# 1. Introduction<sup>1</sup>

The infrastructure gap is large. Today, 940 million individuals are without electricity, 663 million lack improved sources of drinking water, 2.4 billion lack improved sanitation facilities, 1 billion live more than 2 kilometers from an all-season road, and uncounted numbers are unable to access work and educational opportunities due to the absence or high cost of transport services (Rozenberg & Fay, 2019). And yet, infrastructure services are central for public health and individual welfare, and thus for economic development.

Access to improved water supply has been found to efficiently improve health and reduce mortality. The incidence of diarrhea episodes in children decreased by 21 percent in households with access to piped water in India (Jalan & Ravallion, 2003) and duration of diarrhea was shorter when access was in-house. The impacts on welfare are widely known. Households evaluated in a project in Tangier, Morocco reported to have better quality of life due to the increased water availability and time savings resulting from access to piped water supply (Devoto et al., 2011).

There is plenty of evidence on the benefits of sanitation. Improved sanitation has been estimated to reduce diarrhea prevalence between 20 percent and 37 percent (Bose, 2009; Kumar & Vollmer, 2011; Waddington et al., 2009). Access to improved sanitation has additional proved impacts on children’s health improvement, adult’s disease prevention and time saving. In Guatemala, access to improved sanitation facilities was found to increase by 18 percent the average child z-score for height-for-age, a measure of chronic health (Poder & He, 2011) and time savings due to the use of household individual latrines were estimated at 40 to 60 minutes a day for 20 villages in the state of Orissa, India (Dickinson et al., 2011).

Electricity access can also improve lives in many ways. For instance, it can extend the length of active days via lighting, free up time, at least for women who can afford labor-saving household electric appliances, and can have positive health impacts thanks to e.g. refrigeration or the replacement of kerosene lamps.

Better transportation infrastructure reduce travel times and transport costs, which in turn improve people’s access to schools and hospitals in rural areas (BenYishay & Tunstall, 2011 ; H. Levy, 2004) and can raise productivity and income. Reduced transport time and costs also give workers access to employment opportunities over a wider area, and increase regional and inter-regional trade (Gannon & Liu, 1997 ; Volpe Martincus & Blyde, 2012).

However, development economists remain divided as to the extent of the benefits of electrification. On education, some studies show no to very little impact (Bensch, Kluve, & Peters, 2011; Lee, Miguel, & Wolfram, 2016) while others show a significant increase in school enrollment (Khandker, Barnes, & Samad, 2009) or years of schooling (Kumar & Rauniyar, 2011). On health, Brass et al. (2012) and Samad et al. (2013) find the same lack of clear evidence. Most electrification impact evaluation studies show a significant effect on income and female employment (Dinkelman, 2011; Grogan & Sadanand, 2013; Rud, 2012; van de Walle et al., 2017) while others don’t (Lee, Miguel, & Wolfram, 2016). And some studies focusing on rural electrification in Africa, show that electrification may reduce social welfare when electrification costs outweighs its benefits (Lee, Miguel, & Wolfram, 2016; Peters & Sievert, 2015). Allen & Arkolakis (2019) show that transportation infrastructure improvement in the US lead to a substantial welfare gains, albeit highly dependent on context and congestion baseline.

> 1 All the costs reported in this paper are in 2018 USD unless differently specified.

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