The Child Health Implications of Privatizing the Urban Water Supply in Africa. October 2011.
Katrina Kosec, The International Food Policy Research Institute (IFPRI)
Can private sector participation (PSP) in the urban piped water sector improve child health? Allowing the private sector to provide basic infrastructure such as piped water is politically controversial, with some arguing that the private sector is more efficient and will improve access and quality, and others arguing that access and quality will suffer. This paper uses child-level data from 39 African countries during 1986-2010 to shed light on this question. A fixed effects analysis suggests that the introduction of PSP decreases diarrhea among urban-dwelling under-five children by 2.2-2.6 percentage points, or 14-16% of tis mean incidence.
An instrumental variables analysis that exploits variation over time in the share of the world water market controlled by former colonizing countries suggests that the effects are twice as large. The difference between the OLS and the IV results can be explained by the fact that PSP is more likely when the water sector is distressed and causing health problems. PSP in water also leads to higher rates of reliance on piped water as the primary water source, which is a likely channel explaining child health improvements. Importantly, PSP appears to benefit the health of children from the poorest households the most. A placebo analysis reveals that PSP in water does not have a significant effect on respiratory illness (as evidenced by coughing), suggesting that health improvements are driven by changes in the water sector rather than by a correlation of PSP with other health investments.
