The Economic Losses Due to Drinking Water Impurity: A Revealed Preference Analysis in Kolkata, India

Supply of water of desirable quality yields a range of benefits to households by reducing averting expenditure and expenditure on treating illness. The sum of these expenditures can be used as a measure of the costs that the society bears due to undesirable quality of water. The present paper uses household production function approach to formulate a structural model of averting behaviour and illness. The mathematical model is used to empirically estimate the total losses borne by households of Kolkata on averting activities and waterborne illness. The factors explaining variation in averting expenditure and cost of illness were separately investigated.