burlig: Happy to be here.

Daniel Raimi: We're happy to have you. I'm really excited to talk about this recent working paper you published with colleagues. We'll have a link to it in the show notes so people can check it out as they're listening or read it later. The name of the paper is “The Value of Clean Water: Experimental Evidence from Rural India.”

Before we talk about the paper, we always ask our guests to tell us a little bit about themselves and how you got interested in environmental topics. Maybe you had some early-in-life inspiration, or you came to this field later in life, but what drew you to environmental economics?

Fiona Burlig: I grew up in Northern California, and like every good NorCal kid, I was hiking, biking, camping, and skiing from a pretty early age.

That being said, I actually didn't get into the environment professionally until much later in my career. I arrived at graduate school expecting to be a development economist interested in studying social networks and small rural villages in India. But I went to grad school at the University of California, Berkeley, where there's an amazing set of environmental economists. The more seminars that I went to and the more people I interacted with, the more I realized that the environment was something that economists were actually studying and doing really cutting-edge frontier work on.

So, I shifted my research focus a little bit. My dissertation was about rural electrification and bringing energy access to small villages in India for the first time. I was trying to blend this development, energy, and environment focus. Now, I work at the intersection of these two things.

Daniel Raimi: That’s really interesting. I'm curious about the India connection, as well. How did you become interested in working in India?

Fiona Burlig: That’s a great question. It was kind of by mistake. As any enterprising young graduate student is doing, I was looking around for places where there might be interesting projects to work on. We had gotten interested in this question of what happens when you bring electricity access into new places for the first time? As we were looking more and more closely into that, we realized that there had been a series of massive national electrification pushes in India that lent themselves well to research. So, we started working on India for that first topic.

Once you start on one project, you just keep going and keep going and keep going. So, it's been a really enjoyable experience to learn a lot about the institutions and the culture and get to know India a little bit better professionally.

Daniel Raimi: That's super interesting.

Let's talk now about some of your work in India, which, as I mentioned earlier, is focused on access to clean water. In the United States, many of us take clean drinking water for granted. We just turn on the taps, and it's there. But that's, of course, not the case everywhere in the world, including in parts of India.

Can you help us understand how many people around the world struggle with this issue of access to clean water and what the implications are for people's lives and their health?

Fiona Burlig: Yes. We're looking at more than one billion people around the world who don't have access to clean drinking water at home. As you can imagine, that has massive health consequences.

We see close to two billion cases of diarrhea worldwide caused by lack of access to clean drinking water. Perhaps more seriously, drinking contaminated water is one of the leading causes of child mortality around the world. So, lack of access to clean water has these really massive and devastating health consequences. Of course, that lack of access is concentrated, as you might imagine, in low- and middle-income countries.

Daniel Raimi: Talk us through, specifically, where some of the hotspots are where you see this issue being most prevalent—possibly in parts of India or elsewhere around the world.

Fiona Burlig: Much of Sub-Saharan Africa faces this challenge. Because there are just so many people in India, as soon as you have a problem that hits 30, 40, 50 percent of the population, you're dealing with massive numbers. So, India is another place where this is a really serious issue.

Daniel Raimi: Right, okay.

You carried out a large experiment in India focused on this issue. In particular, you were looking at a technology that I'll generally refer to as “decentralized water treatment.” Can you tell us a little bit more about this technology? How is it making the water clean, and how are people actually receiving and consuming this drinking water?

Fiona Burlig: It might be useful for me to tell you a little bit about the various ways in which you could get clean drinking water.

The standard thing that we're used to here in the United States is exactly what you were describing—you turn the tap on and you get clean water that comes right out.

Piped water is definitely something that we are increasingly putting into place around the world, but the reality is that around 14 percent of rural households have access to piped tap water today. So, even though this technology is not new—we've had pipes in people's homes since ancient Rome and these things have been mandated in the United Kingdom since the 1870s—we're still at a place in many low-income countries where people just don't have clean water coming through their taps.

What we're doing is trying to emulate that piped water service through what we call the “decentralized treatment” and then home delivery. The way that this works is that each village is going to have a water kiosk. You can think about that as a miniature water-treatment plant that uses an electrochemical process to treat the local groundwater or surface water, making it clean—meaning it’s free of heavy metal contamination, as well as biological contaminants. That's step one—cleaning up the water. We're going to do that locally.

Because these households don't have pipes in their homes, we need to get the water to them in some way. That’s step two. We're going to do that in this project by partnering with a small company called Spring Health that does exactly this. They clean the water themselves, and then they deliver it to households using auto rickshaws. You can think of them as small motorbike taxis. They do so using these large, water cooler–style jugs. Households can call up the company and ask for a clean water delivery and they'll get a giant jug of clean water that arrives at their house quite shortly.

Daniel Raimi: Got it. And this is a service that's by request? There's a phone number you can text and request the water, and then it comes?

Fiona Burlig: Yes, that's exactly right. Delivery guys are driving around the village making deliveries to homes, essentially daily. If you want a delivery, you just call, and usually that water will show up either that day or the next.

Daniel Raimi: Interesting.

Tell us a little bit, now, about the experiment that you conducted and how you designed the study.

Fiona Burlig: We were interested in learning a couple of different things. The first one is how much people were interested in getting this water delivered to their home. A challenge with clean water in the past has been the absence of pipes. How else can you provide clean water into people's houses?

An alternative technology that's become pretty popular among development economists is basically chlorination tablets or a chlorine solution. If you provide households with chlorine that they can just mix into their water, that actually yields massive health benefits at really low prices.

One problem with that technology, though, is that it turns out the take-up is quite limited. So, people don't actually want that chlorinated water even when it's free. Some people do, but it's hard to get more than about 50 percent of the population to take those chlorine tablets or that chlorine solution and use it.

I think the reason for this is self-explanatory. We've all been in a swimming pool and accidentally drank some of the water. It's not a very pleasant experience, and you can imagine that making that your primary source of drinking water is not something that people are really interested in doing.

What we wanted to then learn was whether this alternative source of clean water, which is nice, because it's tasteless and clean, can get people to actually be willing to take and consume that water, so that people can get the health benefits that we're hoping to see by providing people with clean water.

The goal of this study was, first of all, to measure take-up. Second, we wanted to see how take-up of that clean water varied with different prices, so we could learn something about how much households value that clean water. And then, as an ancillary bonus, we wanted to corroborate existing findings that suggest that clean water is, in fact, as you would imagine, good for people's health.

Daniel Raimi: That's really interesting. For the purposes of figuring out the effects of providing this water, did you do a randomization of households, of who got the service and who didn't? Can you tell us a little bit about that element of the study design?

Fiona Burlig: Yes, absolutely. A challenge with this kind of research question is that we're interested in understanding the causal effect of providing clean water at different levels of price. One thing that's hard about that is that if you were to only compare households that are currently buying clean water to those that aren't, those households are going to be different in a variety of ways. So, we use a randomized control trial to overcome those differences in households, so that we can isolate the causal effects of clean water on our outcomes and the effect of pricing that water differently to different households.

We do that by running a randomized control trial in a state in eastern India called Odisha. We picked around 120 villages where the clean water company was already working and we randomized these villages into 3 main groups.

In one group, we give households, again, in a randomized way, different discounts for their clean water. Households that get unlucky and end up in the control group can continue to purchase water at the market price that the company is already charging. But then we're also going to provide discounts on top of that market price ranging from 10 percent to 90 percent. So, we’re almost giving away the water for free.

In a second group of villages, we give households what we call a “free ration.” It’s an entitlement of about a normal household's worth of drinking water once a month.

Finally, in a third arm that's a little bit strange and unusual, but that we are pretty excited about, we do what we're calling an “exchangeable entitlement.” We tell households, "You're eligible for 300 liters of clean drinking water for free this month. But for every liter of water you choose not to order from us, we'll come back at the end of the month and give you cash back."

What's nice about these three arms is they allow us to measure a bunch of things that we're interested in. You can think about the free-ration arm as a nice way of just directly measuring the health effects of clean water. We're giving people water for free, and we're looking at whether they benefit in terms of their health as a result.

The other two treatment arms help us learn something about the value of that clean water to households. How much do households actually take up that clean water, and does that vary by price? That's what we get from the prices arm, but we might be concerned in this low-income setting that there are liquidity constraints or other barriers that prevent people from getting the cash together right away to order the clean water that they'd like. By doing this exchangeable entitlement thing, where we give households an allocation but then give them cash for every unit they don't use, that allows us to measure willingness to pay for this water, but absent some of the standard development market failures you might be concerned about.

Daniel Raimi: That’s really interesting.

Fiona, one question that I think researchers listening will know well, but maybe students or others who haven't gone through research protocols with human subjects might not understand, is about the things you have to do before doing an experiment like this. You can't just go out there and start doing experiments in villages without oversight. Can you talk a little bit about the institutional process that you and others go through before carrying out these experiments in the real world with real people?

Fiona Burlig: Yes, absolutely. Of course, carrying out research with a high degree of ethical integrity is really important, because we're dealing with real people who are participating in these studies. We need to make sure that we're respecting them and treating them as well as possible. But we also need to make sure that that research has the ability to have important policy implications. It matters that we do the research correctly.

So, in addition to spending a lot of time figuring out what the right experimental design is from the perspective of answering the research question as best as possible, we also go through intensive ethical review.

The way that works is, at our home institution, in this case, the University of Chicago, there's an institutional review board, or IRB. Before doing anything or interacting with people in the field, we will submit our entire research protocol—including the design of the experiment, the treatment arms themselves, any survey instruments we're going to use, any incentives that we give households, etc—to the IRB. They do a really careful overview to make sure that we're doing things in an ethical and approved way.

Daniel Raimi: Great, thank you for that.

We've talked about the study’s design for a while now. Let's talk about the results. Can you tell us a little bit about how costly the program was? What were people willing to pay, and how widespread was the take-up in your experiment?

Fiona Burlig: We think that these results are really encouraging. As I was talking about earlier, even when you give out chlorine solution or chlorine tablets for free, only around 50 percent of households on average take those tablets, let alone use them.

In this study, what we're finding is when we give out our clean water for free, we're getting a take-up of around 90 percent. What's really exciting about that is it's not just a one-off offer. We ran the experiment for between five and seven months, and we're seeing consistently high take-up at the zero-cost version of the experiment.

What that suggests to us is that this approach of decentralized treatment and home delivery might overcome a lot of the barriers that have prevented people from being excited about the chlorine solution, which means it might unlock a bunch of health benefits that have been previously elusive.

The other thing we learned that's really important, however, is that people are quite sensitive to price. As you increase the price, take-up goes down substantially. When you're at the control group or status quo price, we're seeing take-up of about 1 to 2 percent of households. What that suggests is that how you price this water really matters for how easy it is to get it into people's hands.

What we're seeing in terms of valuation, even though people's take-up falls with price, is that the revealed value of clean water that we get out of this experiment is much higher than what had been found in previous studies.

Why is that? We think an important piece of this is that previous studies were valuing clean water, essentially by valuing how much people were willing to pay for chlorine solution. As we've been discussing, that comes with additional costs above and beyond just the cost of clean water.

What we think we're finding here is that people actually do value clean water. They value clean water quite a lot, and that's a somewhat rare finding. There's been other evidence in the development setting that people have surprisingly low valuation for environmental quality. Here we're finding reasonably high valuations for clean water, much higher than what's been found for previous studies. To us, this suggests that it's really important to go in and measure this value directly, rather than thinking about willingness to pay for a water-purification technology.

Daniel Raimi: It's so interesting that it varies widely across technologies. But it totally makes sense when you think about the potentially nasty taste of chlorinated water.

Fiona Burlig: Yeah.

Daniel Raimi: Another thing I was curious about was the dollars and cents. How much is this company that's providing this clean water charging per gallon or per liter? How does that cost compare to other water prices you might see around the world? I’m just trying to get a sense of how much money we’re talking about that people are actually paying.

Fiona Burlig: Yeah, so the price the company is charging in the status quo is about 1.4 rupees per liter. That's around 2 cents.

Daniel Raimi: Great. I'm also curious, you said that you were looking at the health impacts of access to this clean water. What types of things were you finding in terms of health outcomes?

Fiona Burlig: This isn't the primary focus of our study since, as we mentioned, it's a well-established fact that drinking dirty water is bad for you. But it's still important to corroborate those findings in our setting to help us think about the household's valuation as well.

We measure a couple of key health outcomes. One of them is how often the household reports that somebody is sick. Another one is trying to understand how often people miss work because of illness. A third one is expenditures on health.

What we see is that people's reports of illness within the family goes down substantially; by about 50 percent, in some cases. So, there are really big effects on reported illness. We also see that households miss work less often. That's especially true, as you might not be surprised to hear, for households that have small kids at home. We also look at these health-spending measures. There we don't really see much, although that's consistent with the setting where people aren't spending all that much on their health care to begin with.

Daniel Raimi: That's interesting.

I'm also curious about the business-model aspect of this. In the United States and many other parts of the world, drinking water access is provided by a public entity like a city utility. But here, we're talking about a private company that's providing this service.

How do you think about the opportunities for private water companies to play a role here, especially in low-income markets, compared to the potential for a state actor to come in and try to provide a similar service?

Fiona Burlig: Normally, we think about water being a gutter service that makes sense to be provided by a state utility, because we don't want 50 sets of pipes being sent to your house. But, here, we're not necessarily dealing with infrastructure, we're dealing with one kiosk and then decentralized delivery. So, you can imagine that there's more space for private actors to enter the market.

One reason to study private water delivery, by the way, is that this is really taking off around the developing world. We're seeing that the government isn't providing clean water in lots of places, so the market is starting to fill a gap.

That being said, there’s one thing that came out of our study that we think is really interesting. We did a little bit of a back-of-the-envelope calculation and worked out that the firm that we're working with is, as you might have imagined, charging prices that are pretty close to profit maximizing. That means that the price that the firm is charging in the private market is enough for the firm to stay afloat, but it’s actually way too high to increase take-up to the levels that we might want. That suggests that if we want to get to this 90 percent take-up that we're seeing when we're giving water for free, we need to actually have some kind of government intervention.

What might justify that here? Clean water is something that's associated with a lot of externalities. We're thinking about waterborne disease. If I'm less sick, that means my neighbors are less sick, as well, but I don't internalize the benefits to my neighbor when I'm buying my own clean water. That by itself is a reason that we might imagine government subsidies could be useful in this kind of a setting.

One thing we think could be cool is a combination of the private market with government subsidies. So, allowing the private players to continue to participate here, pay the fixed cost of setting up the water kiosks, and do some delivery. But then they’d also allow the government to subsidize the per-unit price so we get that water to many, many more households than their private market would supply on its own.

Daniel Raimi: Right. I'm just thinking, as you answer that question, about listeners who might think to themselves, "Well, water is a basic necessity to live. Why are private companies involved at all? Shouldn't the government just play this role entirely?" How do you think about that issue?

Fiona Burlig: That's a really important question. The way that I think about this is that, yes, we agree that water is really vital for human life. But it also doesn't come completely for free. There are costs associated with bringing that water to people's homes. Someone needs to bear that cost. Our results broadly suggest that there would be massive benefits if the government were to get involved in this market and dramatically reduce the price to households.

Daniel Raimi: Right. And whether the government directly does the provision or a private company does the provision of the water, do you see many trade-offs with regard to that question?

Fiona Burlig: I think that at the end of the day, what we want is high-quality clean water getting into people's homes. If it turns out that private firms have figured out a great way to do that, then we want to support them in doing so—as long as we can do that in a way that keeps the price down for private consumers.

Normally, we think about governments getting involved when we're worried about quality. But one thing that's interesting, that we don't always think about in the development setting, is that it's not obvious whether the state is actually going to do a better job at this than the private firms. Yes, we want some form of oversight and regulation to make sure that the water that's being provided to households is actually clean. But in this setting we're working in, in the places that do have piped water that typically is supplied by the government, we do tests of that water and actually find pretty high levels of contamination, even in the government-supplied water.

So, that's actually a place where the private market might do better, because they have an incentive that comes from people choosing with their pocketbooks to provide water that's higher quality than what exists in the status quo and is provided by the state.

Again, at the end of the day, what we want is clean water getting into people's houses. If a combination of private and public actors is able to deliver that, then we're delighted.

Daniel Raimi: That’s really interesting.

Well, I have one last question I'd love to ask you before we go to the Top of the Stack segment, which is about working with this company that you mentioned. I think it's relatively rare for researchers to work directly with private companies to run experiments. I'm curious about your experience partnering with this company. How did it come about, and what was the experience of working with them like?

Fiona Burlig: It's the first time I've done it myself, as well. It’s definitely a little unusual, and I think you need to have the right type of partner here.

We found these guys, actually—you will be surprised to hear, I think—through a LinkedIn cold call. The three of us, the principal investigators on the project, were interested in thinking about these questions of water and allocation, take-up and prices, and willingness to pay. We realized that while we are experts in the economics of this, we're not necessarily experts in clean-water provision and the logistics of setting this experiment up. Imagine if we did this ourselves— It would've been a complete nonstarter. So, we knew that we had to find a partner to work with.

We had been discovering that these private firms were increasingly running around and providing clean water to households. We thought that that might be an interesting way into this market.

So, we Googled around a little bit for firms that do this kind of thing. Spring Health popped up at the top of our search list. We sent the CEO a message and were able to get him on the phone.

Now, one challenge with working with firms is often that the incentive of the researchers is to provide the truth, whether that truth turns out to be good for the firm or bad for the firm. As the firm, you of course are interested in your bottom line, so there can be concerns if the research results don't align with your own best interest.

What was nice here was that, first of all, the firm was quite convinced that what they were doing was a good thing, and having rigorous evidence to demonstrate that that was true was really valuable to them. Because they're a firm working in a low-income country context, where they're always looking to raise capital, particularly from some philanthropic types of investors, having high-quality evidence to suggest that what they’re doing is working is useful.

Secondly, this firm was also interested in learning some fundamental things about their business. One of the things we're doing is estimating how take-up changes as prices change. That's actually really important input into how the firm is operating. So, we were able to find a unique win-win scenario in this case.

Daniel Raimi: That's really interesting. It's like a combination of economic research and market research for the company. It's super cool.

Well, Fiona, this has been fascinating. This is a really interesting study and paper, and I hope people will check it out again. We'll have a link to it in the show notes.

Now, I'd love to ask you the same question we ask all of our guests at the end of the show, which is to recommend something that is related to the environment or your work, or that’s maybe even just tangentially related to those things that you think is really great and that you think our audience might enjoy.

What's at the top of your literal or your metaphorical reading stack?

Fiona Burlig: One of my go-tos these days is a blog series written by the World Bank, called Development Impact. This is really nice, because it provides an overview for both practitioners of this kind of work, as well as more casual readers on what's going on in development economics these days.

There are some reviews of the best papers that are out there, thinking a little bit about methods, but there’s just a really wide range of topics written by some real experts, including David McKenzie and some of his coauthors at the World Bank. It's a fabulous series, and I check it out every time it hits my inbox.

Daniel Raimi: Fantastic. Well, we'll definitely have a link to that in the show notes and encourage people to check it out alongside the paper.

One more time, Fiona Burlig from the University of Chicago. Thanks so much for coming on Resources Radio and telling us about this fascinating work.

Fiona Burlig: Thanks so much for having me. This has been great.

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