A puzzle: Sanitation is one of the most productive investments a government can make. There is now rigorous empirical evidence that improved sanitation systems reduce the incidence of diarrhea among children. Diarrhea, in turn, harms children’s nutritional status (by affecting their ability to retain nutrients). And inadequate nutrition (stunting, etc.) affects children’s cognitive skills, lifetime health and earnings. In short, the benefits of sanitation investment are huge. Cost-benefit analyses show rates of return of 17-55 percent, or benefit/cost ratios between 2 and 8.
But if the benefits are so high (relative to costs), why aren’t we seeing massive investments in sanitation? Why are there 470 million people in East Asia, 600 million in Africa and a billion people in South Asia lacking access to sanitation? Why are there more cellphones than toilets in Africa?