Watson Institute for International and Public Affairs

Development and Governance Seminar: Graduate Student Presentations

Wednesday, October 25, 2017

3 p.m. – 6 p.m.

McKinney Conference Room

3:00-4:30pm - Will Violette, PhD Candidate in Economics, Formal Redistribution and Informal Sharing: Evidence from Piped Water in Manila"

In developing cities, last-mile problems of extending bulk infrastructure to the poor are often exacerbated by high fixed costs of access. Policymakers often cross-subsidize fixed costs of access with high marginal prices for large users. At the same time, this paper documents that many households in these cities choose to share water connections with their neighbors, splitting the burden of any fixed costs, reaching over 43% of households. With connection-level data for 1.5 million households in Metro Manila, Philippines, this paper examines the distributional impacts of water pricing policies in the presence of informal sharing networks. This paper finds that pricing policies from developed countries can have large unintended consequences in developing countries by taxing these water sharing relationships. Informed by new survey data, I develop a simple model of these water sharing contracts, which explicitly captures information frictions between households. I then estimate household water demand across three sources: purchasing directly from the provider, sharing with a neighbor's tap, or buying from a small-scale provider. I use these estimates to simulate the impacts of (1) a connection fee discount program and (2) optimal non-linear pricing schemes. I find that despite aiming to increase coverage among the poor, programs that lower connection fees and increase tariffs can actually reduce welfare for low-income households by increasing the costs of sharing arrangements. The optimal tariff increases shared connections, ensures nearly universal access to the piped water network, and improves welfare by up to 41.8% of consumer surplus or 0.6% of household income.

4:30-6:00pm - Marcus Walton, PhD Candidate in Political Science, “Resources and Recourses: Social Policy and Entitlement in Egypt, Nigeria, and South Africa”

Development and Governance Seminar