Demand for Environmental Quality: Survey Evidence on Drinking Water in Urban India
The demand for environmental quality is often presumed to be low in developing countries due to poverty. Less attention has been paid to the possibility that lack of awareness about the adverse health effects of environmental pollution could also keep the demand low. We use a household survey from urban India to estimate the effects of awareness proxies such as schooling and exposure to mass media controlling for wealth on home water purification. Average costs of different home purification methods are used to get estimates on willingness to pay for better drinking water quality. We find that our awareness proxy measures have statistically significant effects on adoption of different home purification methods and therefore, on willingness to pay. These effects are similar in magnitude to the wealth effects.
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