Cisterns, Climate Adaptation, and Economic Development

Over 2 billion people worldwide travel long distances daily to fetch water that is often unsafe for human consumption. This paper studies how lack of water can limit economic development and how families adapt to permanent shifts in water provision in rural areas. It studies a policy providing 1 million rain-fed water cisterns in Brazil’s poorest and most drought-prone areas. Using unique individual-level administrative data and a difference-in-differences design, we show that the program substantially improved family welfare. In ten years, household dependency on cash transfers decrease by as much as 19 percentage points while formal labor earnings increase by 15% driven by an increase in off-farm jobs. In turn, hospitalizations due to waterborne diseases declined by 16% among adults and 37% among children, and compliance with cash transfer conditionalities on child health and education improved. Additional evidence suggests that these gains were driven by a relaxation of time constraints: cisterns markedly reduced the time burden of water collection, enabling beneficiaries to allocate more time to productive activities. A cost-benefit analysis indicates a high marginal value of public funds relative to a broad range of public policies.