Economic Aspects of Sanitation in Developing Countries

BACKGROUND: Improved sanitation has been shown to have great impacts on people’s health and economy. However, the progress of achieving the Millennium Development Goals (MDGs) on halving the proportion of people without access to clean water and basic sanitation by 2015 has thus far been delayed. One of the reasons for the slow progress is that policy makers, as well as the general public, have not fully understood the importance of the improved sanitation solutions. This paper, by gathering relevant research findings, aims to report and discuss currently available evidence on the economic aspects of sanitation, including the economic impacts of unimproved sanitation and the costs and economic benefits of some common improved sanitation options in developing countries. METHODS: Data used in this paper were obtained from different information sources: international and national journal articles and reports, web-based statistics, and fact sheets. We used both online search and hand search methods to gather the information. RESULTS: Scientific evidence has demonstrated that the economic cost associated with poor sanitation is substantial. At the global level, failure to meet the MDG water and sanitation target would have ramifications in the area of US$38 billion, and sanitation accounts for 92% of this amount. In developing countries, the spending required to provide new coverage to meet the MDG sanitation target (not including program costs) is US$142 billion (US$ year 2005). This translates to a per capita spending of US$28 for sanitation. Annually, this translates to roughly US$14 million. The evidence complied in this paper demonstrates that investing in sanitation is socially and economically worthwhile. For every US$1 invested, achieving the sanitation MDG target and universal sanitation access in the non-OECD countries would result in a global return of US$9.1 and US$11.2, respectively. CONCLUSION: Given the current state of knowledge, sanitation is undeniably a profitable investment. It is clear that achieving the MDG sanitation target not only saves lives but also provides a foundation for economic growth.