Access to safe and clean drinking water is a challenge in rural India. Scarce infrastructure, limited state capacity, and climate change-induced limitations only compound the problem. Researchers at the Energy Policy Institute at the University of Chicago (EPIC India) are attempting to determine if utilizing decentralized markets to tackle the water access problem might yield significant societal benefits, owing to the high costs of using polluted sources or going without enough water.

Through a randomized control trial, the researchers in this study aim to understand the willingness to pay for clean water in rural India, the health effects of clean water, and what they are willing to pay for their health. Fiona Burlig, Deputy Director at EPIC-India and one of the principal investigators in this project, says, “The purpose of this research is to provide insight into both the desire to pay for clean water and the many strategies of ensuring that water is both inexpensive and adequately delivered and used. The data we collect will be used to establish the causal impact of clean water on health outcomes and related socioeconomic outcomes.”

This experiment is being carried out in Odisha, one of India’s poorest states, and the target demographic is the population most vulnerable to a shortage of drinkable water. In a pilot project that was carried out in three villages in December 2021, each community received a unique offer, including 750 control offers and 250 treatment offers. The purpose of the pilot was to see whether any changes were needed in the research design. The project currently directly facilitates and subsidizes the distribution of approximately 11 million litres of clean water to households in rural Odisha over six months. The project collaborates with Spring Health, a company that uses electro-chlorination for water purification, and will cover over 200 villages and thousands of households in rural Odisha.

Explaining the rationale behind the study, Anant Sudarshan, EPIC South Asia Director, another principal investigator in the project, says, “To make these markets operate, certain roadblocks must be addressed. First, little is known about rural customers’ need for home-delivered clean water and their price sensitivity. Second, alternative approaches to water allocation can result in very different distributional results, particularly in contexts characterized by credit and liquidity restrictions, caste barriers, and knowledge asymmetries. Third, we need additional research on the health advantages of decentralized market access to clean water because these private benefits may ultimately influence families’ willingness to pay.”

Researchers anticipate that if climate change worsens the water situation, it will impact many future policy ideas that will be contested for this finite resource. The insights generated with the research will generate crucial information on the impact of clean water on the beneficiaries’ health. The study will also generate crucial detailing of households’ demand for clean water, which can inform free-market approaches and advance policy discussions on the potential for private-public partnerships to provide public goods.