1 dr. doulaye koné eawag/sandec doulaye.kone@eawag.ch www.sandec.ch/ financial and economic aspects...

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  • Dr. Doulaye KonEawag/SandecDoulaye.Kone@eawag.ch www.sandec.ch/ Financial and Economic Aspectsof Faecal Sludge ManagementFaecal Sludge Management in Developing Countries

  • 1Cost for whom ?5Savings + benefits of iFSM2How to make cost comparable3Costing examples4Financing mechanism6Agronomic aspectsContents

  • 4Which financing mechanism ? Indiscriminate and illegal dumpingHealth risks and water pollutionThe challenge

  • All FS to designated treatment or disposal site

    The challengeSeptic tanks emptied at shorter intervalsPit emptying affordable4Which financing mechanism ?

  • 1Cost for whom ?Household:cost for pit emptying (and re-construction)Collector/hauler:Cost of vehicles and their O+M (incl. salaries)

  • 1Cost for whom ?FSTP holder/operator:cost for treatment plant construction, O + MFarmer:Cost of organic fertilizer and organic fertilizer transport

  • 2 How to make cost comparablee.g.: Price charged to household for pit emptyingCost shaped to allow for comparison of treatment or management systems?Financial costEconomic cost

  • 2 How to make cost comparableCost elements:Capital (or investment) cost $Annual O + M cost $ p. yearSystems not comparableCost elements:Annualised capital cost $ p. year(~ amortization)Annual O + M cost $ p. yearSystems still not comparableCost elements:Annualised capital cost $ p. ton TSper unit FS treatedAnnual O + M cost $ p. ton TSSystems now comparable !

  • 3Costing examples100,000 inhabitants20,000 m3/yr - 500 t TS/yr20 % uncertainty rangeComparing cost of FS treatment alternatives

    _1099310717.doc

    0

    10

    20

    30

    40

    cost [US$/t TS]

    Settling/ thickening tank

    Settling ponds

    Constructed wetlands

    Settling pond, Buobai

    Drying beds

    Annualised capital cost of different FSTP

    _1099311670.doc

    0

    10

    20

    30

    40

    cost [US$/t TS]

    Settling/ thickening tank

    Settling ponds

    Constructed wetlands

    Settling pond, Buobai

    Drying beds

    Annualised capital cost

    _1099310873.doc

    0

    5

    10

    15

    20

    25

    30

    cost [US$/t TS]

    Settling/ thickening tank

    Settling ponds

    Constructed wetlands

    Settling pond, Buobai

    Drying beds

    Annual O+M cost for different FSTP

    _1099311788.doc

    0

    5

    10

    15

    20

    25

    30

    cost [US$/t TS]

    Settling/ thickening tank

    Settling ponds

    Constructed wetlands

    Settling pond, Buobai

    Drying beds

    Annual O+M cost

    _1099310528.doc

    0

    5

    10

    15

    20

    25

    30

    cost [US$/t TS]

    Settling/ thickening tank

    Settling ponds

    Constructed wetlands

    Settling pond, Buobai

    Drying beds

    Annual O+M cost for different FSTP

    (20% uncertainty range)

    20

    30

    40

    50

    60

    cost [US$/t TS]

    Settling/ thickening tank

    Settling ponds

    Constructed wetlands

    Settling pond, Buobai

    Drying beds

    Total annual cost

  • 3Costing examplesComparing cost of FS treatment alternativesfor Nam Dinh (2,500 m3 septage/yr ~ 50 t TS/yr)Treatment optionAConstructed wetlands

    BDrying beds +

    CSettling / thickening + pondsInvestment cost *O+M cost p. yearCap $ 23,200O+M 1,400

    Cap24,350O+M2,010

    Cap24,100O+M6,180

    Land required200 m2

    290 m2

    245 m2

    (* Note: Cost of one mini tug = $ 24,000 !)OtherBest productsO+M need lowPlant care

    Polishing treatment requiredO+M high

    Less pumpingorganic fertilizer volumin.O + M high

  • In general, funds can originate from:General tax revenuesSubsidies and transfersDirect user chargesSanctionsAdvance disposal feeIncome from sales or recyclables and recovered resourcesDonor money

    Tipping feesLicense feesWhich financing mechanism?4Which financing mechanism ?

  • TaxesCentralized tax collection and distributionLack of transparencyWeak financial base and poor collection ratesStrong competition for budget shares User charges give the solid waste agency some autonomy by eliminating the need to compete with all other government agencies for their share of general revenue. User charges also may render the solid waste agency more directly accountable to residents for the cost and value of services that they provide. (Cointreau-Levine 1995) Which financing mechanism?4Which financing mechanism ?

  • Principles of tariff calculationProcess of service provision(Public) Service providerPrinciple of Cost RecoveryWhich costs should be included/considered?calculation base:provided byTotal cost4Which financing mechanism ?

  • Principles of cost recoveryBUT: Which costs should be included/considered in a charge or fee?AND: Which costs or which handling stages should be covered through taxes?cost componentshandling stagesOperation andMaintenance costInvestment costAppropriate Technologies to adjust overall cost to ability-to-pay!What are lessons learnt from solids waste management?Replacement cost4Which financing mechanism ?

  • ServiceMoney Flux Leasing Control Fees CooperationFarmersHouseholdsManualEmptiers Waste Collection(NEERE)MechanicalEmptiers (ADSI) National Water& Sanitation Office (ONEA) MunicipalityEngineering Departments DonorsAgenciesWomensCoordination NGOStakeholders analysis4Which financing mechanism ?

  • Secondary StakeholdersE1: Official Engineering departmentsE2: ONEAE3: NEEREE4: womens Coordination E5: Donors agenciesCE1BASecondary StakeholdersE1: Official Engineering departmentsE2: ONEAE3: NEEREE4: womens Coordination E5: Donors agenciesCE2E5BA1D1AB1B2C1 E3 E4Secondary StakeholdersE1 Engineering departmentsE2: ONEAE3: NEEREE4: Women CoordinationE5: Donors agenciesE 1InfluenceImportanceStakeholder analysis

    Primary stakeholdersA1 Municipality

    B1 Mechanical emptiers

    B2 Manual emptiers

    C1 Farmers

    D1 HouseholdsD4Which financing mechanism ?

  • A planning tool helping to create the MARKET for a sustainable business 4Which financing mechanism ?

  • Financial sustainability of FS emptying service providersPerformance is largely influenced by :Trucks status (2nd-3rd hand)O&M skills and teams efficiency at workDistance to disposal sitePolice harassment4Which financing mechanism ?

  • Sustainability of mechanical emptying

  • Jeuland (2002) and Steiner (SANDEC) 2002The solution:incentives and sanctionsReversing the money flux ?Household (pit owner)FS treatment plant operatorTransport and Truck capital costAdministration, office cost, etc.O+M costCapital coststakeholdercostmoney flowLegend revenue?~30 FS delivery remuneration~15 AuthoritySubsidySanitation tax~50~45Pitemptying fee~30 Collection companyLicense charge~5 organic fertilizersale~13(~10)(based on Kumasi, Ghana, FSTP @ 200 m3/d)Based on costing data from Ghana4Which financing mechanism ?

  • If the dumping of FS is remunerated (Blue line), how much external money (i.e. sanitation tax) is needed to finance a treatment plant and what is the correspondent emptying fee or WTP? Money flux model for decision making (Ouahigouya)4Which financing mechanism ?

  • 5Health savings and benefits Defining impacts and benefitsFocus on health

    _1099375874.doc

    Improved FS Management

    Health sector

    morbidity and mortality reduced

    Environment

    less pollution

    Population

    higher amenity

    (less odours, emptying affordable, etc.)

    Better livelihood

    Saving on med. medmedical

    treatment cost

    Higher productivity

    Water res. protected protection

    Impact quantification

    Monetary

    valuation

    of :

    Monetary

    valuation

    of :

    Monetary

    valuation

    of :

    _1099377359.doc

    Improved FS Management

    Health sector

    morbidity and mortality reduced

    Environment

    less pollution

    Population

    higher amenity

    (less odours, emptying affordable, etc.)

    Better livelihood

    Saving on med. medmedical

    treatment cost

    Higher productivity

    Water res. protected

    Impact quantification

    Monetary

    valuation

    Monetary

    valuation

    Monetary

    valuation

    _1099377448.doc

    Improved FS Management

    Health sector

    morbidity and mortality reduced

    Environment

    less pollution

    Population

    higher amenity

    (less odours, emptying affordable, etc.)

    Better livelihood

    Saving on med. medmedical

    treatment cost

    Higher productivity

    Water res. protected

    Impact quantification

    Monetary

    valuation

    Monetary

    valuation

    Monetary

    valuation

    _1099377505.doc

    Improved FS Management

    Health sector

    morbidity and mortality reduced

    Environment

    less pollution

    Population

    higher amenity

    (less odours, emptying affordable, etc.)

    Better livelihood

    Saving on med. medmedical

    treatment cost

    Higher productivity

    Water res. protected

    Impact quantification

    Monetary

    valuation

    Monetary

    valuation

    Monetary

    valuation

    _1099376353.doc

    Improved FS Management

    Health sector

    morbidity and mortality reduced

    Environment

    less pollution

    Population

    higher amenity

    (less odours, emptying affordable, etc.)

    Better livelihood

    Saving on med. medmedical

    treatment cost

    Higher productivity

    Water res. protected

    Impact quantification

    Monetary

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