Economic valuation of safe water from new boreholes in rural Zambia: A coping cost approach

Abstract

Access to safe water sources remains scarce in sub-Saharan African countries. We estimate the economic value of safe water from newly constructed boreholes in rural Zambia. Our quasi-experimental setting allows us to estimate the revealed preference measure of new safe water sources in a causal way, empowered by precise information on water collection and distance to new facilities. We show that the share of time value for water collection in total expenditures was about 10% at the baseline survey, which was reduced to about 3% at the end-line survey, but the difference-in-differences analysis reveals that the project did not reduce the time burden for collecting water due to the greater demand for safe water. The main net benefit of the project lies in improved productivity due to decreased diarrhea incidence among working-age adults. The estimated internal rate of return of the project is not large. However, the project is likely to have additional dynamic health benefits due to the decrease in disability-adjusted life years (DALYs), corresponding to 192.3 USD per DALY and 6.88 USD per household.