Using Mobile Money to Make Water Safe | Source: Jill Luoto, The RAND Blog, May 23, 2013 |
Contaminated drinking water contributes to the deaths of some 750,000 children under the age of five every year due to diarrheal disease. As a result, there is a pressing need in the developing world for ways to make water safe to drink that are affordable and widely used.
A RAND project, with USAID funding, is using mobile phones to increase the sales and use of safe-water filters in Kenya. The ceramic filters are microbiologically effective and often preferred by users over chemical disinfection (e.g., adding chlorine to water).
photo by waterdotorg/Flickr.com
The filters, however, are not affordable for all who need them. Costing about $10 each, the filters are still a middle-class technology for the poorest of the poor. Many potential users also do not know if they will like the filter or how it works, which can further drive down their purchases.
To increase purchases and use of the filter, David Levine of UC-Berkeley and I are working with the Safe Water and AIDS Project of Kenya to use mobile banking and text messaging to market durable ceramic safe-water filters. The project combines a free product trial with a “rent to own” payment plan to overcome consumer uncertainty and liquidity constraints.
The project began in August 2012 and builds on my previous work regarding consumer preferences in safe water technologies. It takes advantage of new mobile health and banking innovations that have accompanied the exploding growth in mobile-phone access throughout the developing world. In Kenya, the mobile-banking system M-PESA is widespread, with 73 percent of the poor using its services in 2012.
The project includes a randomized control trial of 300 households in rural western Kenya. Half the households were offered the filter through door-to-door marketing and a lump-sum purchase. The other half were offered it through the mobile marketing plan and payments over time.
The mobile marketing plan has had a remarkable effect on initial acceptance of the technology: 52 percent of households accepted the free trial, compared to 16 percent of those reached through the traditional marketing plan.
The project offers several potential ways to sustain use of the filters after purchase, including text messages reminding customers about the benefits of the product while requesting installment payments. Results so far are mixed, in part because of intervening holidays, school sessions, and national elections that have made payment performance difficult for many.
Should the project ultimately be successful, it could expand to other development products and settings. By allowing consumers to pay a little at a time and using mobile phones to collect those payments, this approach can help increase adoption of products for which transaction costs would otherwise be too high.
Jill Luoto is an associate economist at the nonprofit, nonpartisan RAND Corporation.
