This study estimates the impact of improved sanitation on diarrhoeal incidence among Nepalese children below the age of five. Using 2006 cross-sectional survey data from the DHS for Nepal, I employ non-parametric techniques to match children belonging to ”treatment” groups with children in a ”control” group without access to the facilities to explain the decline in diarrhea rates among children from 2001 to 2006. The empirical framework yields strong support that access to improved sanitation has had a substanital impact on reducing the (predicted) diarrhea outcomes. This is especially true among young children defined as those below 24 months of age whose rates of have shown the largest declines between 2001 and 2006. These estimates can serve as an input into cost-effectiveness analysis, that compares the provision of increased access to sanitation with other MDG proposed public service interventions for the reduction of diarrhea in comparable developing countries.
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