Anant Sudarshan

Over 2 billion people lack clean drinking water. Existing solutions face high costs (piped water) or low demand (point-of-use chlorine). Using a 60,000-household cluster-randomized experiment, we test an alternative approach: decentralized treatment and home-delivery of clean water to the rural poor. At low prices, take-up exceeds 90 percent, sustained throughout the experiment. High prices reduce take-up but are privately profitable. We experimentally recover revealed-preference measures of valuation: willingness-to-pay is several times higher than prior indirect estimates, and willingness-to-accept is larger and exceeds marginal cost. Self-reported health measures improve accordingly. On a cost-per-DALY basis, free water-delivery regimes appear highly cost-effective.

Developing-country governments routinely attempt to collect revenue using threats they cannot systematically enforce. We study how citizens assess the credibility of such empty threats in the context of payment for electricity in Madhya Pradesh, India, where state-run utilities recovered only 60 cents per dollar of power supplied. Using two field experiments covering 30,000 households with high arrears, we show that the household response to a threat depends on the state's choice of messenger. Legal threats delivered by local linesmen — state agents with a history of ignoring non-payment — have no effect. Yet identical notices sent by registered mail, bypassing linesmen, reduce arrears by 11.4 percent among recipients, a 241 percent return on investment. A second experiment a year later shows these effects are dynamic: consumers originally visited by a linesman do not respond to future notices, while those never exposed to linesmen do. Low-credibility state agents can render threats ineffective.

Market-based environmental regulations are seldom used in low-income countries, where pollution is highest but state capacity is often low. We collaborated with the Gujarat Pollution Control Board to design and experimentally evaluate the world's first particulate-matter emissions market, covering industrial plants in a large Indian city. There are three main findings. First, the market functioned well: treatment plants, randomly assigned to the market, traded permits to become significant net sellers or buyers, and after trading held enough permits to cover their emissions 99% of the time, compared to just 66% compliance under the command-and-control status quo. Second, treatment plants reduced emissions, relative to control plants, by 20% to 30%. Third, the market reduced abatement costs by an estimated 11%, holding emissions constant. Together, the pollution reductions and low costs imply mortality benefits that exceed the market's costs by at least twenty-five times.