Saturday, April 15, 2006

Exciting Environmental Economic Research on Arsenic Contamination of Groundwater in Bangladesh

On April 7th, I attended a great NBER environmental economics conference. If you would like to the see the papers presented take a look at this link. I'm hoping that ABC's 20/20 might run a show about our next conference!

I wanted to briefly blog about Pfaff et. al. paper on Arsenic Contamination of Groundwater in Bangladesh. The public health officials are convinced that this is a serious problem. Pfaff's team did something real simple. They tested local water wells for arsenic. If they discovered high levels of arsenic, they notified the locals who were drinking this water. Economists study choice. Here the choice is whether a person switches water wells when notified about pollution at their current choice. Pfaff finds a huge "treatment effect". The probability that a random household switches wells increases 50 percentage points when it is notified that the well is "poisoned".

This research highlights the role that information can play in changing household behavior and mitigating the damage from pollution exposure. Of course, there remain important questions of what these households who switch, switch to?

Our ability to adapt as we learn is a key parameter in environmental economics yet we know so little about it. Economists are optimistic that people respond to incentives but we need to continually estimate the degree to which this is true.