world water week - asia day - presentation ghutton

8/6/2019 World Water Week - Asia Day - Presentation GHutton

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The Economics of Sanitation

Initiative (ESI)Contributing to Improved

Decision MakingGuy Hutton

Water and Sanitation ProgramEast Asia and Pacific

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the AsianDevelopment Bank (ADB), or its Board of Directors, or the governments they represent. ADB does not guarantee the accuracyof the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may notnecessarily be consistent with ADB official terms.



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The hygienic disposal or recycling of waste Latrine practices and management of human excreta

Wastewater, drainage and flood control

Solid waste management

Agricultural, industrial, medical waste; animal excreta

What is Sanitation?

A public concernA private issue



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The pollution: humans produce

1 million tons of feces per day

The Sanitation Problem

Asia is home to61% of worldpopulation, where,in 2004, more than

half the populationdoes not have basicimproved sanitation0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

C a m b o

d i a

L a o P D R

I n d i a

T i m o r - L e s t e

B a n g l a d e

s h

C h i n a

I n d o n e s i a

M o n g o l i a

P a k i s t a n

V i e t N a m

P h i l i p p i n e s

M y a n m

a r % B a s i c S a n i t a t i o n C o v e r a g e

Improved Unimproved

http://www.archives.gov/research/ansel-adams/images/aae11.jpg



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Why economics? Public spending is low & budget reallocation is difficult

Lack of political will at top and decentralized levels

Sanitation and hygiene still seen as a private matter

No single institutional home for sanitation

Weak demand for development loans

Need to improve effectiveness of public investments

Private spending limited by low income of unserved

Consumer demand not stimulated

Limited evidence in Asia to stimulate demand

and support evidence-based decision making



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The ESI Lead by the Water and Sanitation Program in the EAP

region, extending to other regions

Aim: to compile and generate socio-economic evidencefor improved sanitation advocacy and policy making

Two phases:

(1) Sanitation economic impact study: 2006-2007(2) Sanitation options cost-benefit study: 2008-2009

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ESI Phase 1 Aim: to measure the financial and

economic impacts of poor sanitation

Results in time for EASAN in 11/2007 Modeling using available secondary data

Impacts presented at national and sub-

national level Assessment of impacts by age, gender

and rural-urban

Focus on major impacts or impactswhich help make the case for sanitation: health, water ,environment, tourism, and other

welfare (time loss, intangibles)



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Sanitation-related economiclosses in 4 countries

9 billion US$ p.a.

Headline results

US$30 per

capita

2% of

GDP



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Headline results

0

5

10

15

20

25

30

35

Cambodia Indonesia Philippines Vietnam

E c o n o m i c l o s s e s ( U S $ / c a p i t a )

Tourism

Other welfare

Environment

Water

Health



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Selected diseases measured in this study

Data sources

Routine statistics (scaled upfor underreporting)

National surveys (e.g. DHS) Other national studies

Economic impacts

Health care

Health-related productivity

Premature death

Health impacts



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9,688

121,199

38,626

9,87211,925

50,132

27,904

9,264

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000


N o

. e p i d o s e s ( t h o

u s a n d ) a n d d e a t h s

Episodes (thousand) Deaths

1 case for every 2 people, concentrated in under fives

> 100,000 deaths/year for 400m population

Health impacts



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- Up to a dollar per capita health care costs

- Economic costs dominated by premature mortality

1.0 0.80.4 0.60.4

1.6

0.70.1

12.2 12.7

11.0

2.4

0

2

4

6

8

10

12

14

Cambodia Indonesia Philippines Vietnam H e a l t h - r e l a t

e d e c o n o m i c c o

s t ( U S $ p e r c a p i t a )

Health care Productivity Premature death

50% of economiccost = indirect disease

Health impacts



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6.8

5.8

1.4

0.70.8

0.6

2.3 2.3

3.2

0.40.1

0.3

0

1

2

3

4

5

6

7

8


W a t e r - r e l a t e d e c o n o m i c c o

s t ( U S $ p e r c a p i t a )

Drinking water costs Domestic use water costs Fish production losses

Water costs dominatedby access to clean

drinking water

0.0 10.0 20.0 30.0 40.0 50.0

Piped

Vendor

Boiled

Bottled

Cost per cubic meter (US$)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


% h o u s e h o l d s t r e a t i n g w a t e r

Water impacts



13Very limited evidence on preferences from survey work

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Status & prestige

More privacy

Time savings

Improved safety

Improved health

More comfortable

Hygiene/clean

%Urban

% Rural

% households. Survey Cambodia 2006

User preferences



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0 5 10 15 20 25

Cambodia

Indonesia

Philippines

Vietnam

Population (million)

Shared latrine

Open defecation

Traveling & queuing time for unimprovedsanitation access leads to time losses

Whatever its use, time has a value because

people would (generally) prefer not wastingtime unnecessarily

Time loss



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Sanitation in institutions also lags behind

Inadequate facilities in

Schools Work places

Public places

Impacts on

School and work absence

Life decisions

Quality of life of those usingunsanitary latrines or practicingopen defecation, especiallyvulnerable groups – women,children, seniors, handicapped

Away from the home



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Poor sanitation affects the wider environment and living space

Open defecation

Unemptied septic tanks

Leaking shared and publictoilets, sewers

Leading to

“No go” zones – loss of valuableland, especially in cities

Welfare loss – putrid smells,diseases, poor image

Environment



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0

5

10

15

20

25

30

35


E c o n o m i c l o s s e

s ( U S $ p e r c a p i t a )

Tourism

Other welfare

Environment

Water

Health

Other actual or potential impacts:

Diseases with poor routine information

Health-related quality of life loss

Education loss

Intangible welfare impacts

Marine fish, subsistence fishing

Polluted water use in agriculture and industry

Business, foreign investment, economic growth

Recreation

Impacts excluded



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Dissemination



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Moving onto ESI Phase 2

The Sanitation ‘Options’ Cost-Benefit Study



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ESI Phase 2 Aim: to compare the costs and benefits of improved

sanitation options in selected country settings

Data collection from field

Program approaches as well astechnical sanitation options

Range of options and target populations

Human excreta and hygiene measures

Study reflects a mixture of bestpractice in CBA as well as innovation

Target audiences include primarilynational decision makers but also

households, local government,donors and technical partners



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Key policy questionsAre the intervention benefits greater than the costs?

Net Present Value (NPV)>0, BCR>1

How do different options on the sanitation ladder compare? Benefit-Cost Ratio (BCR)

Who benefits? Who pays? Who is willing to pay?

Benefit Incidence Analysis (BIA), Willingness to Pay (WTP) Does a household recover its costs, and if so, how soon?

Payback period

What is the rate of return on investment? Economic or Financial Internal Rate of Return (E/FIRR)

Is sanitation a good investment using public money?

BCR, Cost-Effectiveness Ratio (CER), IRR



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Study components Component 1: program approach analysis

Assess performance using review of available documentation(& interview) from >10 selected sanitation programs per country

Component 2: household and community-level CBA

Locations: 5 sites per country (≤2 urban and ≤2 rural)

Scientific design: before-after in intervention households, andinterventions-control comparison

Tools: household survey, discussion groups, environmentaland water quality surveys, market survey

Component 3: national level analysis

Survey of tourists and those involved in tourism industry

Survey of business leaders and other key informants

Further compilation of health and water statistics



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Activity East Asia South AsiaConcept note, peer review Dec. 07 May. 08

Terms of reference Jan. 08 Sept. 08

Procurement May. 08 Dec. 08

Data collection tools Aug. 08 Dec. 08

Initiation workshops Aug. 08 Jan. 09

Meeting sector partners Aug. 08 Jan. 09

Pilot testing Sept. 08 Feb. 09

Data collection Mar. 09 May. 09

Data analysis May. 09 Jun. 09

Report writing Jul. 09 Jul. 09

Dissemination Dec. 09 Dec. 09

Timeline Options Study



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Acknowledgements

ESI teams in Cambodia, Indonesia, Lao

PDR, Philippines, Vietnam and IndiaWSP colleagues

Funding agenciesPhase 1: Sweden, Denmark, UK (core WSP

funds) and USAID (Philippines study)Phase 2: Sweden (core WSP funds) and

ADB

world water week - asia day - presentation ghutton

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