help raise school attendance (Brenneman and Kerf, 2002). Access to electricity improves school performance by allowing kids to spend more time studying and use computers (Leipziger et al., 2003). On the health front, several studies show that access to clean water has significantly helped reduce child mortality (Behrman and Wolfe, 1987; Lee et al. 1997; Jalan and Ravallion, 2003). In Argentina, expanded access to water and sanitation has reduced child mortality by 8 percent, with most of the reduction taking place in low-income areas where the expansion in the water network was the largest (Galiani et al., 2002). Transport also makes a difference. Lokshin and Yemtsov (2005) show that road and bridge rehabilitation projects generate clear economic benefits at the community level – not only by increasing the number of small and medium-size enterprises but also by improving access to emergency medical assistance. Infrastructure raises an economy’s ability to produce health services, which, in turn, enhances labor productivity (Aegnor, 2010). Similarly, Ganelli and Tervala (2010) shows that a higher domestic stock of public capital financed by lower public consumption increases domestic welfare if the productivity of public capital is not too low and the importance of public consumption (relative to private consumption) in private utility is not too high.<sup>26</sup>

**Second, infrastructure services help increase household income and therefore welfare (e.g., market access to household products, job created by the construction and operation of the infrastructure projects).** Infrastructure projects, such as construction of road, irrigation canal, and power plants, provide jobs to low-income households, which are the main source of unskilled labor in the short-run. In South Asia, a key source of cash income to unskilled labor is construction work in infrastructure projects. Using a sample survey of cities from 20 developing countries over the period 1980-2005, Seetanah et al. (2009) finds that transport and communication infrastructure helps reduce urban poverty in developing countries. Using a large panel data set encompassing over 100 countries and spanning the years 19602000, Calderon and Serven (2004) finds that increased infrastructure quantity and quality reduces income inequality. Another strain of the literature argues that connective infrastructure services, such as roads, do not necessarily help reduce poverty in rural and remote areas as poor households cannot afford them. Using survey data from Ethiopia, Zambia, and Vietnam, Bryceson et al. (2008) find that, in extremely remote areas, enhancing the mobility of the rural poor does not necessarily reduce poverty given the poor's lack of access to motor vehicles and ability to pay for public transport. This finding shows that infrastructure investments are not a silver bullet for reducing poverty.

**Third, infrastructure investment boosts economic growth, which spills over to household welfare.** Economic growth and welfare are positively correlated. This reflects the fact that when a country achieves higher economic growth and development, the welfare of its population would also increase. Gupta and Barman (2010) support this hypothesis developing an endogenous growth model with special focus on the role of health capital, public infrastructure, and environmental pollution. They find no conflict between the social welfare maximizing solution and the growth rate maximizing solution in the balanced growth equilibrium in an economy.

**7. Infrastructure Services Provision: Financing, Construction, and Operation**

> 26 On the empirical side, there is a vast literature on valuating the welfare impacts of some infrastructure services, particularly those with strong externalities associated with them (see Andres, Iimi, Orfei, and Samad (2013) for a survey of this literature).

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