A spatio-temporal analysis of water investment allocation in Colombia and its impacts on drinking water quality

Abstract

Investments in the water sector are important for economic and social development. Though the impacts of extending coverage are well-documented, the impacts of investment on water quality remain unclear. We assess the extent to which different types of investments in the water sector affect water quality from three perspectives (resource management, operation management, and water quality management) by implementing fixed effects, nonparametric fixed effects, and structural equation models. We introduce an innovative spatial index to account for investments in water treatment and sewage made by upstream municipalities. We use a panel dataset from 2009 to 2014 with nearly 400 observations at the provider-municipality level in Colombia with information on drinking water quality, and key variables that may influence it such as investment in water and sewage, poverty, and rurality. We show that improving resource allocation could enhance the effect of investment on water quality. Provider size also plays a role: investments made by providers with 100–450 employees show significant improvements, while other provider sizes do not. Finally, we show the need for investment in chemical, physical, and microbiological components that improve water quality.