Toilets

Effects of Rural Sanitation on Infant Mortality and Human Capital: Evidence from India's Total Sanitation Campaign
Dean Spears

Abstract: Open defecation without a toilet or latrine is among the leading global threats to health, especially in India. Although it is well-known that modern sewage infrastructure improves health, it is unknown whether a sanitation program feasible for a low capacity, poor country government could be effective. This paper contributes the first causally identied estimates of effects of rural sanitation on health and human capital accumulation. The Indian government's Total Sanitation Campaign reports building one household pit latrine per ten rural persons from 2001 to 2011. The program offered local governments a large ex post monetary incentive to eliminate open defecation. I use several complementary identification strategies to estimate the program's effect on children's health. First, I exploit variation in program timing, comparing children born in different years. Second, I study a long difference-in-differences in aggregate mortality. Third, I exploit a discontinuity designed into the monetary incentive. Unlike many impact evaluations, this paper studies a full-scale program implemented by a large government bureaucracy with low administrative capacity. At the mean program intensity, infant mortality decreased by 4 per 1,000 and children's height increased by 0.2 standard deviations (similar to the cross-sectional difference associated with doubling household consumption per capita). These results suggest that, even in the context of governance constraints, incentivizing local leaders to promote technology adoption can be an effective strategy

How much international variation in child height can sanitation explain?
Dean Spears

Physical height is an important economic variable reflecting health and human capital. Puzzlingly, however, differences in average height across developing countries are not well explained by differences in wealth. In particular, children in India are shorter, on average, than children in Africa who are poorer, on average, a paradox called “the Asian enigma” which has received much attention from economists. This paper provides the first documentation of a quantitatively important gradient between child height and sanitation that can statistically explain a large fraction of international height differences. This association between sanitation and human capital is robustly stable, even after accounting for other heterogeneity, such as in GDP. The author applies three complementary empirical strategies to identify the association between sanitation and child height: country-level regressions across 140 country- years in 65 developing countries; within-country analysis of differences over time within Indian districts; and econometric decomposition of the India-Africa height differences in child-level data. Open defecation, which is exceptionally widespread in India, can account for much or all of the excess stunting in India.

Perhaps the most disturbing thing of all is the simple summary statistic that there are many regions where >50% of households do not have toilets.

Is it true that "Everyone's a winner?" Dams in China and the challenge of balancing equity and efficiency during rapid industrialization

Jesse and I both come from the Sustainable Development PhD Program at Columbia which has once again turned out a remarkable crop of job market candidates (see outcomes from 2012 and 2011). We both agreed that their job market papers were so innovative, diverse, rigorous and important that we wanted to feature them at FE.  Their results are striking and deserve dissemination (we would probably post them anyway even if the authors weren't on the market), but they also clearly illustrate what the what the Columbia program is all about. (Apply to it here, hire one of these candidates here.) Here is the third and final post.

Large infrastructure investments are important for large-scale industrialization and economic development. Investments in power plants, roads, bridges and telecommunications, among others, provide important returns to society and are compliments to many types of private investment. But during rapid industrialization, as leaders focus on growth, there is often concern that questions of equity are cast aside. In the case of large-scale infrastructure investments, there are frequently populations ("losers") that suffer private costs when certain types of infrastructure are built -- for example, people whose homes are in the path of a new highway or who are affected by pollution from a power plant.

In public policy analysis and economics, we try to think objectively of the overall benefits of large investments to an entire society, keeping in mind that there will usually be some "losers" from the new policy in addition to a (hopefully larger) group of "winners."  In the cost-benefit analysis of large projects, we usually say if that a project is worth doing if the gains to the winners outweigh the loses to the losers -- making the implicit assumption that somehow the winners can compensate the losers for their loses and continue to benefit themselves. In cases where the winners compensate the losers enough that their losses are fully offset (i.e. they are no longer net losers), we say that the investment is "Pareto improving" because nobody is made worse off by the project.

A Pareto improving project is probably a good thing to do, since nobody is hurt and probably many people benefit. However, in the case of large infrastructure investments, it is almost guaranteed that some groups will be worse off because of the project's effects, so making sure that everyone benefits from these projects will require that the winners actually compensate the losers. Occasionally this occurs privately, but that tends to be uncommon, so with large-scale projects we often think that a central government authority has a role to play in transferring some of benefits from the project away from the winners and towards the losers.

But do these transfers actually occur? In a smoothly functioning government, one would hope so.  But the governments of rapidly developing countries don't always have the most experienced regulators and often pathologies, like corruption, lead to doubt as to whether large financial transfers will be successful.  Empirically, we have little to no evidence as to whether governments in rapidly industrializing countries (1) accurately monitor the welfare lost by losers in the wake of large projects and (2) have the capacity necessary to compensate these losers for their loses. Thus, establishing whether governments can effectively compensate losers is important for understanding whether large-scale infrastructure investments can be made beneficial (or at least "not harmful") for all members of society.

Xiaojia Bao investigates this question for the famous and controversial example of dams in China. Over the last few decades, a large number of hydroelectric dams have been build throughout China. These dams are an important source of power for China's rapidly growing economy, but they also can lead to inundation upstream, a reduction in water supply downstream, and a slowed flow of water that leads to an accumulation of pollutants both upstream and downstream.

Bao asks whether the individuals who are adversely affected by new dams are compensated for their losses. To do this, she obtains data on dams and municipal-level data on revenue and transfers from the central government.   She uses geospatial analysis to figure out which municipalities are along rivers that are dammed and also which are upstream, downstream or at the dam site.  She then compares how the construction of a new dam alters the distribution of revenues and federal transfers to municipalities along the dammed river, in comparison to adjacent municipalities that are not on the river.

Bao finds that the Chinese government has been remarkably good at compensating those communities who suffer when dams are built.  Municipalities upstream of a dam lose the most revenue both while the dam is being built and after it become operational. But at the same time, the central government increases transfers to those municipalities sufficiently so that these municipalities suffer no net loss in revenue. In contrast, populations just downstream look like they benefit slightly from the dam's operation, increasing their revenue -- and it appears that the central government is also good at reducing transfers to those municipalities so that these gains are effectively "taxed away." The only group that is a clear net winner are the municipalities that host the actual dam itself, as their revenue rises and the central government provides them with additional transfers during a dam's construction.

These findings are important because we often worry that large-scale investment projects may exacerbate existing patterns of inequality, as populations that are already marginalized are saddled with new burdens for the sake of the "greater good." However, in cases where governments can effectively distribute the benefits from large projects so that no group is made worse off, then we should not let this fear prevent us from making the socially-beneficial investments in infrastructure that are essential to long run economic development.

The paper:

Dams and Intergovernmental Transfer: Are Dam Projects Pareto Improving in China?
Xiaojia Bao  

Abstract: Large-scale dams are controversial public infrastructure projects due to the unevenly distributed benefits and losses to local regions. The central government can make redistributive fiscal transfers to attenuate the impacts and reduce the inequality among local governments, but whether large-scale dam projects are Pareto improving is still a question. Using the geographic variation of dam impacts based on distances to the river and distances to dams, this paper adopts a difference-in-difference approach to estimate dam impacts at county level in China from 1996 to 2010. I find that a large-scale dam reduces local revenue in upstream counties significantly by 16%, while increasing local revenue by similar magnitude in dam-site counties. The negative revenue impacts in upstream counties are mitigated by intergovernmental transfers from the central government, with an increase rate around 13% during the dam construction and operation periods. No significant revenue and transfer impacts are found in downstream counties, except counties far downstream. These results suggest that dam-site counties benefit from dam projects the most, and intergovernmental transfers help to balance the negative impacts of dams in upstream counties correspondingly, making large-scale dam projects close to Pareto improving outcomes in China.

In figures...

In China, Bao obtains the location, height, and construction start/stop dates for all dams built before 2010.

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For every dam, Bao follows the corresponding river and calculates which municipalities are "upstream" and which are "downstream." She then computes finds comparison "control" municipalities that are adjacent to these "treatment" municipalities (to account for regional trends). Here is an example for a single dam:

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Bao estimates the average effect of dam construction (top) and operation(bottom) on municipal revenues as a function of distance upstream (left) or downstream (right).  Locations just upstream lose revenue, perhaps from losing land (inundation) or pollution. Locations at the dam gain revenue, perhaps because of spillovers from dam-related activity (eg. consumer spending). During operation, downstream locations benefit slightly, perhaps from flood control.

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Government transfers during construction/operation upstream/downstream. Upstream locations receive large positive transfers. Municipalities at the dam receive transfers during construction. Downstream locations lose some transfers (taxed away).

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Transfers (y-axis) vs. revenue (x-axis) for locations upstream/downstream and at the dam site, during dam construction. Locations are net "winners" if they are northeast of the grey triangle. Upstream municipalities are more than compensated for their lost revenue through transfers.   Municipalities at the dam site benefit through revenue increases and transfers.

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Same, but for dam operation (after construction is completed). Upstream locations are compensated for losses. Benefits to downstream locations are taxed away. Dam-site locations are net "winners".

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Temperature and infrastructure

Once while presenting this paper on temperature's influence on economic performance, someone in the audience asked whether any of the observed declines in output could be due to stress on infrastructure. I honestly replied that I didn't know, but that it seemed like a possibility.  If high temperatures began to interfere with the structure or integrity of steel, concrete or other materials used in infrastructure, existing systems might begin to slow down or fail.

Apparently, this is mechanisms is beginning to become an issue. One of today's cover stories in the New York Times described various infrastructure failures that are emerging around the country as effects of the persistent and extreme heat. Some highlights:

On a single day this month here, a US Airways regional jet became stuck in asphalt that had softened in 100-degree temperatures, and a subway train derailed after the heat stretched the track so far that it kinked — inserting a sharp angle into a stretch that was supposed to be straight. In East Texas, heat and drought have had a startling effect on the clay-rich soils under highways, which “just shrink like crazy,” leading to “horrendous cracking....” 

Excessive warmth and dryness are threatening other parts of the grid as well. In the Chicago area, a twin-unit nuclear plant had to get special permission to keep operating this month because the pond it uses for cooling water rose to 102 degrees; its license to operate allows it to go only to 100....

When railroads install tracks in cold weather, they heat the metal to a “neutral” temperature so it reaches a moderate length, and will withstand the shrinkage and growth typical for that climate. But if the heat historically seen in the South becomes normal farther north, the rails will be too long for that weather, and will have an increased tendency to kink. 

I don't know of any work on the economic or social impact of these types of failures. And I similarly don't know of any theory explaining how we ought to alter our patterns of infrastructure investment, based on the realization that this will continue into the future. The NYT article describes a few ad hoc adaptive measures that companies are starting to adopt, but since the lifetime of new infrastructure will extend into 2040 (or longer), we would do well to plan. This seems like an area ripe for research.

Weekend links @ the Adventure Journal

Some links from the adventure journal that I found and liked during my continuing ascent (descent?) into the blogosphere:

- The climate on other planets can put ours in perspective.

- Optimal policies for adaptation to environmental risk does not involve reducing our risks to zero. Instead, we should aim to accept calculated risks when the [marginal] cost of mitigating them becomes high.

- In rural Rwanda, bikes are low-tech but high-value, endearing them to their owners and D. Turrene, who put together this 1 minute tribute:


Une Minute de Vélos - Rwanda from Darcy Turenne on Vimeo.

Complementarity in economic development policies

[This is a guest post by Anna Tompsett.]

If you work in development, or think or read about it, you’ll be familiar with the idea of complementarity.  You may not have called it by that name, but you’re sure to be familiar with the idea; that a package of interventions can be much more effective than interventions on their own.  

For example, if there is no road access to a village, then people inside can’t travel to access healthcare, teachers can’t get to schools in order to teach and farmers can’t get their goods to market.  Improving the clinic in the nearby town, or paying teachers extra to show up on time, or creating a mobile phone price information system, has little impact, because of the constraints of the existing infrastructure.  On the other hand, building the road doesn’t, in itself, improve the clinic, change incentives for teachers, or resolve agricultural market failures.  

Some schoolgirls in a very isolated area of Nigeria 

(Dadiya Hills, Gombe State) looking out across the 

valley.  You can't see the road, because there's a 

two-hour walk and a thigh-deep river in between,

but that's kind of the point.

It’s a critically important idea in policy; it has informed the Millennium Development Goals, and it’s a large component of the philosophy behind theMillennium Villages (love them or hate them).  Yet we have staggeringly little evidence for how important these complementarities really are.  If they are significant, they could cause us to systematically underestimate how effective development interventions could be in conjunction when we assess them in isolation.   

However, there’s a very good reason why there is little robust evidence on their magnitudes; it’s hard enough to design an effective field test, or find a natural experiment, when you’re interested in a single intervention or policy.  And the size of your required sample increases with the square of the number of interventions whose interactions you would like to measure.  (Anecdotal evidence suggests that the amount of luck required to find natural experiments may even increase with the cube of that number.)

Every time I get disheartened by these odds, however, I read an article like this one, and I’m reminded of why I shouldn’t lose give up looking for a context in which to study this issue with the rigour it deserves.