Herding Behavior in Household Water Storage: A Spatial Analysis of Guatemala City

Storing water at home is increasingly common in developing countries, with considerable economic and health consequences, particularly for impoverished households. Therefore, the analysis of water storage behaviors is timely and policy-relevant. We provide the first spatial analysis of water storage behaviors at the household level. Using spatial probit models, we identify factors underlying the household decision to store water at home, while controlling for potential spatial correlations. Our findings indicate that households store water in response to water service interruptions, influenced by their satisfaction with current services and home ownership as well as water service providers and demographic neighborhood characteristics. We also find evidence of herding behavior, which explains a substantial proportion of water storage behaviors. Households are more likely to invest in water storage if their neighbors are doing so, all else equal. Our findings point to a latent demand for continuous water services, and they provide useful insights for better management of water service intermittency.