title: Public infrastructure and health in low- and middle-income countries
Creators: name: Bancalari Valderrama, Antonella
Publisher: name: London School of Economics and Political Science (LSE)
Year: 2020

description: Public infrastructure provides the services that allow societies to function and economies to thrive. Economic research has been very useful at identifying the social returns to investing in public infrastructure, once projects are completed and in use. Yet, we know little about what made these infrastructure projects successful in improving living standards in the first place. A key policy question moving forward is not “how much” but “how well” we invest in public infrastructure. In thinking about the “how well”, we need to look at both supply and demand side factors during infrastructure development. This thesis explores these separate, but interlinked, research agendas in the form of three papers. The specific focus is on the sanitation market and its link to public health in low- and middle-income countries. In the first paper, “Can White Elephants Kill? Unintended Consequences of Infrastructure Development in Peru”, I analyse the consequences of a common inefficiency in the supply of public infrastructure: unfinished projects. I specifically evaluate the effect of unfinished sewerage projects on early-life mortality —the outcome this intervention aimed at improving— in Peru. I use an instrumental variable strategy, exploiting geographic characteristics and partisan alignment. The large variation in the number of unfinished projects is generated by the high prevalence of mid-construction abandonment and delays. I find that unfinished infrastructure —the so called “white elephants”— can cause high social costs: it can kill children. The mechanisms behind these non-trivial effects are: i) water cuts force the population to rely on unsafe sources of water and jeopardise their sanitation practices, (ii) open ditches filled with stagnant water become pools of infection, and together these cause (i) increased deaths due to water-borne diseases; and (iii) construction works increases deaths due to accidents. Finally, the results suggest that the social benefits of completed sewerage projects may not fully manifest due to less than universal connectivity rates. A natural question arising from the first paper is how to promote the use of public sanitation infrastructure once it is completed. In the second paper, “Challenges to Promoting Demand for Shared Infrastructure: Experimental Evidence from Slums in India”, I explore the demand-side of the sanitation market. In this co-authored chapter (with B. Augsburg and A. Armand), I specifically study the market of community toilets, which suffer from rampant free-riding and a remarkably low valuation and usage. We use a randomised field experiment to test the effectiveness of two interventions aimed at breaking the vicious cycle of low quality public health infrastructure and low willingness to pay: (i) a “supply push” that rehabilitates the infrastructure and promotes cleanliness; and (ii) a complementary campaign aimed at generating awareness of the importance of payment and the negative externalities resulting from unsafe sanitation behaviour. We find that externally funding public infrastructure rehabilitation backfires. The “supply push” reduces willingness to pay at a time when households appreciate improvements in infrastructure; and attitudes towards paying a user fee deteriorate further with time. In addition, the “supply push” shifts the demand for public intervention away from other pressing issues in the community towards the maintenance of community toilets. Altogether, these findings provide evidence that external funds crowd-out private contributions in our study context. The third paper titled "Running the Last Mile: Sewerage Connectivity Density and Child Height" provides a comprehensive picture of the sanitation market at the point at which supply meets demand for infrastructure. Even in “equilibrium”, achieving safe sanitation environments depends on three key factors: the local adoption level, the population density and the quality of the sanitation solution. In this paper, I aim to bring together these three factors by exploring the relationship between child health and the local connectivity density of sewerage —i.e. the interaction between the share of neighbouring households connected to sewerage and the population density. I specifically focus on height because it has been widely recognized as an important measure of human capital with long-lasting consequences. I present three complementary analyses: (i) a cross-country analysis among LMICs; (ii) a within-country analysis focusing specifically on Latin American countries; (iii) a withincountry analysis in Peru aimed at improving the internal validity of the association of interest using an instrumental variable strategy. I find that sewerage connectivity density increases child height. Interestingly, the increase goes beyond the sewerage connectivity of the child’s household, which serves as evidence of a positive externality. I document two mechanisms behind the results: improvements in the disease environment and malnutrition. The results also reveal that sewerage connectivity density decreases the mortality of children under the age of five. Altogether, the thesis suggests that while barriers to adequate supply and demand for sanitation infrastructure can pose threats to public health, once these are released, this infrastructure protects early life survival and promotes human capital accumulation.