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The Drivers and Impacts of Water Infrastructure Reliability : A Global Analysis of Manufacturing Firms

Author

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  • Islam,Asif Mohammed
  • Hyland,Marie Caitriona
Abstract
Inadequate infrastructure impedes the productivity of manufacturing firms, with negative consequences for the wider economy. This study examines how water infrastructure copes with severe weather fluctuations and analyzes the effect of unreliable water supplies on the productivity of manufacturing firms, focusing predominately on firms in developing economies. This is achieved using firm-level data from World Bank Enterprise Surveys covering more than 16,000 manufacturing firms in a cross-section of 103 countries between 2009 and 2015. The study finds that periods of significantly low rainfall lead to higher water outages, and that the overall impact is driven by the effects of drought on low-income and lower-middle-income economies, with upper-middle-income and high-income economies benefitting from more resilient water infrastructure. Furthermore, the study finds that incidents of water outages lead to lower firm productivity for firms in less developed economies. For the average firm located in a low-income or lower-middle-income economy, one additional water outage incident per day in a typical month can lead to losses of approximately 8.2 percent of annual sales. This finding calls for increased policy focus on water infrastructure services, particularly in poorer countries where water infrastructure and firms seem to be particularly vulnerable to the vagaries of rainfall.

Suggested Citation

  • Islam,Asif Mohammed & Hyland,Marie Caitriona, 2018. "The Drivers and Impacts of Water Infrastructure Reliability : A Global Analysis of Manufacturing Firms," Policy Research Working Paper Series 8637, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8637
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    Cited by:

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    2. Damania, R. & Desbureaux, S. & Zaveri, E., 2020. "Does rainfall matter for economic growth? Evidence from global sub-national data (1990–2014)," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    3. Li, Tongzhe & Roy, Danielle, 2021. "“Choosing not to choose”: Preferences for various uses of recycled water," Ecological Economics, Elsevier, vol. 184(C).
    4. Chen, Fanglin & Zhang, Jie & Chen, Zhongfei, 2024. "Assessment of the effects of extreme temperature on economic activity," Ecological Economics, Elsevier, vol. 222(C).
    5. Otienoa, Jackson & Cook, Joseph & Fuente, David, 2023. "The coping costs of dealing with unreliable water supply in the Nairobi commercial sector," EfD Discussion Paper 23-3, Environment for Development, University of Gothenburg.
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    7. Hanna Berkel & Finn Tarp, 2022. "Informality and Firm Performance in Myanmar," Journal of Development Studies, Taylor & Francis Journals, vol. 58(7), pages 1363-1382, July.

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    More about this item

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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