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Economic Valuation of Safe Water from New Boreholes in Rural Zambia: A Coping Cost Approach with Estimates of Internal Rate of Return

Author

Listed:
  • Yasuharu Shimamura

    (Graduate School of International Cooperation Studies, Kobe University)

  • Satoshi Shimizutani

    (JICA Ogata Sadako Research Institute for Peace and Development)

  • Shimpei Taguchi

    (JICA Ogata Sadako Research Institute for Peace and Development, Research Program Division)

  • Hiroyuki Yamada

    (Faculty of Economics, Keio University)

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 5 percent at the baseline survey, which was reduced to 1.6 percent at the end-line survey, but the difference-indifferences analysis reveals that the project did not reduce the time burden for collecting water due to the greater demand for safe water. Moreover, we estimate the economic benefits of the project stemming from the significant reduction of diarrhea incidence. By estimating the economic value of a reduction in days lost due to diarrhea and a decrease in age-standardized disability-adjusted life years (DALYs), the internal rate of return (IRR) is estimated to be 14.2 percent, which is highly likely to be the lowest boundary of the actual IRR.

Suggested Citation

  • Yasuharu Shimamura & Satoshi Shimizutani & Shimpei Taguchi & Hiroyuki Yamada, 2021. "Economic Valuation of Safe Water from New Boreholes in Rural Zambia: A Coping Cost Approach with Estimates of Internal Rate of Return," Keio-IES Discussion Paper Series 2021-009, Institute for Economics Studies, Keio University.
  • Handle: RePEc:keo:dpaper:2021-009
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    References listed on IDEAS

    as
    1. Yasuharu Shimamura & Satoshi Shimizutani & Shimpei Taguchi & Hiroyuki Yamada, 2020. "Improved Access to Safe Water: Effects on Adult Health and Time Reallocation in Rural Zambia," Keio-IES Discussion Paper Series 2020-024, Institute for Economics Studies, Keio University.
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    7. Whittington, Dale & Mu, Xinming & Roche, Robert, 1990. "Calculating the value of time spent collecting water: Some estimates for Ukunda, Kenya," World Development, Elsevier, vol. 18(2), pages 269-280, February.
    8. Yasuharu Shimamura & Satoshi Shimizutani & Shimpei Taguchi & Hiroyuki Yamada, 2020. "The Impact of Improved Access to Safe Water on Childhood Health, Schooling and Time Allocation in Rural Zambia," Keio-IES Discussion Paper Series 2020-022, Institute for Economics Studies, Keio University.
    9. Florencia Devoto & Esther Duflo & Pascaline Dupas & William Parienté & Vincent Pons, 2012. "Happiness on Tap: Piped Water Adoption in Urban Morocco," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 68-99, November.
    10. Jessoe, Katrina, 2013. "Improved source, improved quality? Demand for drinking water quality in rural India," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 460-475.
    11. Ashraf, Nava & Jack, B. Kelsey & Kamenica, Emir, 2013. "Information and subsidies: Complements or substitutes?," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 133-139.
    12. Orgill-Meyer, Jennifer & Jeuland, Marc & Albert, Jeff & Cutler, Nathan, 2018. "Comparing Contingent Valuation and Averting Expenditure Estimates of the Costs of Irregular Water Supply," Ecological Economics, Elsevier, vol. 146(C), pages 250-264.
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    More about this item

    Keywords

    Nonmarket valuation; revealed preference; time use; borehole; groundwater development;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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