Strategic complements: Poverty-targeted subsidy programs show additive benefits on household toilet purchases in rural Cambodia when coupled with sanitation marketing.

Abstract

While poverty-targeted subsidies have shown promise as a means of reducing financial constraints on low-income populations to invest in new latrines, concerns have been raised about whether they may reduce demand for new latrines among non-eligible, non-poor populations, especially in geographically limited or closed markets. Using quasi experimental methods, we investigate the interaction effects of the “CHOBA” subsidy, a partial poverty-targeted monetary incentive to build a toilet, and a sanitation marketing program (SanMark) on new latrine uptake among households from different income segments in 110 rural villages across six Cambodian provinces. These programs were implemented either jointly with or independently. Overall, we find strong complementarity of the CHOBA subsidy with SanMark where the coupled implementation of the programs increased latrine uptake across all households as compared to exclusive deployment of the programs independently. Additionally, the CHOBA subsidy alone resulted in higher gains among the poor compared to SanMark suggesting that financial constraint is indeed a significant demand barrier for new latrines. The presence of the poverty-targeted subsidies did not reduce demand for new latrine purchases among ineligible households. Instead, we find some evidence for a positive spillover effect of subsidies on uptake of latrines among ineligible households in villages where both programs were implemented indicating that the presence of sanitation subsidies and the decision to purchase latrines among non-beneficiaries can be viewed as complements. We employ multivariate logistic regressions as well as further robustness checks to estimate the effects of the different interventions, with qualitatively consistent results.