1. Microcredit and willingness to pay for environmental quality: Evidence from a randomized-controlled trial of finance for sanitation in rural Cambodia.
- Author
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Ben Yishay, Ariel, Fraker, Andrew, Guiteras, Raymond, Palloni, Giordano, Shah, Neil Buddy, Shirrell, Stuart, and Wang, Paul
- Subjects
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WILLINGNESS to pay , *ENVIRONMENTAL economics , *MICROFINANCE , *ENVIRONMENTAL management ,DEVELOPING countries environmental conditions - 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. [ABSTRACT FROM AUTHOR]
- Published
- 2017
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