When we go to the supermarket, our decision-making is considerably aided by having the price, ingredients and source of goods clearly labeled. This allows us to rapidly compare the characteristics, perceived benefits, and price of different products to make what is usually an informed and instantaneous purchase decision.
When it comes to making investment choices for public programs, we do not traditionally have the same luxury of information. The full benefits and costs of those interventions, including the long-term costs to maintain and operate a service, are rarely understood or taken into account in the decision. As a result, public decisions are usually made based on the most visible costs (capital investment required from the public budget), historical choices and the political process.
To reduce the detrimental effects of these influences, we need to move public sector decision making more towards the supermarket model, and increase the availability of key information so that decisions can be more rational, consistent, and transparent.
Since 2007, the Water and Sanitation Program (WSP), part of the World Bank’s Water Global Practice, has been attempting to put a price on sanitation by essentially understanding two sides of the same coin: what the costs of current inaction on sanitation are (i.e. how much poor sanitation costs households and the wider economy) and how much acting will cost (i.e. increasing access to sanitation services).
When it comes to acting, we need to understand the alternatives. What technology option best suits the preferences and local practices, available land, population density, disposable income, and willingness to pay of different population groups? What are the benefits of different technology options? And who is able to pay for the costs of behavior change, capital investment and sustained service delivery?
Read the complete post on the World Bank Water Blog, Jan 2015.
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