Environment and Development Economics

Valuing health damages from water pollution in urban Delhi, India: a health production function approach

a1 Institute of Economic Growth, University Enclave, Malka Ganj, Delhi-110007. Fax 91-011–27667410. E-mail: pdg@ieg.ernet.in

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Diarrhoeal diseases are endemic in Delhi. The causes of diarrhoeal illness involve both the household and the public sector as a provider of a public good, namely water supplies. Questions of both adequacy and quality of the water supply available to the household for drinking purposes are of crucial importance. The present study conducts an objective assessment of the health damages incurred by urban households by adopting a health production function approach. A model for valuing the damages from contaminated water supplies, based on the theory of utility-maximizing consumer behaviour is developed for estimating the probability of illness for a household. An estimate for the predicted probability of observing illness in a household is obtained. This probability measure is subsequently used along with data on illness to derive treatment costs and the wage-loss arising from the illness. Thus, a measure of the total costs of illness is obtained.


1 The author gratefully acknowledges the guidance received from Prof. R.P. Sengupta, Jawaharlal Nehru University, New Delhi, and the comments received from Profs. K. Chopra and M.N. Murty, Institute of Economic Growth, Delhi. The author is indebted for the substantial help received from Dr R. Dasgupta, Deputy Health Officer, Epidemiology Division and Public Health Laboratory, Municipal Corporation of Delhi and, Dr Ritu Priya, Associate Professor, Centre for Social Medicine and Community Health, Jawaharlal Nehru University, New Delhi. The comments received from the anonymous referees helped in improving the paper.