Sanitation Finance for the Poor that Works

Public investments of varying forms enable an absolute increase in the number of poor people gaining access to sanitation, varying from 20 percent to 70 percent, according to a study of six cases in Bangladesh, Ecuador, India, Mozambique, Sénégal, and Vietnam by the World Bank-administered Water and Sanitation Program (WSP). 
Financing On-Site Sanitation seeks to identify the best-performing approaches and the relevant factors and issues to consider in designing a sanitation financing strategy.  The report offers guidance to sector professionals developing on-site sanitation projects and programs, which play the leading role in providing access to sanitation.
The study compares alternative financing approaches based on a set of common indicators, including in terms of the effectiveness in the use of public funds and targeting. 
“Each of the six sanitation programs studied enabled significant numbers of people to improve their sanitation,” said co-author and World Bank Senior Water and Sanitation Specialist Pete Kolsky. “The numbers of people benefiting varied. The India case enabled the most people to gain access, at over 21 million, while the Ecuador program enabled access for over 140,000 people.”
Forty percent of the world’s population does not have access to a basic level of sanitation, while one in five people practices open defecation, according to the UNICEF/WHO Joint Monitoring Program (2008). This crisis in sanitation has clear consequences: diarrhea kills over 1.5 million children each year, and 88 percent of these deaths are attributed to fecal contamination from inadequate sanitation, hygiene, and water supply.
The lack of sanitation spreads many other diseases, pollutes water and land, and robs poor people of basic dignity. Most of those without sanitation live in rural areas or on the fringes of cities beyond the reach of sewerage networks.
The first step up “the sanitation ladder” for those without access is on-site sanitation, the report says. "Promotion of household investment in sanitation is a cost-effective public health intervention, in terms of the ratio of public cost to estimated health benefits," said co-author and WSP Senior Water and Sanitation Specialist Eddy Perez. "The case studies reveal a wide spectrum of options: from a minimal investment in start-up of a revolving fund, to significant community mobilization and demand stimulation, all the way to hardware subsidies of up to 75 percent of capital costs in addition to community mobilization. The choice is thus not 'Subsidy or no subsidy?' but rather, 'What form and level of public funding makes sense in a specific context?' "
The report also shows that households are key investors in on-site sanitation, and careful project design and implementation can maximize their involvement, satisfaction, and financial investment. It also found that hardware subsidies of some form played a critical role in all six case studies.