for comments. This RCT was registered in the American Economic Association Registry for randomized control trials under Trial number 2507 The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w23929.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Most existing literature focuses on the benefits of establishing basic drinking water access for unserved populations, the extensive water supply margin. In contrast, this article examines the intensive margin-the benefits of improving water service to under-served households, a growing population in developing country cities. We use contingent valuation to estimate willingness to pay (WTP) for improved piped water quality and reductions in supply interruptions among a sample of 193 households in Lahore, Pakistan. The distribution of WTP is described using parametric and non-parametric models. Results indicate that households in Lahore are willing to pay about $7.50 to $9 per month for piped water supply that is clean and drinkable directly from the tap-comparable to the monthly cost of in-home water treatment, and about three to four times the average monthly water bill for sample households using piped water. Estimates of WTP for reducing supply interruptions are both smaller and more difficult to interpret, since a significant fraction of the estimated WTP distribution for supply improvements is negative. All of our WTP estimates are well below 4% of monthly household income, the World Bank's benchmark upper bound for affordable water service.Akram is a doctoral student at the School of Forestry and Environmental Studies, Yale University. Olmstead is a Fellow at Resources for the Future. We are grateful to the Career Development Office at the Yale School of Forestry and Environmental Studies for financial support, to the Kashf Foundation for support and assistance with survey implementation, and to Erin Mansur, Robert Mendelsohn, and seminar participants at Resources for the Future and the International Water Resource Economics Consortium for insight and comments. Two anonymous referees provided extensive comments that improved the quality of the manuscript. All remaining errors are our own.

This paper argues that a water market is physically feasible in the existing reality of Pakistan's Indus Basin Irrigation System at the watercourse and distributary levels. The paper starts by describing the existing system and contrasts it with ideal economic management of surface water. It then lays out the degree and extent of modification to outlet structures that would be needed to enable trading based on structure type and the scale of the water-trading region, along with a first glance at the relative costs of those modifications. The ongoing decentralization of irrigation management should support water-trading efforts.

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There is ample evidence that canal systems often fail to reach their design capacity. This study argues that inefficient allocation of water within canals is one cause. This study collects precise measures of farm-level water withdrawals using flow meters in a canal in Pakistan. These data reveal that farmers near the head of the canal get more canal water than farmers near the tail, even accounting for conveyance efficiency. The results suggest that improvements in canal water management would yield efficiency gains for the canal.