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Study on Economic Impacts of Sanitation Highlights Need for Change

Governments and the media in East Asia have responded to a recent WSP study, "Economic Impacts of Sanitation."

The study found that the four countries -- Cambodia, Indonesia, the Philippines and Vietnam – lost an estimated US$9 billion a year because of poor sanitation. These findings have already been used by the government of the Philippines to spotlight sanitation issues during a recent launch of the International Year of Sanitation in Manila.

Government partners in other countries have also used the impact data for their public awareness campaigns.

 "A budget increase is a result of the political process. Therefore, lobbying, pressure by interest groups and public campaigns are an effective way of pushing for an increase in sanitation investment," said Dr. Oswar Mungkasa from Indonesia’s National Development Planning Agency.

National, regional and international mass media agencies have also used facts and figures from the study to produce headlines calling for higher investment in the sector. These include BBC International and other major media outlets in the four countries.

"This hard-hitting sanitation data helps us convince our editors of the news value of sanitation articles," says Mulyanda Djohan from Xinhua News Agency.

Study Findings

This study examines the major health, water, environmental, tourism and other welfare impacts associated with poor sanitation in the four countries. By examining the economic impacts of poor sanitation, and the potential gains from improved sanitation, this study provides important evidence to support the need for sanitation investments.

Sanitation is not just a social welfare or humanitarian issue. The report shows decision makers at the country and regional levels how the negative impacts of poor sanitation can be mitigated by investing in improved sanitation.

The $US 9 billion loss to sanitation is approximately 2% of the four countries’ combined Gross Domestic Product (GDP), varying from 1.3% in the Philippines and Vietnam, to 2.3% in Indonesia and 7.2% in Cambodia.

The annual economic impact is approximately US$6.3 billion in Indonesia, US$1.4 billion in the Philippines, US$780 million in Vietnam and US$450 million in Cambodia. Investing in improved sanitation toward universal coverage would lead to an annual gain of US$6.3 billion in the four countries.

The summary study has been followed by individual and more detailed country reports, which will all be available in English and local languages by May 2008. In a second phase under ESI starting now, alternative sanitation interventions will be compared in terms of their costs and benefits to contribute to informed decision-making for the use of public and private funds allocated to sanitation.

Contact Name: 
Almud Weitz or Guy Hutton
Contact Email: 
wspeap@worldbank.org