Access to safe and clean drinking water, especially in rural areas, is still a significant challenge in India. Solving the problem of access is particularly difficult in rural areas of developing countries, where the challenges of scarce infrastructure and limited state capacity exist. Therefore, using the private markets to solve the water access problem could produce considerable social value. In partnership with Spring Health Water India Pvt Ltd (SH) in rural Odisha, EPIC aims to explore the demand for clean water and understand how affordable water can be allocated efficiently in rural areas.

The project will directly facilitate and subsidize the distribution of approximately 11 million litres of clean water to households in rural Odisha over 6 months. Using a Randomized Control Trial, the research findings will generate crucial information on households’ demand for clean water, which can inform free-market approaches to its provision. It will also generate crucial data detailing the impact of clean water on the beneficiaries’ health. Apart from this, the study will be directly relevant to Spring Health’s business and will inform their strategy for expansion into new villages

Background

Climate change is altering the hydrological cycle, causing freshwater resources in many developing countries to shrink. In India, a shifting monsoon may exacerbate an already severe groundwater depletion problem (UN 2020, Ryan and Sudarshan 2021). Adapting to these changes requires efficient and universal access to clean water. Unfortunately, over 30 percent of the global population still falls short of this goal (Berry, Fischer, Guiteras 2020). In India, significant sections of the urban poor must buy water at high prices with no access to reliable piped supply, and meanwhile the rural poor are sorely lacking piped water supplies (NSSO 2019). These facts underscore the critical importance of uncovering effective public and private mechanisms to allocate this resource. Using decentralized markets to solve the water access problem could produce very large social value, precisely because of the high costs of using contaminated sources or of going without sufficient water. Yet making these markets work involves tackling some challenging considerations. First, little is known about the demand of rural consumers for home-delivered clean water and their sensitivity to price. Second, different ways of allocating water may produce very different distributional outcomes especially in settings characterized by credit and liquidity constraints, caste barriers, and information asymmetries. Third, we need more evidence on the health benefits from access to clean water through decentralized markets, since it is these private benefits that may ultimately determine household willingness to pay.

This study is an empirical comparison of canonical allocation methods that have been theoretically discussed (e.g. Weitzman 1977) and implemented in a variety of developing-country contexts, but rarely tested against one another. For this project, we are partnering with Spring Health Water India Pvt Ltd (SHWI), an award-winning startup that uses electro-chlorination for water purification. Spring Health sells this water in over 250 villages in rural Odisha as a door-to-door delivery service presently serving over 150,000 people. In partnership with SHWI, we will test out three different water allocation regimes. These approaches to water allocation are valuable to test, as they reflect possible mechanisms that could be used by private companies or the government. The research design also allows us to identify a demand curve for water, and empirically test how the distribution of water varies.