More people die from inadequate sanitation-related causes in India everyday than 10 aeroplanes filled with 200 people each. This has high economic costs. Therefore, achieving adequate sanitation is an imperative.
A summary of the report on economic impacts of inadequate sanitation in India, released on December 20, 2011, by Water and Sanitation Program (WSP) of the World Bank, shows that lack of adequate sanitation in India resulted in an annual loss of $53.8 billion ($161 billion in purchasing power parity, or PPP) or $48 per capita ($144 in PPP) in 2006, the year of evaluation in the report. This was equivalent to 6.4% of GDP in 2006.
Most of these losses were related to health (71.7%; $38.5 billion), and mostly concentrated in children below five years. Other quantified economic losses from inadequate sanitation in this report relate to getting access to cleaner drinking water, time losses from not having access to sanitation, and tourism-related losses.
Based on international evidence, even locally-implemented toilet and hygiene interventions could have saved $32.6 billion, equivalent to 3.9% of GDP annually; a potential gain of $29 per capita.
What is the estimated potential size of the sanitation market until 2020, if goals for sanitation stated by government are achieved (household and community toilets, sewage treatment infrastructure, and operations and maintenance)? The annual national toilet and sewage treatment market is estimated at over $6.6 billion annually, with cumulative market during 2007-20 at over $152 billion.
Of the cumulative market, $97 billion, or 64%, can potentially be in infrastructure and $54 billion, or 36%, in operations and maintenance services. In this context, it is clear that government funds allocated to sanitation fall far short of the finances needed to achieve goals stated in government documents.
In the 11th Five-Year Plan (2007-11), the flagship Total Sanitation Campaign (TSC) has been allocated $4 billion in 593 districts for rural toilets. In addition to funding and policy, administrative and governance initiatives have been substantially improved in recent years for TSC.
These include using internet and web-forms for online monitoring of progress, online public availability of village-level data on targets and achievements, online availability of analysis, technical notes and designs, and invitation of feedback from all stakeholders by the implementing departments.
Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is the flagship urban infrastructure programme of the government. It is being implemented in 63 cities accounting for 42% of urban Indian population.
How do we fill the gap in financing of sanitation infrastructure? One way is to find funds in government plan and Budget allocations, the other is to look for public and private financing, including public and private international funds. These are complementary and non-competing sources.
Research in economics has shown over past several decades that in many situations, especially in infrastructure and ‘facilitating’ investments, public investments can crowd-in and increase private investments. Sanitation has both public good and private good aspects to it. It should be funded by both public and private finances.
A model where public funds provide the back-end and private funds provide the front-end can fill the gap in sanitation financing. This G-B-C, or Government-Business-Consumer, model can be used at all levels of government, by including local governments.
This may include plan and budgetary funds, state funds, municipal and local government funds, and private funds to build sewers and sewage treatment infrastructure of high quality. This may be done on a build-operate-transfer (BOT) basis, or on a lease-hire-to-businesses basis – like telecom, electricity or transport infrastructure in some places.
Business operators could raise their own finances to deliver services, and government and democratic institutions can play a regulatory role to ensure these ‘natural’ monopolies provide good service at reasonable price to consumers. These businesses may also help households find long-term financing for access to toilets and sustainable sewage treatment systems that have long durability andhigh quality.
(The author is economics faculty at the International Management Institute)