Is the Distribution of Ecosystem Service Benefits Pro-Poor? Evidence from Water Purification by Forests in Thailand

Forests are widely believed to provide a water purification service that reduces the cost of treating drinking water, but few empirical economic studies have investigated this service in developing countries, where deforestation rates and thus threats to the service tend to be higher than in developed countries. Even fewer studies have investigated the distribution of the benefits of this service, or any other regulating ecosystem service for that matter, in either developing or developed countries. Using quarterly panel data for 158 water utilities in Thailand during 2004–2014, we find robust evidence that forests significantly reduced the material cost of water treatment, but we find no evidence that the cost reductions were progressive in the sense of being larger in provinces with higher poverty rates. The economic justification for source water protection in Thailand appears to hinge purely on considerations of efficiency — does source water protection provide net benefits? — not on the distribution of those benefits between poorer and richer locations. Research in other countries is needed to determine if the absence of pro-poor distributional impacts of forest water purification is unique to Thailand or the norm and if interventions that enhance forest water purification significantly reduce poverty in locations served by treated drinking water systems.