Economics of Sanitation Initiative
Watch: A presentation by ESI lead Guy Hutton
The Economics of Sanitation Initiative was launched in 2007 with a WSP study from East Asia, which found that the economic costs of poor sanitation and hygiene amounted to over US$9.2 billion a year (2005 prices) in Cambodia, Indonesia, Lao PDR, the Philippines, and Vietnam. The groundbreaking study was the first of its kind to attribute dollar amounts to a country’s losses from poor sanitation. The report sparked public awareness and Government action in several countries. The ESI initiative was born as a response by WSP to address major gaps in evidence among developing countries on the economic impacts of sanitation. Following the success in East Asia, ESI studies were completed in Africa and South Asia, with a study currently underway in Latin America.
The second phase of ESI in East Asia analyzes the costs and the benefits of alternative sanitation interventions in a range of typical contexts. The study results enable decisions on how to more efficiently spend funds allocated to sanitation. The study was conducted in Cambodia, Indonesia, the Philippines, Vietnam, and Yunnan Province in China.
The study found that sanitation interventions have very favorable socio-economic returns to households and society, contributing improved health, clean environment, dignity and quality of life, among many other benefits. In addition, while the study showed sanitation options that protect the environment are more costly to provide, the benefits are highly valued by households, tourists and businesses. When environmental benefits to downstream populations of proper wastewater management are valued, it can considerably increase the economic returns.
ESI work continued at the global level through a WHO publication, Global costs and benefits of drinking-water supply and sanitation interventions to reach the MDG target and universal coverage, which found that the global economic return on sanitation spending is US$5.5 for every one dollar invested. The report also estimated the global economic losses associated with inadequate water supply and sanitation at US$ 260 billion annually.