India: inadequate sanitation costs the equivalent of 6.4 percent of GDP

Cover WSP report Economic Impacts Sanitation India

Inadequate sanitation costs India US$ 53.8 billion, which is equivalent to 6.4 percent of India’s GDP in 2006, according to a new report [1] from the Water and Sanitation Program (WSP).

The study analyzed the evidence on the adverse economic impacts of inadequate sanitation, which include costs associated with death and disease, accessing and treating water, and losses in education, productivity, time, and tourism. The findings are based on 2006 figures, although a similar magnitude of losses is likely in later years.

The report indicates that premature mortality and other health-related impacts of inadequate sanitation, were the most costly at US$ 38.5 billion, 71.6 percent of total impacts, followed by productive time lost to access sanitation facilities or sites for defecation at US$ 10.7 billion, 20 percent, and drinking water-related impacts at US$ 4.2 billion, 7.8 percent.

“The cost is more than I expected,” UNICEF’s water, sanitation and hygiene chief Clarissa Brocklehurst said in an interview with news site Bloomberg. “Yet, if you know the scale of open defecation in India, it’s not all that surprising.”

Children and the poor, especially the urban poor, are hardest hit by inadequate sanitation.

More than three-fourths of the premature mortality-related economic losses are due to deaths and diseases in children younger than five. Diarrhea among these children accounts for over 47 percent (US$18 billion, Rs.824 billion) of the total health-related economic impacts.

[…]

At 75 percent more than the national average and 60 percent more than the urban average, the poorest 20 percent of households living in urban areas bear the highest per capita economic impacts of inadequate sanitation. Rural households in the poorest quintile bear per capita losses 8 percent more than the average loss for households in rural areas.

The study focused on safe excreta management and hygiene behaviour, using the disaggregation of economic impacts of inadequate sanitation into health-related impacts including:

  • premature deaths, costs of treating diseases, and productive time lost due to illnesses
  • domestic water-related impacts including household treatment of water, and money and time costs to obtain safe water
  • welfare losses including additional time spent by people for accessing toilets or open defecation sites, and girls having to miss school, and women not going to work; and
  • the loss of potential tourism owing to inadequate sanitation

Recommendations

The study underlines that substantial investments are needed in improving sanitation  It recommends a new monitoring framework – one that measures not just sanitation coverage and use, but also improvements in the overall health, water-related, environmental, and other welfare indicators that result from inadequate sanitation.

A 2007 WSP study in East Asia [2] showed annual per capita losses of US$ 9.30 in Vietnam, US$ 16.80 in the Philippines, US$ 28.60 in Indonesia and US$ 32.40 in Cambodia. India surpasses all of these countries, as it lost US$ 48 (Rs.2180) on a per capita basis.

The report estimates that comprehensive interventions (use of toilets, hygiene promotion, improved access to safe water, and proper waste management) can save India US$ 32.6 billion (Rs. 1.48 trillion) or US$ 29 (Rs. 1321) per capita.

The report also shows that increasing public and household investments in sanitation can generate considerable economy activity – the sanitation ‘market’ is estimated at about US$ 152 billion (Rs. 6.87 trillion) for infrastructure creation and operations and maintenance services, over the period 2007-2020.

[1] WSP (2010). The economic impacts of sanitation in India : inadequate sanitation costs India Rs. 2.4 trillion (US$53.8 billion). New Delhi, India, Water and Sanitation Program, World Bank. 8 p. : 5 fig. Download report

[2] Hutton, G. … [et al.] (2007). Economic impacts of sanitation in Southeast Asia : summary report. Jakarta, Indonesia, Water and Sanitation Program, World Bank. 23 p. Download report

Related web site: WSP – Economic Impacts of Sanitation

Source: WSP, 20 Dec 2010 ; Jason Gale, Bloomberg, 21 Dec 2010

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