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International Water Contracts and Household Outcomes: Evidence from Albania


  • Justin B. May

    () (Department of Economics, College of William and Mary)

  • Andrew Bacher-Hicks



In mid-2003, four of 36 Albanian political districts entered into management contracts with Berlinwasser International AG for the provision of water supply. Using 2002 and 2005 data from the World Bank's Living Standards Measurement Study for Albania, we assess the results of this contracting out of supply on various household outcomes including continuity of water supply, hours per day of water availability, water price, water source, water quality, and incidence of diarrhea. Using a difference-in-difference approach and controlling for a variety of household characteristics, our results suggest that consumers in contracted districts experience no significant change in hours per day of service though privatization comes with average price increases of 13-17 percent. In a multinomial logit framework, we find that consumers in contracted districts are significantly less likely to use water from an outdoor tap, a public tap, or a spring/well but far more likely to report obtaining water by truck. Households receiving piped water in contracted districts are 29 percentage points more likely to report their subjective water quality as "unsuitable for drinking", though estimates suggest no significant change in the incidence of diarrhea in contracted districts.

Suggested Citation

  • Justin B. May & Andrew Bacher-Hicks, 2009. "International Water Contracts and Household Outcomes: Evidence from Albania," Working Papers 83, Department of Economics, College of William and Mary.
  • Handle: RePEc:cwm:wpaper:83

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    Albania; household; management contract; privatization; water supply;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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