In June 2014, a census listing of 2,200 compounds will be done to form the sampling framework and randomization for the 2,200 households. The census will collect basic demographic information; number of households per compound; number of children; if landlord is resident or not; contact details of landlord; toilet type; etc. From this listing, two households per compound will be randomly selected for baseline.
A baseline survey will be administered to all 2,200 compound landlords to collect socio-economic information, wealth, credit history, ownership and value of the compound, rents and policy for late payment, knowledge and attitudes towards hygiene and health, and interaction with and knowledge of tenants.
A baseline survey will be conducted with two household heads (male or female) per compound, resulting in about 4,400 household surveys. Baseline surveys will collect data on socio-economic characteristics; sanitation facilities, use, practices, and satisfaction; water sources, use, storage, treatment, and cost; hygiene and hand-washing knowledge and practice; altruism, reciprocity, and risk preferences; and limited health outcomes such as diarrhea and child weight for height to be able to assess power for the possible health impact follow-on study.
When available, administrative data will be used to cross-check information on take-up rates. Administrative data will also be collected and used to measure costs of the interventions. Direct costs include the subsidies, the administrative costs to deliver them, and the cost of the information campaign. We will use these costs to measure the cost-effectiveness of alternative subsidy and promotion campaigns in terms of take-up.
We will also conduct a short follow-up survey approximately 6 months after the intervention to verify the proper installation and use of sanitation facilities, satisfaction with the new sanitation facilities, other investments in housing that might have been made, changes in rent, and changes in tenants.
We will study two interventions deigned to promote take-up of household connections to the sewage system:
1. Three subsidy amounts – a low subsidy, a medium subsidy, and a large subsidy. The low subsidy amount is the subsidy being offered by GPOBA. The medium and high subsidy amounts will be decided based on the results of formative research on willingness to pay for sanitation services, which will be conducted as part of this study. The subsidies will be delivered in the form of vouchers that will be difficult to sell in a secondary market. The operational aspects of the voucher program will be designed and implemented by a local NGO with oversight from the research team.
2. An information campaign that promotes hygienic practices such as sanitation facility use, hand washing, and drinking water. The promotion campaign is being designed and delivered by the Water and Sanitation Program (WSP) in the World Bank and will explicitly incorporate learning from previous WSP activities including a recent series of impact evaluations exploring the effectiveness of these campaigns.
The demand for sanitation services is also likely to be confounded with collective action problems. Moral hazard and free riding problems typically arise when the sanitation infrastructure is shared. In many urban slums, multiple households live in compounds that share a single connection to the sewage network. Landlords may be unwilling to pay the cost of connection if they cannot recoup all or some of the cost from tenants either through increased rent or cost sharing. The per-household cost sharing needed to cover costs will be smaller in larger compounds. Hence, larger compounds might require a smaller subsidy in order to induce the landlord to connect. In this case, a policy that has smaller subsidies for larger compounds would achieve higher connection rates than uniform subsidies for the same total budget for subsidies. On the other hand, larger compounds may lead to more free riders so that some tenants may refuse to participate in the payments and thereby freeze collective action to pay for the connection. In this case, a policy that had larger subsidies for larger compounds would achieve higher connection rates than uniform subsidies for the same total budget for subsidies.
We also propose to measure how the cost is shared between tenant and landlord, and whether the connection results in increased rent that the landlord might be able to get from the market for the improved housing. If the sewage connection allows landlords to raise rent to tenants and current tenants are not willing to pay the increased rent, then they may be forced to move, thereby further disadvantaging the poor. We will also assess the extent to which altruism and reciprocity traits on the part of both landlord and the tenants affect the distribution of costs, and the extent to which the landlord living in the compound affects the distribution of the costs. Altruistic landlords may not pass on much of the cost, where reciprocal landlords will likely pass them on. If most or all of the costs are passed onto tenants and rents raised, then rather than subsidizing the landlord, it might be better to subsidize tenants’ cost-sharing conditional on being able to maintain residency in newly connected compounds.
There also may be differences in willingness to pay when the landlord is resident versus absentee. Absentee landlords might benefit from increased rent that they could charge by connecting their property to the sewage network, and resident landlords should additionally benefit from the health value of having sanitation in their homes. Moreover, an absentee landlord is probably less likely to be able to solve the collective action problem to be able to pass on the costs to the tenants. If the demand for sanitation is substantially different, pricing policies might have to be different not only depending on the size of housing compounds but also based on whether the landlord is resident.