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Using data from community-based water services in Sri Lanka and India, this paper shows first that: (a) improved household health and reduced water collection times are associated with better service design and construction: (b) well-designed services involve more community members in the design process and final decision-making about service type; and (c) well-constructed services have effective mechanisms to monitor household contributions to construction. The paper then shows that these service-level institutions are endogenously determined: in communities with higher levels of social capitalin particular, with more active community groups and associationsdesign participation is more likely to be high and monitoring mechanisms are more likely to be in place. This suggests a way to place an economic value on this form of social capital in the context of water projects: as the net present value of the marginal increase in health associated with active critic associations. These results suggest that designers and supervisors of community-based water projects need to pay special attention to the prevailing levels of social capital as one of the factors that will influence performance. When targeting a range of communities, the allocation of investment resources for water services programs may need to be adjusted to take into account the lack of this form of social capital in some villages: possible adjustments include increased investments in social mobilization efforts (for example, through the strengthening of local organizations) and in more direct supervision to oversee system performance.

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Jonathan Isham

Satu Kahkonen

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