Access to Drinking Water and Inclusive Development : Evidence from Rural China

This paper evaluates the impacts of China's massive drinking water program on labor reallocation and rural development. Using representative survey data, we find that improved access to drinking water at the village level significantly increased off-farm employment and household labor income. The transformation toward off-farm development was inclusive: increased access to drinking water affected lower income households more favorably, enhanced local off-farm employment without inducing outward migration, and benefited females and males equally. A back-of-the-envelope calculation shows that the program helped reallocate 32 million rural people to off-farm sectors and raised their annual per capita income by US$108 at a lump-sum cost of US$30 per person