Drought of Learning: Can private sanitation systems exacerbate the impact of droughts on student learning?

Abstract

This paper examines the impact of droughts on educational performance, highlighting the exacerbating role of private water provision and limited service coverage. Using a balanced panel of 5,570 Brazilian municipalities from 2004 to 2021, we investigate the relationship between drought exposure, water provision characteristics, and student learning outcomes. To capture distinct mechanisms, we distinguish between short-term droughts, which primarily affect agricultural production, and long-term droughts, which deplete water stocks in reservoirs, rivers, and lakes and thus constrain sanitation services. Our findings indicate that severe droughts adversely affect educational outcomes and that these effects are significantly stronger in municipalities with privately operated sanitation systems. This result aligns with theoretical predictions from incomplete contracts models \citep{hart1997proper}, which predict that private providers are less likely to undertake precautionary investments in water resilience. Overall, while private provision tends to enhance efficiency, public systems demonstrate greater resilience to extreme droughts, with meaningful implications for education and public policy}.