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Can we really put a price on meeting the global targets on drinking-water and sanitation?

Guy Hutton's picture

When the Millennium Development Goals (MDGs) were signed, a commitment was made to deliver improved water and sanitation to half the unserved population. This ambitious target was met for water but not for sanitation, with 2.4 billion people still lacking improved sanitation in 2015. The first part of our new study, The Costs of Meeting the 2030 Sustainable Development Goal Targets on Drinking Water, Sanitation, and Hygiene, estimates the cost of finishing what was started as part of the MDG target.

The study found that globally current levels of financing are likely to cover the capital costs of achieving universal basic WASH by 2030. The global capital costs amount to $28.4 billion per year (range: $13.8 to $46.7 billion). However, despite this good news, the current allocations need to be redirected and there will need to be significantly greater spending on sanitation (accounting for 69% of the cost of basic universal WASH) and operations and maintenance, as well as in the most off-track countries which are mainly in sub-Saharan Africa and South Asia.

But this isn’t the full story.

Even while the MDG sanitation target was not met a new global target was set, as part of the Sustainable Development Goals (SDGs). The targets and proposed indicators within the water goal (6.1 and 6.2) talk about ‘safely managed’ services, which includes continuously-available, on-plot water supply and an improved service chain to ensure safely managed fecal waste. When these additional services are costed, they amount to approximately $87 billion per year (range: $61 to $123 billion). Then, we needed to add the basic sanitation and hygiene cost, as well as part of the basic water cost (as many households will not go direct to safely managed water). This takes the cost of achieving targets 6.1 and 6.2 to about $114 billion per year (range: $74 to $116 billion). At 0.39% of the sum of gross domestic product (GDP) of the 140 included countries (range: 0.26 to 0.55%), $114 billion per year requires an additional 0.27% of global GDP spent on WASH, hence requiring massive additional in-flows of financing to the sector.

As these funds are unlikely to be met in any major way from traditional bi- or multilateral aid, it is likely that the investments need to be met from the growing tax revenues of developing country governments and from the private sector recognizing the business potential in the long-term provision of WASH services.

And perhaps, this is the most important part of the story.

Sustained universal coverage requires more than capital inflows: financial and institutional strengthening will be needed to ensure that capital investments translate into effective service delivery.

Tariff policies will need to be strengthened but affordability will remain a critical issue, especially in low-income countries and communities where even the operational costs of basic WASH can add up to more than 5% of the poverty income levels.

Understanding costs is an important part of planning and implementing services to reach universal coverage, but financing should be viewed as part of a broader strengthening of the services system that includes development of technology, private suppliers and providers, policy reform, institutional strengthening, regulation and improved monitoring and evaluation. Financing needs to be planned for operational costs, as well as the capital cost numbers presented above.

What next?

Of course, some of the estimates presented here are at best back-of-the-envelope calculations, as there are so many unknowns such as current service levels and underlying cost data are at times weak. However, the results of this study provide some hard-to-ignore findings such as where the majority of costs (and challenges) are likely to occur, and they provide a basis for discussing global, regional and national priorities. The study provides an approximate global number on the costs of meeting two of the 169 targets, which should be compared with the costs and financing for achieving the other SDG targets, thus enabling an overall prioritization of the development agenda, such as has already been started by the Copenhagen Consensus Center, an exercise which was also conducted for water and sanitation.

In order to encourage deeper analysis, the underlying worksheets are available online for countries to rework the calculations made in this study based on different input data. However, these superficial assessments should not replace the implementation of detailed investment plans and financing strategies within each country as well as at sub-national level.


Related links:

Press Release: More Money and Better Service Delivery: A Winning Combination for Achieving Drinking Water and Sanitation Targets
Report: The Costs of Meeting the 2030 Sustainable Development Goal Targets on Drinking Water, Sanitation, and Hygiene 


This study is a collaborative effort by the World Bank, the United Nations Children’s Fund (UNICEF), the World Health Organization (WHO), and a range of sector partners engaged in the post-2015 process revolving around the new Sustainable Development Goal framework. The task team leader is Guy Hutton, senior economist at the Water and Sanitation Program (WSP) at the World Bank, supported by Mili Varughese, WSP operations analyst. In addition, the team consists of Eddy Perez, Jema Sy, Luis Andres, and Chris Walsh. Rifat Hossain (WHO) from the WHO/ UNICEF Joint Monitoring Programme for Water Supply and Sanitation conducted the coverage forecasts in 2015 for the baseline. Full acknowledgements are provided in the report.

Comments

Submitted by Michael Jackson on

Adopting A Water Monetary Standard will allow the financial barriers to access to be overcome. Such a monetary policy would create tax revenue versus consuming tax revenue. It is a policy of Co-Operation versus the current Fuedal economic monetary policies.

Submitted by John Oldfield on

This is an enormously important and helpful piece, Guy et al. Lots of good news and some clear, urgent next steps as well. I particularly like the fact that you highlight how important domestic tax revenues will be in developing countries. And thank you for making the underlying worksheets available online so that WASH leaders across the globe can build on them.

Submitted by billy d willoughby on

We can do this

Submitted by Diego Fernandez on

Dear friends

It is a great work; congratulations. I am making a detailed review of the model and I have 2 question:

a) Why the formula used in column (cell) IIQ(32), used 50% of (III+IIJ). It seems it have to add 100% of those columns.

b) The cost of Universal Safe Service level do not include yet the cost of Universal basic service level?

One personal comment: it seems to my, at leat for Colombian case, per capita cost are very low when compared with actual cost. In fact Colombia invest two times the annual amount required in this model for SDO.

Best regards,

Submitted by Temple Oraeki on

This is an interesting document. Making it accessible to all is a great feat but wider publicity is an even greater feat. Hopefully, countries can adopt and modify the template to suit their varying socio-economic conditions. Costing is an integral part of planning and should not be overlooked.

Submitted by Jonathan Fisher on

I am the international water economist working on an ADB study to improve water supply, waste water mgt and sanitation in Armenia. In particular to improve their investment planning for these measures and enhance their prioritisation of these measures. Grateful for information on the benefits of the sanitation problems in Armenia and the benefits of improved sanitation behind the BCR of 4.3 for Armenia in your good WHO report (2012) on global costs and benefits of drinking water supply and sanitation interventions to reach MDG target. Welcome opportunity to discuss this with you if you could email me (jonathanfisherenvecon@virginmedi.com) or ring me (44 (0)1707 272778 sometime in March before I return to Armenia in April to complete our study. Thanks. best wishes Jonathan Fisher

Submitted by Srinivasa Chaitanya on

World Bank estimates that 21% of communicable diseases in India are related to unsafe water. Most of the population get drinking water from rivers and bore wells, and the level of the dissolved salts in the water is very high. In some areas, TDS levels are so high that harmful metals like Arsenic, Cadmium and Lead are dissolved in the water. Only an RO water purifier can remove those salts but the problem is along with the harmful salts, natural minerals are also washed away from the water. Minerals are very important to lead a healthy life, so people should choose a water purifier that comes with TDS regulator.

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