The Economics of Sanitation Initiative: An Introduction

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This PowerPoint was presented by WSP Senior Economist, Sophie Hickling, during AfricaSan 3 (Kigali, Rwanda - 2011) under the "Economics of Sanitation for Advocacy and Decision Making" session.

This session introduced the Economics of Sanitation Initiative (ESI) aims, rationale, and methods. A panel of experts from government, donors and other sector specialists in Africa commented on the use of ESI results for sanitation financing; the use of media to influence stakeholders; the mechanisms for adopting ESI results into government decision making; and critical assessment and proposed improvement to ESI methods.

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The Economics of Sanitation Initiative: An Introduction

  1. 1. The Economics of Sanitation Initiative: An Introduction Guy Hutton Senior Economist, Consultant Water and Sanitation Program
  2. 2. ESI in Southeast Asia Overall Goal: Advocate for increased investments, and provide evidence for efficient planning and implementation of sustainable sanitation services Motivating factors • Low priority • Lack of evidence Geographical locations 5 year study Household sanitation focus Study phasing
  3. 3. Study Phases Phases: 1. Impact Study: Analyze economic impacts of current sanitation arrangements & hygiene practices; and estimate potential gains from improvements based on analysis of secondary data 2. Options Study: Analyze costs and benefits of different sanitation options to inform policies and programs which ones to select based on primary surveysPhase 1: Selection of analysis levels ‘Outputs’ – Focus on the National level – Total cost – Health damage costs by age – Cost as % of GDP – Available water quality data – Cost per person – Illustrative case studies, where available
  4. 4. Economic Impacts - % of Gross Domestic Product 8 7 6 5 4 3 2 1 0 Cambodia India Lao PDR Indonesia Philippines Vietnam Tourism User preferences Environment Water Health Strong inverse relationship between sanitation coverage and economic impacts across 6 Asian countries.
  5. 5. Economic Impacts - % of Gross Domestic Product International Dollar (ID)* United States Dollar (USD) 220 200 180 160 140 120 100 80 60 40 20 0 Cambodia India Lao PDR Indonesia Philippines Vietnam Considerably larger costs per capita when taking into account differences in purchasing power, compared with prices in the USA.
  6. 6. Methodological IssuesOr…what do the results really mean? Valuation • What is life worth? • Poor sanitation’s contribution to water degradation and its economic consequences Non-financial Financial • Valuing tourism development aided by a clean 7,000 environment 6,000 Economic versus financial cost 5,000 • Financial = direct and impact on cash 4,000 3,000 Who incurs the cost? 2,000 • Part private cost, part externality • Variation between country 1,000 0 Underestimates of damage cost • Conservative estimates • Omitted impacts
  7. 7. Dissemination
  8. 8. www.wsp.org

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