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Economics 539 Presentation 1 Presenter: Skye Root

Water for Life: The Impact of Privatization of Water Services on Child Mortality By Sebastian Galiani , Paul Gertler , and Ernesto Schargrodshy Journal of Political Economy. Economics 539 Presentation 1 Presenter: Skye Root. Game Plan. Central Question Background

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Economics 539 Presentation 1 Presenter: Skye Root

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  1. Water for Life: The Impact of Privatization of Water Services on Child MortalityBy Sebastian Galiani, Paul Gertler, and Ernesto SchargrodshyJournal of Political Economy Economics 539 Presentation 1 Presenter: Skye Root

  2. Game Plan Central Question Background Economic of Water Services Data Methods/Model Results Policy Implications Questions and Comments…

  3. Question In Argentina, did the massive privatization of water services of the 1990’s (60 % population affected) influence the reduction of the country’s child mortality rate?

  4. Background “While most countries are committed to increasing access to safe water, and thereby reducing child mortality, there is little consensus on how to actually improve water services” (Galiani, 83) Argentina (1990’s) Privatization Campaign Historical Context Why did local governments privatize water services?

  5. Background (cont)

  6. Economics of Water Systems NATURAL MONOPOLY Large Fixed Cost Little Competition Significant Economies of Scale Externalities Human Life depends on it, therefore it has perfect inelastic demand at the survival level. Private versus Public Incentives Cost reductions, productivity enhancements, regulation in both directions, non benevolent governments, and project prioritization…

  7. Data • Government Ministry Data • Census Data (INDEC) • Permanent Household Survey

  8. Data

  9. Data

  10. Methods Formally, the difference-in-differences model can be specified as a two-way fixed-effect linear regression model: yitis the mortality rate in municipality i in year t αdIitis an indicator variable that takes on the value one if municipality i’s water services are privately provided in year t and zero otherwise. βxitis a vector of control variables that vary across both municipalities and time μiis a fixed effect unique to municipality I. λtis a time effect common to all municipalities in period t. εitis a municipality time-varying error and is assumed to be distributed independently of all μi and λt .

  11. Results

  12. Policy Implications Although this is historical information, this paper resurfaces the public versus private debate? At many levels… In this case, properly regulated private companies have the potential of better outreach than public utilities. There is a direct correlation between clean water and children dying, that could be an important relationship to focus on.

  13. Questions/Comments?? Do you think this is Argentina specific or are other countries possibly like this? How might you do the study differently? Likes and dislikes?

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