1. Smart Subsidies Help the Rural Poor Climb the Sanitation Ladder in Vietnam
PER LJUNG
EAST MEETS WEST / THRIVE NETWORKS
MEKONG DEVELOPMENT RESEARCH INSTITUTE
1 SEPTEMBER 2016

2. CHOBA Vietnam - Financial Incentive Structure

3. Main Research Objective
Examine the effectiveness of key incentives — consumer rebate and conditional cash transfers — in encouraging the installation of hygienic latrines among different income groups 2

4. Research Communes
Hai Duong
Tien Giang

5. Survey Coverage
2 Provinces - Hai Duong in Red River Delta, Tien Giang in the Mekong Delta
Panel data: 3 surveys (same households, preferably same individual)
Baseline: Mid 2012
Mid-term: End 2013
Endline: Early 2015
2,100 Households

6. Research Methodology Four treatment arms (31-34 communes/arm):
Consumer Rebate & Conditional Cash Transfers (CCT)
Consumer Rebate only
Conditional Cash Transfers only
Control (Government’s National Target Program and other programs)
Operational constraints imperfect randomization of communes
Difference in differences approach
Heterogeneous impact including interactions between the treatment variables and other control variables

7. Regression Model
𝑌 𝑖𝑐𝑡 = 𝛽 0 + 𝛽 1 𝑅𝑒𝑏𝑎𝑡𝑒_𝐶𝑇𝑇 𝑐𝑡 + 𝛽 2 𝑅𝑒𝑏𝑎𝑡𝑒 𝑐𝑡 + 𝛽 3 𝐶𝐶𝑇 𝑐𝑡 + 𝑋 𝑖𝑐𝑡 𝛽 4 + 𝑇 𝑡 𝛽 5 + 𝑢 𝑖𝑐 + 𝑣 𝑖𝑐𝑡
𝑌 𝑖𝑐𝑡 is the dummy variable indicating of the latrine status of household i in commune c in year t
𝑅𝑒𝑏𝑎𝑡𝑒_𝐶𝑇𝑇 𝑐𝑡 etc. are dummies for the treatments
𝑋 𝑖𝑐𝑡 is a vector of household characteristics
𝑇 𝑡 are year dummies of the mid-term and endline surveys
𝑢 𝑖𝑐 and 𝑣 𝑖𝑐𝑡 are time-invariant and time-variant unobserved variables

8. Overall Treatments Effect Outcome: Ownership of Septic Tank Latrines
Year 2015 (Endline)
Unimproved Latrine (at baseline)
Poverty Certificate
Rebate and CTT
0.171
0.275
0.178
Only Rebate
0.101
0.192
0.114
Only CCT
0.054
0.118
0.033

9. Research confirmed our operational experience
Program impact is significant at the 1% level
Consumer rebate is more effective than the CCT
The program has greatest impact on the poor
Households with unimproved latrines move up the sanitation ladder

10. Results from CHOBA M&E – Reaching the Poor with Hygienic Latrines

11. Results from CHOBA M&E – Leverage in Use of Public Funds
Note: CHOBA costs are for latrines built by households in the poorest 40% of the population only!

12. Results from CHOBA M&E – How does the consumer rebate work?
Little impact on the household’s cost-benefit analysis (the traditional argument for sanitation subsidies private versus public benefits & costs)
Part of a whole “package” the “hook” on which the whole incentive system hangs (OBA payments to Women’s Union, volunteers, etc.)
Creates interest in village education and communications meetings
Open doors for Women’s Union volunteers
Without the rebate, the extensive M&E would not work
Rebate is similar to a “SALE” sign (“good deal”)
Time limit encourages people to get a new latrine NOW

13. Going to Scale Research Achievements so far: Policy Impact:
126,000 latrines in Vietnam built and used by poor households
61,000 latrines in Cambodia built and used by poor households
“Spill-over” effects on richer households
Policy Impact:
Phase-in Phase-out program
Governments in Cambodia and Vietnam have agreed to gradually finance the consumer rebates
EMW (with donor support) will finance software costs (performance based)
Research
Laos: OBA & CLTS

14. Thank you!