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Benefit–Cost Analysis of Community-Led Total Sanitation: Incorporating Results from Recent Evaluations
- Mark Radin, Marc Jeuland, Hua Wang, Dale Whittington
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- Journal:
- Journal of Benefit-Cost Analysis / Volume 11 / Issue 3 / Fall 2020
- Published online by Cambridge University Press:
- 04 May 2020, pp. 380-417
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We analyze the economic costs and benefits of “community-led total sanitation” (CLTS), a sanitation intervention that relies on community-level behavioral change, in a hypothetical rural region in sub-Saharan Africa with 200 villages and 100,000 people. The analysis incorporates data on the effectiveness of CLTS from recent randomized controlled trials and other evaluations. The net benefits of this intervention are estimated both with and without the inclusion of a positive health externality, that is, the additional reduction in diarrhea for an individual when a sufficient proportion of other individuals in the community construct and use latrines and thereby decrease the overall load of waterborne pathogens and fecal bacteria in the environment. We find that CLTS interventions would pass a benefit–cost test in many situations, but that outcomes are not as favorable as some previous studies suggest. The model results are sensitive to baseline conditions, including the value of time, income level used to calculate the value of a statistical life, discount rate, case fatality rate, diarrhea incidence, and time spent traveling to defecation sites. We conclude that many communities likely have economic investment opportunities that are more attractive than CLTS, and recommend careful economic analysis of CLTS in specific locations.
Valuing Changes in Time Use in Low- and Middle-Income Countries
- Dale Whittington, Joseph Cook
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- Journal:
- Journal of Benefit-Cost Analysis / Volume 10 / Issue S1 / Spring 2019
- Published online by Cambridge University Press:
- 19 December 2018, pp. 51-72
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Valuing changes in time use is often a critical element of economic analyses of development projects. In this paper we review the literature on the monetary value of time in low- and middle-income countries and find support for a commonly used benchmark of 50% of after-tax wages for time changes in activities in the informal sector, such as collecting water or traveling to health clinics. We offer recommendations to analysts who are conducting benefit-cost analyses in these settings about what methods they can use to estimate the value of time. These include a benefits transfer approach and also a relatively simple stated preference approach that might be deployed in a specific context if the project recommendation is sensitive to the assumption of the value of time or if the distribution of the benefits of time savings is especially important.
23.1 - alternative perspective
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- By Dale Whittington, Professor, Departments of Environmental Sciences & Engineering, and City & Regional Planning, University of North Carolina at Chapel Hill, USA, and Manchester Business School, UK
- Edited by Bjorn Lomborg, Copenhagen Business School
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- Book:
- Prioritizing Development
- Published online:
- 30 May 2018
- Print publication:
- 07 June 2018, pp 443-443
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Summary
Summary
Guy Hutton's chapter is part of a series of publications from the WHO and World Bank that suggest the benefits of water and sanitation interventions in developing countries are an order of magnitude or more higher than the costs of improved services. However, I challenge this finding on a number of grounds, particularly related to the assumptions made in the economic analysis.
The benefit-cost analysis rests on two assumptions, that each person's well-being is to count, and count according to their own valuation, and that this is also the valuation placed on the change by society. The challenge is to learn about individuals’ preferences and measure the strength of these in monetary terms, either via the willingness to pay (WTP) for the outcome or the willingness to accept (WTA) compensation to forego the change.
Some experts are reluctant to measure benefits in terms of expressed preferences because they believe that people do not fully understand either the benefit or the causal relationship between hygiene and health. They are thus inclined to substitute their own assessment of the benefits into the benefit-cost calculation, which creates a challenge for BCA. In simple terms, if the benefit-cost ratio of a WASH intervention is 10:1, or even 20:1 as suggested in the chapter, why don't individuals rush to adopt these interventions?
The reasonableness of the benefit estimate depends largely on the accuracy of the estimates of time saving, which is what delivers the greatest benefit. Consider one of the sources of time savings – not walking to an open defecation site. If we assume a rural household of two adults and three children, the monthly benefits estimated in the chapter would be about US$5 per month, but would everyone actually change their behavior? In practice, in rural India, there is evidence that many people prefer to practice open defecation, which means that the benefit in the chapter must be considered highly speculative and subject to a high level of uncertainty.
A similar argument applies to the benefits of avoided mortality. The human capital approach has no theoretical justification; a WTP figure would give a much lower benefit, particularly in poor communities, but some experts are uncomfortable with this. The substitution of expert judgment gives the appearance of greater certainty in the benefit estimates and, in many situations, inflates the economic benefits.
23.2 - alternative perspective
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- By Dale Whittington, Professor, Departments of Environmental Sciences & Engineering, and City & Regional Planning, University of North Carolina at Chapel Hill, USA, and Manchester Business School, UK
- Edited by Bjorn Lomborg, Copenhagen Business School
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- Book:
- Prioritizing Development
- Published online:
- 30 May 2018
- Print publication:
- 07 June 2018, pp 444-445
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Summary
Summary
Both the UN Panel of Eminent Persons and the Open Working Group for Sustainable Development Goals struggled with how to frame goals for the broader water resources management challenge. It is easy to agree that water resources should be used more efficiently, but that does not necessarily mean minimizing water use. Most water problems are essentially local, and tailored local solutions must be developed. These must also recognize that water is a renewable resource; after use by humans, each molecule of water reenters the natural hydrological cycle.
All this means that it does not make economic sense to present an average benefit-cost ratio for investment in water infrastructure such as dams. Some projects make good economic sense, while others do not. One approach to providing a figure for comparison with other options under consideration in this project would be to use a baseline of some of the most economically attractive dams in the world and assume that the BCR for others would be lower. Using this approach, we find that even the large multipurpose dam in the Blue Nile gorge in Ethiopia – one of the most attractive places in the world for hydropower generation – has a much lower benefit-cost ratio than smallerscale WASH interventions.
Health policy interventions (e.g., vaccination, malaria, HIV-AIDS, hospital care) consistently dominate the Copenhagen Consensus rankings, whereas these are generally at the bottom of the list of development priorities in low-income countries. Similarly, they are not at the top of the priority list for many households in developing countries. I suggest there are five systemic reasons why the Copenhagen Consensus process overlooks the economic importance of large-scale infrastructure projects.
First, analysts underestimate the costs of targeted health and social interventions, in part because they implicitly assume that infrastructure is in place to enable the efficient delivery of health services. Ex post cost-benefit analysis of infrastructure projects often reveals cost overruns, and analysts responsible for the appraisal of large water resources projects have long been aware of this issue. More ex post cost-benefit analysis of targeted health and social policy interventions is needed to temper overly optimistic cost estimates.
Process, Ideology, and Willingness to Pay for Reducing Childhood Poverty
- Semra Ozdemir, F. Reed Johnson, Dale Whittington
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- Journal:
- Journal of Benefit-Cost Analysis / Volume 7 / Issue 3 / Fall 2016
- Published online by Cambridge University Press:
- 18 August 2016, pp. 373-399
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We investigated the perceived value of government programs on early-childhood development as a means of reducing childhood poverty. We incorporated preferences for the process as well as the outcome by developing two stated-preference survey instruments. One survey directly elicited respondents’ willingness to pay specifically for high-quality, intensive, early-childhood development programs at federal and state levels. A second survey elicited respondents’ preferences for increasing or decreasing taxes and reallocating expenditures between other government programs and early-childhood programs. We found that respondents cared greatly about how childhood poverty was reduced, not just reducing poverty per se. The perceived effectiveness of a program and ideological perspective were found to be important determinants of preferences for a poverty-reduction program. Respondents across all groups, including conservatives and respondents who perceived the effectiveness of early-childhood programs to be low, were not in favor of reducing the early-childhood program.
Chapter 10 - Water and Sanitation: Economic Losses from Poor Water and Sanitation – Past, Present, and Future
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- By Marc Jeuland, Duke University, David Fuente, University of North Carolina at Chapel Hill, Semra Özdemir, University of North Carolina at Chapel Hill, Maura Allaire, University of North Carolina at Chapel Hill, Dale Whittington, University of North Carolina at Chapel Hill
- Edited by Bjørn Lomborg, Copenhagen Business School
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- Book:
- How Much Have Global Problems Cost the World?
- Published online:
- 05 June 2014
- Print publication:
- 10 October 2013, pp 303-364
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Summary
Introduction
Diseases associated with poor water, sanitation, and hygiene comprise on average 6–7% of the annual mortality in less developed countries (World Health Organization 2004; Prüss-Üstün et al. 2008). A growing body of research suggests that a variety of different types of water, sanitation, and hygiene (WASH) interventions are effective and capable of delivering large health benefits to target populations (Hutton and Haller 2004; Fewtrell et al. 2005; Luby et al. 2005; Clasen et al. 2007; Hutton et al. 2007). Many of these interventions – the provision of improved community water supplies, point-of-use water treatment, hygiene education, on-site sanitation – can be delivered at very low cost, but their adoption remains surprisingly low (Whittington et al. 2012). Piped water and sewerage services, the gold standard for water and sanitation in the developed world, do not seem to be necessary to achieve many of the health benefits from improving existing water and sanitation conditions. Household demand for these network services, however, is much higher than for low-cost interventions, perhaps because they bring other types of improvements that households value, such as time savings and greater convenience (Whittington et al. 2009).
In this chapter we present a global analysis of the “economic losses” associated with inadequate water and sanitation from 1950 to 2050. These estimates provide an entry point for thinking about the challenges of ameliorating water and sanitation services in poor countries. Using a simple simulation model, we calculate the economic losses from the morbidity and mortality associated with inadequate water and sanitation services, and from the time spent collecting water from outside the home, in less developed countries during the period 1950 to 2008. We then use projections of GDP and population growth to forecast economic losses from 2008 to 2050. We compare total economic losses with non-monetary measures of disease burden, such as deaths due to WASH-related diseases.
7 - Water and sanitation
- Edited by Bjørn Lomborg, Copenhagen Business School
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- Book:
- Global Crises, Global Solutions
- Published online:
- 05 June 2012
- Print publication:
- 09 July 2009, pp 355-450
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Summary
Introduction
The 1980s were designated the International Water and Sanitation Decade, and the international community committed itself to ensuring that everyone in the world would have access to at least basic water and sanitation services by 1990. This target was not met. While hundreds of millions did receive access to new services, at the end of the decade well over 1.1 billion people still lacked improved water supplies, and more than 2.7 billion lacked sanitation services. By the year 2000, although another billion people had obtained access to improved water and sanitation services, population growth had left the number of those still unserved at roughly the same absolute level. In 2002, at the Johannesburg World Summit on Sustainable Development, the global community made a new commitment to a set of Millennium Development Goals (MDGs), including environmental sustainability. One of the targets under the environmental sustainability MDG is to cut by half the proportion of people in the world living without access to water and sanitation by 2015.
While we certainly hope that the global target for water and sanitation will be met this time, there are grounds for concern. Some important physical and economic features of water supply and sanitation make it inherently difficult to achieve broad-scale goals such as those of the International Water and Sanitation Decade and the MDG water and sanitation target – more difficult than for other MDG targets such as providing access to affordable essential drugs or communication and information technology.
16 - Infrastructure: Water vending activities in developing countries
- Edited by Richard Layard, London School of Economics and Political Science, Stephen Glaister, London School of Economics and Political Science
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- Book:
- Cost-Benefit Analysis
- Published online:
- 24 November 2009
- Print publication:
- 30 June 1994, pp 448-463
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Summary
Water supply projects in developing countries are traditionally based on either (a) piped systems, with public taps or private household services (or both), or (b) wells with handpumps. Both of these approaches to providing water services have been extensively studied; planning and design manuals for such systems abound. There is, however, a third approach to service delivery which is seldom explicitly recognized or incorporated in design or investment decisions: water vending. Millions of people in villages and cities throughout the developing world are, in fact, already being served by vendors who take water from a source that is available and then deliver it in containers to households or fill household containers from their vehicle tanks.
WATER VENDING
The distribution of water by vendors is expensive, whether the vehicles are powered by people, animals or engines. Households which are served by vendors generally pay more per month for 20–40 litres per capita per day than those directly connected to a piped system who might use as much as 400 litres per capita per day. Households sometimes pay over 10 per cent of their monthly income for vended water, as compared to 1–5 per cent for most piped water systems (Whittington, Lauria and Mu, 1989; Zaroff and Okun, 1984). In addition, vendors sometimes sell water from polluted sources or fouled containers. Water vending can thus be a financial burden and a health threat to millions of people.