The long-term economic impact of water quality: Evidence from rural drinking water program in China

Abstract

The provision of safe and clean drinking water is a key component of the United Nations Sustainable Development Goals. This paper examines the long-term economic benefit to rural residents in China from a major water treatment program started in the 1980s. By employing a data set covering almost three decades and utilizing Difference-in-Difference (DID) approach, we find that, on average, the program led to a 28.4 % increase in individual gross income. Residents with access to treated water in early life experienced significantly higher gains in income. Villages that are poorer and more remote also benefit more. Mechanically, the program has saved time spent on fetching water, spent more time on agricultural activities, improved health status, and alleviated the negative impacts of drought, through which it helps raise individual gross income.