THE ECONOMIC IMPACTS OF INADEQUATE SANITATION IN BANGLADESH 68158 Inadequate Sanitation Costs Bangladesh BDT 295.5 Billion (US$4.2 Billion) An Overview of the Economic Impacts of Inadequate Sanitation in Bangladesh Overview The Economic Impacts of Inadequate Sanitation in Bangladesh �nds that This brochure substantial economic losses are incurred ever year in Bangladesh as a result of summarizes key inadequate sanitation. While the Government of Bangladesh has made signi�cant �ndings from investments to achieve its ‘Sanitation for All by 2013’ goals, much work remains the study, The to be done. Economic Impacts of Inadequate Sanitation The total economic impacts of inadequate sanitation in Bangladesh amount in Bangladesh. The to a loss of BDT 295.5 billion (US$4.2 billion1) each year. This is equivalent to study, carried out 6.3 percent of gross national product (GDP) in 2007.2 by the Water and Sanitation Program Translated into per-person costs, this impact means a loss of BDT 2,072 (WSP) to address (US$29.6) per person each year. The study underlines the fact that substantial major gaps in investments are needed to mitigate inadequate sanitation. These investments evidence and can become effective only when they result in reducing mortality and morbidity, support sanitation mitigating impacts on access to drinking water, and improving welfare. advocacy, is the latest in a series of new reports on water Figure 1: Primary and �nal impacts of improved sanitation options and sanitation in developing countries. Improvement Primary Impact Expected Economic Impact All the topics and measures highlighted Closer latrine access and Less use of public latrines Saved entry fee costs in the following are more latrines per capita Improved aesthetics addressed in much Less open defecation School participation greater detail by the Better living standards full report. Less latrine access time Higher house prices Improved latrine system Health Related Quality of Life improvement Intangible user benefits Higher labor productivity Improved health status due to Saved healthcare costs Improved hygiene less exposure to pathogens Value of saved lives practices Saved water treatment Improved quality of ground More domestic uses of water and surface water Higher cottage industry income Improved isolation, Improved quality of land and Higher tourist revenue removal and treatment external living area Foreign direct investment of human excreta Better fish production More fertilizer available Better agricultural production Improved aesthetics More fuel available Greater fuel cost savings Reuse of human excreta (cooking, lighting) Education 1 US$1 = BDT 70. 2 The per person annual impact of BDT 2,072 (US$ 29.6) was calculated by dividing the 2007 total population of Bangladesh (142.6 million). Consequences for Children’s Health are Severe In Bangladesh, diarrhea is the second leading cause of morbidity and the fourth leading cause of death among children. Bacteria, viruses, and parasites Sanitation: A Pathway to Health and Human Dignity that cause diarrhea are common environmental hazards linked to Access to safe drinking water and good sanitation is considered a poor sanitation. Acute respiratory fundamental human right, one that both safeguards health and protects infection and pneumonia, which human dignity.3 Bangladesh’s progress toward reaching two of the are leading causes of death Millennium Development Goals—‘Reduce the under-�ve mortality rate by and illness among children, are two-thirds between 1990 and 2015’ and ‘The proportion of the population also indirectly related to poor without sustainable access to safe drinking water and basic sanitation sanitation via malnutrition.5 halve by 2015’—will be accelerated by promoting sanitation and hygiene. The Government of Bangladesh has already shown it is highly committed to these goals through its national ‘Sanitation for All by 2013’ campaign, under which there has been increasing budgetary allocations for sanitation (hygienic/improved latrines): BDT 4,080 million in �nancial year 2006–07, BDT 5,510 million in 2007–08, and BDT 6,370 million in 2008–09. How does Better Sanitation Move Bangladesh Society Forward? Good sanitation and hygiene practices make major differences in health, education, and socioeconomic development. They increase life expectancy and reduce morbidity, in turn leading to other bene�ts such as decreased healthcare costs, increased worker productivity, higher school attendance, reduced water treatment costs, and more (Figure 1). Their impact on girls and women is especially large: lack of latrines in households makes women vulnerable to harassment and assault, particularly at night, and many girls and women drop out of schools and miss work due to inadequate sanitation facilities.4 What is the Status of Sanitation in Bangladesh Today? According to the Joint Monitoring Program of the World Health Organization (WHO) and UNICEF, Bangladesh’s sanitation coverage rose from 20 percent in 1990 to 39 percent in 2004 and 53 percent in Sewage conditions: A large number 2008. Although access to improved latrines remains low, the percentage of people remain at risk from the lack of people defecating in the open has dramatically reduced since 2003. of safe disposal of excreta. In urban More than 90 percent of the population has access to latrines (mainly areas, ensuring sanitation for all is low cost pit latrines). While there has been a signi�cant movement from a huge challenge and an expensive ‘open defecation’ towards ‘�xed point defecation’, the quality of coverage option for the government. Even in is the emerging area of concern. Seventy-�ve percent of the country’s Dhaka, the capital of Bangladesh, population lives in rural areas, and many communities in hard-to-reach only 20 percent households are regions do not have adequate access to sanitation. In such a densely covered by the sewerage network. populated country, where a large proportion of the land regularly floods, The rest of the population uses sanitation is a continuing challenge. septic tanks, pit latrines, unhygienic latrines or makes do without latrines. 3 Of�ce of the High Commissioner for Human Rights, Consultation on Human Rights and Access to The sanitation conditions are even Safe-Drinking Water and Sanitation: Summary of Discussions (Geneva: United Nations, 2007). 4 Abul Barkat, G. Mahiyuddin, A. Poddar, R. Ara, M. Rahman, M. Badiuzzaman, S. Khan, and A. Osman, more severe in the slums, where Advancing Sustainable Environmental Health (ASEH): Impact Study (Dhaka: WaterAid, 2009). 5 most households do not have private Bangladesh Country Paper: Sanitation in Bangladesh (Third South Asian Conference on Sanitation), November 2008. latrines or access to public latrines. Overview What Methodology Does the Study Use to Disease pathways: The Measure Impact? study points to important The study estimates economic impacts by examining three major components: issues regarding hygiene in health impact, water-related impact, and user preference impact. Bangladesh. On this matter, a Health-related impacts include premature deaths and morbidity as well as there is a wide gap between the burden of disease due to inadequate sanitation. To estimate the cost of reported �gures and observed premature deaths, the human capital approach and the value of statistical facts. Handwashing is life approach is followed, while the cost estimation of episodes of illness an important case: The considers the treatment cost, and welfare and productivity losses. percentage reported to be washing their hands with water aWater-related impacts include the household cost of treatment of drinking and soap after defecation is water, the cost of piped drinking and nondrinking domestic water production, 50 percent for rural areas and the cost of fetching cleaner water. and about 80 percent for aUser preference, time loss, and welfare-related impacts consider the urban areas, but the observed extra time needed for open defecation and for use of a shared toilet as scenario indicates that while well as the time lost by girls due to absence from schools and by women 55 percent wash their hands, from workplaces. only 1.7 percent wash both hands with soap or ash.6 The estimation includes both �nancial and nonmonetary costs to portray a About 42 percent of the complete picture of the economic losses caused by poor sanitation. rural and 20 percent of the aFinancial costs are the direct expenses paid in �nancial terms by a person urban population disposes of or institution, such as changes in household and government spending, real children’s feces in the open. income losses for households, and so on; and aNonmonetary costs consist of resource use, such as the time spent on taking care of patients, fetching water or using unimproved latrines; they can also be expressed in �nancial units using ‘shadow prices.’ The study also calculates the economic gains that improvements in sanitation and hygiene can bring by reduced relative risk of diarrhea. A sensitivity analysis is made to capture the low and high cases of parameter values to cover the overall variation. Data sources:7 National data on incidence or actual numbers for the indicators under the three broad impact components were compiled from the following data sources: Bangladesh Demographic and Health Survey 2007, Health Bulletin (2008), WHO’s Global Burden of Disease (2004), Household Income and Expenditure Survey (2005), Sample Vital Registration System (2007), Multiple Indicator Cluster Survey (MICS) (2006), Population Census (2001), National Accounts and GDP (2007), Labor Force Survey (2005-06), and Statistical Yearbook (2007). Based on the review of relevant scienti�c literature, attribution factors were used to estimate the populations impacted by inadequate sanitation and, �nally, the economic valuation was done using costs/prices based on other secondary sources. Conservative assumptions have been used in economic valuation and the pertinent analysis has been carried out for 2007 for want of comprehensive data for later years. 6 ICDDR’B, Health and Science Bulletin, Vol. 6, No. 3 (September 2008). 7 2007 was used as the study year for benchmarking reasons. When this study commenced there was no published data after 2007. Selected Findings The Magnitude of the Loss in Bangladesh is Enormous Economic losses due to inadequate sanitation amount to a �gure that is 33 percent higher than the National Development Budget in Figure 2: Composition of 2007–08. This amount is also �ve times higher than the national the economic impacts of health budget, three times higher than the national education budget, inadequate sanitation by and three times higher than the value of national exports in 2007. broad components, 2007 Health Impacts, Including Premature Death, Make Up the Single Largest Economic Loss Welfare and The health-related economic loss due to inadequate sanitation, access time, 10.8% at BDT 249.2 billion (US$3.56 billion) is the largest component of US$456.3 million impacts (84 percent of the total economic impacts or equivalent (BDT 31.8 billion) to 5.3 percent of GDP 2007). More than BDT 195 billion (US$2.8 billion) was lost due to premature mortality—the single-largest health subcomponent. Health-related productivity losses, estimated at BDT 31.9 billion (US$456.5 million), are the second-largest impact. (Figures 2 and 3.) Time Lost at Home, Work, and School is Water, 4.9% US$207.3 million Signi�cant As Well (BDT 14.5 billion) The other two main areas of impact—on welfare and access time and on drinking water—account for losses of BDT 31.8 billion (US$456.3 million) and BDT 14.5 billion (US$207.3 million), respectively. Within Health, 84.3% those categories, loss of access time cost households BDT 30.1 US$3.56 billion billion (US$430.2 million) and healthcare costs add up to BDT (BDT 249.2 billion) 22.1 billion (US$316.3 million). Figure 3: Economic impacts of inadequate sanitation by sub-components, 2007 Premature mortality US$2,787 million (BDT 195.1 billion) Health Productivity loss US$456.3 million (BDT 31.9 billion) Healthcare US$316.3 million (BDT 22.1 billion) Household access US$430.2 million (BDT 30.1 billion) access time Welfare and School access US$12.2 million (BDT 0.9 billion) Workplace access US$11.6 million (BDT 0.8 billion) Household treatment, drinking water US$140.6 million (BDT 9.8 billion) Water Cost of fetching water US$50.5 million (BDT 3.5 billion) Piped water US$16.2 million (BDT 1.1 billion) Selected Findings Diarrhea is the Largest Health Factor Figure 4: Distribution of the health impact of Contributing to inadequate sanitation by disease, 2007 Economic Loss Under the health-related impact Other of BDT 249.2 billion (US$3.56 Diseases, 18.7% billion), diarrhea is the largest US$629.4 million contributor, amounting to two-thirds of the total impact. This is followed by Acute Lower Respiratory Infection (ALRI), accounting for about 15 percent of the health-related impact (Figure 4). ALRI, 14.8% US$498.5 million Diarrhea, 67.1% Measles, 4.2% US$2,255 million US$139.6 million Malaria, 0.2% Helminthes, 0.9% US$6.7 million US$30.5 million Children and Poor Households are the Most Heavily Affected Victims Very young children—below age �ve—account for 95 percent of the economic losses related to premature deaths under the health impact total (US$2.66 of US$2.79 billion, or BDT 186.1 of BDT 195.1 billion). More broadly, diarrhea in the same age group (under �ve) accounts for 41 percent (BDT 101.9 billion, US$1.46 billion) of all health-related economic impacts (BDT 249.2 billion, US$3.56 billion). Comprehensive data on mortality are not available for all wealth and income classes. However, conservative estimates8 show that poor households bear the greatest brunt of inadequate sanitation. The estimated total losses in the 40 percent of poor households affected are equivalent to about 71 percent of the total impact on the nation’s population (BDT 210 billion of BDT 295.48 billion). 8 The poorest 40 percent of households are those in the lowest two wealth quintiles. In Bangladesh, the poverty ratio based on the direct calorie intake method was 40 percent in 2007. In estimating the poor household’s share in the total losses due to inadequate sanitation, the poor/non-poor ratio of diarrheal morbidity (2.73) and that for ALRI (common cold, URI, acute cough, bronchitis; 2.04) were considered in weighted form. Source: Barkat Abul. ‘Political Economy of Health Care in Bangladesh’, in Social Science Review, Vol. 27, Number 1, June 2010, Dhaka University. Key Lessons and As a result of Recommended Action comprehensive interventions, the study estimates a potential gain of about The study’s estimation of economic losses shows that inadequate BDT 158.4 billion sanitation has serious implications for Bangladesh’s overall (US$2.26 billion, socioeconomic and cultural development. Its �ndings are also highly encouraging in the measurable gains that sanitation and hygiene the equivalent to interventions could achieve by reducing premature deaths and related 3.4 percent of GDP in morbidity, eliminating domestic water-related costs, reducing absentee 2007). This implies time at schools and workplaces, and improving welfare and productivity. a potential gain of Therefore, to derive maximum bene�ts from sanitation, the study recommends the following: BDT 1,111 (US$15.9) per capita. a Increase investment in sanitation. a Increase investment in hygiene interventions. a Launch vigorous communication campaign. a Devise an appropriate monitoring framework. What can Bangladesh Gain by Improving Sanitation? This study estimates that a package of comprehensive sanitation and hygiene interventions can result in preventing 61 percent of the economic loss due to health impacts linked with sanitation and all the adverse impacts of inadequate sanitation related to water and welfare losses. Such a comprehensive package would need to address increased use of sanitary toilets, hygiene promotion (including hand washing and safe water management), safe disposal of human excreta, and improved access to safe water. Acknowledgments Dr Abul Barkat, Ph.D., Professor and Chairman, Economics Department, University of Dhaka, was the lead analyst and author of the ESI report summarized here, The Economic Impacts of Inadequate Sanitation in Bangladesh. Guy Hutton (Consultant, WSP) helped initiate the study and provided technical guidance to it. The study was task- managed by Rokeya Ahmed (WSP). The study also bene�tted from analytical and editorial inputs from Pravin More and Rajiv KR (WSP consultants). WSP wishes to thank the Ministry of Local Government, Rural Development and Cooperatives, Government of the People’s Republic of Bangladesh, for their support in carrying out the studies; and all the technical peer-reviewers of the study report’s draft versions. WSP thanks the Asian Development Bank and AusAID, for their generous assistance to support this ESI impact study. Water and Sanitation Program Funding Partners WSP is a multi-donor partnership created in 1978 and administered by the World Bank to support poor people in obtaining affordable, safe, and sustainable access to water and sanitation services. WSP provides technical assistance, facilitates knowledge exchange, and promotes evidence-based advancements in sector dialog. WSP has of�ces in 25 countries across Africa, East Asia and the Paci�c, Latin America and the Caribbean, South Asia, and in Washington, DC. WSP’s donors include Australia, Austria, Canada, Denmark, Finland, France, the Bill and Melinda Gates Foundation, Ireland, Luxembourg, Netherlands, Norway, Sweden, Switzerland, the United Kingdom, the United States, and the World Bank. Economics of Sanitation The Economics of Sanitation Initiative (ESI) is a multi-country initiative of the Water and Sanitation Program (WSP). ESI was launched in 2007 as a response by the Water and Sanitation Program (www.wsp.org) to address major gaps in evidence among developing countries on the economic aspects of sanitation. The study aims to provide evidence that supports sanitation advocacy, elevates the pro�le of sanitation, and acts as an effective tool to convince governments to take action. The �rst study completed in Southeast Asia found that the economic costs of poor sanitation and hygiene amounted to over US$9.2 billion a year (2005 prices) in Cambodia, Indonesia, Lao PDR, the Philippines, and Vietnam. Its second phase analyzes the cost-bene�t of alternative sanitation interventions and will enable stakeholders to make decisions on how to spend funds allocated to sanitation more ef�ciently. Due to that study’s successful traction, WSP has now carried out ESI studies in India and Pakistan as well as the Bangladesh study summarized here. ESI studies are also planned for countries in Africa, Latin America, and the Caribbean. DISCLAIMER: Water and Sanitation Program (WSP) reports are published to communicate the results of WSP’s work to the development community. Some sources cited may be informal documents that are not readily available. The �ndings, interpretations, and conclusions expressed herein are entirely those of the author and should not be attributed to the World Bank or its af�liated organizations, or to members of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. 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