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Water, Water, Everywhere: Municipal Finance and Water Supply in American Cities

Author

Listed:
  • David Cutler
  • Grant Miller
Abstract
The construction of municipal water systems was a major event in the history of American cities -- bringing relief from disease, providing resources to combat fires, attracting business investment, and promoting development generally. Although the first large-scale municipal water system in the United States was completed in 1801, many American cities lacked waterworks until the turn of the twentieth century. This paper investigates the reason for the century-long delay and the subsequent frenzy of waterworks construction from 1890 through the 1920s. We propose an explanation that emphasizes the development of local public finance. Specifically, we highlight the importance of municipal bond market growth as a facilitator of debt finance. We argue that this explanation is superior to others put forward in the literature, including disease knowledge, the presence of externalities, municipal population density, natural monopoly, contracting difficulties, corruption costs, and growth in the supply of civil engineers.

Suggested Citation

  • David Cutler & Grant Miller, 2005. "Water, Water, Everywhere: Municipal Finance and Water Supply in American Cities," NBER Working Papers 11096, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:11096
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    References listed on IDEAS

    as
    1. Michael D. Bordo & William G. Dewald, 2001. "Bond Market Inflation Expectations in Industrial Countries: Historical Comparisons," NBER Working Papers 8582, National Bureau of Economic Research, Inc.
    2. David M. Cutler & Grant Miller, 2004. "The Role of Public Health Improvements in Health Advances: The 20th Century United States," NBER Working Papers 10511, National Bureau of Economic Research, Inc.
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    6. Bordo, Michael D. & Schwartz, Anna J., 1999. "Monetary policy regimes and economic performance: The historical record," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 3, pages 149-234, Elsevier.
    7. Sukkoo Kim, 2002. "The Reconstruction of the American Urban Landscape in the Twentieth Century," NBER Working Papers 8857, National Bureau of Economic Research, Inc.
    8. Scott E. Masten, 2011. "Public Utility Ownership in 19th-Century America: The "Aberrant" Case of Water," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 27(3), pages 604-654.
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    10. Rebecca Menes, 2003. "Corruption in Cities: Graft and Politics in American Cities at the Turn of the Twentieth Century," NBER Working Papers 9990, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Bel, Germà, 2020. "Public versus private water delivery, remunicipalization and water tariffs," Utilities Policy, Elsevier, vol. 62(C).
    2. Galiani, Sebastián & Gertler, Paul J. & Undurraga, Raimundo & Cooper, Ryan & Martínez, Sebastián & Ross, Adam, 2017. "Shelter from the storm: Upgrading housing infrastructure in Latin American slums," Journal of Urban Economics, Elsevier, vol. 98(C), pages 187-213.
    3. Carol A. Heimer & Elsinore Kuo, 2021. "Subterranean successes: Durable regulation and regulatory endowments," Regulation & Governance, John Wiley & Sons, vol. 15(S1), pages 63-82, November.
    4. Howard Bodenhorn, 2017. "Finance and Growth: Household Savings, Public Investment, and Public Health in Late Nineteenth-Century New Jersey," NBER Working Papers 23430, National Bureau of Economic Research, Inc.
    5. Matthew E. Kahn, 2017. "Will Climate Change Cause Enormous Social Costs for Poor Asian Cities?," Asian Development Review, MIT Press, vol. 34(2), pages 229-248, September.
    6. Daniel Platz, 2009. "Infrastructure finance in developing countries—the potential of sub-sovereign bonds," Working Papers 76, United Nations, Department of Economics and Social Affairs.
    7. Yusuf, Shahid & Nabeshima, Kaoru & Wei Ha, 2007. "What makes cities healthy ?," Policy Research Working Paper Series 4107, The World Bank.
    8. Dora L. Costa & Matthew E. Kahn, 2015. "Death and the Media: Asymmetries in Infectious Disease Reporting During the Health Transition," NBER Working Papers 21073, National Bureau of Economic Research, Inc.
    9. Edward L. Glaeser, 2013. "A World of Cities: The Causes and Consequences of Urbanization in Poorer Countries," NBER Working Papers 19745, National Bureau of Economic Research, Inc.
    10. Daron Acemoglu & Simon Johnson, 2007. "Disease and Development: The Effect of Life Expectancy on Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 925-985, December.
    11. Beach, Brian, 2022. "Water infrastructure and health in U.S. cities," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    12. Hoehn-Velasco, Lauren, 2018. "Explaining declines in US rural mortality, 1910–1933: The role of county health departments," Explorations in Economic History, Elsevier, vol. 70(C), pages 42-72.
    13. Dora L. Costa, 2015. "Health and the Economy in the United States from 1750 to the Present," Journal of Economic Literature, American Economic Association, vol. 53(3), pages 503-570, September.
    14. Feigenbaum, James J. & Muller, Christopher, 2016. "Lead exposure and violent crime in the early twentieth century," Explorations in Economic History, Elsevier, vol. 62(C), pages 51-86.
    15. Cain, Louis & Hong, Sok Chul, 2009. "Survival in 19th century cities: The larger the city, the smaller your chances," Explorations in Economic History, Elsevier, vol. 46(4), pages 450-463, October.
    16. Dora L. Costa & Matthew E. Kahn, 2015. "Declining Mortality Inequality within Cities during the Health Transition," American Economic Review, American Economic Association, vol. 105(5), pages 564-569, May.
    17. Laura Abramovsky & Britta Augsburg & Pamela Jervis & Bansi Malde & Angus Phimister, 2019. "Complementarities in the Production of Child Health," IFS Working Papers W19/15, Institute for Fiscal Studies.
    18. Nicola Tynan & Brian Beach & Werner Troesken, 2016. "Who should own and control urban water systems? Disease and the municipalisation of private waterworks in nineteenth-century England," Working Papers 16006, Economic History Society.
    19. Brian Beach & Werner Troesken & Nicola Tynan, 2016. "Who Should Own and Control Urban Water Systems? Historical Evidence from England and Wales," NBER Working Papers 22553, National Bureau of Economic Research, Inc.
    20. Edward L. Glaeser, 2012. "Urban Public Finance," NBER Working Papers 18244, National Bureau of Economic Research, Inc.
    21. Matthew Gandy, 2006. "Water, Sanitation and the Modern City: Colonial and Post-colonial Experiences in Lagos and Mumbai," Human Development Occasional Papers (1992-2007) HDOCPA-2006-06, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).

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    More about this item

    JEL classification:

    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • I1 - Health, Education, and Welfare - - Health
    • H4 - Public Economics - - Publicly Provided Goods

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