Document Type
Article
Department/Program
Economics
Journal Title
JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT
Pub Date
11-2-2017
Volume
86
Abstract
Low willingness to pay (WTP) for environmental quality in developing countries is a key research question in environmental economics. One explanation is that missing credit markets may suppress WTP for environmental improvements that require large up-front investments. We test the impact of microloans on WTP for hygienic latrines via a randomized controlled trial in 30 villages in rural Cambodia. We find that microcredit dramatically raises WTP for improved latrines, with 60% of households in the Financing arm willing to purchase at an unsubsidized price, relative to 25% in the Non-financing arm. Effects on latrine installation are positive but muted by several factors, including a negative peer effect: randomly induced purchases by neighbors reduce a household's probability of installing its own latrine. On methodological grounds, this paper shows that a "decision-focused evaluation" can be integrated into academic analysis to provide insight into questions of general interest. (C) 2017 The Authors. Published by Elsevier Inc.
Recommended Citation
Ben Yishay, Ariel; Fraker, Andrew; Guiteras, Raymond; and Palloni, Giordano, Microcredit and willingness to pay for environmental quality: Evidence from a randomized-controlled trial of finance for sanitation in rural Cambodia (2017). JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT, 86.
https://doi.org/10.1016/j.jeem.2016.11.004
DOI
https://doi.org/10.1016/j.jeem.2016.11.004
