Investing in Basic Improvements in Sanitation Yield Major Economic Gains for East Asia’s Poor Households

Aug 31, 2011

The Water and Sanitation Program, a multi-donor partnership administered by the World Bank released a series of reports pointing out that households that invest in basic sanitation have a better quality of life and could increase up to seven fold the return on investment in economic benefits.

The reports, which are the second phase of the Economics of Sanitation Initiative (ESI) launched initially in East Asia in 2007, found that all types of sanitation improvement evaluated have benefits that exceed costs. The new reports analyze benefits and costs of sanitation interventions in Indonesia, Cambodia, China (Yunnan Province), Philippines, and Vietnam.
 
They recommend that countries:
 
· Intensify efforts to improve sanitation access for the entire population by focusing on developing viable sanitation markets, collective behavior change, and disseminating widely information on household sanitation options and models.
 
· Go beyond basic sanitation provision in contexts where pit latrines are not feasible and where populations demand higher levels of service. At the same time, decision-makers should be aware of the full range of sewage removal and treatment options and their related costs and benefits, in order to avoid investing in expensive technologies that are difficult and costly to sustain.
 
· Promote evidence-based sanitation decision-making. The variation in economic performance of options between different sites suggests that careful consideration of site conditions and local demand and preferences is needed to select the most appropriate sanitation option and delivery approach.
 
 
“Decisions should take into account not only the measurable economic costs and benefits, but also other key factors, including intangible impacts and socio-cultural issues that influence demand and behavior change, availability of suppliers and private financing, and actual household willingness and ability to pay for services,” lead author Guy Hutton, economist and WSP consultant said.
 
The high net benefits from low-cost sanitation options, such as pit latrines, suggest these technologies should be centerpiece to increasing access for rural households, the reports said. For example, among the various sanitation options in Indonesia’s rural areas, the most favorable economic performance was for wet pit latrines. The annual economic rate of return was more than 100 percent, requiring less than one year to recover the economic value of the initial investment costs.
  
To improve quality of life in East Asia’s increasingly populated cities, where pit latrines have limited feasibility, decision-makers need to take into account the economic benefits from improved waste removal and treatment options, the reports said.
 
“The first phase of ESI demonstrated for the first time the huge economic toll of poor sanitation, up to seven percent of GDP in some countries,” said WSP Senior Regional Team Leader for East Asia, Almud Weitz. “The findings from phase two give countries, more specifically sanitation decision-makers, improved evidence on the costs and benefits of alternative sanitation options in different contexts.”
 
Despite significant growth among some countries in East Asia, access to, and the quality of sanitation facilities are closer to that of comparable low-income countries. For example, 60 million people in Indonesia still defecate in the open.
 
For a copy of the reports, visit: www.wsp.org/wsp/content/economic-impacts-sanitation
 
Background knowledge:
 
The Water and Sanitation Program (WSP) is a multi-donor partnership created in 1978 and administered by the World Bank to support poor people in obtaining affordable, safe, and sustainable access to water and sanitation services. WSP’s donors include Australia, Austria, Canada, Denmark, Finland, France, the Bill & Melinda Gates Foundation, Ireland, Luxembourg, Netherlands, Norway, Sweden, Switzerland, United Kingdom, United States, and the World Bank.
 
The World Bank Group is the largest external financier (US$7.5 billion in fiscal year 2011) in water supply and sanitation, irrigation and drainage, water resources management, and other water-related sectors, and provides strong advisory and analytical support to client countries.
 

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