Subjective Well-Being Effects of Coping Cost: Evidence from Household Water Supply in Kathmandu Valley, Nepal

Abstract

Coping with unreliable water supply—in terms of quantity and quality—can impose significant costs on households as they are required to spend more resources on coping strategies such as purchasing, storing, treating, pumping, and collecting. Does increased coping cost affect people’s subjective well-being? We answer this question using unique panel data on urban households in the Kathmandu Valley in Nepal from 2001 and 2014. Using previously computed coping cost estimates, we examine the association between total coping cost and both evaluative and hedonic measures of subjective well-being. To understand the underlying mechanisms, we examine the detailed composition of household coping cost and also the correlation between coping cost and time use. We take necessary steps to address potential endogeneity in coping cost and subjective well-being. Our main finding is that increased coping cost is positively correlated with evaluative well-being but not with hedonic well-being. This result is robust to alternate specifications. Exploration of mechanisms suggests that this may be owing to spending on storage tanks and treatment systems, which are likely to be perceived as long-term ‘investments’ that make people more resilient to water insecurity, and not ‘costs’. Further, increased coping cost significantly reduces time spent on collecting water, which may also explain the positive correlation between coping cost and evaluative well-being.