68159 Flagship Report Economic Impacts of Inadequate Sanitation in India Economic Impacts of Inadequate Sanitation in India Acknowledgements The Economics of Sanitation Initiative is a multi-country initiative of the Water and Sanitation Program (WSP). Anupam Tyagi (Consultant) was the lead analyst and author of the ESI India Impact Assessment Report. Guy Hutton (Consultant, WSP) helped initiate and provided technical guidance to the ESI India Impact and Options Studies. Somnath Sen (Consultant) was the lead specialist for ESI Studies in South Asia. The Impact Study benefited from analytical and editorial inputs from Pravin More and Rajiv KR (WSP Consultants) The ESI India Impact Study was task managed by C. Ajith Kumar, Joseph Ravi Kumar, Vandana Bhatnagar, Vandana Mehra, and Vivek Raman (WSP). The study benefited from the continuous support of Christopher Juan Costain, Chris Heymans, Catherine Revels, Risha Jain, Shalini Agrawal, and Ammini Menon (all WSP). WSP wishes to thank the Ministry of Urban Development, Government of India and the Department of Drinking Water and Sanitation (Ministry of Rural Development), Government of India, for their support in carrying out the studies; and all the technical peer reviewers of the draft versions of the ESI Impact Report. We would like to thank the following peer reviewers who took out the time from their busy schedules to provide extremely useful and detailed comments: Dr. Atindra Sen, Director General, Bombay Chamber of Commerce; Dr. Avinash Patwardhan, Vice President, Water Business Group, International Sustainability Manager, CH2M Ltd., USA; Mr. Eduardo Perez, Sr. Water and Sanitation Specialist, WSP; Dr. Guy Hutton, Lead ESI Global, WSP; Dr. Kalpana Balakrishnan, Principal, Sri Ramachandra College of Allied Health Sciences, Chennai, India; Dr. Luis Alberto Andres, Senior Economist, SASSD, World Bank; Mr. N.V.V. Raghava, Sr. Infrastructure Specialist, World Bank; Mr. Nathaniel Stell, Advisor, Arghyam Foundation, Bangalore, India; Dr. Priyanie Amerasinghe, Sr. Researcher– Biomedical Sciences, International Water Management Institute, India; Dr. Richard Franceys, Senior Lecturer, Cranfield University (DFID); Mr. S. Rajashekaran, Sr. Development Expert, JICA; Mr. S. Vishwanath, Arghyam Foundation, Bangalore, India; and Ms. Stefanie Sieber, Young Professional, SASSD, World Bank. WSP thanks the Asian Development Bank, AusAID, and DFID for their generous assistance to support the ESI Impact Study, and the ongoing ESI India Options Study. 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’s donors include Australia, Austria, Canada, Denmark, Finland, France, the Bill & Melinda Gates Foundation, Ireland, Luxembourg, Netherlands, Norway, Sweden, Switzerland, United Kingdom, United States, and the World Bank. 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 findings, interpretations, and conclusions expressed herein are entirely those of the author and should not be attributed to the World Bank or its affiliated 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 material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to wsp@ worldbank.org. WSP encourages the dissemination of its work and will normally grant permission promptly. For more information, please visit www.wsp.org. Editor: Marc P. DeFrancis Created by: Write Media © 2011 Water and Sanitation Program 2 India Impact Study Economic Impacts of Inadequate Sanitation in India Contents Contents Executive Summary........................................................................................................................................................07 1. Introduction.................................................................................................................................................................16 Why Sanitation?...........................................................................................................................................................16 Inadequate Sanitation and its Impacts......................................................................................................................17 Household Sanitation Coverage in India...................................................................................................................19 Sanitation Programs in India......................................................................................................................................21 2. Overview of Methodology.........................................................................................................................................26 Data Sources...............................................................................................................................................................26 Scope of Sanitation.....................................................................................................................................................27 Scope of Impacts........................................................................................................................................................28 Monetary and Economic Impacts..............................................................................................................................29 Estimation of Impacts and Their Valuation................................................................................................................30 Impacts Not Included.................................................................................................................................................35 3. ESI Results..................................................................................................................................................................36 Health Impacts............................................................................................................................................................36 Domestic Water-related Impacts...............................................................................................................................43 Access Time Impacts..................................................................................................................................................50 Tourism Impacts..........................................................................................................................................................51 Aggregate Economic Impacts of Inadequate Sanitation.........................................................................................53 Differential Impacts on the Poor................................................................................................................................56 Sensitivity Analysis.....................................................................................................................................................59 Potential Gains from Improved Sanitation and Hygiene..........................................................................................60 4. Sanitation Markets.....................................................................................................................................................62 Projected Changes in Toilets and Wastewater Treatment.......................................................................................62 Estimation of Sanitation Market Size.........................................................................................................................65 Cumulative Sanitation Market....................................................................................................................................68 5. Conclusion and Areas for Further Research...........................................................................................................71 Summary of Findings...................................................................................................................................................71 Policy Priorities for Sanitation Investments...............................................................................................................71 Areas Needing Further Research...............................................................................................................................72 Annexes 1: Water Quality Standards.............................................................................................................................................74 2: Change in Infant Mortality and Under-five Mortality.................................................................................................77 3: Diseases and Health Problems Related to Sanitation and Hygiene........................................................................78 4: Health...........................................................................................................................................................................80 5: Water............................................................................................................................................................................94 6: Access Time................................................................................................................................................................99 7: Tourism Losses..........................................................................................................................................................102 8: Gains from Sanitation and Hygiene ........................................................................................................................106 9: Sanitation Markets....................................................................................................................................................108 10: Population Distribution by Wealth Quintiles............................................................................................................110 11: Sensitivity Analysis.....................................................................................................................................................111 www.wsp.org 3 Economic Impacts of Inadequate Sanitation in India Boxes Basic Indicators: India.........................................................................................................................................15 Box 1.1 National Urban Sanitation Policy..........................................................................................................24 Box 2.1 Valuation of Human Life........................................................................................................................32 Tables Table 1.1 Percent distribution of urban, rural, and total households and de jure population by type of toilet or latrine facilities, 2005-06.................................................................................20 Table 2.1 Scope of sanitation—aspects included and excluded in this study........................................27 Table 2.2 Definition of improved and unimproved sanitation facilities....................................................27 Table 2.3 Attribution of diseases to sanitation..........................................................................................28 Table 2.4 Impact categories considered and justification for their inclusion.........................................29 Table 2.5 Monetary and non-monetary impacts considered...................................................................30 Table 3.1 Annual cases of diarrhea and ALRI attributable to inadequate sanitation, 2006..................36 Table 3.2 Number of cases, treatments, deaths, and time lost due to diseases caused by inadequate sanitation, by disease, and age group, 2006........................................................38 Table 3.3 Health-related economic impacts of inadequate sanitation from various diseases, 2006......................................................................................................43 Table 3.4 Sources of household drinking water, 2005-06........................................................................44 Table 3.5 Economic costs for treating household water due to inadequate sanitation, 2006..............46 Table 3.6 Bottled water consumption, 2006.............................................................................................48 Table 3.7 School and workplace absence: Lower bound of economic cost of inadequate sanitation from girls’ and women’s absence, 2006 ...................................................................................51 Table 3.8 Economic losses to tourism due to poor sanitation, 2006......................................................52 Table 3.9 Economic and monetary impacts of inadequate sanitation, 2006..........................................54 Table 3.10 Composition of economic impacts of inadequate sanitation..................................................55 Table 3.11 Per capita economic and monetary impacts of inadequate sanitation, 2006........................56 Table 4.1 Summary of potential sanitation market in India in 2009, 2012, 2015, and 2020...................66 Figures Figure E.1 Composition of economic impacts of inadequate sanitation, 2006.......................................09 Figure E.2 Economic impacts of inadequate sanitation, by subcategories, 2006...................................10 Figure E.3 Distribution of health impacts of inadequate sanitation, by disease, 2006............................11 Figure E.4 Economic impact of inadequate sanitation, by wealth quintiles and rural/urban residence, 2006 ......................................................................................................12 Figure E.5 Per capita economic impacts of inadequate sanitation, by wealth quintiles and rural/urban residence, 2006.......................................................................................................13 Figure 1.1 Primary impacts and resulting economic impacts associated with improved sanitation options.......................................................................................................16 Figure 1.2 Transmission pathways of diseases carried by feces, shown by the F-diagram...................18 Figure 1.3 Improvements in rural sanitation coverage in India, 1980-2009.............................................23 Figure 2.1 Indirect health impacts via malnutrition....................................................................................31 Figure 3.1 Deaths attributed to inadequate sanitation as percent of all deaths, 2006...........................37 Figure 3.2 Distribution of health economic impacts of inadequate sanitation, 2006..............................39 Figure 3.3 Distribution of economic impact of premature mortality from inadequate sanitation, by diseases, 2006............................................................................................................................39 Figure 3.4 Distribution of economic impacts of premature mortality among children under five, across diseases, 2006................................................................................................................40 Figure 3.5 Treatment costs of sanitation-related diseases, by age classes, 2006..................................41 Figure 3.6 Health-related productivity and welfare costs of inadequate sanitation in India and its breakdown across diseases and age classes, 2006...................................................42 4 India Impact Study Economic Impacts of Inadequate Sanitation in India Figure 3.7 Domestic water-related economic impacts of inadequate sanitation, 2006.......................45 Figure 3.8 Distribution of households using various drinking water treatment methods, 2006........................................................................................................46 Figure 3.9 Cost of water treatment: Distribution of annual rural, urban, and national water-related economic impacts by treatment methods......................................................47 Figure 3.10 Distribution of cost of piped water due to inadequate sanitation among rural and urban households, 2006..........................................................................................................48 Figure 3.11 Cost of bottled drinking water, 2006......................................................................................49 Figure 3.12 Economic cost of hauled water among rural and urban households, 2006........................49 Figure 3.13 Economic cost of access time lost due to inadequate sanitation, 2006.............................50 Figure 3.14 Tourism earnings loss due to inadequate sanitation from domestic and foreign tourists, 2006............................................................................................................................52 Figure 3.15 Composition of economic impacts of inadequate sanitation...............................................53 Figure 3.16 Economic impacts of inadequate sanitation in India by subcategories, 2006....................53 Figure 3.17 Per capita economic impacts of inadequate sanitation, 2006.............................................56 Figure 3.18 Per capita economic impacts of inadequate sanitation, by wealth quintiles and rural/urban residence, 2006....................................................................................................57 Figure 3.19 Economic impact of inadequate sanitation by wealth quintiles and rural/urban residence, 2006........................................................................................................................58 Figure 3.20 Low, base, and high estimates for economic impacts of inadequate sanitation, 2006....................................................................................................59 Figure 3.21 Potential gains from sanitation and hygiene interventions, 2006.........................................60 Figure 4.1 Projected trends in number of households using various types of toilets in India, 2009-20...........................................................................................................62 Figure 4.2 Projected distribution of households using various types of toilets in India, 2009-20...........................................................................................................63 Figure 4.3 Projected trends in wastewater generated, collected, and treated in India, 2009-20..................................................................................................64 Figure 4.4 Projected growth of annual sanitation market, 2007-20.......................................................65 Figure 4.5 Distribution of annual sanitation market, 2009-20................................................................67 Figure 4.6 Projected trends in potential annual sanitation expenditures on infrastructure, replacement, and operations and maintenance, 2007-20....................................................68 Figure 4.7 Projected trends in potential cumulative sanitation expenditures at household, community (toilets), and city levels, 2007-20.........................................................................69 Figure 4.8 Projected trends in potential cumulative sanitation expenditures on infrastructure, replacement, and operations and maintenance, 2007-20....................................................70 Annex Tables Table A.1 Water quality standards and designated best use................................................................74 Table A.2 Standards for drinking water in India and guidelines of World Health Organization......................................................................................................75 Table A.3 Diseases and health problems related to sanitation and hygiene........................................78 Table A.4 Distribution of population across age classes (persons)......................................................80 Table A.5 Cause-specific deaths in children under five and deaths from diarrhea in population 5+ years..................................................................................................................81 Table A.6 Relative risk of death from severe, moderate, and mild underweight (WAZ) in children below five years.........................................................................................................83 Table A.7 Relative risk of illnesses from underweight (WAZ) in children below five years.................84 Table A.8 Percent of children below five years with diarrhea during a two-week recall period and average annual cases of diarrhea per child...................................................................85 Table A.9 Annual cases of diarrhea attributed to sanitation.................................................................85 Table A.10 Time spent in illness due to diarrhea (years).........................................................................85 www.wsp.org 5 Economic Impacts of Inadequate Sanitation in India Table A.11 Percent with ALRI (two-week recall), annual cases of ALRI, and time spent in illness by children below age five...............................................................................................................86 Table A.12 Reported infections by intestinal helminthes.............................................................................86 Table A.13 Percent of children below five treated with medicine for intestinal worms in a six-month recall period...........................................................................87 Table A.14 Unit values for economic cost of a premature death...............................................................89 Table A.15 Sensitivity of economic loss from premature mortality to valuation of premature mortality.................................................................................................90 Table A.16 Percent of diarrhea cases treated in children below five years and percent distribution of treatment by provider type....................................................................................................91 Table A.17 Percent of ALRI cases treated in children below five years, and percent distribution of treatment by provider type.........................................................................................................92 Table A.18 Association between access to water and health....................................................................94 Table A.19 Household size, households, boiling, and chlorine cost per household................................95 Table A.20 Bottled water consumption, and percent of households using bottled drinking water..................................................................................96 Table A.21 Annual piped water production (cubic meters or ’000 liters)..................................................96 Table A.22 Time for fetching water and percent and number of households fetching drinking water..........................................................................................97 Table A.23 Percent of households with adult women fetching water.......................................................97 Table A.24 Domestic water-related economic impacts of inadequate sanitation in India in 2006, by location and type of impacts................................................................................................98 Table A.25 Number of persons without toilet access or using shared toilets..........................................99 Table A.26 Percentage of children aged 6-17 years not attending school..............................................100 Table A.27 Percent of schools having common toilets in school, 2006-07.............................................100 Table A.28 Percent of schools having girls’ toilets in school, 2006-07...................................................100 Table A.29 Worker-population ratios (percent) by age groups and gender.............................................101 Table A.30 Tourism indicators for India in 2006........................................................................................102 Table A.31 Cleanliness and toilets at airports...........................................................................................104 Table A.32 Actual and potential tourist visits and average expenditures................................................105 Table A.33 Relative risk reduction from sanitation interventions.............................................................106 Table A.34 Benefits and avoided costs from sanitation interventions.....................................................107 Table A.35 Unit costs of sanitation products and services in selected years, 2006-20........................108 Table A.36 Population in wealth quintiles and rural/urban locations in India, 2006...............................110 Table A.37 Input values for low, base, and high estimates of inadequate sanitation in India in 2006...............................................................................................................................111 Annex Figures Figure A.1 Infant and under-five mortality rates in India, 1992-93 to 2005-06........................................77 Figure A.2 Indirect health impacts via malnutrition....................................................................................82 Figure A.3 Low, base, and high estimates for health, water, and access time economic impacts of inadequate sanitation in India in 2006......................................................................................111 References and Bibliography........................................................................................................................112 List of Abbreviations.......................................................................................................................................126 6 India Impact Study Economic Impacts of Inadequate Sanitation in India Executive Summary The Economics of Sanitation Initiative (ESI) of human fecal waste being released untreated both onto The Water and Sanitation Program (WSP) has launched a land and into bodies of water (especially from urban areas). multicountry Economics of Sanitation Initiative (ESI) to Inadequate sanitation and poor hygienic practices lead to study the economic impacts of poor sanitation and the costs huge public health costs (e.g., the associated costs of deaths and benefits of improved sanitation options. The overall and diseases that are attributable to inadequate sanitation) as goal of ESI is to provide decision makers at the country well as environmental and other welfare impacts. and regional levels with the evidence they need to advocate for increased investment in improving sanitation and to Despite widespread recognition of the human and social provide an improved evidence-base for efficient planning handicaps that poor sanitation places on developing countries, and implementation of sustainable sanitation and hygiene the considerable economic losses arising from inadequate options and programs. sanitation are not well recognized, since they are not counted properly. This study attempts to estimate impacts The inter-related objectives of the ESI India Study1 are to: in economic terms. It looks at the impacts of sanitation and associated hygiene practices separately, in a departure from 1. Carry out an impact study to generate evidence the conventional approach of conjoint statements about on the economic impacts of current sanitation water-and-sanitation or the effects of “water-borne diseases.� arrangements and hygiene practices in relation to the Many communicable diseases are overwhelmingly explained management of human excreta (and related hygiene by poor sanitation rather than by water (even though water practices), in both the rural and urban areas of India, may act as a medium and is therefore important). This study based on an analysis of secondary data. The findings constructs the evidence about the adverse economic impacts of the resulting impact study form the contents of of inadequate sanitation at the national level, using existing this report. information on health (deaths and diseases) and other 2. Carry out an options study to collect and analyze impacts, including those on the availability and quantity of data on the actual costs and benefits of different drinking water, on welfare and tourism-related losses. sanitation options or interventions in a range of program delivery contexts. These primary surveys are Measuring the Impact of ongoing, and findings from them are likely to become Inadequate Sanitation available in 2011. Sanitation is broadly defined to include management of human excreta, solid waste, and drainage. The ESI India The ESI Impact Study is highly relevant to the sanitation study focused exclusively on the safe management of human challenges that the people of India face today in both excreta and associated hygiene behavior. This is not to discount rural and urban areas of the country. These challenges are the importance of the other aspects, but to focus on the key substantial, with large populations defecating in the open dimensions that cause a substantial health burden on Indians, or using unimproved toilets and a very high proportion especially the poor. 1 Impact studies have been completed in Cambodia, Indonesia, the Philippines, and Vietnam (2008). Options studies are in progress currently in those four countries and in the Yunnan Province of China. In South Asia, the India Impact Study was commenced in 2008 and completed in 2010. Impact studies are also being carried out in Pakistan and Bangladesh. www.wsp.org 7 Economic Impacts of Inadequate Sanitation in India Executive Summary The UN-WHO Joint Monitoring Programme for Drinking • Hauling cleaner water from a distance outside the Water Supply and Sanitation (JMPDWSS, 2008, 2010) household because a nearer source of water may be defines an “improved� sanitation facility as one that contaminated due to poor sanitation. hygienically separates human excreta from human contact. These include facilities that flush or pour-flush into a piped Access time impacts include: sewer system, septic tanks, or pit latrines, as well as ventilated • Cost of additional time needed for accessing shared improved pit latrines (also known as VIP latrines) and pit toilets and open-defecation sites compared to using a latrines with slab or composting toilets. private toilet within the household, and • Cost of school absence time due to inadequate toilets “Unimproved� sanitation facilities include defecation in for girls and work-absence time due to inadequate the open, bucket or hanging latrines, open pit latrines toilets for working women. or those without a slab, and facilities flushing or pour- flushing into open drains or open areas (that is, not into Tourism impacts include: a piped sewer system, septic tank, or pit latrine). Shared • Potential loss of tourism revenues, and toilets are also considered unimproved facilities. It is not • The economic impacts of gastrointestinal illnesses only a deficit of sanitary toilets that constitutes inadequate among foreign tourists. sanitation, but also the unsafe disposal of human excreta and, most important, the whole range of unhygienic For each of the above, data on incidence or actual numbers practices that break down the separation of human excreta (e.g., of diarrheal diseases and deaths) were processed from from human contact and thus expose people to fecal-oral relevant secondary data sources, most importantly the pathogens. This report uses this broader understanding of National Family Health Surveys (the last round being done inadequate sanitation. in 2005-06), the WHO Global Burden of Disease data, the For this study, economic impacts of inadequate sanitation are National Sample Surveys, and the Census of India. Based first estimated in non-economic units and then converted to on a review of the literature, attribution factors were used economic units using appropriate valuation methods. to trace back the proportions and numbers that may be attributed to poor sanitation. Finally, an economic valuation Health-related impacts include: was carried out on the resulting numbers using costs/prices, • Premature mortality, that is, lost lives, especially those again based on previous studies. In order to err on the of children due to diarrheal and other diseases caused side of caution, conservative assumptions were used in the by poor sanitation economic valuation. The human capital approach was used • Cost of healthcare incurred in treating diseases caused for valuing human lives—this accounts for the economic by poor sanitation, and loss during a person’s productive years by valuing lost output due to premature death. To compute this, the study used the • Productivity losses, that is, productive time lost due unemployment-adjusted labor share of GDP per worker. to people falling ill, as well as productive time lost An analysis of this kind requires comprehensive data-sets on when care-givers need to look after the ill. multiple dimensions of sanitation, health, water resources, Domestic water-related impacts include: and other identified areas. Estimations of sanitation impacts • Household treatment of drinking water by have been carried out for the year 2006, since only partial various methods data was available for later years. Wherever data was not available for 2006, older or more recent data-sets have been • Use of bottled water by households processed to obtain estimates for the year 2006. The estimates • Piped water (a fraction of this use is attributed to for 2006 are, nevertheless, a good indication of the order inadequate sanitation, and the rest to factors like of magnitude of impacts that inadequate sanitation poses convenience), and annually in economic terms. 8 India Impact Study Economic Impacts of Inadequate Sanitation in India Executive Summary Impact of Inadequate Sanitation in India was `1.75 trillion ($38.5 billion), which was 72 percent of This study estimates that the total annual economic impact the total impact. Access time and water-related impacts made of inadequate sanitation in India amounted to a loss of up the other two main losses. (See Figure E.1.) `2.4 trillion ($53.8 billion2) in 2006. This implies a per capita annual loss of `2,180 ($48). Figure E.2 presents the economic impacts by subcategories within each of the four impact categories. Within the health In purchasing power parity (PPP) terms, the adverse economic category, more than `1.3 trillion ($29 billion) was lost due impact of inadequate sanitation in India was $161 billion, to premature mortality, the single largest subcategory. Access- or $144 per person. time costs for households, estimated at `478 billion ($10.5 billion), had the second-largest impact, and healthcare costs These economic impacts were the equivalent of about 6.4 (`212 billion, $4.7 billion) and health-related productivity percent of India’s gross domestic product (GDP) in 2006. losses (`217 billion, $4.8 billion) made up the other main The health-related economic impact of inadequate sanitation impact subcategories. FiguRE E.1 COMPOSITION OF ECONOMIC IMPACTS OF INADEQUATE SANITATION, 2006 Access time $10.73 (`487), 20.0% Water $4.21 (`191), 7.8% Tourism $0.26 (`12), 0.5% Health $38.49 (`1.74), 71.7% (in billion) 2 Throughout this report, the symbol $ and other references to dollars always refer to US dollars. Dollar values are based on the 2006 exchange rate of $1 = `45.3325. The Indian rupee is represented by the symbol `. www.wsp.org 9 Economic Impacts of Inadequate Sanitation in India Executive Summary FiguRE E.2 ECONOMIC IMPACTS OF INADEQUATE SANITATION, BY SUBCATEGORIES, 2006 Premature mortality $29,052 (`1,317) Health Productivity loss $4,787 (`217) Healthcare $4,677 (`212) HH treatment, drinking water $2,471 (`112) Bottled water consumption $132 (`6) Water Piped water $397 (`18) Cost of fetching water $1,235 (`56) HH access $10,544 (`478) Access time School access $66 (`3) Workplace access $132 (`6) Lost tourism earnings $110 (`5) Tourism International tourist illness $154 (`7) (US$ in million; ` in billion) Health-related economic impacts of diseases Disproportionate impact on the poor Under the health-related impacts of `1.75 trillion ($38.5 The poor in India suffer substantial harm to their lives, billion), diarrhea is the largest contributor, amounting to two- health, and scarce financial resources because of inadequate thirds of the total impact, followed by acute lower respiratory sanitation. Poorer families tend to lose wages and spend infection (ALRI), accounting for 12 percent of the health precious resources treating illnesses. Children in poorer impact (Figure E.3). households are, again, the segment that is most affected. However, mortality-related data is not available by income Most severe impact—suffered by children or wealth classification, so the differential impacts presented Of the total economic losses related to premature mortality, below are substantial underestimates, since they only include 79 percent ($23 billion of $29 billion, or `1.04 trillion of health-related impacts. Even with a conservative estimate that `1.3 trillion) was due to deaths and diseases in children below is based on cases of diarrhea, intestinal worms, and indirect age five. Diarrhea in children below age five accounted for impacts via cases of ALRI, in aggregate terms the poorest 20 more than 47 percent (`824 billion, $18 billion) of the total percent of households are hit by a loss of `220 billion ($4.85 health-related economic impacts. billion), which is 20 percent of the total computed losses. 10 India Impact Study Economic Impacts of Inadequate Sanitation in India Executive Summary FiguRE E.3 DISTRIBUTION OF HEALTH IMPACTS OF INADEQUATE SANITATION, BY DISEASE, 2006 Other causes $6.2 (`281), 16% ALRI $4.6 (`211), 12% Measles $1.45 (`66), 4% Intestinal worms $0.3,096 (`14), 1% Diarrhea $25.5 (`1,160), 66% Trachoma $0.287 (`13), 1% Malaria $0.088 (`4), 0.2% (in billion) Households in the poorest 20 percent that reside in rural areas Rural households in the poorest quintile bear per capita bear a burden of `204 billion ($4.5 billion) or 28 percent of losses in excess of `1,000 ($22), 8 percent more than the total losses to rural households. As presented in Figure E.4, average loss for rural households of `930 ($20.5). As Figure the aggregate impacts are more heavily concentrated among E.4 shows, the aggregate loss for rural households in the the poor in rural areas, because most of the people in the poorest quintile is substantial (`204 billion, or $4.5 billion) lower quintiles3 reside in those areas. compared to that quintile’s counterpart in urban areas (`16 billion, $0.35 billion). It is also noteworthy that households Per capita losses in higher wealth quintiles also bear substantial impacts due Urban households in the poorest quintile bear the highest to inadequate sanitation. per capita economic losses due to inadequate sanitation, specifically ` 1,699 ($37.5)—1.75 times the national Monetary losses average of `961 ($21), excluding mortality impacts, and Economic impact includes both monetary impact, that is, 60 percent more than the urban average of `1,037 ($22.9). people actually spending or losing money, as well as non- (See Figure E.5, where “WQ1 Urban� signifies the poorest monetary impact to which monetary values are imputed urban quintile.) for valuation. Monetary losses, a subset of economic losses, 3 Wealth quintiles are defined at the national level, not at the rural and urban levels. Therefore, “WQ1 Rural� denotes households in the nation’s poorest wealth quintile that reside in rural areas (and not the poorest wealth quintile of rural areas), and so on. www.wsp.org 11 Economic Impacts of Inadequate Sanitation in India Executive Summary FiguRE E.4 ECONOMIC IMPACT* OF INADEQUATE SANITATION, BY WEALTH QUINTILES AND RURAL/URBAN RESIDENCE, 2006 INDIA 1,075 Rural 738 Urban 337 WQ3 239 WQ2 230 WQ1 220 WQ4 217 WQ1 Rural 204 WQ2 Rural 198 WQ3 Rural 179 WQ5 174 WQ5 Urban 131 WQ4 Rural 118 WQ4 Urban 99 WQ3 Urban 60 WQ5 Rural 43 WQ2 Urban 31 WQ1 Urban 16 0 200 400 600 800 1,000 1,200 (in ` billion) *Note: These estimates do not include losses from mortality and tourism resulting from inadequate sanitation, due to lack of data. Health-related losses included are only from cases of diarrhea, intestinal worms, and ALRI. are estimated to have been `364 billion ($8 billion) in 2006. to `1.3 trillion ($29 billion), equivalent to 3.4 percent of These losses were dominated by the cost of treating illnesses 2006 GDP. (`212 billion, or $4.7 billion), which made up 58 percent of the total, followed by lost productivity due to illnesses (`71 Potential Gains from Improved Sanitation billion, $1.6 billion), the costs of treating water (`49 billion, in India $1.1 billion), and accessing piped water (`18 billion or $0.4 Previous research has shown that in low-income countries, billion). Monetary impacts account for 15 percent of the total investments in sanitation reap a high benefit at least five economic impact and are equivalent to about 1 percent of the times greater than the amount invested (Hutton, Haller, 2006 GDP, or `326 ($7) per person. and Bartram, 2007). The gains from improved sanitation are somewhat like the flip side of the economic costs of inadequate Present and future losses sanitation, although not all the adverse impacts of inadequate Of the `2.4 trillion ($53.8 billion) lost, the loss of flow of sanitation can be fully mitigated, due to a number of factors. 2006 economic value is `1.1 trillion ($24.8 billion), which Hence, the economic gains of improved sanitation are smaller is 46 percent of the total economic impact, equivalent to than the loss due to inadequate sanitation. Nevertheless, this 3 percent of that year’s GDP. Furthermore, deaths in 2006 study estimates that a package of comprehensive sanitation resulted in a loss of human capital that would have generated and hygiene interventions, comprising greater use of toilets, economic flows that year and beyond. The discounted present improved hygiene practices, and improved access to water, value of these future losses are counted in 2006, amounts could result in a potential gain of up to ` 1.48 trillion 12 India Impact Study Economic Impacts of Inadequate Sanitation in India Executive Summary FiguRE E.5 PER CAPITA ECONOMIC IMPACTS* OF INADEQUATE SANITATION, BY WEALTH QUINTILES AND RURAL/URBAN RESIDENCE, 2006 WQ1 Urban 1,699 WQ2 Urban 1,528 WQ3 Urban 1,403 WQ4 Urban 1,057 WQ3 1,056 Urban 1,037 WQ1 1,031 WQ2 1,029 WQ1 Rural 1,001 WQ2 Rural 979 WQ3 Rural 975 INDIA 961 WQ4 933 Rural 930 WQ4 Rural 850 WQ5 Urban 825 WQ5 779 WQ5 Rural 667 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 (in `) *Note: These estimates do not include losses from mortality and tourism resulting from inadequate sanitation due to lack of data. Health-related losses included are only from cases of diarrhea, intestinal worms, and ALRI. ($32.6 billion), avoiding up to 61 percent of the losses due The national cumulative sanitation market has the potential to inadequate sanitation—or an equivalent of 3.9 percent of `6.87 trillion ($152 billion) over the 2007-2020 period. of GDP in 2006. This signifies a potential gain of `1,321 This is projected to consist of `4.4 trillion ($97 billion) or 64 ($29) per capita. percent in infrastructure work and `2.5 trillion ($54 billion) or 36 percent in O&M (operations and maintenance) Potential sanitation market services. The annual sanitation market is estimated to grow Increasing the public investment in meeting sanitation from `300 billion ($6.6 billion) in 2007 to `683 billion priorities, including mobilizing households to build toilets, ($15.1 billion) in 2020. construct and operate waste disposal systems, promote hygienic practices, combined with efforts by households Study Limitations to construct or upgrade to improved toilets are likely to Many economic impacts have not been covered in the generate a huge market for sanitary products and services in current report. These include polio, skin diseases, HIV/ the coming years. While this is not an indication of gain in AIDS, urinary tract infections, oral diseases, infectious GDP, it nevertheless indicates potential economy activity that heart diseases, cancers, influenza, and other diseases that are sanitation can generate. This study estimated the potential influenced by hygiene and sanitation. Impacts on pregnant market for such activity. women, low birth weight, and long-term health also are not www.wsp.org 13 Economic Impacts of Inadequate Sanitation in India Executive Summary included (Almond, Chay, and Lee, 2005). Also excluded action from state and city stakeholders. National flagship from review are the costs of informal healthcare and home programs, including the Jawaharlal Nehru National Urban remedies, livestock impacts, losses to water management, Renewal Mission and the Urban Infrastructure Development agriculture, and pisciculture affected by sanitation and Scheme for Small and Medium Towns, encourage cities hygiene-related pathogens (e.g., salmonella), and impacts to promote sanitation. It is likely that higher priority and related to inadequate solid waste management and drainage. greater investments will continue to be dedicated to the A number of adverse impacts have also had to be excluded national agenda of achieving clean, livable cities. This study from the present analysis because of a lack of robust data. confirms that investments being made in rural sanitation These include intangible welfare benefits, such as the and those proposed for urban sanitation are but critical comfort and acceptability of sanitation arrangements; lack of public investments. This study underlines the finding that convenience and privacy; lack of security, status, and dignity, substantial investments are not only needed but can be especially for women and children. Poor environmental regarded as effective only when they result in reducing the outcomes, including objectionable appearance, poor air morbidity and mortality, the harmful impacts on drinking quality, bad odors, and other aesthetic values have not been water, the costs to welfare, and the negative impact on accounted for either. Other major questions that remain tourism that are all associated with inadequate sanitation. to be answered concern how inadequate sanitation affects This study further suggests the need for a new monitoring trade and businesses and how it impacts the productivity framework. There is a clear need to measure not just the number of populations in different locations. These impacts are of toilets or their use or the number of sanitized communities substantial and cannot be ignored, but it is difficult to impute and cities, but also the impacts of poor sanitation on health- economic values to them because robust data is lacking and related, water-related, environmental, and welfare-related there are conceptual difficulties as well. In other words, the indicators. Finally, the huge market for sanitation products and full impact of inadequate sanitation is likely to be much services provides an additional basis for crowding in private higher than the estimates in this report show, since a number investments in the sector by adjusting public policies. of health, welfare, social, and environmental dimensions are not captured in the economic analysis. Areas deserving further empirical research and regular administrative data collection are suggested in Chapter 5. The Issues for Further Consideration proposed survey on sanitation by the National Sample Survey The results of this exercise underline the substantial economic Organization, the Census of 2011, and the next rounds of losses to India as a result of poor sanitation. The Government the National Family Health Survey will also generate data. of India has been alive to this issue and has made major The ongoing ESI India Sanitation Options Study is expected investments in rural sanitation since the mid-1980s. The to complement the ESI Impact Study findings and inform national flagship Total Sanitation Campaign, which now policies about the improved effectiveness of current and future covers all districts in the country, has sought to shift the investments in sanitation and behavior change in both rural focus from building more toilets to making communities and urban areas. totally sanitized and promoting better usage and hygienic practices. The current annual investment in this campaign How this Report is Organized is about `1,100-1,200 crore ($250 million to $270 million) This report is organized into five chapters. The Introduction (DDWS, 2009). provides the rationale for the study and reviews the current sanitation situation and government initiatives in India. While urban sanitation was not accorded priority earlier, Chapter 2 provides a brief overview of the methodology used with the launch of the National Urban Sanitation Policy to calculate the economic impacts. Chapter 3 presents the in 2008 a national initiative has begun to promote access results of the analysis. Chapter 4 summarizes the estimates and the appropriate infrastructure, systems, processes, and of the potential sanitation market. Chapter 5 provides hygienic practices in urban India. The National Sanitation conclusions and suggestions for further research. The Annexes Rating Survey (2009-2010) of 423 Class I cities in the country present detailed methodology, additional data, and other has raised awareness about urban sanitation and propelled supporting material for the report. 14 India Impact Study Economic Impacts of Inadequate Sanitation in India Executive Summary BASiC iNDiCATORS: INDIA indicator indicator value Population (2006) Total population 1,117,734,000 Urban population 323,827,000 (29%) Rural population 793,907,000 (71%) Percent of population below age 5 11.15 Percent of population age 5 or older 88.9 Currency (2006) Currency exchange with US$ (`/$) 45.3325 GDP at current prices in 2006-07 `37.79 trillion ($0.84 trillion) GDP per capita `33,908 ($750) Sanitation (2006) Percent of households with improved toilets (total) 29.1 Percent urban households with improved toilets 52.8 Percent of rural households with improved toilets 17.6 Drinking water (2006) Percent households with piped drinking water (total) 24.5 Percent urban households with piped drinking water 50.7 Percent of rural households with piped drinking water 11.8 infant mortality (iMR, 2005-06, per 1,000 live births) Infant mortality rate per 1,000 live births 57 under-five mortality Mortality rate per 1,000 live births 74 Poverty and human development Total poverty rate (percentage of population below poverty line, head-count ratio) 27.5% Rural poverty rate (defined as above) 28.3% Urban poverty rate (defined as above) 25.7% Literacy rate, men 76.9% Literacy rate, women 54.5% Human Development Indicator 0.612 Source: Population estimates from Technical Group on Population Projections (TGPP and NCP, 2006); age distribution of population and IMR/U5MR based on data from National Family Health Survey-3 (NFHS-3) (Measure DHS and IFC Macro, 2008); sanitation and drinking water coverage from NFHS-3 (IIPS and Macro International, 2007); average annual exchange rate from Reserve Bank of India (Reserve Bank of India, 2009); GDP is from Ministry of Finance (Department of Economic Affairs, 2009). Poverty and HDR Sources: Poverty (Planning Commission [2004-2005]); Literacy, Human Development (Human Development Report 2009). www.wsp.org 15 Economic Impacts of Inadequate Sanitation in India 1. Introduction WHY SANITATION? South Asia Conclave on Sanitation-III (SACOSAN-III) and, Lack of adequate sanitation is a major cause of deaths and more recently, the United Nations General Assembly have diseases in developing countries. Poor sanitation not only declared sanitation as a human right (SACOSAN-III, 2008; adversely affects the availability and quality of water, but also United Nations, 2010). has the same harmful effects on education, on welfare, on tourism, and on people’s time-use and life opportunities in The aim of Millennium Development Goal (MDG) 7 for water general. Over the last two decades the importance of sanitation and sanitation is to reduce by half the proportion of people in South Asia’s human development has been increasingly without safe access to safe drinking water and basic sanitation recognized, and greater public investments have been made in by 2015. Improved sanitation also contributes in a number promoting access to and achieving improvements in sanitation. of ways to achieving MDG 4, “reducing child mortality,� Noting its importance to ensuring basic human dignity, the and MDG 2, “achieving universal primary education.� FiguRE 1.1 PRIMARY IMPACTS AND RESULTING ECONOMIC IMPACTS ASSOCIATED WITH IMPROVED SANITATION OPTIONS Improvement Primary Impact Economic Impact Closer latrine access and Less use of public latrines Saved entry fee costs more latrines per capita Improved aesthetics Less open defecation School participation Better living standards 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 Higher tourist revenue Improved isolation, Improved quality of land and 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 Source: Hutton et al., 2008. Note: “Intangible user benefits� include comfort, convenience, security, privacy. Improved aesthetics include visual effects, smell. 16 India Impact Study Economic Impacts of Inadequate Sanitation in India Introduction Since sanitation is linked in many ways to livelihoods and handling of water, and personal hygiene) that break down the sustainable development in general, it also contributes to separation of human excreta from human contact and thus expose MDG 1, eradicating extreme poverty and hunger, and people to fecal-oral pathogens. MDG 3, promoting gender equality and empowering women, and MDG 5, improving maternal health. Poor sanitation kills and causes diseases Conventionally, most diseases related to poor sanitation have As evidence from East-Asian countries shows and as this been lumped into the category of “water-borne diseases.� report explores in detail for India, inadequate sanitation also Whereas water may be an important medium, the majority imposes a substantial economic burden on nations (Hutton et al., of water-related diseases are in fact in the fecal-oral category 2008). Figure 1.1 presents the pathways by which improved (Cairncross, 2003). A considerable body of scientific sanitation brings about first-order impacts and then leads to knowledge has established that diseases caused by poor many economic impacts that add up to substantial gains. sanitation and hygiene are viral, bacterial, parasitic, protozoal, helminth, and fungal in nature (Hutton et al., 2008). INADEQUATE SANITATION AND ITS IMPACTS These diseases can be passed directly, from the infected surface Sanitation is a broad subject covering the management of of a latrine, through water or other fluids, person-to-person, human excreta, hygiene practices, and the management of by flies, or via soil. Food can also act as an intermediary domestic, industrial, and medical wastes, animal wastes, for all of these direct transmission pathways (Hutton et al., drainage, among other things. This study looked at a core set 2008). Figure 1.2 shows how disease transmission takes place of practices from the above list, specifically the management of through and how sanitation and hygiene interventions can human excreta and associated hygiene practices. This selection break disease transmission. was not meant to discount the other factors, but was made because of the limited availability of data and to keep a focus “One gram of feces can contain: 10,000,000 viruses, on human excreta and related hygiene practices, which are 1,000,000 bacteria, 1,000 parasite cysts, and 100 often the cause of substantial health and environmental parasite eggs.� burdens on Indians, particularly on the poorest citizens Source: WHO, 2008c. of India. As estimated in this report, diarrheal diseases resulting from Inadequate sanitation defined poor sanitation and hygiene kill more than 400,000 persons The UN-WHO Joint Monitoring Programme for Drinking- in India every year. Contact with human excreta is a source Water Supply and Sanitation defines an improved sanitation of many deadly diseases with symptoms of diarrhea. Some of facility as one that hygienically separates human excreta from the common pathogens that cause diarrhea are viruses and human contact (JMPDWSS, 2008 and 2010). This includes bacteria (Vibrio cholerea, E.coli, Salmonella). Adults and facilities that flush or pour-flush to piped sewer system, septic children get diarrhea and other diseases from ingesting disease- tanks, or pit latrines; ventilated improved pit (VIP) latrines; causing germs in human excreta. This results in dehydration, and pit latrines with slab or composting toilets. malnutrition, fever, and even death, especially of children and those with compromised immune systems, like older persons Unimproved facilities include defecation in the open, bucket and HIV/AIDS patients (Suresh et al., 2006). or hanging latrines, open pit latrines or those without a slab, and facilities flushing or pour-flushing to drains or open areas In turn, malnutrition resulting from diarrhea can lead to (that is, not to piped sewer systems, septic tanks, or pit latrines). enhanced vulnerability to diseases like measles, malaria, and Shared toilets are also considered unimproved facilities. respiratory infections, especially in children. Other illnesses linked with fecal transmission are polio, hepatitis A and E, This study builds on the above description—inadequate intestinal worms, skin diseases like scabies, and eye infections sanitation being the lack of improved facilities (including safe like trachoma that can cause blindness. Polio can cause disposal) and unhygienic practices (e.g., in washing of hands, physical deformities and disability, hepatitis can lead to liver www.wsp.org 17 Economic Impacts of Inadequate Sanitation in India Introduction FiguRE 1.2 TRANSMISSION PATHWAYS OF DISEASES CARRIED BY FECES, SHOWN BY THE F-DIAGRAM Source: After Wagner and Laniox (1958), cited in Hutton et al., 2008. infections and related problems, and intestinal worms can Inadequate sanitation impacts water cause cognitive impairment and anemia. UNICEF’s Multi-District Assessment of Water Safety, part of a global study of water quality in eight countries (including Both the fecal-oral pathogen load and the risk of environmental India), concluded that water quality standards were relatively exposure are very high in India, putting the country in the better in India than in the other study countries. But this highest risk category in WHO’s six-category classification. same study, covering all districts of Madhya Pradesh and 13 India falls in the risk category defined as: districts from 11 other Indian states (11,757 sources tested), also showed that 40 percent of Indian water sources suffered Population not served with improved water supply bacteriological contamination attributable to poor sanitation and no improved sanitation in countries which are (UNICEF, 2008). An important point regarding improved not extensively covered by those services (less than 98 sanitation is that it is not enough to increase access to percent coverage), and where water supply is not likely improved toilets—it is equally important to ensure the safe to be routinely controlled. (Prüss-Üstün et al., 2004, collection, conveyance, and treatment of sewage so that it p. 1,333). can be safely released into the environment. An earlier study commissioned by the Government of India, conducted by The lowest-risk category is where the risk of environmental the National Insitute of Urban Affairs (NIUA) from 1998 to exposure to fecal-oral pathogens is very low and there is no 2003, examined 300 metros and Class I and Class II towns.4 transmission of diarrheal diseases by water, sanitation, and It found that hygiene. Compared to this lowest category, the relative risk of contracting diarrheal diseases is estimated to be 11 times …while all the metropolitan cities have a sewerage higher in highest-risk category, to which India belongs. system, only a third of the Class I cities and less than one-fifth of the smaller-sized urban centers have a The high incidence of diarrheal and other diseases resulting sewerage system. However, the coverage of population from fecal-oral transmission indicates the inadequacy of by the sewerage system is partial in all these urban sanitation in India. centers (NIUA, 2005). Class I towns in India are urban areas with populations of 100,000 and above; Class II towns are those with populations between 50,000 and 100,000. 4 Metros are areas with 5 million or more residents. 18 India Impact Study Economic Impacts of Inadequate Sanitation in India Introduction A 2009 study of 498 Class I and 410 Class II towns reported space, life choices, and, ultimately, livelihoods, incomes, and that while the total sewage generated was more than 38,000 general well-being. million liters per day, treatment capacities were only about 12,000 million liters per day, just 31 percent of what was Health and health-related quality of life play major roles in generated. In the 35 cities with one million-plus populations, educational and economic outcomes. When sanitation is installed capacity can treat 68 percent of the total wastewater absent, this imposes restrictions on people’s time, movement, generated (11,787 million liters per day), although nearly 39 and choices in daily life. Children miss school, fall behind in percent of the treatment plants did not conform to discharge class due to illness, and suffer the shame of using open spaces standards into water bodies. The Ministry of Environment to relieve themselves. Girls have the additional burden of and Forests’ Central Pollution Control Board has estimated inconvenience, lack of safety, and inadequate arrangements that only 13.5 percent of the sewage from Indian cities is for their special needs during menstruation. The lack of treated (CPCB, 2009). sanitation facilities at educational institutions, at workplaces, and in public places causes considerable inconvenience and A national sanitation rating of 423 Class I cities, which cover loss in welfare. 72 percent of the country’s urban population, found that 90 percent of the cities (379) had less than 40 percent of their Inadequate sanitation harms tourism sewage treated. Moreover, 65 percent of the cities (274) had Inadequate sanitation also impacts tourist visits and causes unsatisfactory arrangements for safe collection of human illnesses among tourists (Ansart et al., 2005). Over a third excreta, whether on-site or sewerage (Ministry of Urban of tourists visiting the Indian subcontinent suffer from Development, 2010). According to the Central Pollution gastrointestinal illnesses linked to lack of sanitation (Rack et Control Board, organic matter and bacterial population of al., 2005). Tourists are also at risk of getting malaria, which is fecal origin continue to dominate the water pollution problem. partly attributable to lack of sanitation and prevalent standing The mean levels of biological oxygen demand have increased water. Tourists also mention the poor quality of toilets as a in 6 of the 18 major rivers, accounting for 46 percent of the reason for their dissatisfactory tourism experience. Not having total river length nationally. Groundwater is also polluted due access to good toilets or seeing people defecate or urinate in to discharge of untreated sewage (CPCB, 2009). the open take away from the tourism experience. The widespread contamination of water was confirmed by HOUSEHOLD SANITATION COVERAGE a national rating exercise, in which more than two-thirds of IN INDIA Class I cities (285 cities) failed the test for quality of water While sanitation has historically been a domain of household bodies (outdoor use) in or around the city. A small minority decision making, in the last two decades households’ access (26) of Class I cities failed even the test of drinking water quality to toilets has improved due to the increased public priority (bacteriological and chemical parameters) in all their samples accorded to it, mainly in rural areas. The proportion of all when compared to national standards (also see NIUA, 2005). households with toilets, rural and urban combined, increased from 1 percent in 1981 to 29 percent by 2005-06 (IIPS and ...water bodies are saprobic and eutrophicated near large Macro International, 2007). urban centers due to the discharge of partly treated or untreated wastewater (CPCB, 2008). In 2008, 31 percent of the total Indian population, including 54 percent of urban and 21 percent of rural Indians, had Poor sanitation has harmful effects access to improved toilets. However, 54 percent of the total on welfare population, including 18 percent of urban and 69 percent Apart from causing mortality and morbidity and polluting of rural Indians, did not have any access to toilets, while the water, poor sanitation in India has harmful effects on many remaining 15 percent of the total population had access only aspects of human welfare: education, mobility, use of public to unimproved toilets (JMPDWSS, 2010). www.wsp.org 19 Economic Impacts of Inadequate Sanitation in India Introduction More detailed statistics, covering household access to toilets, Based on data from the 2005-06 National Family Health are presented in Table 1.1. The table shows that during Survey (IIPS and Macro International, 2007), in 2006 about 2005-06, 17 percent of urban and 74 percent of rural 629 million people—575 million in rural areas and 54 million households had no toilet facilities, and another 30 percent in urban areas—experience the forced indignity of defecating of urban and 8 percent of rural households had unimproved in the open every day or resorting to unimproved toilets toilets. This implies 47 percent of urban and 82 percent facilities. As a result, they suffered from the considerable of rural Indian households did not have access to an direct and indirect economic impacts of poor hygiene and improved toilet. the unsafe disposal of human excreta. TABLE 1.1 PERCENT DISTRIBUTION OF URBAN, RURAL, AND TOTAL HOUSEHOLDS AND DE JURE POPULATION BY TYPE OF TOILET OR LATRINE FACILITIES, 2005-06 Type of toilet/latrine facility urban Rural Total A improved, not shared 52.8% 17.6% 29.1% Flush/pour-flush to piped sewer system 18.8 0.6 6.6 Flush/pour-flush to septic tank 27.6 10.6 16.1 Flush/pour-flush to pit latrine 4.7 4.1 4.3 Ventilated improved pit (VIP)/biogas latrine 0.2 0.1 0.2 Pit latrine with slab 1.4 2.2 1.9 Twin pit, composting toilet 0 0 0 B unimproved 46.7 82.2 70.6 Any facility shared with other households 24.2 5.3 11.5 Flush/pour-flush not to sewer/septic tank/pit latrine 4.4 0.2 1.6 Pit latrine without slab/open pit 0.7 2.2 1.7 Dry toilet 0.5 0.6 0.5 No facility/open space/field 16.8 74 55.3 Other 0.4 0.1 0.2 C Missing 0.2 0.1 0.1 Total 100.0 100.0 100 Number 35,579 73,462 109,041 Source: NFHS-3 (IIPS and Macro International, 2007). 20 India Impact Study Economic Impacts of Inadequate Sanitation in India Introduction As outlined in the previous section, most of the sewage off, deficits are enormous even among the other households. from urban areas is released into the environment without India’s national rural sanitation program (“Total Sanitation treatment, resulting in pollution of water and land. Campaign�) has targeted the poorest households for incentives (although it targeted all households for awareness generation), Poor households suffer higher deficits and as a result iniquities may be lower in rural areas than Poor households are disproportionately affected by lack of in urban areas. However, considerable challenges remain in sanitation and hygiene. More than 86 percent of the poorest rural areas in terms of the enormous numbers of households, urban dwellers (the bottom wealth quintile) and more than especially poorer households, still lacking sanitary toilets, as 95 percent of the poorest rural dwellers defecated in the open well as the lack of toilet usage and sustained hygienic behavior in 2005-06, compared to less than 1 percent of the richest and the challenge of coping with deaths and diseases. (top wealth quintile) urban dwellers and less than 10 percent of the richest urban dwellers. SANITATION PROGRAMS IN INDIA Sanitation is a state-level responsibility according to the Indian A study of slums in Indian cities in 2008-09 found that 10 Constitution, with state governments being responsible for percent of notified5 slums and 20 percent of non-notified allocating resources and for planning and implementing slums did not have any latrine facilities (NSSO, 2010). While schemes and projects for rural water and sanitation. With the this is an improvement over the situation in 2002 (when 17 73rd and 74th Constitutional Amendments (1993, 1994), percent and 54 percent of these slums, respectively, did not sanitation was devolved to rural self-governments (Panchayati have latrines) the absolute number of affected households Raj Institutions) and urban local bodies, respectively. At the remains large. national level, the Ministry of Rural Development, and the Ministry of Urban Development (MoUD), and the Ministry Moreover, the national average hides the huge deficits in of Housing and Urban Poverty Alleviation are nodal ministries the urban areas of certain states. One study highlighted the for supporting states with technical and funding assistance iniquities in the provision of latrines by noting that in the rural and urban sanitation sectors. The Ministry of Environment and Forests is responsible for regulating the in four cities (Chennai, Delhi, Mumbai, and Kolkata), discharge of wastewater into land and water bodies. not even one out of every four slum households use improved toilet facilities. In slums in Meerut, Delhi, and Rural sanitation programs Nagpur, the members of about one in six households In the rural water and sanitation sector, rural water investments defecate in the open. Once again, the poor in these enjoyed primacy in post-independence India, and sanitation cities suffer from the worst environmental conditions. showed little progress despite the declaration of the 1980s as For example, in Mumbai, Delhi, Kolkata, and Chennai, the International Decade of Drinking Water and Sanitation. not even 10 percent of poor households use improved It was not until 1986 that rural sanitation received attention toilet facilities. In the other four cities, the proportion with the launch of the national Central Rural Sanitation of poor households that use improved toilet facilities Programme for below-poverty-line households, followed by is also low—less than 30 per cent. In Meerut, Indore, state governments’ own schemes. By 1991-92, these initiatives Nagpur, and Delhi, 35-47 percent of poor households had covered about three percent of the rural population have no toilet facility at all (Gupta, Arnold, and (Ministry of Rural Development, 1992). Lhungdim, 2009). At the turn of the 1990s, the limited coverage of central and The very low coverage in rural areas has been the greatest state subsidy-driven programs contrasted with large-scale challenge—while the poorest households are again worst increase in access to sanitation through private initiatives. 5 “Notified� slums in India are those that are legally recognized and usually identified for upgrading, improved services provision, or displacement/ relocation depending on laws in each of the states (provinces). www.wsp.org 21 Economic Impacts of Inadequate Sanitation in India Introduction Sample surveys in 1989 found that 8 percent of the rural government schools (and specifies separate facilities for boys households had constructed sanitation facilities through their and girls in coeducational institutions) and anganwadis own resources. Learning from program shortcomings (such as (centers for preschool children). The Total Sanitation a focus on latrine construction) and from community-driven Campaign budgetary outlays have grown nine-fold, rising initiatives in different parts of the country, the Eighth Five from ` 1,350 million ($34 million) in 2001-2002 to Year Plan indicated a shift away from a concept of sanitation `12,000 million ($300 million) in 2008-09. as latrines to a comprehensive concept of “total environmental sanitation,� which highlighted: Between 1999 and 2008, the Government of India allocated about ` 4,400 crore ($1 billion), and current annual • liquid and solid waste disposal investments are about `1,100-1,200 crore ($250 million to • personal, domestic, and environmental hygiene, $270 million). This signifies more than a nine-fold increase and in the national sanitation budget since 2001 and has resulted • individual behavior change through information, in rapidly increasing latrine coverage, from 22 percent in education, and communication. 2001 to more than 60 percent as of 2009,7 as presented in Figure 1.3. In the Ninth Five Year Plan, the necessity of converting the subsidy-based sanitation program into a demand-driven one While lessons and experiences from the Total Sanitation was recognized. In 1999, the Total Sanitation Campaign was Campaign were emerging, in June 2003 the Government of launched, in which the ‘campaign’ principles successfully India launched the Nirmal Gram Puraskar, which rewards employed in the Immunization and Literacy missions were local governments financially if they achieve 100 per cent now to be adopted in the sanitation sector. open-defecation-free status and other cleanliness and sanitation goals. The Nirmal Gram Puraskar provides fiscal The Total Sanitation Campaign was later scaled up as the incentives8 and national recognition that has mobilized a large national flagship for rural sanitation, and it now operates in number of Gram Panchayats to become totally sanitized—38 all the rural districts of India. It involves the preparation of Gram Panchayats and 2 Block Panchayats (sub-district district-level proposals, usually implemented over a three- administrative unit comprising a set of Gram Panchayats) to-five-year duration, financed by the Government of India from six states received the award in 2005, growing to more (about 65 percent of total outlay), and the states and the than 12,277 Gram Panchayats, 105 Block Panchayats, and beneficiary households (the balance 35 percent) to cover 8 Zilla (district) Panchayats in 2008. the capital costs of household toilets for poor households. District-level Panchayats have Sanitation Missions and Progress has been laudable, but challenges remain. According cells that implement the program with Block/Panchayat to the Government of India, about 40 percent of the rural Samiti and Gram Panchayat-level elected leaders and population continues to defecate in the open. Sustained functionaries. While the national guidelines provide the change in hygiene practices is yet to come about; weak framework for implementing the rural sanitation program, monitoring and support for facility usage, poor program the implementation is unique in each of the states, districts, monitoring, and a plethora of implementation difficulties are and Gram Panchayats6 with its local institutional, social, and all issues that the government and civil society organizations economic characteristics. The Total Sanitation Campaign are seeking to address. Coverage of girls’ toilets grew from also finances capital subsidies for sanitation facilities in 4 percent in 1993 to 35 percent in 2003, but the majority of 6 A Gram Panchayat is the lowest elected tier of local self-government in rural India, usually comprising one or more revenue villages. 7 The Government of India estimate of coverage is calculated on the basis of access to any type of latrine (sanitary or otherwise). In addition, it is reported that between 2005-06 and 2008-09, a large number of toilets were constructed in rural India under the Total Sanitation Campaign and by private investments. These factors explain the considerable difference between the National Family and Health Survey N-3 estimate presented in Table 1.1 and Figure 1.3. 8 Depending on population size, Gram Panchayats receive `50,000 to `500,000 as prize; Nirmal blocks receive `1-2 million, and totally sanitized districts receive `3-5 million as reward. 22 India Impact Study Economic Impacts of Inadequate Sanitation in India Introduction FiguRE 1.3 IMPROVEMENTS IN RURAL SANITATION COVERAGE IN INDIA, 1980–2009 70 61 1986-’99: CRSP 2003: NGP 57 60 50 45 38 40 31 27 30 23 21.9 22.4 17 18 20 14 11 10 11 6 10 4 3 1 0 2002 1980 1988 1989 1990 1991 1993 1994 1996 1997 2000 2001 2003 2004 2005 2006 2007 2008 2009 1980-’90: IDWSS Decade 1999: TSC Source: Department of Drinking Water Supply (http://ddws.nic.in. Accessed October 16, 2008), cited in Bhaskar, 2009. Estimate for 2009 added from DDWS. girls in rural India still do not have access to basic sanitation and similar schemes of state governments). Community toilets in schools.9 Recent studies have shown that the improvements were constructed for slum populations under the national in many of the Nirmal Gram Puraskar villages have not been VAMBAY (Valmiki Ambedkar Awas Yojana) scheme and its sustained, and a new generation of programmatic changes precursor, the National Slum Development Project. Thus, may be required. unlike the rural areas that have witnessed the implementation of a national-level Total Sanitation Program, programs in Urban sanitation programs urban sanitation have received less attention. Investment in and management of urban sanitation did not receive national priority in the post-independence period. In 2005, the government launched India’s urban sector Instead, that work was left to cities and states to provide for, flagship, the Jawahar Lal Nehru National Urban Renewal with the national agencies providing guidance on technical Mission,10 for 63 cities, accounting for 42 percent of the standards. Investments were traditionally channeled toward country’s urban population. Its emphasis is on the provision building sewerage systems and, later, wastewater treatment of basic services to the urban poor, including housing, water plants in the larger cities. Most of the household toilets were supply, sanitation, road network, urban transport, and the installations made privately by households. At the national development of inner (old) city areas. This national urban level, since the 1970s the Accelerated Urban Water Supply renewal mission consists of two sub-missions: (i) Urban Program has financed some of the sewerage and treatment Infrastructure and Governance and (ii) Basic Services to the infrastructure in the cities. Sanitation for the urban poor was Urban Poor. The Urban Infrastructure Development Scheme supported through subsidies for low-cost toilets under the for Small and Medium Towns covers the rest of the cities and national government’s Integrated Low-Cost Sanitation Scheme towns in the country. 9 In India, almost every 6 out of 10 girls are unable to finish the constitutionally mandated 8 years of education; and beyond that only 3 girls out of 10 actually go on to complete 10 years of schooling (NFHS-3). 10 The erstwhile schemes of the Accelerated Urban Water Supply program and Integrated Development of Small and Medium Towns have since been subsumed in the Jawahar Lal Nehru National Urban Renewal Mission to 63 mission cities; and as the Urban Infrastructure Development Scheme for Small and Medium Towns to cater to the non-mission urban areas (the rest of the 4,898 urban areas). www.wsp.org 23 Economic Impacts of Inadequate Sanitation in India Introduction BOx 1.1 NATIONAL URBAN SANITATION POLICY The vision of the National Urban Sanitation Policy is this: All Indian cities and towns become totally sanitized, healthy, and livable; and ensure and sustain good public health and environmental outcomes for all their citizens with a special focus on hygienic and affordable sanitation facilities for the urban poor and women. To transform urban India into community-driven, totally sanitized, healthy, and livable cities and towns, the policy sets out the following goals: A AWARENESS GENERATION AND BEHAVIOR CHANGE a) Generating awareness about sanitation and its linkages with public and environmental health amongst communities and institutions b) Mechanisms to bring about and sustain behavioral changes aimed at adoption of healthy sanitation practices B OPEN-DEFECATION-FREE CITIES a) Promoting access to households with safe sanitation facilities (including proper disposal arrangements) b) Community-planned and managed toilets wherever necessary, for groups of households who have constraints of space, tenure or economic constraints in gaining access to individual facilities c) Adequate availability and 100 percent upkeep and management of public sanitation facilities in all urban areas to rid them of open-defecation and environmental hazards C INTEGRATED CITY-WIDE SANITATION 1. Re-orienting institutions and mainstreaming sanitation: a) Mainstream sanitation in all sectors and departmental domains as a cross cutting issue—especially in urban management b) Strengthening national, state, city, and local institutions (public, private, and community) to accord priority to sanitation provision c) Extending access to proper sanitation facilities for poor communities and other un-served settlements 2. Sanitary and safe disposal: 100 percent of human excreta and liquid wastes must be disposed of safely. a) Proper functioning of network-based sewerage systems and ensuring connections of households to them wherever possible b) Proper disposal and treatment of sludge from on-site installations (septic tanks, pit latrines, etc.) c) All the human wastes are collected, safely confined, and disposed of after treatment—no hazard to public health or environment 3. Proper operations and maintenance (O&M) of all sanitary installations: a) Promoting proper usage, regular upkeep, and maintenance of household, community, and public sanitation facilities b) Strengthening Urban Local Bodies to provide, or cause to provide, sustainable sanitation services delivery The policy envisages the preparation of State Sanitation Strategies within the overall national policy framework. In turn, cities are expected to prepare their citywide sanitation plans, assisted by the state government and the Ministry of Urban Development. Source: Ministry of Urban Development, 2008. 24 India Impact Study Economic Impacts of Inadequate Sanitation in India Introduction While there is no explicit allocation for urban sanitation, the the government initiated in 1980-81 for the replacement Ministry of Urban Development (2008) reported in November of service latrines and the rehabilitation of workers engaged 2008 that 19 percent of the National Urban Renewal Mission’s in the occupation of manual cleaning. About 2.3 million projects (66) pertained to sanitation. Regarding the scheme for service latrines (of the 5.4 million reported by the 1989 small and medium towns, 94 of its 662 approved projects (as National Sample Survey) were converted into sanitary ones of October 2008) pertained to sewerage. Investment in slum by July 2007, and more than 50,000 scavenging workers sanitation by providing individual and community toilets were rehabilitated. But conservative estimates showed that is now an activity that forms part of the Jawahar Lal Nehru more than 0.12 million workers remained to be retrained National Urban Renewal Mission. A major breakthrough in (Ministry of Housing and Urban Poverty Alleviation, 2006). urban sanitation was made when the government, in discussion The guidelines for this scheme were revised with a new target with the states, constituted a National Urban Sanitation Task of converting 600,000 dry latrines into water-borne flush Force in 2005. The purpose of the task force, comprising toilets during 2007-2010. The Self-employment Scheme for eminent policy makers, practitioners, experts, and NGOs, was Rehabilitation of Manual Scavengers, launched in 2007 under to take stock and formulate a comprehensive policy to deal the Ministry of Social Justice and Empowerment, aims to with the challenges of India’s urban sanitation. Based on its provide alternative occupations via self-employment to those recommendations, the National Urban Sanitation Policy was who manually remove human excreta from remaining dry approved by the government in October 2008. The policy seeks toilets and to assist their dependents by skills training and to comprehensively address the issue of full-cycle human excreta financial assistance (loans and subsidies). management (access, safe collection, conveyance, treatment, and disposal) and associated hygiene behaviors (see Box 1.1). The Ministry of Environment and Forests is the custodian of rivers and surface water bodies and has been concerned with the Considerable policy progress has been made in the protection of river water quality. Beginning with the National implementation of the National Urban Sanitation Policy in River Conservation Plan in the early 1980s, this ministry has India since its launch in 2008. State sanitation strategies have provided technical assistance and funding to riparian cities been formulated for Maharashtra, West Bengal, and Madhya along the country’s main rivers to build and manage sewage Pradesh, while 12 more states are drafting their sanitation treatment plants. The outcomes have not been satisfactory strategies. The Ministry of Urban Development and external for a variety of reasons. In 2009, the National Ganga River agencies have funded cities to prepare city sanitation plans, Basin Authority was established, and it has approved Mission and 150 cities were doing so as of August 2010. Several state Clean Ganga with an aim to stop all untreated municipal governments, institutions, NGOs, and international agencies sewage and industrial effluents from flowing into the Ganga are partners in this effort. To raise awareness about urban River. The authority estimates that `15,000 crore (`150 sanitation and recognize excellent performance in promoting billion) will be needed in the next 10 years to create treatment it, the government carried out a National Sanitation Rating and sewerage capacity to meet this goal (National Ganga River survey of the 423 Class I cities on urban sanitation indicators Basin Authority, 2009). To sum up, while the past decade has and published the results in May 2010, which generated witnessed increased attention to urban sanitation, especially considerable national interest. Other activities, like the National in the wake of higher awareness about issues concerning an Service Level Benchmarking Initiative for select cities, are urbanizing India, and while the coverage of households by supportive actions intended to help elevate the priority accorded toilets is better in urban areas than in rural ones, nevertheless to sanitation and wastewater management. However, the safe management of the complete cycle of human excreta implementation of these new measures will take time to show up to its disposal/re-use has just started as a project. results on the ground. Access to individual and community sanitation facilities remains a knotty problem with unresolved deficits, since Other initiatives in urban sanitation access to such facilities is tied to the nature of urban Supportive national-level activities in urban sanitation also settlements and to tenure and other laws that prevent include the Integrated Low Cost Sanitation Scheme, which sustainable solutions. www.wsp.org 25 Economic Impacts of Inadequate Sanitation in India 2. Overview of Methodology This study followed a standard peer-reviewed methodology Census of India and related based on the ESI (East Asia and Pacific) with adaptations population projections and modifications made for the Indian context. This chapter Estimates based on India’s 2001 Census are used for provides a brief overview of the scope of the sanitation population projections for the years 2006 to 2020 (TGPP analysis and explains which impacts have been included, and NCP, 2006). how attribution has been made to sanitation, how economic valuations have been carried out, and what aspects have National Sample Survey been excluded. National Sample Survey (NSS) is an annual national economic survey conducted by the National Sample Survey The study was carried out at the national level in India. While Organization (NSSO) of the Ministry of Statistics and it involved analyses of sub-national data, the estimations were Program Implementation. Summary statistics on employment, made for national-level impacts. They have been disaggregated workforce participation, unemployment, and other aspects as appropriate into rural and urban domains and age-classes from Report No. 522, based on the 62nd round of the survey wherever the data permitted this. in 2005-06, are used in this report (NSSO, 2007). The present study uses estimates from NFHS-3 for consistency with other DATA SOURCES estimates, when estimates are available from both NSS and The main sources of data for this study included: NFHS-3—for example for the population’s age distribution. Because both surveys are for similar periods and are based The National Family Health Survey 3 (NFHS-3) on representative national samples, the differences between India’s National Family Health Surveys are large, nationally them in results represent sampling error. representative sample surveys covering various health, demographic, social, and political topics, and they are part World Health Organization (WHO) of the larger Demographic and Health Surveys (DHS) The World Health Organization reports estimates for disease (IIPS and Macro International, 2007). Field interviews for episodes, deaths, burden-of-disease measures, sanitation, and the Third National Family Health Survey (NFHS-3) were water. Not all of these estimates are for 2006. For example, conducted from December 2005 to August 2006. This survey the latest available burden-of-disease estimates are for 2004. includes information on household characteristics including This study uses death rates by age from the “Global Burden demography, health services use, sanitation, toilet type, of Disease� study update for 2004 (WHO, 2008a). These water source, and disease episodes for selected diseases rates are combined with 2006 population estimates by including diarrhea. The present study uses NFHS-3 age to estimate the number of deaths from diseases caused information for household size, toilet type, water source and by inadequate sanitation in 2006. This study uses WHO access, disease incidence and treatment, age distribution, national-level disease-incidence estimates where available, weight-for-age categories and malnutrition indices, and time but otherwise uses WHO regional estimates. taken for a round trip (to fetch water from outside household premises), as well as other estimates. In addition to the Other government publications NFHS-3 final report, the study used estimates computed Information used in this report also derives from publications from individual level NFHS-3 data and estimates from the issued by the Ministry of Finance (economic variables), the online database. Ministry of Statistics and Program Implementation (national 26 India Impact Study Economic Impacts of Inadequate Sanitation in India Overview of Methodology account statistics, inflation, others), the Central Pollution SCOPE OF SANITATION Control Board of the Ministry of Environment and Forests, As mentioned earlier, the scope of sanitation in this study the Ministry of Rural Development, the Ministry of Urban includes the management of human excreta and associated Development, the Ministry of Housing and Urban Poverty hygiene practices. It excludes elements of the wider definition Alleviation, the Ministry of Social Justice and Empowerment, (“environmental sanitation�), as presented in Table 2.1. the Ministry of Tourism (tourism statistics), as well as the Reserve Bank of India (exchange rates). Sources include The Joint Monitoring Programme for Water Supply and websites, published research articles, books, and reports (see Sanitation defines an “improved� sanitation facility as one that following sections for details). hygienically separates human excreta from human contact (JMPDWSS, 2008 and 2010). As presented in Table 2.2, this definition encompasses the dimension of safe collection of human excreta as well, and not just the structure. TABLE 2.1 SCOPE OF SANITATION—ASPECTS INCLUDED AND ExCLUDED IN THIS STUDY included Excluded Human excreta management Solid waste management Safe isolation, confinement, conveyance, treatment, and Animal excreta management disposal of human excreta and sewage Agricultural waste Access, quality, and proximity of toilets Industrial waste Hygiene, including hand washing, water treatment, water Medical waste storage, food handling, and bathing Vector control Wastewater management Food safety Drainage and flood control Comprehensive hygiene and sanitation, including aspects other than human excreta TABLE 2.2 DEFINITION OF IMPROVED AND UNIMPROVED SANITATION FACILITIES improved sanitation unimproved sanitation use of the following facilities: use of the following facilities: • Flush or pour-flush to: • Flush or pour-flush to elsewhere (that is, not to piped - piped sewer system sewer system, septic tank, or pit latrine) - septic tank • Pit latrine without slab/open pit - pit latrine • Bucket • Ventilated improved pit (VIP) latrine • Hanging toilet or hanging latrine • Pit latrine with slab • Shared facilities of any type • Composting toilet • Bush or field (no facilities) Source: JMPDWSS, 2010. www.wsp.org 27 Economic Impacts of Inadequate Sanitation in India Overview of Methodology It is important to note that provision and use of improved infections, helminthes-related diseases, Hepatitis, and skin, toilets does not ensure adequate sanitation. The whole cycle of eye, and other diseases (see Annex C). Based on a review of the safe collection to safe disposal needs to be adhered to. Further, scientific evidence, a set of key diseases that can be partly or fully sanitation includes all hygiene practices that prevent human attributable to inadequate sanitation (including poor hygiene) contact with human excreta. Therefore, sanitation involves all was selected for this study, as presented in Table 2.3. (Note that physical infrastructure and services used for safe management this study primarily includes direct impacts only on humans.) (isolation, treatment, and disposal) of human excreta, as well as associated hygienic behaviors. As presented in Chapter 1, Figure 1.1, there are a number of pathways by which improved sanitation brings about first- SCOPE OF IMPACTS order impacts that in turn result in many economic impacts. A set of four negative impact categories was also identified Selection of diseases for analysis under this study. The categories of impacts WHO has compiled the range of diseases linked to poor and the justification for their inclusion are presented in sanitation and hygiene, which include gastrointestinal tract Table 2.4. TABLE 2.3 ATTRIBUTION OF DISEASES TO SANITATION Disease Attribution Diarrhea � Partly attributed Schistosomiasis Full attribution Trachoma � Full attribution Ascariasis � Full attribution Trichuriasis � Full attribution Hookworm � Full attribution Malaria � Via malnutrition Acute Respiratory Infection Via malnutrition Measles � Only mortality, via malnutrition 28 India Impact Study Economic Impacts of Inadequate Sanitation in India Overview of Methodology TABLE 2.4 IMPACT CATEGORIES CONSIDERED AND JUSTIFICATION FOR THEIR INCLUSION impact of Reason for inclusion sanitation on… Health • Scientific evidence points to sanitation and hygiene being a key part of the causal pathways that lead to diseases included in this study. • Diseases resulting from poor sanitation and hygiene lead to substantial premature loss of life, and the economic impacts from these are expected to be large. Water • Water is polluted by the release of human excreta into it. This leads to costly avoidance behaviors and resulting coping costs. These need to be accounted for in a study of economic impacts. • Households use various methods (filters, boiling, etc.) and purchase bottled water to avoid using water polluted by human excreta. These recourses cost money for households. • Household members have to travel longer distances to fetch water from cleaner sources in preference to polluted water from a nearer source, leading to loss of time. Toilet access • Poor sanitation results in poor health, absence from work or school, and restricted mobility, especially for women. These result in loss of education, social and economic opportunities, and incomes. • People from households without toilets have to spend time going to open-defecation sites, or have to wait to use community or shared toilets more than they would if they had toilets at home. • Inadequate toilet access leads to considerable losses of privacy, dignity, security, and convenience, especially for girls, women, children, the elderly, and the infirm. Tourism • Tourism is an important sector for the Indian economy, contributing over $8 billion in annual foreign exchange earnings. Inadequate sanitation is likely to result in discouraging tourism and lowering potential tourist inflow. • Tourist illnesses may result in loss of welfare and money to tourists. This ESI India study also included an additional dimension: an insurer may be paying the medical cost for a patient, or potential sanitation markets. The huge sanitation deficit in the government may be subsidizing healthcare. India signals considerable potential for generating economic activities to meet the future demand for sanitation and Economic impact is a more generalized concept than hygiene products and services. monetary impacts and includes imputed monetary values for non-monetary impacts. Some imputed non-monetary MONETARY AND ECONOMIC IMPACTS impacts have a direct equivalent in terms of market value; for This study uses a societal perspective and examines the example, time spent away from work due to illness. However, present generation to assess economic impacts. Monetary11 many other imputed non-monetary impacts, like the value of impacts are those that have a direct associated monetary a lost life, do not have monetary equivalents in the market. expense to someone, and one that is paid for in monetary terms by someone. The payer of the expense might not be Table 2.5 presents the costs estimated for different categories the same person bearing the physical impact. For example, and subcategories of impacts. 11 Sometimes monetary impacts are also categorized as “financial� impacts; however modern financial accounting includes imputed values of non-monetary assets and liabilities, therefore “monetary�, and not “financial�, is the preferred term to indicate the costs being examined. www.wsp.org 29 Economic Impacts of Inadequate Sanitation in India Overview of Methodology TABLE 2.5 MONETARY AND NON-MONETARY IMPACTS CONSIDERED impact type Subcategory of Economic impacts impact type Monetary imputed non-monetary Health Premature mortality Healthcare Discounted future value of labor share of output lost due to adult and child deaths Healthcare Value of children’s time lost from illness Productivity and welfare Value of adult time lost due to illness and accompanying care-giving to children during illness Water Household treatment Water treatment by boiling, Value of collected wood in rural areas, of drinking water using chlorine, filtering, and and value of time spent in boiling water electronic purifiers and in storage and handling Piped water Part of piped water cost Value of time spent hauling water from Bottled water cleaner sources outside the household Cost of bottled water Access time, user Time loss Value of excess time lost accessing preferences, and loss open-defecation sites and shared toilets of welfare Work/school absence Value of time of absence of girls from schools and women from work Tourism Tourism losses Revenue loss to tourism from Value of lost time due to diarrhea among loss of potential tourists due to international tourists poor toilet facilities Tourist illness Healthcare costs due to diarrhea among international tourists ESTIMATION OF IMPACTS AND this, costs and prices were used from official sources as well as THEIR VALUATION from available studies and meta-studies. Whenever studies of The study’s standard method involved, as a first step, analyzing significant scale and reliability were unavailable, expert opinion various data sources to arrive at physical units for the was sought and assumptions were made based on that. indicators of the impact subcategories, such as incidence of diseases, number of households using a particular treatment Considerable data processing was undertaken given the method, number of girls missing school, and so on. These multiplicity of data sources, differences in scale and coverage, values were adjusted to calculate estimates for the year 2006. varying levels of detail, and even, sometimes, varying definitions. The second step was to attribute a portion of these indicators Some of the methodological highlights are presented below. to inadequate sanitation. These attributions were based on (Detailed explanations about data sets, their processing, values a review of the scientific literature. The final step was to used for economic valuation, and assumptions for each of these value the impact that was attributable to sanitation. For categories are presented in the Annexes.) 30 India Impact Study Economic Impacts of Inadequate Sanitation in India Overview of Methodology Health • Acute lower respiratory disease (ALRI) The health impacts that were measured include premature • Malaria mortality, economic and monetary costs of treatment, loss • Measles, and of productivity and welfare due to illness, and mortality. • A residual category of “other causes� of death. Direct-impact diseases whose economic impact is calculated in this report include these three: Indirect mortality impacts via diarrhea-induced malnutrition in children below age five are estimated for ALRI, measles, • Diarrhea-related diseases malaria, and other unidentified diseases, while indirect • Intestinal helminthes (worms) morbidity (disease cases) impacts in children below age five • Trachoma. are estimated only for ALRI and malaria cases. Estimates are made for all ages for mortality from intestinal helminthes and for trachoma. For computing healthcare costs of treatment of diseases, available studies, and expert opinion of medical practitioners Diarrhea induces malnutrition, especially among children, was used for rates of treatment. which in turn increases susceptibility to diseases and increases the chances of death from other diseases. This indirect For welfare and productivity losses, the loss of adult time burden of diarrhea is captured for children below five years is valued at less than the rate for economic loss of an adult using estimates of relative risk from previous studies and engaged in production, at 50 percent of the full daily valuation malnutrition estimates based on NFHS-3. The indirect based on unemployment-adjusted labor share of GDP per impacts of inadequate sanitation and hygiene via diarrhea- worker. Time lost by children is valued at 50 percent of the induced malnutrition (see Figure 2.1) are measured in adult rate. For these valuations, the current study uses an children below age five, for the following conditions: eight-hour work day and assumes 250 working days a year. FiguRE 2.1 INDIRECT HEALTH IMPACTS VIA MALNUTRITION Increased risk of illnesses Diarrhea, intestinal and deaths from diarrhea, worms, other infections Malnutrition ALRI, malaria, measles, and from inadequate other diseases sanitation www.wsp.org 31 Economic Impacts of Inadequate Sanitation in India Overview of Methodology For calculating the economic value of a human life, the human average earnings of employees, the unemployment-adjusted capital approach was selected, although instead of using the labor share of GDP per worker was used. (See Box 2.1) BOx 2.1 VALUATION OF HUMAN LIFE While ascribing an economic value to the loss of life is fraught with problems, economic methods have been developed to impute values to different facets of life. Two common methods were considered for this study: The Value of Statistical Life (VOSL) method: Studies based on the Value of Statistical Life approach implicitly or explicitly estimate what people are willing to pay for a reduction in chance of death, or what they are willing to accept for an increase in chance of death. Several “willingness to pay� studies ask respondents directly about what they would be willing to pay for reduction in chances of death or disease. The Human Capital Approach: The Human Capital Approach aims to capture loss of productive human capital, reflected in loss of output due to a premature death. This approach accounts for economic loss during the productive years by valuing lost output due to premature death. The usual approach is by estimating the present value of future earnings of employees. Earnings of employees are a market-determined price of labor, influenced by relative bargaining power in the factor markets. Market imperfections may distort market prices, and earnings of employees may not reflect the contribution of labor to output. Market distortions of prices have been cited as a reason for not using market prices in such cost benefit studies, and shadow prices or opportunity costs have been recommended instead (Drèze and Stern, 1990). Labor share of output per worker captures the contribution of labor to output better than average compensation of employees. India lacks recent, large, representative, population-based VOSL studies for reduction in probability of death and disease. Using this method therefore would necessitate transferring VOSL values from OECD countries, but this was deemed inappropriate. The Human Capital Approach was deemed suitable for the study—except that instead of using average earnings of employees, the unemployment-adjusted labor share of GDP per worker was used. This was calculated to be `50,589 ($1,119) (`37,442 or $828 for rural and `84,918 or $1,878 for urban workers). These values are used to estimate the present value of the lost future labor share of output per worker, using a real annual growth rate of labor share of output per worker of 0.02 (2 percent), annual discount rate of future income of 0.03 (3 percent), and a working life from ages 15 to 65. Thus the present value of the expected lifetime contribution to output by children below age five was `1.75 million ($38,706), `1.91 million ($42,172) for persons between ages 5 and 14, and `1.24 million ($27,347) for persons above age 15. 32 India Impact Study Economic Impacts of Inadequate Sanitation in India Overview of Methodology Water areas and an extra 20 minutes in rural areas to access open- Water-related economic costs are considered in the defecation facilities compared to a person with a private toilet, following categories: while the extra time spent in journey and waiting to access shared toilets was assumed to be 5 minutes in both urban and • Household treatment of drinking water rural areas. One toilet trip per day was assumed. • Bottled water consumption • Piped drinking and non-drinking domestic water The study calculated the economic loss for school sanitation production, and and hygiene only for school days missed by girls of post- • Fetching water from a cleaner source. puberty age, due to lack of a girls’ toilet at school. It was assumed that, on average, a post-puberty girl in a school The cost of household treatment of drinking water at the national without a girls’ toilet will miss 10 days of school in a year level is the sum of the estimated costs of household treatment due to lack of sanitation and hygiene at school. computed for different treatment methods separately: boiling; The study also assumed that 10 percent of rural and urban straining through cloth; using alum, bleach, or chlorine; using women would be absent for 10 days a year due to lack of ceramic, sand, or other water filter; and using an electronic adequate sanitation and hygiene at the workplace, a barrier water filter. The monetary and economic costs are calculated especially during their menstrual period. On average, this loss using a mix of direct costs or through the cost of cooking is equivalent to one day (per year) for every working woman fuel used (for boiling). in rural and urban areas. Bottled water consumption costs are calculated using the Tourism reported proportion of households consuming bottled water Tourism losses are estimated as follows: and assumptions about volume and costs reported from the market. • Tourism potentially lost due to poor sanitation and hygiene, and Piped water costs are calculated by separating out water for • Cost of illnesses among foreign tourists attributable drinking and non-drinking uses; using consumption and cost to poor sanitation and hygiene. estimates from studies; and apportioning half the costs to sanitation (the balance being accounted for by other factors, The estimated loss to tourism due to inadequate sanitation is like convenience). calculated as the difference between actual revenue earned by the tourism sector and the counter-factual potential revenue Concerning fetching water from a distance, this study assumes that would have been earned if sanitation had been adequate. that half of the extra time spent for fetching water from a This is computed by analyzing surveys reporting the number distance is due to sanitation-related reasons. of tourists sufficiently dissatisfied to result in the loss of one tourist visit, that is, the tourist not returning or influencing Access time, user preference, and welfare loss another potential visitor not to visit the country. Potential Three categories of impact were considered, those revenue from tourism given adequate sanitation is estimated caused by: as the product of the potential number of tourists and the average spending per tourist. • Open-defecation and shared toilets • School sanitation and hygiene, and Only gastrointestinal illnesses among foreign tourists were • Workplace sanitation and hygiene. included, based on available data from published research. The treatment costs of their illnesses were based on unit Cost of excess time used to access shared toilets and open- treatment costs established by studies. Two days were assumed defecation areas was calculated separately for persons in to be lost per gastrointestinal infection episode for each different age groups and for urban and rural areas. It was tourist. In addition, productivity and welfare losses were assumed that a person spends an extra 15 minutes in urban also computed. www.wsp.org 33 Economic Impacts of Inadequate Sanitation in India Overview of Methodology As is clear from the foregoing account, the base values of A number of meta-analyses have been conducted to document indicators, their valuations, and assumptions (wherever they the health impacts of different types of interventions in have been made) have all tended to be very conservative. improving access to sanitation facilities, hygiene practices, and Therefore, if anything, the estimates made by the current water quantity and quality (World Bank, 2008a). Since most estimates are on the low side—the actual value of impacts is of them have focused on reducing the incidence of diarrhea probably much higher. among infants, this analysis has attempted to answer the question: What are the impacts, in terms of reducing relative Differential impacts on the poor risk, of the various sanitation options and interventions? The availability of data across different socioeconomic classes is limited to the NFHS-3, which surveyed the asset ownership Based on a review of those meta-analyses, the interventions of households and based on which a wealth-index was created have been classified into five types: that divides all households into five wealth quintiles, each with about 20 percent of households ranked according to their 1. Improved toilet access and use wealth. NFHS-3 data also identifies whether a household is 2. Improved hygiene behaviour (including toilet use) urban or rural, but the wealth quintiles are identified only 3. Improved access to adequate quantity of water at the national level and not within rural and urban areas. 4. Improved access to safe quality water, and Therefore, a quintile labelled “WQ1 Rural,� for example, 5. Safe confinement and disposal of fecal matter stands for households in the poorest national wealth quintile (septage/sewage treatment). that are also located in rural areas (and not the poorest quintile of rural households). The estimates of these intervention activities were applied to health impacts in order to estimate potential gains from each Limited data exists on morbidity patterns, so only the costs of category. However, it should be noted that these are based on health treatment have been computed in the wealth analysis. meta-studies and, therefore, it is difficult to neatly separate Mortality-by-disease is also unavailable for disaggregated out the various categories or measure combined effects. wealth categories, so mortality estimates have also been excluded. Thus, the study results are underestimates of the Sanitation markets relative economic impact on the poorer households, since In order to quantify the increased economic activity (although poorer households are more likely to have deaths from not any additions to GDP), a simple model was constructed diseases caused by inadequate sanitation. This provides a to estimate the national market for sanitation products limited picture of inequities, due to under-reporting and and services in India from 2007 to 2020. Following the classification problems as well as other factors, like greater government’s policy targets, it was assumed that all households health-seeking behavior among the rich. Nevertheless, it in India will have access to toilet facilities, either within the does provide some indication of differential impact across household or via community toilets, by 2012, ending the wealth categories. practice of open defecation (Bhaskar, 2009). It was also assumed that the current manually cleaned dry toilets and Gains from sanitation unimproved open-pit toilets will be converted to improved Economic gains from sanitation are somewhat like the toilet types by 2012. The role of community toilets was also reverse side of the economic costs of inadequate sanitation, assumed to be enhanced in order to provide access to toilet comprising what can be saved by avoiding losses in health facilities over the next few years, and that this role would then costs, water-related costs, access time, and tourism due to decline as households are able to move to owning and using inadequate sanitation and hygiene. Practically speaking, it is their own individual toilets. very difficult to eliminate all the losses by making sanitation interventions in developing countries, since these are likely It was also assumed that the number of toilets with sewer to be partial in their implementation, the impacts follow connections and septic tanks will grow slowly over time, with multiple pathways, and effects include geographical spillover more use of sewer-connected toilets by urban households. of sanitation-related diseases. With gradual improvements, the percent of city/village 34 India Impact Study Economic Impacts of Inadequate Sanitation in India Overview of Methodology wastewater collected (and treated) is expected to rise from an losses to agriculture, to cultural and religious uses of estimated 33 percent of wastewater collected (and 24 percent water, and, in many locations, to commercial uses such as treated) in 2007 to 59 percent of wastewater collected (55 fish production. Another aspect of water is the welfare percent treated) in 2015, and then to 81 percent of wastewater benefits to household activities. Conceptual difficulties collected (80 percent treated) in 2020. In the initial years, (e.g., some benefits are noted as well by use of wastewater drainage systems are projected to receive wastewater from in agriculture and pisciculture) as well as the lack of an estimated 25 percent households with on-site sanitation data prevent a full appreciation of these impacts in in urban areas (an insanitary disposal method), and this is economic terms. projected to decline to 0 percent by 2020, with all sewage diverted to proper on-site and sewerage installations. Individual needs and preferences, especially for women and children In rural areas, it was assumed that initially 5 percent of Intangible welfare benefits are excluded, including the households using toilets with pits and septic tanks were comfort and acceptability of sanitation arrangements, treating wastewater on-site, and that this will increase to 59 convenience and privacy, security, status, and dignity. It is percent in 2020. Almost all wastewater treatment in rural well known that these are key factors impeding the welfare areas was assumed to be done through on-site soak-pits and of women, children, and the elderly. However, it is difficult sludge cleaning and treatment services. to ascribe an appropriate economic value to such deficits. Hidden behind the economic loss by way of treatment Unit capital costs for toilets and treatment systems, as well costs, are the losses in missed opportunities for children as operations and maintenance (O&M) expenses, are based and the subsequent loss of future productivity, income, on studies and expert opinion. Accounting for population and employment. growth, the annual and cumulative market size was calculated for each category of toilets, collection/conveyance systems, Environmental impacts and treatment systems. It is commonplace to associate poor sanitation with poor environmental outcomes in terms of visual impact, smell, IMPACTS NOT INCLUDED and other aesthetic values. Anecdotal evidence exists for valuation of land being affected if sanitary conditions are not Some adverse impacts were difficult to capture in economic acceptable; outdoor air quality is also known to be affected. terms, either because reliable data on universe estimates was However, these are dimensions that the current exercise was missing, attribution to sanitation was difficult, or methods unable to quantify. of valuation were unavailable. Therefore, the following have not been included in the current exercise. Other impacts Other health impacts While an attempt has been made to estimate tourism Sanitation-related diseases other than those listed in the losses, these can be considered conservative since tourism previous sections are excluded, as have informal treatment destinations are great in number and each has its own local of diseases and treatments at home. “Quality of life� health peculiarities. Similarly, how sanitation conditions affect trade impacts were not included in the measure either, nor were and businesses, and how these impact the productivity of health impacts related to livestock and animal health. populations in different locations, are additional questions that remain to be answered. Water resources Apart from impacting the availability and quality of water, Detailed notes on sources of data and methods are presented poor sanitation also results in other indirect losses, including in the Annexes. www.wsp.org 35 Economic Impacts of Inadequate Sanitation in India 3. ESI Results This chapter presents the results of the analysis. Health Diarrhea and ALRI among children under impacts are explained first, followed in turn by impacts five years relating to domestic water; welfare losses due to loss of access Children below age five in India numbered about 125 million time; and finally, the impacts on tourism. The total economic and made up 11 percent of the total population in 2006. For impact of inadequate sanitation is then summed up. The this year, this analysis estimates annual cases of diarrhea in chapter ends with a presentation of the differential impacts of children below age five to be 192 million, and for persons sanitation on the poor; potential gains from sanitation; and a in all age groups to be 575 million. Rural areas account for sensitivity analysis. Note that unless otherwise indicated, all 72 percent of all diarrhea cases, and 76 percent of cases in the health and economic measures discussed in this chapter children below age five, while urban areas account for 28 are based on 2005 and 2006 observations. percent of all cases, and 24 percent of those in children below age five. HEALTH IMPACTS The most important causes of morbidity and mortality that Malnutrition induced by sanitation-related diseases is can be attributed to inadequate sanitation are diarrhea and attributed to an annual 21.8 million cases of ALRI among acute lower respiratory infection (ALRI). About 88 percent of children below age five. This burden among children under diarrhea is attributed to inadequate sanitation, poor hygiene, five is disproportionately shared by the rural population, and unsafe water supply. ALRI causes malnutrition, which in which accounts for 81 percent of that age group’s ALRI turn causes diseases and deaths, especially among children. cases attributable to inadequate sanitation and 76 percent its Only half of the diarrhea and ALRI cases in children are diarrhea cases. The incidence of diarrhea and ALRI attributable treated at a medical facility. to inadequate sanitation is presented in Table 3.1. TABLE 3.1 ANNUAL CASES OF DIARRHEA AND ALRI ATTRIBUTABLE TO INADEQUATE SANITATION, 2006 Population ALRi cases: Diarrhea cases: Diarrhea cases: Share in Share in children below children below 5 years all ages population population 5 years below 5 years Number Percent Number Percent Number Percent Percent Percent India 21.8 100.0 192.2 100.0 575.0 100.0 100.0 100.0 Rural 17.7 81.4 145.6 75.8 414.0 72.0 71.0 75.9 Urban 4.0 18.6 46.6 24.2 161.0 28.0 29.0 24.1 (Numbers in million) 36 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results Health impact of disease incidence and hygiene-related deaths. Other mortality-causing diseases Mortality. About one in every 10 deaths in India is from attributable to inadequate sanitation among the population causes related to inadequate sanitation and hygiene. Deaths at large include measles (about 5 percent of all deaths and from diarrhea alone accounted for every 20th death. Diarrhea 1.7 percent of under-five deaths), malaria (0.24 percent and induced by inadequate sanitation is estimated to have caused 0.1 percent for the two age classes), helminthes, and residual 450,000 deaths in 2006, of which 395,000 (88 percent) were “other diseases� (20 percent and 7 percent). among children below age five. Deaths caused by malnutrition induced by inadequate sanitation-related diseases in children Time lost due to diseases and their treatment under five numbered 315,000, and of that number, ALRI Sanitation-related diseases cause extensive loss of time for deaths numbered 115,000. adults as well as children. In aggregate, more than 10 million person-years of normal activities are estimated to have been As presented in Figure 3.1, among children under five, lost to these diseases during 2006 alone. A large majority of inadequate sanitation causes more than 30 percent of all this loss resulted from diarrhea and diarrhea-induced illnesses, deaths. Diarrhea alone accounts for more than 17 percent which account for over 90 percent of the lost time. Intestinal of all deaths in this age group and more than half of all worms (helminthes) and ALRI are other major causes of time sanitation- and hygiene-related deaths in this age-class. lost from normal activities. Table 3.2 also shows the low proportion of disease cases that receive treatment at a medical ALRI is another major cause of under-five mortality: one in facility—less than half of diarrheal disease and ALRI cases and every twenty of all deaths and one in six of the sanitation- a small proportion of worm-related illnesses are treated. FiguRE 3.1 DEATHS ATTRIBUTED TO INADEQUATE SANITATION AS PERCENT OF ALL DEATHS, 2006 All sanitation deaths 9.2% All population Diarrhea 5.4% ALRI 1.4% Other causes 1.9% All sanitation deaths 31.4% Below 5 years Diarrhea 17.4% ALRI 5.1% Other causes 7.1% 0% 5% 10% 15% 20% 25% 30% 35% www.wsp.org 37 Economic Impacts of Inadequate Sanitation in India ESI Results TABLE 3.2 NUMBER OF CASES, TREATMENTS, DEATHS, AND TIME LOST DUE TO DISEASES CAUSED BY INADEQUATE SANITATION, BY DISEASE, AND AGE GROUP, 2006 Disease Total cases (million) Treated at medical Deaths (number Time lost facilities (million) of persons) (1,000 years) Diarrhea 575 249 449,839 9,960 Children below 5 years 192 100 395,423 3,336 Children 5-14 years 383 149 1,071 6,624 Population 15+ years 53,345 Helminthes (intestinal worms) 151 13 2,945 131 Children below 5 years 16 2 449 15 Children 5-14 years 38 4 2,299 31 Population 15+ years 97 6 197 85 Trachoma 0 0 - 37 ALRi 22 11 115,033 303 Measles - - 37,674 - Malaria 2 2 1,817 22 Other causes - - 160,808 - Total 750 275 768,117 10,453 Economic costs of impacts on health adjusted labor share of GDP per worker). Time lost by To calculate the economic value of human life, the Human children is valued at 50 percent of the adult rate. For Capital Approach was used: the unemployment-adjusted these valuations, the current study uses an eight-hour labor share of GDP per worker.12 Available studies were working day and 250 working days a year. As a result, the used to identify the healthcare costs of disease treatment, economic valuation of lives lost, treatment costs, and loss and the expert opinion of medical practitioners was used of productivity add up to a huge `1.75 trillion in 2006. to identify rates of treatment. For welfare and productivity Losses from premature deaths account for three-fourths losses, the loss of adult time is valued at less than the rate for of these losses at `1.3 trillion, and more than `200 billion the economic loss of an adult engaged in production, at 50 each are lost to treatment costs and losses to productivity, percent of the full daily valuation (based on unemployment- as presented in Figure 3.2. 12 As explained in Chapter 2, the present value of the expected lifetime contribution to output by children below five years was `1.75 million ($38,706), `1.91 million ($42,172) for persons between 5 and 14 years, and `1.24 ($27,347) million for persons more than 15 years. 38 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results FiguRE 3.2 DISTRIBUTION OF HEALTH ECONOMIC IMPACTS OF INADEQUATE SANITATION, 2006 Productivity loss 12.4% (`217) Treatment costs 12.2% (`212) Premature death 75.4% (`1,317) (in ` billion) Distribution of mortality impacts, by disease Diarrhea accounts for 58 percent (`760 billion) of the economic impacts of premature mortality from inadequate sanitation, and ALRI (`201 billion) is the other major contributor, as presented in Figure 3.3. FiguRE 3.3 DISTRIBUTION OF ECONOMIC IMPACT OF PREMATURE MORTALITY FROM INADEQUATE SANITATION, BY DISEASES, 2006 Other causes 21.4% (`281) ALRI, 15.3% (`201) Diarrhea, 57.7% (`760) Measles, 5.0% (`66) Intestinal worms 0.4% (`5) (in ` billion) Malaria, 0.2% (`3) www.wsp.org 39 Economic Impacts of Inadequate Sanitation in India ESI Results Mortality from ALRI, measles, malaria, and other causes premature deaths in children this age, followed by ALRI, is the indirect result of malnutrition caused by sanitation- measles, and malaria. related diseases in children under five. Although trachoma causes serious illness, disability, and productivity loss, it is not Treatment costs identified as a significant cause of deaths. “Other causes� are The total cost each year of treating diseases caused by unidentified causes derived by excluding the above diseases inadequate sanitation and hygiene is estimated at `212 from non-perinatal mortality due to all causes.13 billion. Most of these diseases are in children below five, who suffer diseases disproportionately to their share of the Highest burden: Among children under population. As presented in Figure 3.5, children below five five years account for 41 percent of total treatment costs (40 percent of Premature deaths of children under five made up an diarrhea treatment costs and 16 percent of intestinal-worm overwhelming 94 percent of the economic losses from prophylactics and treatment costs). Treatment costs for premature death in India in 2006—valued at `1.24 trillion. diarrhea in this age group make up 38 percent of all treatment Figure 3.4 shows that diarrhea caused the largest loss from costs for sanitation- and hygiene-related diseases. FiguRE 3.4 DISTRIBUTION OF ECONOMIC IMPACTS OF PREMATURE MORTALITY AMONG CHILDREN UNDER FIVE, ACROSS DISEASES, 2006 Other causes 22.6% (`281) ALRI, 16.2% (`201) Diarrhea, 55.6% (`692) Measles, 5.3% (`66) Malaria, 0.3% (`3) Helminthes, 0.1% (`1) (in ` billion) 13 Mortality from “other causes� is estimated only in children under five and results from malnutrition effects of diseases directly caused by inadequate sanitation. The review of literature and meta-analysis of relative risks of morbidity and mortality from underweight excludes perinatal causes because they are identified as not related to childhood malnutrition, but related to the health of pregnant women (Fishman et al., 2004). 40 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results FiguRE 3.5 TREATMENT COSTS OF SANITATION-RELATED DISEASES, BY AGE CLASSES, 2006 Malaria `0.9 ALRI `5.4 Trachoma `0.1 Intestinal worms `0.9 `4.5 Diarrhea `80.2 `120.3 Treatment cost `87.3 `124.8 0% 20% 40% 60% 80% 100% Age <5 Age 5+ Not assigned (in billion) The high shares of treatment costs of children reflect higher miss work due to illness, they suffer monetary losses. This is incidence of diseases in children (1.75 per child per year) especially true in a country like India, where 55 percent of and also higher rates of treatment for children (69 percent) workers are self-employed and 29 percent are casual workers. compared to adults (52 percent). Treatment costs for trachoma Non-workers, those engaged in household work, retired (not segmented into age-classes) were `144 million, and for persons, and care-givers are also affected. Finally, children malaria (all for children under five) `902 million. suffer, and miss school and recreational opportunities. Research evidence suggests that improved health in childhood Rural areas house 71 percent of the total population and improves school attendance, education outcomes, and income 76 percent of children below five. Regarding treatment for persons when they become adults (Maccini and Yang, costs, rural populations bear 67 percent (`135 billion) of 2008; Alderman and King, 2006; Alderman, Hoddinott, and the cost of diarrhea, 69 percent (`3.7 billion) of the cost Kinsey, 2006; Currie, 2008). of intestinal worms, and 76 percent (`4.1 billion) of ALRI costs. The relatively lower share of rural areas in economic The health-related productivity and welfare losses resulting burden reflects low treatment rates (67 percent rural and from inadequate sanitation and hygiene are estimated at 74 percent urban), less treatment at medical facilities (71 percent `217 billion. Figure 3.6 shows that children below five are still rural, 83 percent urban), and lower valuation of time (average, the largest segment of losers. Even when their time is valued at `42 rural and `102.5 urban). half the rate for adults, the economic impact on them is more than a quarter (`57 billion) of the total, which is more than Productivity and welfare losses from morbidity double their share (11 percent) of the population. Illness can lead to substantial losses in productivity, welfare, income, and lifetime opportunities both for patients and Diarrhea once again dominates the losses, at `198 billion. for the family members who care for them. When workers Productivity/welfare losses from trachoma (which may lead www.wsp.org 41 Economic Impacts of Inadequate Sanitation in India ESI Results to vision loss) are `12.5 billion. Intestinal worm infections in the same way due to diarrhea, and within this amount represent a loss of `3.1 billion, the bulk of which is in the urban children account for `22 billion. Welfare losses from population over age five. The estimated welfare losses of malnutrition-induced ALRI of `4.5 billion are evaluated only children below five due to ALRI—indirectly caused by poor for children below five. Of these losses, rural children account sanitation via malnutrition—are `4.5 billion; and for malaria for `2.9 billion (65 percent) and urban children account for they are `0.4 billion. `1.6 billion (35 percent). Diarrhea-related productivity and welfare losses (loss of Economic impacts of different diseases productive time) are considerable. Rural residents lose `101 Each of the sanitation-linked diseases causes economic impacts billion (51 percent of the national total) in productivity and that vary depending on the disease’s incidence, its treatment welfare due to diarrhea and within this amount the losses costs, and the productivity and time losses associated with its stemming from rural children due to this disease are estimated treatment. Table 3.3 summarizes the economic impacts that at `30 billion, which is 30 percent of this disease’s rural different diseases cause by their contribution to premature productivity/welfare loss. Urban residents lose `96 billion mortality, treatment costs, and losses of productivity. FiguRE 3.6. HEALTH-RELATED PRODUCTIVITY AND WELFARE COSTS OF INADEQUATE SANITATION IN INDIA AND ITS BREAKDOWN ACROSS DISEASES AND AGE CLASSES, 2006 Malaria `0.4 ALRI `4.5 Trachoma `12.5 Intestinal worms `0.2 `3.0 Diarrhea `52.0 `144.7 Productivity/Welfare `57.0 `147.7 0% 20% 40% 60% 80% 100% Age <5 Age 5+ Not assigned (in billion) 42 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results TABLE 3.3 HEALTH-RELATED ECONOMIC IMPACTS OF INADEQUATE SANITATION FROM VARIOUS DISEASES, 2006 Disease Premature Treatment Productivity Total costs death Diarrhea 760 200 197 1,157 Intestinal worms 5 5 3 14 Trachoma - 0.1 12.5 13 ALRI 201 5 4 211 Measles 66 - - 66 Malaria 3 1 - 4 Other causes 281 - - 281 Total 1,317 212 217 1,746 (in ` billion) DIARRhEAL DISEASES result of the malnutrition caused by sanitation-related Deaths, treatment, and productivity losses from diarrheal diseases. Intestinal helminthes incur a total cost of `14 diseases alone (`1.16 trillion) account for two-thirds of the billion. Although trachoma causes serious illness, disability, economic impact of all diseases. Of this, the bulk is from and productivity loss, it is not identified as a significant cause diarrhea mortality, which contributes 44 percent (`760 of deaths. However, it causes visual impairment that can be billion) of total health-related impacts. Because diarrheal chronic and cause blindness if left untreated. Trachoma is a diseases are directly linked to inadequate sanitation, they cause disease with a relatively high morbidity burden (2.9 percent, the maximum number of cases, deaths, and economic losses `13 billion) but low incidence (26 per 100,000 persons, from inadequate sanitation reported here. Even though overall or 0.026 per 100). Trachoma disability results in large diarrhea incidence appears low in the entire population (58 productivity losses (`12.5 billion), which are much higher per 100 persons), it is highest of all diseases considered in this than the relatively low treatment costs of `0.1 billion. report for children below age five (at 175 per 100 children); and its case fatality ratio of 486 cases per death in children DOMESTIC WATER-RELATED IMPACTS this age is comparable to the ratio of 437 for ALRI. While the Arrangements for household drinking occurrence of diarrhea cases is distributed 72 percent in rural water supply areas and 28 percent in urban areas, the economic impacts of In 2005-06, about half of urban households and a little more this illness (i.e., treatment costs and productivity losses) are than one-tenth of rural households in India had access to distributed 59 percent in rural and 41 percent in urban areas. piped drinking water in their dwellings or in the yard of their As explained earlier, this is due to lower treatment rates and residences. An additional 20 percent of urban and 16 percent lower average productivity losses in rural areas. of rural households accessed piped water through public taps. OThER ILLNESSES Even these arrangements are hazardous from a health point As mentioned earlier, in children under five mortality from of view, since contamination is likely, given that the supply ALRI, measles, malaria, and other causes is indirectly the of piped water is irregular and intermittent. www.wsp.org 43 Economic Impacts of Inadequate Sanitation in India ESI Results Table 3.4 shows that apart from the piped and tube-bore storage vessels that are common in both rural and urban areas. categories, which may be only apparently safe, a significant Storing of water may increase the chance of contamination by proportion of household water supply is dependent on inappropriate handling. Households thus have to incur costs completely unprotected sources. for household water treatment, go in for piped systems to avoid contamination to the extent possible, purchase bottled It is worth noting that nearly one percent of urban households water, or haul cleaner water from a distance. get their drinking water hauled by tanker or cart, and that about 0.1 percent of rural households and 1 percent of urban Economic impacts of domestic water households use bottled water. The domestic water-related economic impacts of inadequate sanitation in India in 2006 is estimated to be `191 billion Lack of reliable and continuous drinking water supply forces ($4.2 billion). Economic impacts for rural residents are households to store water, whether in the underground sumps `111.5 billion (58 percent) and for urban residents `80 and overhead tanks common in urban areas or in a variety of billion (42 percent). TABLE 3.4 SOURCES OF HOUSEHOLD DRINKING WATER, 2005-06 Drinking water source Rural urban Total Piped (derived) 11.8% 50.7% 24.5% Piped to dwelling 3.9 31.9 13.1 Piped to yard 7.9 18.8 11.5 Public tap 16.1 20.3 17.5 Tube-bore 53.2 21.3 42.8 Rain 0.2 0.0 0.1 Protected spring 0.3 0.1 0.2 Protected well 2.8 1.8 2.5 Bottled 0.1 0.9 0.4 Unprotected spring 0.8 0.1 0.6 Unprotected well 12.4 2.9 9.3 River/surface water 1.8 0.8 1.5 Tanker 0.2 0.9 0.4 Cart 0.2 0.0 0.1 Other 0.1 0.2 0.2 Source: Based on NFHS-3 (IIPS and Macro International, 2007). 44 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results Figure 3.7 shows that of these costs, `112 billion (58 percent Household water treatment costs account for two-thirds (`49 of total) results from the household treatment of water, billion) of the above monetary costs, and the cost of piped `17.5 billion (9 percent) from the costs of piped water, water attributable to sanitation accounts for a quarter (`18 `5.7 billion (3 percent) from purchasing bottled water, and billion); the cost of bottled water purchases is `6 billion and about `56 billion (29 percent) from hauling cleaner water the cost of hauling cleaner water is `2.3 billion from outside the household premises. Household treatment of drinking water Monetary losses The treatment of household drinking water mostly takes the Of the total loss of `191 billion, the monetary impacts are form of boiling, and to a lesser extent it means use of filters or about `75 billion ($1.6 billion). Of this, urban residents bear electronic purifiers, as presented in Figure 3.8. A tiny percent the burden of `47 billion, or two-thirds of the monetary of households also use chemical purification or other methods losses, the balance being lost to residents of rural areas. A like filtering water through a cloth. higher urban share is explained by the type of treatment methods used (e.g., more expensive filters compared with Economic costs of domestic water treatment cheaper boiling or straining in rural areas), greater expenses The economic costs of domestic water treatment form the for accessing piped water, and the costs of purchasing of bulk of the water-related impacts of inadequate sanitation bottled water. at ` 111.7 billion. Of this total, rural residents bear FiguRE 3.7 DOMESTIC WATER-RELATED ECONOMIC IMPACTS OF INADEQUATE SANITATION, 2006 `120 `100 `43.7 `80 `60 `68.0 `19.6 `40 `10.9 `36.7 `20 `5.7 `6.6 `0 HH treatment Piped water Bottled water Hauled water Rural Urban (in billion) www.wsp.org 45 Economic Impacts of Inadequate Sanitation in India ESI Results FiguRE 3.8 DISTRIBUTION OF HOUSEHOLDS USING VARIOUS DRINKING WATER TREATMENT METHODS, 2006 1.19% Electronic purifier 3.37% 0.13% 6.58% Ceramic, sand, other filter 13.45% 3.26% 16.59% Straining through cloth 19.08% 15.38% 2.33% Bleach/chlorine 2.17% 2.40% 10.38% Boiling 16.00% 7.65% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% India Urban Rural Source: Estimates based on NFHS-3 data (Measure DHS, 2008). `68 billion (61 percent), the balance (`44 billion) being The cost of boiling water (`80 billion) makes up 72 percent of borne by urban residents. These costs arise from using all the water treatment costs by all methods; of this amount, various drinking water treatment methods used by urban `53 billion is spent in rural areas and `28 billion in urban and rural households in India, as presented in Table 3.5 and areas. Straining water through cloth costs `14 billion, use of Figure 3.9. filters costs `10 billion, and use of electronic filters costs about TABLE 3.5 ECONOMIC COSTS FOR TREATING HOUSEHOLD WATER DUE TO INADEQUATE SANITATION, 2006 Population Boiling Bleach/chlorine Straining Ceramic, sand, Electronic Total through cloth or other filter purifier Rural 52,578 2,340 9,129 3,583 353 67,982 Urban 27,797 824 4,969 6,311 3,766 43,668 India 80,375 3,164 14,098 9,894 4,119 111,650 (in ` million) 46 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results `4 billion, mostly in urban areas. It should be noted that the open wells are not. This study assumes that about half of the presence of water treatment equipment in a household alone costs of obtaining piped water can be attributed to inadequate may not ensure that drinking water is uncontaminated by sanitation conditions causing potential contamination. Costs fecal bacteria. Further, straining through cloth may not be of public taps, assumed mainly for convenience, have not been effective in avoiding contamination. included in this estimate (although time and productivity losses take this into account). Economic costs of piped water Households use piped water because of convenience as well Total costs of piped domestic water attributable to inadequate as because it is perceived to be of good quality, that is, safe sanitation are estimated at `17.5 billion—62 percent for from contamination in a way that unprotected sources like urban households and 38 percent for rural households. FiguRE 3.9. COST OF WATER TREATMENT: DISTRIBUTION OF ANNUAL RURAL, URBAN, AND NATIONAL WATER-RELATED ECONOMIC IMPACTS BY TREATMENT METHODS 0.5% 100.0% 3.7% 5.3% 8.6% 90.0% 8.9% 13.43% 14.5% 80.0% 3.4% 12.63% 2.8% 70.0% 11.38% 1.9% 60.0% 50.0% 40.0% 77.3% 72.0% 30.0% 63.7% 20.0% 10.0% 0.0% Rural Urban India Electronic purifier Ceramic, sand, other filter Straining through cloth Bleach/chlorine Boiling www.wsp.org 47 Economic Impacts of Inadequate Sanitation in India ESI Results FiguRE 3.10 DISTRIBUTION OF COST OF PIPED WATER DUE TO INADEQUATE SANITATION AMONG RURAL AND URBAN HOUSEHOLDS, 2006 Rural, 38% (`6.6 billion) Urban, 62% (`10.9 billion) Economic costs of bottled water person per day. The annual cost of bottled water purchased About 0.8 million households are estimated to have been by households is estimated to be ` 6 billion, of which using bottled water in 2006. Households buy bottled 94 percent is incurred in urban areas (see Figure 3.11). The water because it is perceived to be free of bacteria and cost of bottled water forms about 3 percent of the domestic- other impurities. water-related economic costs of inadequate sanitation and about 8 percent of the monetary costs thereof. Table 3.6 shows that an estimated 0.38 percent of households in India used bottled drinking water. This implies bottled Economic costs of hauled water drinking water consumption of 12.2 million liters per day and In India, 29.4 percent of urban households haul water from 4.4 billion liters annually, based on an average of 2.92 liters per outside their homes, spending an average of 18.4 minutes TABLE 3.6. BOTTLED WATER CONSUMPTION, 2006 Population Percent of households using Annual bottled drinking water bottled drinking water consumption (billion liters) Rural 0.14 1.4 Urban 0.86 3.1 India 0.38 4.4 48 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results FiguRE 3.11 COST OF BOTTLED DRINKING WATER, 2006 `7.00 `5.69 `6.04 `6.00 `5.00 `4.00 `3.00 `2.00 `1.00 `0.35 `0.00 Rural Urban India (in billion) per trip in 2005-06 (Measure DHS, 2008). In rural areas, residents, 144 million days for urban residents, and 818 this percentage is nearly double that of urban areas at 57.8 million days nationally. The total costs of hauling water are percent, with 19.4 minutes per trip. Nationally, 48.5 percent `54 billion for all households, with `36 billion (66.8 percent) of households haul water from outside, spending an average for rural households and `17.9 billion (33.2 percent) for of 19.2 minutes per trip. This report conservatively attributes urban households. The costs in rural areas reflect the higher half the trip time to inadequate sanitation, since households incidence of fetching water from distant sources, but their must travel farther from alternate polluted sources to haul share is lower than their proportion of the population water; that is, the report attributes an additional 9.6 minutes (71 percent) because of the lower productivity used for time per household per day to inadequate sanitation. This report in rural areas. In more than 83 percent of rural households estimates that this water-hauling time led to substantial and 75 percent of urban households, fetching water is a task loss of productive time in 2006: 673 million days for rural mostly carried out by women and girls. FiguRE 3.12 ECONOMIC COST OF HAULED WATER AMONG RURAL AND URBAN HOUSEHOLDS, 2006 Urban, 33% (`17.9 billion) Rural, 67% (`36.1 billion) www.wsp.org 49 Economic Impacts of Inadequate Sanitation in India ESI Results FiguRE 3.13 ECONOMIC COST OF ACCESS TIME LOST DUE TO INADEQUATE SANITATION, 2006 `500.0 `450.0 `400.0 62.1 `350.0 `300.0 `250.0 `200.0 376.3 `150.0 `100.0 31.6 `50.0 `0.0 7.6 Open defecation Shared toilet Rural Urban (in billion) ACCESS TIME IMPACTS It is estimated in this study that an extra 78.6 billion hours Economic costs of accessing open-defecation were spent accessing open-defecation sites and shared toilets areas and shared toilets in 2006. This estimate is based on a single visit to a toilet per Not having access to good toilets results in a loss of time, person per day, using 20 extra minutes per person per day to comfort, convenience, security, dignity, and status, and it access open-defecation sites in rural areas and 15 minutes in may also lead to conflicts within a community. These losses urban areas, and using 5 extra minutes to access shared toilets are felt more heavily by women and girls. A partial economic in both rural and urban areas. The economic cost of this lost equivalent of this loss of welfare and ability to exercise access time is estimated at `477.5 billion ($10.5 billion). preferences by persons who are forced to defecate in the open Since open defecation is more prevalent in rural areas, the or to share toilets, has been estimated in this study. Estimates time-cost of open defecation makes up 98 percent of the are based on a valuation of extra time that people use to access costs of access time in rural areas. Time lost for use of shared open-defecation sites and shared toilets. This economic loss toilets makes up a much higher proportion of lost access is a conservative estimate, because it does not include many time in urban areas (33 percent). This reflects the fact that intangible aspects and welfare losses unrelated to loss of time, shared toilets were used by 24.6 percent of urban residents like embarrassment or convenience. and only 5.7 percent for rural residents. Rural residents bear a substantial 86 percent (`376.3 billion, $8.3 billion) of An estimated 629 million persons (56 percent of population) the country’s total time costs for accessing open-defecation defecated in the open in 2006: this number comprises 575 sites, whereas for the time costs of accessing shared toilets, million (72 percent) rural residents and 54 million (17 urban residents bear 81 percent of the burden (`31.6 billion, percent) urban residents. An additional 125 million persons $697 million). (11 percent) used shared toilets, 45 million of them rural residents and 80 million urban. Thus, 754 million people, Economic costs at schools and workplaces including 621 million in rural and 134 million in urban areas, This study also estimated losses from inadequate sanitation either defecated in the open or used shared toilets. in schools and in workplaces. These estimates are made 50 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results only for losses experienced by girls aged 11 to 17 in schools France, Germany, Japan, Sri Lanka, Malaysia, and Australia without girls’ toilets and by working women due to absence are also significant sources of international tourists coming from work during menstrual periods. Lack of disaggregated to India. Of the arriving international tourists, less than data presents difficulties in computing such losses, but 10 percent were children below age 15, while 7 percent using very conservative estimates lower bound values have were elderly (over age 65). Domestic tourism has also been been estimated. Assuming that an average of 10 days a year substantial in recent years, with 462 million Indians making are missed by girls in schools without a girls’ toilet, and that day and overnight tourist visits in 2006. one day a year is missed by a working woman, this study estimates that annually 74 million school days were missed If tourists are dissatisfied with sanitation, they may not visit by girls and 94 million work days by working women. The again or may discourage other potential tourists from visiting. economic cost of this loss of time is estimated as `3.4 billion This study used this premise, along with data about tourist ($74 million) for girls and `6.3 billion ($139 million) for stays, spending, and dissatisfaction with toilets to estimate working women, totaling `9.6 billion, as presented in the loss of tourism earnings due to inadequate sanitation in Table 3.7. 2006. The percentages of satisfied and dissatisfied tourists, along with reasons for dissatisfaction, are available for a TOURISM IMPACTS sample of tourists visiting Buddhist centers located in all International and domestic tourism have been growing parts of the country.14 rapidly in India. The average growth rate of international tourist arrivals rose from 2003 to 2006 by 17.7 percent per Many tourists also suffer health problems resulting from year (Ministry of Tourism, 2008). Tourism receipts from inadequate sanitation. Such illnesses among domestic tourists international tourists were `404 billion ($8.9 billion) in are potentially covered in health-related estimates discussed 2006, a year when 4.45 million international tourists arrived above. To avoid double counting, and for lack of tourist illness in India and 8.3 million Indian tourists went abroad from data for domestic tourists, this study separately estimates India. With these numbers, India’s share of world tourist only the economic impact of illnesses among foreign tourists arrivals was 0.5 percent and its share of tourist receipts was visiting India in 2006. Only gastrointestinal illnesses for 1.2 percent. India ranked 42nd in international tourist foreign tourists are included, based on prevalence data from arrivals in 2006. published research. Leaving out visitors from Bangladesh, 32 percent of Tourism-related economic impact international visitors arriving in India are from the United Tourism-related economic losses from inadequate sanitation Kingdom and the United States. In addition, Canada, are estimated to be `12 billion ($266 million). Of these TABLE 3.7. SCHOOL AND WORKPLACE ABSENCE: LOWER BOUND OF ECONOMIC COST OF INADEQUATE SANITATION FROM GIRLS’ AND WOMEN’S ABSENCE, 2006 urban Rural india urban Rural Total Girls’ absence from school 1.4 2.0 3.4 41.5% 58.5% 100.0% Women’s absence from work 2.2 4.1 6.3 35.1% 64.9% 100.0% Total 3.6 6.0 9.6 37.4% 62.6% 100.0% (in ` billion and percent) 14 The survey reports were from tourists in the following states: Uttaranchal, Uttar Pradesh, Rajasthan, Madhya Pradesh, Karnataka, Goa, Chhattisgarh, Bihar, Assam, and Orissa. Buddhist centers about which questions are asked are spread across India. www.wsp.org 51 Economic Impacts of Inadequate Sanitation in India ESI Results TABLE 3.8 ECONOMIC LOSSES TO TOURISM DUE TO POOR SANITATION, 2006 impact type Amount Percent Amount Type of loss (` million) ($ million) Loss to tourism earnings (international and domestic) 5,473 45.3 120.73 Monetary Treatment costs for international visitors 938 7.8 20.70 Monetary Value of welfare lost by international tourists 5,663 46.9 124.92 Economic Economic loss due to gastrointestinal illness 6,601 54.7 145.62 Monetary + among international tourists Economic Total tourism-related loss due to poor sanitation 12,074 100.0 266.35 Monetary + Economic losses, 45 percent (`5.5 billion, $121 million) are from loss domestic overnight tourism days, 46 percent are domestic day of tourism earnings, and 55 percent (`6.6 billion, $145.6 tourism days, and the remaining 4 percent are international million) are from losses due to gastrointestinal illnesses tourism days. Of the total tourism earnings loss of `5.4 among international tourists, as presented in Table 3.8. billion due to inadequate sanitation and hygiene, the bulk About 9.85 million tourism days are estimated to be lost was accounted for by lost domestic overnight tourism, as due to inadequate sanitation and hygiene. Of these, half are presented in Figure 3.14. FiguRE 3.14 TOURISM EARNINGS LOSS DUE TO INADEQUATE SANITATION FROM DOMESTIC AND FOREIGN TOURISTS, 2006 Foreign overnight tourist, 13% (`0.71 billion) Domestic day tourist 9% (`0.47 billion) Domestic overnight tourist, 78% (`4.29 billion) 52 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results AGGREGATE ECONOMIC IMPACTS OF Measured in purchasing power parity (PPP) terms, with the INADEQUATE SANITATION price level in India being about one-third that in the United Putting together all the impacts in the previous sections, States, the adverse economic impacts of inadequate sanitation this study shows that the total annual economic impacts in India add up to $161 billion, or $144 per person. of inadequate sanitation amount to `2.44 trillion ($53.8 billion). This implies a per capita annual loss of `2,180 ($48). Composition of Impacts This in turn translates into an impact that is equivalent to As presented in Figure 3.15, the health-related economic about 6.4 percent of the GDP of India in 2006. impact of inadequate sanitation is `1.75 trillion, that is, FiguRE 3.15 COMPOSITION OF ECONOMIC IMPACTS OF INADEQUATE SANITATION Access time, 20.0% (`487 billion) Water, 7.8% (`191 billion) Health, 71.7% (`1,746 billion) Tourism, 0.5% (`12 billion) FiguRE 3.16 ECONOMIC IMPACTS OF INADEQUATE SANITATION IN INDIA BY SUBCATEGORIES, 2006 International tourist illness Tourism `7 Lost tourism earnings `5 Workplace access `6 Access School access `3 time HH access `478 Cost of fetching water `56 Piped water `18 Water Bottled water consumption `6 HH treatment, drinking water `112 Healthcare `212 Health Productivity loss `217 Premature mortality `1,317 (in billion) www.wsp.org 53 Economic Impacts of Inadequate Sanitation in India ESI Results 72 percent of the total impact in 2006. Loss of access time for households at `478 billion show up as the next large and impacts on water costs are the other two main losses. subcategory of impacts. In addition, Figure 3.16 shows that As a portion of health impacts, premature mortality makes healthcare costs and productivity losses are significant at more up the main share at more than `1.3 trillion. Access costs than `200 billion each. TABLE 3.9 ECONOMIC AND MONETARY IMPACTS OF INADEQUATE SANITATION, 2006 impact type Economic impacts Monetary impacts Amount Amount Percent Amount Amount Percent (` billion) ($ billion) of total (` billion) ($ billion) of total Health 1,746 38.5 72 283 6.2 77.8 Premature mortality 1,317 29.1 54 - - - Productivity loss 217 4.8 9 71 1.6 19.5 Healthcare 212 4.7 9 212 4.7 58.3 Water 191 4.2 8 74 1.6 20.5 Household treatment, 112 2.5 5 49 1.1 13.4 drinking water Bottled water 6 0.1 0.2 6 0.1 1.7 consumption Piped water 18 0.4 1 18 0.4 4.8 Cost of fetching water 56 1.2 2 Access time 487 10.7 20 Household access 478 10.5 20 School access 3 0.1 0.1 Workplace access 6 0.1 0.3 Tourism 12 0.3 0.5 6 0.1 1.8 Lost tourism earnings 5 0.1 0.2 5 0.1 1.5 International tourist 7 0.1 0.3 1 0.02 0.3 illness Total impact 2,437 53.8 100 364 8.0 100 Total impact as 6.4% 1.0% percentage of gDP 54 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results TABLE 3.10 COMPOSITION OF ECONOMIC IMPACTS OF INADEQUATE SANITATION Type of loss Loss Percent equivalent of (` billion) gDP (rounded-off) Monetary losses in 2006 364 1 Non-monetary economic losses in 2006 759 2 Loss of flow of value in 2006 1,123 3 Discounted present value of future losses resulting from the loss 1,314 3.4 of human capital in 2006 Total economic impact of inadequate sanitation in 2006 2,437 6.4 Monetary losses equivalent to 6.4 percent of GDP should not be interpreted Economic impact includes monetary impacts (that is, someone as a loss of 6.4 percent of GDP during 2006. The discounted paying out or losing money), as well as non-monetary impacts present value of loss of economic flows that may occur after on which monetary values are imputed for valuation (e.g., that 2006 due to deaths in 2006 is about 54 percent of the total of time lost due to walking to an open-defecation location). economic impacts, equivalent to 3.4 percent of GDP. Thus, This analysis shows that monetary losses, a subset of economic the actual loss of flow of 2006 economic value is the remaining losses, are estimated to be `364 billion ($8 billion) in 2006, 46 percent, equivalent to about 3.0 percent of GDP. Table 3.10 as presented in Table 3.9. presents the composition of economic impacts by monetary and non-monetary losses in 2006, and shows the future losses The costs of treating illnesses dominate the monetary losses that are also accounted for in the year 2006. (58 percent of the total), followed by lost productivity due to illnesses, treating water, and accessing piped water. In Per capita impacts percentage terms, monetary impacts are 15 percent of the total A large population of 1.12 billion (est. 2006) can appear to economic impacts. These losses are equivalent to 1 percent explain the large magnitude of impacts, but per capita impacts of the GDP, or `326 ($7) per person. also show up as significant, as Figure 3.17 shows. The per capita losses are estimated to be `2,180 ($48.10)—consisting of Present and future losses `1,562 ($34.47) due to health-related losses, `171 ($3.78) It may be noted that while the economic impacts of inadequate related to water, `436 ($9.61) related to access time, and `11 sanitation in 2006 estimated in this report total `2.4 trillion— ($0.24) related to tourism. A substantial 54 percent of per equivalent to 6.4 percent of India’s GDP—not all of these capita and total economic losses stem from premature deaths are losses of economic value that were created in 2006. For due to inadequate sanitation and hygiene. example, deaths that occurred in 2006 resulted in a loss of human capital in 2006 that would have generated economic Per capita monetary loss flows in 2006 and beyond. Therefore, loss of human capital The per capita monetary losses are `326 ($7), three-fourths in 2006 also reflects economic losses of future flows of value, of which are health-related and one-fifth of which are water- in addition to the flow of value in 2006. The discounted related. Table 3.11 shows that an equivalent of 0.96 percent present value of these future losses is counted in the 2006 of the GDP (or GDP per person) is lost as monetary losses total. Thus, an economic impact of inadequate sanitation due to inadequate sanitation and hygiene. www.wsp.org 55 Economic Impacts of Inadequate Sanitation in India ESI Results FiguRE 3.17 PER CAPITA ECONOMIC IMPACTS OF INADEQUATE SANITATION, 2006 Tourism `11 Access time `436 Water `171 Health `1,562 TABLE 3.11 PER CAPITA ECONOMIC AND MONETARY IMPACTS OF INADEQUATE SANITATION, 2006 impact type Economic impacts Monetary impacts Amount (`) Amount ($) Percent of Amount (`) Amount ($) Percent of per-person gDP per-capita gDP Health 1,562 34.47 4.6 253 5.59 0.75 Water 171 3.78 0.5 67 1.47 0.20 Access time 436 9.61 1.3 Tourism 11 0.24 0.03 6 0.13 0.02 Total impacts 2,180 48.10 6.4 326 7.18 0.96 DIFFERENTIAL IMPACTS ON THE POOR households it is, again, the children that are relatively the The poor in India have to bear substantial adverse impacts worst affected. on their lives, health, and scarce financial resources because of inadequate sanitation. Diseases caused by inadequate This study estimated the economic impacts of inadequate sanitation disproportionately affect poor households, because sanitation on the urban and rural poor and on other wealth these households have relatively little access to sanitary quintiles according to categories of impact for which data toilets, hygiene-related resources and practices, and clean and was available. To identify poor households, classifications sufficient water. Compared with other households, poorer based on wealth quintiles from the National Family Health families tend to lose more of their wages and spend more of Survey-3 (NFHS-3) were used. Estimates of impact at the their precious resources on treating illnesses–affecting their national, rural, and urban levels use data on the incidence well-being much more negatively than their counterparts in of disease related to inadequate sanitation, as well as data on other socioeconomic classes are harmed. And within poorer domestic water and toilet access, from NFHS-3, which adjusts 56 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results adult incidence of disease proportionally. Mortality-related denotes households in the poorest wealth quintile that reside data is not available by income or wealth classification, and in rural areas (and not the poorest wealth quintile of rural is therefore not included in these estimates. Health-related households), and so on. impacts only include estimates based on cases of diarrhea and intestinal worms and indirect impacts from cases of ALRI. Per capita losses Figure 3.18 shows that urban households in the poorest It is likely that poor persons in India bear a disproportionately quintile (WQ1 Urban) bear the highest per capita economic high mortality burden stemming from inadequate sanitation, impacts of inadequate sanitation, at `1,699 ($37). That since they have lower access to and fewer resources for health is 1.75 times the national average per capita losses and care. Therefore, the relative burden on the poor is likely to be 60 percent more than the urban average. Rural households underestimated in the estimates presented below. It may also be in the poorest quintile bear per capita losses in excess of noted that the wealth quintiles used are defined at the national `1,000—8 percent more than the average loss for households level, not at the rural or urban levels. Therefore, “WQ1 Rural� in rural areas. FiguRE 3.18 PER CAPITA ECONOMIC IMPACTS* OF INADEQUATE SANITATION, BY WEALTH QUINTILES AND RURAL/URBAN RESIDENCE, 2006 WQ1 Urban 1699 WQ2 Urban 1528 WQ3 Urban 1403 WQ4 Urban 1057 WQ3 1056 Urban 1037 WQ1 1031 WQ2 1029 WQ1 Rural 1001 WQ2 Rural 979 WQ3 Rural 975 INDIA 961 WQ4 933 Rural 930 WQ4 Rural 850 WQ5 Urban 825 WQ5 779 WQ5 Rural 667 0 200 400 600 800 1000 1200 1400 1600 1800 (in `) *Note: These estimates do not include losses from mortality and tourism resulting from inadequate sanitation, due to lack of data. Health-related losses included are only from cases of diarrhea, intestinal worms, and ALRI. www.wsp.org 57 Economic Impacts of Inadequate Sanitation in India ESI Results The richest 20 percent of all households (WQ5) experience losses computed. The poorest 20 percent residing in rural lower economic impacts from inadequate sanitation, at areas bear a burden of `204 billion ($4.5 billion), or 28 `779 ($17) per capita. Among the richest 20 percent of percent of total losses to households living in rural areas. households nationwide, those residing in urban areas As presented in Figure 3.19, the aggregate impacts are experience economic impacts of `825 ($18.20) per capita, more heavily concentrated among the poor in rural areas, and those in rural areas experience impacts of `667 ($14.70) because most of the people in the lower quintiles reside in per capita—which are, respectively, half and two-thirds of the rural areas. per capita losses suffered by the poorest households in those two categories. When looking at the relative impact on the urban poor, rather than poor people residing in urban areas per se, the Aggregate losses relevant quintiles in urban areas are the first, second, and In aggregate terms, the poorest 20 percent of households third quintiles, because most urban poor fall in these wealth are hit by a loss of `220 billion—or 20 percent of the total quintiles. The poorest 20 percent of people living in urban areas FiguRE 3.19 ECONOMIC IMPACT* OF INADEQUATE SANITATION BY WEALTH QUINTILES AND RURAL/URBAN RESIDENCE, 2006 INDIA 1,075 Rural 738 Urban 337 WQ3 239 WQ2 230 WQ1 220 WQ4 217 WQ1 Rural 204 WQ2 Rural 198 WQ3 Rural 179 WQ5 174 WQ5 Urban 131 WQ4 Rural 118 WQ4 Urban 99 WQ3 Urban 60 WQ5 Rural 43 WQ2 Urban 31 WQ1 Urban 16 0 200 400 600 800 1,000 1,200 (in ` billion) *Note: These estimates do not include losses from mortality and tourism resulting from inadequate sanitation due to lack of data. Health-related losses included are only from cases of diarrhea, intestinal worms, and ALRI. 58 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results bear the highest per capita burden of inadequate sanitation, health impacts are driven by changing the method for the even though they are relatively fewer in number compared valuation of premature loss of life from the base scenario to the poorest 20 percent of persons living in rural areas. It to a high scenario. Base estimates use employment-adjusted is noteworthy that households in higher wealth quintiles also labor share of GDP per worker, while the high estimates use bear substantial impacts due to inadequate sanitation. value of statistical life (VOSL) using the official exchange rate from OECD countries. Estimates for value of access SENSITIVITY ANALYSIS time lost are much higher in the high case, since 100 The estimates of economic impact presented above are based percent of the unemployment adjusted labor share of GDP on some numbers that could have been selected differently. per worker is used for the valuation of time for adults and Whenever a choice of numbers was available, this study children instead of the much lower percentages used in the generally chose the more conservative number. Therefore, base case. in addition to the “base� estimates presented so far, it is also instructive to look at a range—a low and a high estimate—of The low case uses a different method for valuation of the economic impacts based on alternate methods and premature loss of life based on average compensation of assumptions. Figure 3.20 presents input values used for the workers. The low case estimate for total health impact is low, base, and high estimates presented in this section. `1.34 trillion ($29.5 billion or 3.5 percent of GDP), which is not much lower than the base case value of `1.75 trillion The low estimate for the total economic impact of inadequate ($38.5 billion or 4.6 percent of GDP). The high case health sanitation is `1.8 trillion ($39.3 billion) or 4.7 percent of impact, however, is much higher, at `4.4 trillion ($98 billion GDP, and the high estimate is `6.9 trillion ($151.6 billion) or 11.7 percent of GDP). From the scenario results it is or 18.1 percent of GDP. The higher estimate is greatly evident that results are sensitive to valuation methods for influenced by a higher value for health impacts. Higher premature loss of life and time. FiguRE 3.20 LOW, BASE, AND HIGH ESTIMATES FOR ECONOMIC IMPACTS OF INADEQUATE SANITATION, 2006 8 6.9 7 6 5 4 2.4 3 1.8 2 1 4.7% 6.4% 18.1% 0 Low Base High (in ` trillion) www.wsp.org 59 Economic Impacts of Inadequate Sanitation in India ESI Results POTENTIAL GAINS FROM IMPROVED A review and meta-analysis (Fewtrell, et al., 2005) estimates SANITATION AND HYGIENE a relative risk reduction in diarrhea of 32 percent through The potential gains achievable from adequate sanitation the use of improved toilets, a 45 percent reduction from are somewhat like the flip side of the economic costs of hygiene interventions (primarily washing hands by soap), inadequate sanitation—the savings that result by avoiding a 25 percent reduction from improved water supply, and the health-related, water-related, access time-related, and a 39 percent reduction from household water treatment tourism-related losses caused by inadequate sanitation (primarily disinfection and safe storage). A World Bank and hygiene. Improved access to sanitary toilets and better review of about 100 impact studies of water and sanitation hygiene practices (such as washing hands with soap, non- sector interventions (World Bank, 2008) found substantial contamination while handling water and food) acts as a barrier evidence that “hand washing, sanitation, and household and to the five fecal contamination routes to sanitation-related point-of-use water treatment improve health outcomes (in diseases: fingers, flies, fields, fluids, and foods. In practice, it terms of infant and child mortality, nutrition, and childhood is very difficult to eliminate all the losses through sanitation diseases like diarrhea).� interventions in developing countries, which are likely to be incomplete in their implementation and impacts due to the Based on these meta-analyses, for this study the various multiple pathways and geographical spillover that characterize interventions for estimating percent reduction in diarrhea sanitation-related diseases. were classified as follows: FiguRE 3.21 POTENTIAL GAINS FROM SANITATION AND HYGIENE INTERVENTIONS, 2006 1.94% of GDP bacteriological Water free from contamination Safe confinement and disposal of fecal matter `733 1.77% of GDP Improved access to safe quality water `668 3.38% of GDP Improved hygiene behavior `1,279 Sanitation + hygiene interventions 2.78% of GDP Improved access to toilets `1,052 3.91% of GDP Sanitation + hygiene `1,476 `1,600 `0 `400 `800 `1,200 (in billion) Note: Improved hygiene behavior may also include use of existing toilets; safe disposal of fecal matter includes sewage treatment. 60 India Impact Study Economic Impacts of Inadequate Sanitation in India ESI Results 1. Safe confinement and the disposal of fecal matter Figure 3.21 presents the potential gains from the different (sewage treatment) types of intervention (these are not additive categories). These 2. Improved access to safe quality water range from `668 billion saved from improving access to safe 3. Improved access to adequate quantity of water water, to `1 trillion saved by improving access to toilets. 4. Improved hygiene behavior (including toilet use), and A package of comprehensive sanitation and hygiene 5. Improved toilet access and use. interventions that includes increased use of toilets, hygiene promotion (including hand washing with soap and safe water The estimates were applied to health impacts to estimate management), and improved access to water will result in potential gains in each of the categories under this study. It may, averting 45 percent of the adverse health impacts, and avoid however, be noted that these are based on meta-studies and it all the adverse impacts of inadequate sanitation related to is difficult to neatly separate out the various categories. water, welfare losses, and tourism losses. It is estimated that sanitation and hygiene (including hand As a result of such a comprehensive intervention, this study washing with soap) interventions could have prevented estimates a potential gain of about `1.48 trillion ($32.6 346,000 deaths and 338 million cases of diseases and could billion, equivalent to 3.9 percent of GDP). This signifies have saved at least 1.7 billion days of time lost in 2006. a potential gain of `1,321 ($29) per capita. www.wsp.org 61 Trends in Impacts of Inadequate Economic the Indian Water SectorSanitation in India A Critical Review 4. Sanitation Markets Estimates in this chapter of the potential sanitation market Campaign and the National Urban Sanitation Policy (both from 2007 to 2020 are based on the expectation that discussed in Chapter 1), is expected to be accompanied by households will be switching from open defecation and households switching from no toilets, unimproved toilets, unimproved toilets to improved toilets over this period. shared or community toilets to individual improved pit A steady increase in wastewater collection and treatment toilets, toilets with septic tanks and soakaways, or sewer- through 2020 is also assumed for this estimation. connected toilets. Figure 4.1 presents the projected number of households using different types of toilets in India, from PROJECTED CHANGES IN TOILETS AND 2009 to 2020. WASTEWATER TREATMENT The rapid expansion of sanitation facilities because of various It is also assumed that the current dry manually cleaned initiatives by the government, including the Total Sanitation toilets and unimproved open-pit toilets will be converted FiguRE 4.1 PROJECTED TRENDS IN NUMBER OF HOUSEHOLDS USING VARIOUS TYPES OF TOILETS IN INDIA, 2009-20 160 140 120 Million households 100 80 60 40 20 0 09 10 11 12 13 14 15 16 17 18 19 20 Year Sewer connections Septic tanks Pit latrines Other Community toilet blocks None Source: Authors’ analysis based on data for household toilet type from NSSO, 2007 and 2010; NIUA 2005; and JMPDWSS, 2006 and 2008. 62 India Impact Study Economic Impacts of Inadequate Sanitation in India Sanitation Markets to improved toilet types by 2012. Pit toilets, shared, and of sewer-connected toilets by urban households. It is envisaged community toilets are expected to be intermediate steps in that when urban households switch from community toilets moving from no or unimproved toilets to improved toilets to private household toilets, the community toilet facilities emptying into sewerage systems or, where sewerage systems will be converted into public toilets that will primarily be used are not available, to septic tanks with soakaways. As a result, by the floating population. Therefore, when urban households the distribution of households by toilet types in India over move to private toilets, annual spending on community/ the period under consideration will transform, as presented public toilets is expected to stabilize, though its percentage in Figure 4.2. share in sanitation expenditures will decline. The use of toilets with sewer connections and septic tanks with In step with improvements in household arrangements, it soakaways is assumed to grow slowly over time, with more use is projected that following implementation of the National FiguRE 4.2 PROJECTED DISTRIBUTION OF HOUSEHOLDS USING VARIOUS TYPES OF TOILETS IN INDIA, 2009-20 350 300 Million households 250 200 150 100 50 0 09 10 11 12 13 14 15 16 17 18 19 20 Year Sewer connections Community toilet blocks Other Pit latrines Septic tanks None Source: Authors’ analysis based on data for household toilet type from NSSO, 2007 and 2010; NIUA 2005; and JMPDWSS, 2006 and 2008. www.wsp.org 63 Economic Impacts of Inadequate Sanitation in India Sanitation Markets Urban Sanitation Policy15 wastewater collection and treatment 25 percent households with on-site sanitation will discharge facilities will be expanded in the coming years, closing the to open drains (in the absence of safe collection and gaps between the wastewater generated, collected, and treated, treatment facilities). This is projected to decline to 0 percent as presented in Figure 4.3. by 2020, when all sewage will be diverted to proper on-site and/or sewerage installations. In rural areas, it is assumed With gradual improvements, the proportion of city and that initially 5 percent of households using toilets with pits village wastewater collected (and treated) is expected and septic tanks are treating wastewater on-site, and that this to rise from an estimated 33 percent in 2007 to about will increase to 59 percent by 2020. Almost all wastewater 59 percent collected (55 percent treated) in 2015, and then treatment in rural areas, it is assumed, will be done to 81 percent collected (80 percent treated) in 2020. In the through on-site sanitation with sludge collection as well as initial years, in urban areas, wastewater from an estimated treatment services. FiguRE 4.3 PROJECTED TRENDS IN WASTEWATER GENERATED, COLLECTED, AND TREATED IN INDIA, 2009-20 100 90 Million Liters Day (MLD) (1000s) 80 70 60 50 40 30 20 10 0 09 10 11 12 13 14 15 16 17 18 19 20 Year WW generated WW collected WW treated Note: WW = Wastewater. 15 While the Total Sanitation Campaign (TSC) at present assumes construction of toilets with on-site safe collection and treatment only, limited resources are made available for solid and liquid waste management in rural areas. In larger rural centers, this is also likely to take the form of some sort of small-scale organized treatment mechanism before moving to conventional systems like those available in urban areas. 64 India Impact Study Economic Impacts of Inadequate Sanitation in India Sanitation Markets ESTIMATION OF SANITATION MARKET SIZE Over time, the annual infrastructure expenditure is expected The national cumulative sanitation market has the potential to rise from `223 billion in 2007 to `391 billion in 2020, to grow to `6.87 trillion ($152 billion) for the period of 2007 and operation and maintenance expenditures are expected to 2020, of which `4.4 trillion (64 percent) is projected to to rise from `77 billion in 2007 to `292 billion over the be in infrastructure and another `2.5 trillion (36 percent) same period. in operation and maintenance services. In rural areas during this period the market has a potential of `3.77 trillion The annual rural sanitation market has the potential to more ($83 billion) and in urban areas a potential of `3.1 trillion than double from 2007 to 2020, from `162 billion ($3.6 ($69 billion). billion) to `369 billion ($8.1 billion). The annual urban sanitation market is projected to increase similarly, from Figure 4.4 indicates that the estimated annual market size `138 billion ($3.0 billion) to `314 billion ($6.9 billion), in for sanitation products and services ranges from `300 billion the same period. The key indicators of the potential market ($6.6 billion) in 2007 to `683 billion ($15.1 billion) in 2020. and its components are summarized in Table 4.1. FiguRE 4.4 PROJECTED GROWTH OF ANNUAL SANITATION MARKET, 2007-20 2020, O&M (`292 billion), 43% 2007, O&M (`77 billion), 26% 2020, Infrastructure (`391 billion), 57% 2007, Infrastructure (`223 billion), 74% www.wsp.org 65 Economic Impacts of Inadequate Sanitation in India Sanitation Markets TABLE 4.1 SUMMARY OF POTENTIAL SANITATION MARKET IN INDIA IN 2009, 2012, 2015, AND 2020 2009 2012 2015 2020 Sanitation indicators (percent) Household with sewer connections 8.7 11.2 14.5 20.5 Household using community toilets 13.1 11.8 8.8 3.6 Household without toilet facilities 22.5 0.3 0.0 0.0 Wastewater treated 31.0 42.4 54.8 80.3 Annual market size (` billion) 484 392 470 683 Household 363 268 312 452 Community (toilets) 88 72 72 73 City (wastewater collection and treatment) 32 51 86 157 investments (` billion) 378 235 272 391 Household 306 170 177 232 Community (toilets) 44 20 19 21 City (wastewater collection and treatment) 28 45 76 138 Operations and maintenance (` billion) 105 157 198 292 Household 57 98 135 220 Community (toilets) 45 53 53 52 City (wastewater collection and treatment) 4 6 10 19 66 India Impact Study Economic Impacts of Inadequate Sanitation in India Sanitation Markets Over time, the share of spending on household toilets and Of the annual city wastewater collection and treatment community toilets is expected to decline, and the share of expenditures in 2009, `25 billion (77 percent) was for new spending on wastewater collection and treatment is expected infrastructure, `3.4 billion (10 percent) for infrastructure to rise, as presented in Figure 4.5. replacement, and `4 billion (13 percent) for annual operation and maintenance. Over time, the distribution of spending is The decline in share of expenditure is expected to be relatively projected to tilt in favor of infrastructure replacements and greater for community toilets than for household toilets as operation and maintenance as new wastewater collection and households using community toilets move to private toilets. treatment infrastructure is built up. In 2015, new investment The shares will stabilize after all households have moved is expected to cost `76 billion, replacements `8.7 billion, to private toilets connected to sewer or septic tanks with and operation and maintenance `10 billion. By 2020, new soakaways, and when all of the wastewater that is generated wastewater investments will potentially cost `119 billion is collected and treated. In all likelihood, these goals will be (76 percent), replacements `18 billion (12 percent), and achieved after 2020. operation and maintenance `19.5 billion (12 percent), for FiguRE 4.5 DISTRIBUTION OF ANNUAL SANITATION MARKET, 2009-20 800 700 600 500 Annual market 400 300 200 100 0 09 10 11 12 13 14 15 16 17 18 19 20 Year Household Community (toilets) City (wastewater collection and treatment) (in ` billion) www.wsp.org 67 Economic Impacts of Inadequate Sanitation in India Sanitation Markets FiguRE 4.6 PROJECTED TRENDS IN POTENTIAL ANNUAL SANITATION ExPENDITURES ON INFRASTRUCTURE, REPLACEMENT, AND OPERATIONS AND MAINTENANCE, 2007-20 450 400 350 300 Annual expenditure 250 200 150 100 50 0 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Year New infrastructure Replacement Annual O&M (in ` billion) a total wastewater collection and treatment expenditure of CUMULATIVE SANITATION MARKET `157 billion. While creating the infrastructure, whether at As mentioned above, the cumulative sanitation market, the household or the city level, will dominate the market starting from 2007, is expected to reach `3.9 trillion by 2015 during the initial years, over time the share of expenditures on and `6.9 trillion by 2020. Of this total cumulative market infrastructure replacements and operation and maintenance size, the cumulative market of household toilets from 2007 will increase, as presented in Figure 4.6. is projected to be `2.8 trillion by 2015 and `4.8 trillion by 2020, as presented in Figure 4.7. 68 India Impact Study Economic Impacts of Inadequate Sanitation in India Sanitation Markets FiguRE 4.7 PROJECTED TRENDS IN POTENTIAL CUMULATIVE SANITATION ExPENDITURES AT HOUSEHOLD, COMMUNITY (TOILETS), AND CITY LEVELS, 2007-20 5.0 4.5 4.0 3.5 Cumulative expenditure 3.0 2.5 2.0 1.5 1.0 0.5 0.0 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Year Household Community (toilets) City (wastewater collection and treatment) (in ` trillion) Community toilets are projected to attract a cumulative The share of cumulative expenditures consisting of new investment of ` 665 billion by 2015 and ` 1 trillion infrastructure is projected to fall, from 75 percent (`883 by 2020, while wastewater collection and treatment billion) in 2009, to 65 percent (`2.5 trillion) in 2015, has the potential to reach ` 440 billion by 2015 and and to 60 percent (`4.1 trillion) in 2020, as presented `1 trillion by 2020. in Figure 4.8. www.wsp.org 69 Economic Impacts of Inadequate Sanitation in India Sanitation Markets FiguRE 4.8 PROJECTED TRENDS IN POTENTIAL CUMULATIVE SANITATION ExPENDITURES ON INFRASTRUCTURE, REPLACEMENT, AND OPERATIONS AND MAINTENANCE, 2007-20 4,500 4,000 3,500 Cumulative expenditures 3,000 2,500 2,000 1,500 1,000 500 0 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Year New infrastructure Replacement Cumulative O&M since 2007 (in ` billion) The share of replacement expenditures is projected to rise from of operation and maintenance expenditures will rise from `26 billion in 2009 to `222 billion in 2020, and the share `273 billion in 2009 to `2.5 trillion in 2020. 70 India Impact Study Economic Impacts of Inadequate Sanitation in India 5. Conclusion and Areas for Further Research SUMMARY OF FINDINGS are equivalent of about 3.9 percent of the GDP, or `1,321 The annual economic impact of inadequate sanitation in India ($29) per capita in 2006. estimated in this report is `2.44 trillion ($53.8 billion). This implies an annual impact of `2,180 ($48) per capita. The poor in India have to bear substantial adverse impacts on their lives, health, and scarce financial resources because This estimated impact is equivalent to 6.4 percent of the of inadequate sanitation. Diseases caused by inadequate country’s GDP in 2006. Monetary losses, a subset of economic sanitation affect poor households more than others because the losses, are estimated to be `364 billion ($8 billion), or about poor have relatively lower access to sanitary toilets, hygiene- 1 percent of the GDP. Of the total impact, the loss of flow related resources and practices, and clean and sufficient water. of 2006 economic value makes up 46 percent of the total Poorer families tend to lose wages and spend precious resources impact, equivalent to 3 percent of the GDP, the balance on treating related illnesses—impacting their well-being being the discounted present value of flow of losses incurred much more severely than that of their counterparts in higher in later years. socioeconomic classes. Within poorer households, children are most affected. The per capita losses related to health are `1,562 ($34.47), while losses related to water are `171 ($3.78), those related to In the coming decade, the sanitation market is likely to play access time are `436 ($9.61), and those related to tourism are an important role in the local economy. Its potential annual `11 ($0.24). A substantial 54 percent of per capita and total market size is expected to increase after large investments economic losses reflect economic loss from premature deaths are made in the initial years to provide improved toilets to due to inadequate sanitation and hygiene. all. The annual market is expected to rise from `0.39 trillion ($8.7 billion) in 2012 to `0.68 trillion ($15 billion) in 2020. Previous research shows that investments in sanitation yield The cumulative market size for the period of 2007 to 2012 is large benefits, which in low-income countries are at least five expected to be `2.58 trillion ($57 billion); for the 2007-2015 times higher than the amounts invested (Hutton, Haller, and period `3.88 trillion ($86 billion); and for the 2007-2020 Bartram, 2007). In India, additional sanitation and hygiene period `6.87 trillion ($151.6 billion). (hand washing with soap) interventions in 2006 would have prevented 346,000 deaths and 338 million cases of diseases POLICY PRIORITIES FOR and saved at least 1.7 billion days of time lost in 2006. It SANITATION INVESTMENTS is also estimated that up to `1.48 trillion ($32.6 billion) of The above results underline the substantial economic losses annual economic gains could result from a combination of that India experiences as a result of poor sanitation. The sanitation and hygiene interventions; these interventions Government of India has been alive to this issue and has would need to include access to improved toilet facilities, made major investments in rural sanitation since the mid- hygiene education, and behavior change (including hand 1980s. Its national flagship program, the Total Sanitation washing with soap), improved domestic water quality, Campaign, now covers all districts of the country. Moreover, improved water supply, improved food handling, and safe in order to accelerate achievement of “total� sanitation, in confinement and disposal of fecal matter (wastewater/sludge 2004 the campaign instituted a fiscal award called Nirmal collection, treatment, and disposal). The benefits would Gram Puraskar (“Clean Village Award�), which has resulted result from improvements in health, domestic water supply in a shift from building more toilets to making communities and quality, access time, and tourism. Altogether, these gains totally sanitized. www.wsp.org 71 Economic Impacts of Inadequate Sanitation in India Conclusion and Areas for Further Research Between 1999 and 2008, the national government allocated in the sector have. Apart from public investments, policy to this campaign about `4,400 crore ($1 billion), and its direction for improved sanitation and hygiene, in managing current annual investment is about `1,100-1,200 crore the full cycle of safe collection, conveyance, and disposal of ($250 to $270 million).16 While the achievements have been human excreta, is likely to crowd in significant household laudable—more than 60 percent toilet coverage in rural and private corporate investments. areas—the sector is struggling with the issues of maintaining momentum in improving access, post-construction AREAS NEEDING FURTHER RESEARCH operations and maintenance, sustaining behavior change, The current exercise also points to a number of areas for and other issues of sustainability. further research to strengthen the analysis of impacts and gains from mitigation actions in India. Many aspects of life However, priority was not accorded explicitly to urban related to the impacts of sanitation are not well documented sanitation until as late as 2008, when the National Urban in existing general surveys. Sanitation-specific surveys Sanitation Policy was approved by the government. The two usually do not cover topics that give information about the urban flagship programs—the Jawaharlal Nehru National adverse impacts of inadequate sanitation. Such information Urban Renewal Mission (for 63 cities) and the Urban should be collected routinely at the national, state, and Infrastructure Development Scheme for Small and Medium local levels. Workplace sanitation is another area that needs Towns for other urban areas—are sources of investments attention in data collection. Secondly, empirical research in water and sanitation by states and cities. The National on the relationship between sanitation and its impacts, Urban Sanitation Policy explicitly encourages states to including potential gains from good sanitation, could benefit develop with their sanitation strategies, help cities prepare from integrated information sources that combined physical, citywide sanitation plans, and make infrastructure and psychological, and economic aspects. This could guide local software investments to rapidly improve urban sanitation. policy and the implementation of plans. The results of a National Sanitation Rating Survey (2009- Other areas deserving further study and other unmet 2010) of 423 Class I cities have further raised awareness research needs in India include: about urban sanitation and propelled action from state and city stakeholders. It is expected that further priority will be • Longitudinal data from repeat surveys, which is accorded to infrastructure and behavior change in urban needed on education, health, impacts on lifetime sanitation over the coming years. opportunities, future incomes, and sanitation. • Epidemiological studies are needed to estimate disease This study confirms that such investments as have been made risk reduction and other gains from sanitation and in rural sanitation, and those that are intended to be made hygiene interventions at the total-population level. in urban sanitation, are critical public investments. Apart • For refining economic impacts related to health, data from increased investments, greater efforts are required in is needed on seasonal variations in the incidence of making these investments effective, including targeting diseases, their duration, the number of days an ill reductions in morbidity and mortality, mitigating impacts person is treated by different providers, and the costs on water resources, improving welfare, and reducing impacts of treatment at different providers. on tourism. The ESI analysis also provides this framework • Detailed data needs to be collected about school for periodic monitoring, since investments in sanitation enrollment by gender, the quality of school sanitation, must result in preventing economic losses apart from the reasons for school absence, and the welfare impacts benefits gained in the noneconomic dimensions. of inadequate sanitation on school-age children. • Surveys of potential tourist visits should include The potential sanitation market described in this report also sanitary conditions, tourists’ inclination to revisit points to the economic potential that future investments locations, alternate choices, and so on. 16 Figures from the Department of Drinking Water Supply’s Outcome Budget 2009-10. 72 India Impact Study Economic Impacts of Inadequate Sanitation in India Conclusion and Areas for Further Research The proposed National Sample Survey on sanitation is a The ongoing ESI Options Study in India is expected welcome step in filling some of the above gaps in data. to complement the findings of the current ESI Impact Findings from the ongoing Census 2011 are also expected to Study, especially in assessing the effectiveness of sanitation provide better data on sanitation-related indicators. Finally, technologies at the household level and programmatic the next rounds of the National Family Health Survey will approaches at the community level and in informing help assess the incremental progress and impacts on different policies about improved effectiveness of current and future dimensions of quality of life that the current exercise has investments in sanitation and behavior change in the begun addressing. country’s rural and urban areas. www.wsp.org 73 Trends in Impacts of Inadequate Economic the Indian Water SectorSanitation in India A Critical Review Annexes Annex 1: Water Quality Standards TABLE A.1 WATER QUALITY STANDARDS AND DESIGNATED-BEST-USE Designated-best-use Class of water Criteria Drinking water source without A Total Coliforms Organism MPN/100ml shall be 50 or less; pH between conventional treatment but 6.5 and 8.5; Dissolved Oxygen 6 mg/l or more; Biochemical Oxygen after disinfection Demand 5 days 20°C 2 mg/l or less Outdoor bathing (organized) B Total Coliforms Organism MPN/100ml shall be 500 or less; pH between 6.5 and 8.5; Dissolved Oxygen 5 mg/l or more; Biochemical Oxygen Demand 5 days 20°C 3 mg/l or less Drinking water source after C Total Coliforms Organism MPN/100ml shall be 5,000 or less; pH conventional treatment between 6 and 9; Dissolved Oxygen 4 mg/l or more; Biochemical and disinfection Oxygen Demand 5 days 20°C 3 mg/l or less Propagation of wildlife and fisheries D pH between 6.5 and 8.5; Dissolved Oxygen 4 mg/l or more Free Ammonia (as N) 1.2 mg/l or less Irrigation, industrial cooling, E pH between 6.0 to 8.5; Electrical Conductivity at 25°C micro mhos/cm controlled waste disposal Max. 2250; Sodium Absorption Ratio Max. 26; Boron Max. 2 mg/l Below E Not meeting A, B, C, D, and E criteria Source: Central Pollution Control Board website, www.cpcb.nic.in. 74 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.2 STANDARDS FOR DRINKING WATER IN INDIA AND GUIDELINES OF WORLD HEALTH ORGANIZATION Parameter BiS, indian Standards World Health Organization (iS 10500:1991) (WHO guideline) Desirable limit Permissible limit Maximum allowable concentration Color 5 Hazen Units 25 Hazen Units 15 True Color Units Turbidity 5.0 NTU 10 NTU 5.0 NTU pH 6.5-8.5 No relaxation 6.5-8.5 Total hardness (as CaCO3 ) 300 mg/l 600 mg/l 500 mg/L Chlorides (as Cl) 250 mg/l 1,000 mg/l 250 mg/L Residual-free chlorine 0.2 mg/l - - (When protection against viral infection is required it should be min. 0.5 mg/l) Dissolved solids 500 mg/l 2,000 mg/l 1,000 mg/l Calcium (as Ca) 75 mg/l 200 mg/l - Sulphate (as SO42-) 200 mg/l 400 mg/l 400 mg/l Nitrate (as NO3-) 45 mg/l 100 mg/l 10 mg/l Fluoride (as F-) 1.0 mg/l 1.5 mg/l 1.5 mg/l Phenolic compounds (as C6H5OH) 0.001 mg/l 0.002 mg/l - Anionic detergent (as MBAS) 0.2 mg/l 1.0 mg/l - Mineral oil 0. 01 mg/l 0.03 mg/l - Alkalinity 200 mg/l 600 mg/l - Boron 1.0 mg/l 5.0 mg/l - Micro pollutants (heavy metals and pesticides) Zinc (as Zn) 5.0 mg/l 15 mg/l 5.0 mg/l Iron (as Fe) 0.3 mg/l 1.0 mg/l 0.3 mg/l Manganese (as Mn) 0.1 mg/l 0.3 mg/l 0.1 mg/l Copper (as Cu) 0.05 mg/l 1.5 mg/l 1.0 mg/l Continued on Page 76 www.wsp.org 75 Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.2 STANDARDS FOR DRINKING WATER IN INDIA AND GUIDELINES OF WORLD HEALTH ORGANIZATION (CONTINUED) Parameter BiS, indian Standards World Health Organization (iS 10500:1991) (WHO guideline) Desirable limit Permissible limit Maximum allowable concentration Arsenic (as As) 0.05 mg/l No relaxation 0.05 mg/l Cyanide (as CN) 0.05 mg/l No relaxation 0.1 mg/l Lead (as Pb) 0.05 mg/l No relaxation 0.05 mg/l Chromium (as Cr6+) 0.05 mg/l No relaxation 0.05 mg/l Aluminium (as Al) 0.03 mg/l 0.2 mg/l 0.2 mg/l Cadmium (as Cd) 0.01 mg/l No relaxation 0.005 mg/l Selenium (as Se) 0.01 mg/l No relaxation 0.01 mg/l Mercury (as Hg) 0.001 mg/l No relaxation 0.001 mg/l Total pesticides Absent 0.001 mg/l - Sodium - - 200 mg/l Aldrin and dieldrin - - 0.03 µg/l DDT - - 1.0 µg/l Lindane - - 3.0 µg/l Methoxychlor - - 30.0 µg/l Benzene - - 10.0 µg/l Hexachlorobenzene - - 0.01 µg/l Pentachlorophenol - - 10.0 µg/l Source: CPCB, 2007; Bureau of Indian Standards. 76 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes Annex 2: Change in Infant Mortality and Under-five Mortality FiguRE A.1 INFANT AND UNDER-FIVE MORTALITY RATES IN INDIA, 1992-93 TO 2005-06 120 109.4 94.7 100 80 74.3 78.5 60 67.5 57 40 20 0 1992-93 1998-99 2005-06 Infant mortality (per 1,000 live births) Under-five mortality (per 1,000 live births) Source: Based on NFHS 2005-06 (Measure DHS and IFC Macro, 2008). www.wsp.org 77 Economic Impacts of Inadequate Sanitation in India Annexes Annex 3: Diseases and Health Problems Related to Sanitation and Hygiene TABLE A.3 DISEASES AND HEALTH PROBLEMS RELATED TO SANITATION AND HYGIENE Disease/health impairment information about disease/health impairment Diarrhea 88% of diarrhea is attributed to unsafe water supply, inadequate sanitation, and hygiene. Improved water supply reduces diarrhea morbidity by 6% to 25%, if severe outcomes are included. Improved sanitation reduces diarrhea morbidity by 32%. Hygiene interventions including hygiene education and promotion of hand washing can lead to a reduction of diarrhea cases by up to 45%. Improvements in drinking water quality through household water treatment, such as chlorination at point of use, can lead to a reduction of diarrhea episodes by 35% and 39%. Campylobacter spp. Diarrhea, occasionally bloody and severe. Cramping abdominal pain, fever, malaise. Shigelladysenteriae Severe abdominal pain, watery diarrhea, or stools containing blood. Giardia spp. Acute onset of diarrhea, abdominal cramps, bloating and flatulence, malaise, weight loss. E. coli O157:H7 Severe bloody diarrhea and abdominal cramps; sometimes the infection causes non-bloody diarrhea or no symptoms. Cryptosporidium spp. Diarrhea, mild abdominal pain, mild fever. Helicobacter pylori Nausea, abdominal pain, gastritis, hypochlorhydria. Legionella spp. Fever, cough, prostration, diarrhea, pleuritic pain. HIV/AIDS With inadequate sanitation and hygiene people afflicted with HIV/AIDS become more susceptible to opportunistic infections. As a result, their health and quality of life suffers. Good sanitation and hygiene are important for maintaining health, productivity, and quality of life of people living with HIV/AIDS. Schistosomiasis An estimated 160 million people are infected with schistosomiasis. It is strongly related to unsanitary excreta disposal and absence of nearby sources of safe water. Basic sanitation reduces the disease by up to 77%. Intestinal helminthes (ascariasis, Access to safe water and sanitation facilities and better hygiene practice can reduce morbidity trichuriasis, hookworm) from ascariasis by 29% and hookworm by 4%. Campylobacteriosis Campylobacteriosis is a severe form of diarrhea that occurs worldwide. Sanitation and personal and food hygiene as well as safe water supply are important in its prevention. Campylobacteriosis is an infection of the gastrointestinal tract. Symptoms of the infection include diarrhea (often including the presence of mucus and blood), abdominal pain, malaise, fever, nausea, and vomiting. Death from campylobacteriosis is rare and is more likely in the very young, the very old, or those already suffering from a serious disease such as AIDS. 78 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.3 DISEASES AND HEALTH PROBLEMS RELATED TO SANITATION AND HYGIENE (CONTINUED) Disease/health impairment information about disease/health impairment Cholera Cholera is an acute infection of the intestine, which begins suddenly with painless watery diarrhea, nausea, and vomiting. Most people who become infected have very mild diarrhea or symptom-free infection. Malnourished people in particular experience more severe symptoms. Severe cholera cases present with profuse diarrhea and vomiting. Severe, untreated cholera can lead to rapid dehydration and death. If untreated, 50% of people with severe cholera will die, but prompt and adequate treatment reduces this to less than 1% of cases. Hepatitis Hepatitis, a broad term for inflammation of the liver, has a number of infectious and non-infectious causes. Two of the viruses that cause hepatitis (hepatitis A and E) can be transmitted through water and food; hygiene is therefore important in their control. Among the infectious causes, hepatitis A and hepatitis E are associated with inadequate water supplies and poor sanitation and hygiene, leading to infection and inflammation of the liver. The illness starts with an abrupt onset of fever, body weakness, loss of appetite, nausea, and abdominal discomfort, followed by jaundice within a few days. The disease may range from mild (lasting 1-2 weeks) to severe disabling disease (lasting several months). In areas highly endemic for hepatitis A, most infections occur during early childhood. The majority of cases may not show any symptoms; fatal cases due to fulminant acute hepatitis are rare. Nearly all patients recover completely with no long-term effects. Leptospirosis Leptospirosis is a bacterial disease that affects both humans and animals. The early stages of the disease may include high fever, severe headache, muscle pain, chills, redness in the eyes, abdominal pain, jaundice, hemorrhages in skin and mucous membranes (including pulmonary bleeding), vomiting, diarrhea, and a rash. Pathogenic Leptospira spp. cause leptospirosis. Human infection occurs through direct contact with the urine of infected animals or by contact with a urine-contaminated environment, such as surface water, soil, and plants. Leptospires can gain entry through cuts and abrasions in the skin and through mucous membranes of the eyes, nose, and mouth. Human-to-human transmission occurs only rarely. Malnutrition Malnutrition is a major health problem, especially in developing countries. Water supply, sanitation, and hygiene, given their direct impact on infectious diseases, especially diarrhea and intestinal worms, are important for preventing malnutrition. Both malnutrition and inadequate water supply and sanitation are linked to poverty. The impact of repeated or persistent diarrhea on nutrition-related poverty and the effect of malnutrition on susceptibility to infectious diarrhea are reinforcing elements of the same vicious circle, especially amongst children in developing countries. Spinal injury Deformities of the spine may also occur when water has to be fetched and carried long distances over a considerable period of time. Trachoma Trachoma is an infection of the eyes that may result in blindness after repeated re-infections. It is the world’s leading cause of preventable blindness and occurs where people live in overcrowded conditions with limited access to water and healthcare. Trachoma spreads easily from person to person and is frequently passed from child to child and from child to mother within the family. Infection usually first occurs in childhood but people do not become blind until adulthood. The disease progresses over years as repeated infections cause scarring on the inside of the eyelid, earning it the name of the “quiet disease.� The eyelashes eventually turn in. This causes rubbing on the cornea at the front of the eye. The cornea becomes scarred leading to severe vision loss and eventually blindness. Typhoid and paratyphoid Typhoid and paratyphoid fevers are infections caused by bacteria which are transmitted from enteric fevers feces to ingestion. Clean water, hygiene, and good sanitation prevent the spread of typhoid and paratyphoid. Contaminated water is one of the pathways of transmission of the disease. Source: WHO, 2008a, 2008b, 2008c; and United States, CDC, “Emergency Preparedness and Response,� http://www.bt.cdc.gov. www.wsp.org 79 Economic Impacts of Inadequate Sanitation in India Annexes Annex 4: Health Reliable estimates for mortality by cause of death for children Organization (WHO, 2008a). Age-specific death rates for below five years and population above five years for 2006 2004 are estimated by dividing deaths from diseases by total are not available. This study estimates the disease-specific population in different age groups. To estimate death from mortality by using disease-specific death rates for 2004 from various diseases in 2006, age-specific death rates for 2004 are the Global Burden of Disease study by the World Health multiplied by age-specific populations. TABLE A.4 DISTRIBUTION OF POPULATION ACROSS AGE CLASSES (PERSONS) Population Total population Children under 5 years Children 5-14 years Population 15+ years India 1,117,734,000 125,146,982 265,318,060 727,268,955 Rural 793,250,994 95,053,046 199,087,334 499,110,614 Urban 324,483,006 30,093,936 66,230,726 228,158,340 Wealth Quintile-1 213,491,297 29,509,127 62,625,342 121,356,828 Wealth Quintile-2 223,193,287 27,521,502 59,396,324 136,275,461 Wealth Quintile-3 226,207,844 25,090,248 53,381,326 147,736,270 Wealth Quintile-4 232,044,077 23,782,141 49,172,733 159,089,203 Wealth Quintile-5 222,797,493 18,573,106 39,046,468 165,177,921 Source: Estimates based on population estimates from TGPP and NCPP (2006); and age and wealth-group distributions from the National Family Health Survey-3. Note: Wealth Quintile-1 is the bottom 20% and Wealth Quintile-5 is the top 20%. For details of methodology of wealth groups see NFHS-3 Final Report. 80 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.5 CAUSE-SPECIFIC DEATHS IN CHILDREN UNDER FIVE AND DEATHS FROM DIARRHEA IN POPULATION 5+ YEARS Children below 5 years Deaths Percent of age-group total Diarrhea 449,345 19.83 ALRI 319,759 14.11 Intestinal nematode infections 449 0.02 Trachoma 6 0.00 Skin diseases 432 0.02 Measles 129,888 5.73 Malaria 4,733 0.21 Protein energy malnutrition 10,372 0.46 Low birth weight 372,043 16.41 Other perinatal conditions 530,916 23.42 Other causes 448,601 19.79 Total deaths, children below 5 years 2,266,544 100.00 Deaths from all causes, other than perinatal deaths 1,363,585 60.16 Population 5+ years Diarrhea, population 5-14 years 1,217 0.32 Diarrhea, population 15+ years 60,619 0.74 Source: Estimates are based on cause-specific death rates from the 2004 Global Burden of Disease study (updated 2008) of the World Health Organization (WHO, 2008a) and age-specific population for 2006. Note: Perinatal deaths are defined as the sum of deaths due to low birth weight and other perinatal conditions. Sanitation Attributable Fraction of 88 percent was applied to malnutrition, and the impact of malnutrition on relative diarrhea deaths to estimate diarrhea deaths due to inadequate risk of all-cause and cause-specific mortality (Larsen, 2008; sanitation (Hutton, et al., 2008). This gives direct mortality Hutton et al., 2008; Prüss-Üstün, et al., 2008). due to diarrhea. Indirect deaths due to malnutrition induced by diarrhea, intestinal worms, and other infectious diseases Malnutrition can also increase susceptibility to diarrhea, related to inadequate sanitation in children under age five intestinal worms, and other infections resulting from were estimated using an approach that looks at the impact inadequate sanitation or increase their severity, resulting in of diarrhea, intestinal worms, and other infections on a positive feedback loop, as illustrated in Figure A.2 www.wsp.org 81 Economic Impacts of Inadequate Sanitation in India Annexes FiguRE A.2 INDIRECT HEALTH IMPACTS VIA MALNUTRITION Diarrhea, intestinal Increased risk of illnesses worms, other infections and deaths from diarrhea, Malnutrition ALRI, malaria, measles, and from inadequate sanitation other diseases Malnutrition can be measured by using a variety of measures. the WAZ score by 35 percent. A counter-factual WAZ One of the popular measures is the Weight-for-Age Z-score score was calculated under the scenario where underweight (WAZ), which measures how many standard deviations away due to diarrhea and other sanitation-related infections is a child’s weight compared to an international reference is eliminated in underweight children. Weight, age, and weight for children of the same age. This study uses this WAZ information for children in India is available from the measure of malnutrition along with results from previous National Family Health Study-3 data. Using this information, studies to estimate the fraction of deaths and disease cases counter-factual WAZ scores were estimated using individual that can be attributed to malnutrition induced by diarrhea children’s records from the NFHS-3 survey (2005-06), and (Fishman, et al., 2004). This fraction is the Attributable the percentage distributions of children in the observed and Fraction of deaths and disease cases. Attributable Fraction for counter-factual WAZ scenarios were estimated for WAZ each disease is multiplied by the total deaths from a disease categories corresponding to mild, moderate, and severe to estimate the number of deaths from the disease that can malnutrition status. be attributed to malnutrition induced by diarrhea. Health and medical literature reports impacts of malnutrition Studies of the impact of diarrhea on nutritional status on illness and deaths. A review and meta-analysis by Fishman typically find that diarrhea-related infections account for and others reports increased risk of mortality for various 20 to 50 percent of a child’s weight deficit (Larsen, 2008; diseases due to malnutrition (Fishman et al., 2004). According Hutton et al., 2008; Prüss-Üstün et al., 2004) (Whitehead, to this study, compared to children with WAZ scores greater Rowland, and Cole, 1976; Black, Brown, and Becker, 1984; than -1 (children with weight one standard deviation below Becker, Black, and Brown, 1991). A midpoint of 35 percent the standard international median weight), children who are of the weight deficit attributable to diarrhea and intestinal mildly underweight (WAZ between -1 and -2) are two times helminthes is used in this study. Hence, if there were no more likely to die from ALRI; children who are moderately diarrhea and intestinal helminthes, 35 percent of children’s underweight (WAZ between -2 and -3) are four times more weight deficit would have been eliminated.17 This will increase likely; and children who are severely underweight (WAZ 17 Weight deficit is the difference between the standard age-specific median international weight and the actual weight of a child. 82 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.6 RELATIVE RISK OF DEATH FROM SEVERE, MODERATE, AND MILD UNDERWEIGHT (WAZ) IN CHILDREN BELOW FIVE YEARS Weight for age Z-score (WAZ) Diarrhea ALRi Measles Malaria All causes <-3 SD 12.5 8.09 5.22 9.49 8.72 -2 to -3 SD 5.4 4.03 3.01 4.48 4.24 -1 to -2 SD 2.3 2.01 1.73 2.12 2.06 >-1 SD 1.0 1.00 1.00 1.00 1.00 Source: Fishman et al., 2004. less than -3) are eight times more likely to die from ALRI. result in low birth weight in the newborn, for example The study also reports the relative risk of death by measles, diarrhea or intestinal worms in pregnant women may cause malaria, diarrhea, and all-cause mortality for children with premature birth and low birth weight (Bhargava, Singh, and mild, moderate, and severe malnutrition compared to the Saxena 1991; Bundy, et al., 2004; Hotez, et al., 2006). Low reference category of those with WAZ >-1. birth weight is associated with poor prognosis and health in children, and it also affects social and economic outcomes A residual category for deaths from “other causes� was when low birth weight infants grow up to be adults (Almond, constructed by deducting deaths from diarrhea, ALRI, Chay, and Lee, 2005; Currie, et al., 2008; Fishman et al., malaria, measles, and perinatal causes from all-cause mortality. 2004). This pathway was not explored in the present study. Perinatal deaths18 related to low weight are more likely to be of fetal origin and not likely to be caused by malnutrition Information on the prevalence of observed and counter-factual induced by diarrhea among children, and are thus excluded WAZ and on the relative risks was used to estimate Attributable from this study (Fishman, et al., 2004). It is possible that Fractions for all-cause mortality, cause-specific mortality, and sanitation-related diseases among pregnant women may cause-specific morbidity using the following formula: 18 Perinatal deaths are stillbirths and deaths of infants in the first seven days after birth. www.wsp.org 83 Economic Impacts of Inadequate Sanitation in India Annexes Here Pi is the prevalence of the underweight risk categories and babies with low birth weight, and impaired lactation in RRi is the relative risk of death or illness for the underweight pregnant and lactating women. International visitors are categories shown in the preceding tables. In the formula also affected by worm infections. Fecal-oral route related to above, Pic is the counter-factual prevalence of underweight in human excreta, lack of hygiene, and contaminated water is each of the WAZ categories. The Attributable Fraction (AF) the major transmission mechanism. Prevention of intestinal of deaths and illnesses from malnutrition is the fraction of worm infections is reported to lead to gains in school deaths or illnesses caused by malnutrition. attendance and other outcomes (Hotez, et al., 2008; Hotez, et al., 2006; DCPP, 2008; Miguel and Kremer, 2004; Ansart Attributable Fractions for all-cause and cause-specific et al., 2005). deaths were multiplied by the deaths from all causes, ALRI, Deaths from intestinal nematodes (helminthes) are estimated measles, and malaria deaths in children below five years to by applying the percentage distribution of cause of death to estimate the deaths attributable to malnutrition resulting total mortality. This is similar to the estimation of total deaths from diarrhea and other infections resulting from inadequate by diarrhea, ALRI, and other diseases described earlier. sanitation. An estimated 88 percent of diarrhea is caused by inadequate sanitation. This fraction was applied to indirect Morbidity burden of disease cases deaths from malnutrition to estimate the deaths from all due to inadequate sanitation causes, ALRI, measles, and malaria deaths attributable to Increased risks for illness in children below age five due to inadequate sanitation in children below five years of age. underweight are also reported in the study by Fishman and Deaths from the residual category of “other causes� due to co-authors (Fishman, et al., 2004). Relative risks for illnesses inadequate sanitation were estimated by deducting deaths due to malnutrition are reported for cases of ALRI, diarrhea, due to diarrhea, ALRI, malaria, and measles from all-cause and malaria. For example, a WAZ less than -2 nearly doubles non-perinatal deaths due to inadequate sanitation. Indirect the risk of being ill from ALRI. impacts via malnutrition are estimated only in children below five years of age, due to a lack of relevant information for Cases of ALRI and malaria indirectly attributable to poor other age groups. sanitation via malnutrition were estimated using an approach similar to the estimation of indirect mortality described above. This study also estimated the direct impact from intestinal Direct impact of inadequate sanitation manifested as cases helminthes (worms) and trachoma. Intestinal helminthes of diarrhea in children below age five and in the population (worms) are important causes of growth retardation, cognitive above age five were estimated using children’s records and impairment, chronic pain, malnutrition, and poor health, different age-group population figures at the national and especially among children. Intestinal worm infections can sub-population levels in NFHS-3. The proportion of children cause obstruction of intestinal tracts, requiring surgery. They reporting diarrhea episodes during a two-week recall period, are also a cause of malnutrition, anemia, decreased fertility, reported in NFHS-3 (2005-06), was estimated first. TABLE A.7 RELATIVE RISK OF ILLNESSES FROM UNDERWEIGHT (WAZ) IN CHILDREN BELOW FIVE YEARS Weight for age Z-score (WAZ) Diarrhea ALRi Malaria <-2 SD 1.23 1.86 1.31 >-2 SD 1.00 1.00 1.00 Source: Fishman et al., 2004. 84 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.8 PERCENT OF CHILDREN BELOW FIVE YEARS WITH DIARRHEA DURING A TWO-WEEK RECALL PERIOD AND AVERAGE ANNUAL CASES OF DIARRHEA PER CHILD Population, children <5 years Diarrhea Bloody diarrhea Any diarrhea prevalence prevalence (percent) prevalence (percent) India 7.62 0.81 8.42 Rural 7.50 0.90 8.40 Urban 7.96 0.54 8.49 Source: Estimated from NFHS-3. Average annual cases of diarrhea per child were estimated above age five were not available. These were therefore by multiplying diarrhea prevalence (decimal proportion) estimated using the ratio of diarrhea prevalence in the by 52/2.5. Dividing by 2.5 reflects that reported diarrhea population above five and the population below five. episodes may have started or ended outside the two- Based on regional estimates, this is assumed to be 25 week recall period. Multiplying average annual cases per percent (Hutton et al., 2008). Applying the fraction of child by the number of children below age five yielded diarrhea cases attributable to sanitation (88 percent), the the number of episodes of diarrhea in children below total number of cases of diarrhea attributable to sanitation five in 2006. The diarrhea episodes in the population was estimated. TABLE A.9 ANNUAL CASES OF DIARRHEA ATTRIBUTED TO SANITATION Population Children below 5 years Population 5+ years Total cases India 192,962,706 382,849,175 575,811,881 Rural 146,176,274 268,428,997 414,605,271 Urban 46,786,432 114,420,178 161,206,610 TABLE A.10 TIME SPENT IN ILLNESS DUE TO DIARRHEA Population Children below 5 years Population 5+ years Total years India 2,643,325 5,244,509 7,887,834 Rural 2,002,415 3,677,110 5,679,524 Urban 640,910 1,567,400 2,208,310 www.wsp.org 85 Economic Impacts of Inadequate Sanitation in India Annexes Estimates of episodes of ALRI are based on the estimated be attributed to malnutrition resulting from diarrhea is prevalence rates in NFHS-3 and the number of children estimated based on observed and counter-factual WAZ below age five in 2006. This survey inquires about scores, as explained earlier. two-week prevalence of symptoms of ALRI in children. Responses to these questions are used to make estimates Malaria cases estimated for this report are fever cases of annual cases of ALRI in children below five years. in children below age five that were treated by malaria The prevalence rates are multiplied by 52/2.5 to arrive medicines. (The NFHS-3 asked respondents about treating at an average number of cases per child in 2006. This is fevers in children below age five with malaria medications.) done to reflect that the illness reported in a two-week This method provides a conservative number, because it reference period may start or end outside the reference may leave out some untreated malaria cases due to poor period. Total cases (episodes) of ALRI in children under treatment-seeking behavior in tribal populations (Matta, five are estimated by multiplying the average number of Khokhar, and Sachdev, 2004; Singh, Singh, and Singh, cases per child by the number of children below age five 2003; Sharma et al., 2003; Vijayakumar et al., 2009). With in 2006. The number of children below age is estimated widespread knowledge about the symptoms of malaria, its from the age distribution in NFHS-3 and the estimated severity, and its easily recognized malaria chills, it is likely population in 2006 from census-based projections (TGPP that a high percentage of malaria cases are treated, although and NCP, 2006). The fraction of ALRI cases that can treatment may not be at modern health facilities. TABLE A.11 PERCENT WITH ALRI (TWO-WEEK RECALL), ANNUAL CASES OF ALRI, AND TIME SPENT IN ILLNESS BY CHILDREN BELOW AGE FIVE Population ALRi prevalence in preceding Cases Cases attributable Time spent in 2 weeks (percent) to poor sanitation illness (years) India 5.42 141,303,449 21,974,562 240,817 Rural 5.62 111,080,606 17,875,029 195,891 Urban 4.83 30,222,843 4,099,533 44,926 TABLE A.12 REPORTED INFECTIONS BY INTESTINAL HELMINTHES19 Type of worm Total population Population infection infections in age groups (millions) (millions) at risk (millions) prevalence 1-4 5-9 10-14 15+ All years years years years years Ascariasis 1,027 808 14% 15 18 17 89 140 Trichuriasis 1,027 398 7% 8 9 9 47 73 Hookworm 1,027 534 7% 2 5 8 56 71 Source: de Silva et al., 2003. 19 High intensity infection is defined to result in at least 20-40 worms per stool load for ascariasis, at least 250-500 worms per stool load for trichuriasis, and at least 80-160 worms per stool load for ancylostomiasis and necatoriasis. 86 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.13 PERCENT OF CHILDREN BELOW FIVE TREATED WITH MEDICINE FOR INTESTINAL WORMS IN A SIx-MONTH RECALL PERIOD Population Children treated for intestinal worms (percent) India 10.88 Rural 10.43 Urban 12.19 Source: Estimates from NFHS-3 (Measure DHS and IFC Macro, 2008). Valuation of premature deaths using 1990 data for the population of blue-collar workers Studies based on the Value of Statistical Life (VOSL) in Chennai gives a VOSL ranging from $1 million to $4.1 approach implicitly or explicitly estimate what people are million (Shanmugam, 1996/97, 1997, 2000, and 2001). In willing to pay for a reduction in chance of death, or what such circumstances, it is recommended that VOSL values be they are willing to accept for an increase in chance of death. transferred from countries where such studies are available Several “willingness to pay� studies ask respondents directly after adjustments for incomes and other factors affecting about what they would be willing to pay for reduction in these valuations. chances of death or disease. Early discussion of this can be found in research by Shelling (1968). Other studies An estimate for VOSL can be obtained from reviews and indirectly estimate what people actually may be accepting meta-analysis that combine results from a large number of for an increased probability of death—for example, by studies, instead of relying on one or a few studies in which negotiating higher wages for a job with higher chances of methods and populations from which samples are drawn death resulting from exposure to hazardous conditions. This could have influenced the values. The high-VOSL cases is the valuation of compensating differentials in labor market presented below are based on the median value reported by using money-risk trade-off. Workers normally expect in the recent review and meta-analysis by Bellavance, to be paid an additional compensation to work in more Georges, and Lebeau (2009). For the medium-VOSL hazardous conditions that increase chances of death, injury case presented below, $3.7 million is transferred with an or illness. Therefore, differences in price of labor (wages) income elasticity of 0.6. This is the median of values used paid for different jobs partly reflect this compensation for by regulatory agencies in the United States mentioned in bearing higher risk to life and health. Other studies capture the review by Viscusi and Aldy (2003). This value is lower extra payments made for additional safety in a toy or a than the median and average values presented in the review car—the price-risk trade-off. People normally pay higher studies by Bellavance and co-authors and Viscusi and Aldy prices for cars with safety features like air-bags, which reduce discussed earlier. the chances of death and injury. For the low-VOSL case presented in the table below, the To assign an economic value to deaths and disease cases estimates are based on a VOSL of $2.35 million in year 2000 resulting from inadequate sanitation, the present study US dollars. This is the lowest VOSL value from an OECD could have used a VOSL estimate. There is, however, a lack country after 1996 presented in the review and meta-analysis of recent, large, representative, population-based VOSL of VOSL studies by Bellavance and co-authors discussed studies for reduction in probability of death and disease in earlier in this sub-section. Per capita gross national income India. Even the number of small sample population- based (GNI) estimates in 2006 for the United States and India studies in India is also low. This prevents constructing from the World Bank were used for VOSL benefit-transfer average VOSL estimates using meta-analysis. A VOSL study (World Bank, 2008a). www.wsp.org 87 Economic Impacts of Inadequate Sanitation in India Annexes The Human Capital Approach aims to capture loss of Present value of lifetime income for the population 5-14 productive human capital, reflected in loss of output due to years is estimated using the weighted average age of 9.5 a premature death. This approach accounts for the economic years. For present value estimation for people 15+ years, loss during the productive years by valuing lost output due a weighted average age for this age group of about 36.84 to premature death. The usual approach for doing this is by years was used, along with a remaining working life from estimating the present value of future earnings of employees. average age to 65 years and the same growth and discount Earnings of employees are a market determined price of rates as for children below five years. labor, influenced by relative bargaining power in the factor markets. Market imperfections may distort market prices, Present value of the expected lifetime contribution to output and earnings of employees may not reflect the contribution by children below five years is `1,754,657 ($38,706). of labor to output. Market distortions of prices have been Present value of expected lifetime contribution to output cited as a reason for not using market prices in cost benefit for persons aged 5-14 years is `1,911,776 ($42,172), for studies, and shadow prices or opportunity cost have been persons aged 15+ it is `1,239,723 ($27,347). These values recommended instead (Drèze and Stern, 1990). Labor share are similar to the value of $39,201 updated to 2006 at 2 of output per worker captures the contribution of labor to percent per year growth from $33,458, used in a 1998 case output better than average compensation of employees. study of deaths from air pollution in Mumbai (Lvovsky, Therefore, in the present study, Human Capital Approach 1998). The base case estimates for the loss of life are based valuations are based on labor share of output per worker. on the Human Capital Approach using unemployment For India this was reported to be 75 percent in 1982 and adjusted labor share of GDP per worker as described. 67 percent in recent studies on macroeconomic growth accounting and productivity in India (Brahmananda, 1982; The Commission on Macroeconomics and Health used Value Virmani, 2004; Bosworth, Collins, and Virmani, 2007). of Statistical Year of Life at three times the per capita GDP in their illustration, while expressing uncertainty about this HCA valuation used in the current study reflects the present multiple of GDP (Commission on Macroeconomics and value of labor share of GDP per worker. Labor share of GDP Health, 2001), but theoretical reasoning is lacking to support per worker of `66,043 ($1,460) for fiscal year 2006-07 is its use in valuation of premature loss of life. Aggregate losses used for this valuation. This is adjusted for unemployment based on these are presented in the following table, primarily in working-age population (15-59 years) using a male to indicate the order of magnitude of the losses if they had worker-population ratio of 76.6 percent.20 This gives the been based on three times GDP per capita. unemployment-adjusted labor share of GDP per worker of `50,589 ($1,119). Corresponding values for rural and urban Healthcare costs of treatment areas are `37,442 ($828) and `84,918 ($1,878). These values Healthcare costs of treatment of diseases are estimated for are used to estimate present value of lost future labor share the cases of diarrhea that are seen by a healthcare provider, of output per worker. Present value is estimated using a real for children below five years, and for the population over five annual growth rate of labor share of output per worker of years. These costs are also estimated for morbidity from ALRI 0.02 (2 percent), annual discount rate of future income of and malaria that is attributed to malnutrition induced by 0.03 (3 percent), and working life from 15-65 years. The diarrhea in children below five years. Morbidity costs include 2 percent real annual growth rate of labor share of output those from treatment of helminthes (ascariasis, trichuriasis, per worker is reasonable given the recent annual growth and hookworms) and trachoma. rate of NDP per worker of well over 3 percent (Virmani, 2004). A midpoint at two years is used for present value The percentages of diarrhea episodes in children below five estimation in the age category for children below five years. years that were treated at a medical facility or pharmacy or 20 The worker-population ratios used in the current study are based on current daily status definition of workers. The National Sample Survey also uses broader definitions based on usual status and weekly status. For example, the worker-population ratio using usual status was 84.2%, compared to 76.6% using the current daily status. 88 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.14 UNIT VALUES FOR ECONOMIC COST OF A PREMATURE DEATH Human Capital Approach (`) Earnings/W uNiTS L Share gDP/W gDP/W Economic Low Base High 0-4 years 1,311,862 1,754,657 3,418,918 5-14 years 1,429,332 1,911,776 3,725,062 15+ years 926,873 1,239,723 2,415,577 VOSL approach: Loss transfer with official exchange rate (`) Low Middle High Income elasticity = 0.6 9,688,330 15,228,492 27,161,238 Income elasticity = 0.8 4,354,424 6,844,453 12,207,631 Income elasticity = 1.0 1,957,098 3,076,243 5,486,726 VOSL approach: Loss transfer with PPP (`) Income elasticity = 0.6 18,892,030 29,695,226 52,963,818 Income elasticity = 0.8 10,608,086 16,674,201 29,739,776 Income elasticity = 1.0 5,956,559 9,362,751 16,699,217 input values of VOSL approach ($) VOSL in OECD 2,353,931 3,700,000 6,599,247 GNI per person in the USA, exchange rate 44,710 44,710 44,710 GNI per person in India, exchange rate 820 820 $820 GNI per person in the USA, PPP 44,070 44,070 44,070 GNI per person in India, PPP 2,460 2,460 2,460 Exchange rate (`/US$) 45.3325 45.3325 45.3325 Note: Earnings/W: Earnings per Worker; L Share GDP/W: Labor Share of GDP per Worker; GDP/W: GDP per Worker. www.wsp.org 89 Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.15 SENSITIVITY OF ECONOMIC LOSS FROM PREMATURE MORTALITY TO VALUATION OF PREMATURE MORTALITY Human Capital Approach Earnings/ unadjusted labor gDP/ 3xgDP/ worker share of gDP/ worker person worker Economic loss from premature mortality (` billion) 987 1,317 2,566 2,648 Economic loss from premature mortality as % of gDP 2.61 3.48 6.79 7.01 VOSL approach: Loss transfer with official exchange rate VOSL in OECD $2,353,931 $ 3,700,000 $6,599,247 Economic loss from mortality using loss transfer 7,442 11,697 20,863 with income elasticity = 0.6 (` billion) Economic loss as % of gDP 19.69 30.95 55.20 Economic loss from mortality using loss transfer with 3,345 5,257 9,377 income elasticity = 0.8 (` billion) Economic loss as % of gDP 8.85 13.91 24.81 Economic loss from mortality using loss transfer with 1,503 2,363 4,214 income elasticity = 1.0 (` billion) Economic loss % of gDP 3.98 6.25 11.15 Note: 3xGDP/person: Three times GDP per person. by a traditional medical practitioner were estimated from providers across categories used in the present study. Medical children’s records of the NFHS-3. Here traditional facilities facilities are predominantly preferred for treatment of diarrhea include Vaidya, Hakim, homeopaths, and other unidentified in children. Using this information, the total number of traditional medical facilities reported by the survey diarrhea cases treated at medical facilities, pharmacies, and respondents. Multiple responses are allowed in NFHS-3 for traditional medical practitioners was estimated. For the facilities where diarrhea was treated. This reflects the fact that population above five years, a treatment rate of 50 percent of more than one medical service provider may treat the same children below five years is used in the absence of empirical episode of diarrhea of a child. Information on the number of evidence. This is likely to give a conservative estimate of days a child is treated by a provider and the number of visits diarrhea treatment cost in this population. The percent of to the provider is not available through this survey. cases treated at different facilities was assumed to be same for the population above five years as for the population below Therefore, only the first medical service provider is used to five years. The estimates for the population above five years estimate the percent distribution of episodes over treatment are derived at national and national subpopulation levels. providers—the first treatment provider is the service provider to whom the child with diarrhea was first taken for treatment. NFHS-3 does not inquire about treatment costs of disease This method is likely to give a good approximation, because episodes. Therefore, estimates are used from a recent study the percentage of children treated at pharmacy and traditional of the cost of illness in five rural and urban locations in providers is low, and evidence from the same survey suggests resource-poor settings in different parts of India (Dror, van little use of multiple sources and switching of medical Putten-Rademaker, and Koren, 2008). This is a study of over 90 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes 2,000 rural and 1,500 urban households with over 4,000 unlikely to significantly influence the overall estimates. illness episodes. Costs for treatment of intestinal helminthes (high intensity infection) and trachoma cases (with visual impairment or This last study provides separate estimates for acute, chronic, blindness) at clinics are based on expert opinion of medical and accidental episodes. It also provides separate estimates practitioners. Treatment costs are `235 and `1,000 per case, for hospitalization, consultations, medicines, and tests. The respectively. It was assumed that the treatment rates are 50 costs are reported for 2005. In the absence of a price index percent for helminthes with high intensity infection and for for medicines and medical services, these costs are adjusted trachoma with visual impairment or blindness. to 2006 using 3.6 percent GDP deflator for 2006. Estimates of treatment cost of acute illnesses, excluding hospitalization A larger number of people are treated for helminthes in costs, are used for estimating the cost of diarrhea treatment. mass treatment campaigns; with the cost of one course of This gives the average treatment cost per episode, excluding treatment assumed to be `15. Taking this into account, the hospitalization, as `452.86. With over 20 percent of acute average cost of treatment per person treated for helminthes cases reporting hospitalization in the above-mentioned was estimated to be `31.42. The estimated costs include study, the average cost with hospitalization is `609.87. The only outpatient costs, due to a lack of data about in-patient study also reports that children below five years have higher treatments. The costs are likely to be conservative. average costs of treatment compared to persons aged 5 to 15, or to those aged 15 to 55. Similarly, the average cost of The estimates of the cost of treatment of ALRI and malaria treatment of an episode at a pharmacy, with only the cost attributable to malnutrition induced by diarrhea and other of medicine, is `312.90. In the absence of studies reporting sanitation-related diseases in children below five years were treatment at traditional medical practitioners, it was estimated in a manner similar to cost of treatment from assumed to be `100 per illness episode of five days based on diarrhea for children below five years. This estimation used the expert opinion of medical practitioners. The percentage costs of treatment per case, duration of illness of four and of illness episodes treated at traditional facilities is less than three days, respectively, and cases treated at medical facilities, 3 percent at the national level, and this choice of cost is pharmacies, and traditional healthcare. TABLE A.16 PERCENT OF DIARRHEA CASES TREATED IN CHILDREN BELOW FIVE YEARS AND PERCENT DISTRIBUTION OF TREATMENT BY PROVIDER TYPE Population, Percent of Percent of cases treated Percent of cases Percent of cases treated children <5 years cases treated at medical facility treated at pharmacy at traditional healthcare India 69.12 74.34 8.72 2.82 Rural 67.47 71.07 8.42 3.03 Urban 73.94 83.01 9.51 2.27 Source: Estimates based on NFHS-3 (Measure DHS and IFC Macro, 2008). www.wsp.org 91 Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.17 PERCENT OF ALRI CASES TREATED IN CHILDREN BELOW FIVE YEARS, AND PERCENT DISTRIBUTION OF TREATMENT BY PROVIDER TYPE Population Percent of Percent of cases treated Percent of cases Percent of cases treated cases treated at medical facility treated at pharmacy at traditional healthcare India 70.94 74.68 7.10 4.13 Rural 68.64 69.99 8.05 4.34 Urban 77.77 86.96 4.63 3.59 Source: Estimates based on NFHS-3 (Measure DHS and IFC Macro, 2008). Welfare and productivity losses for ill persons and to accompany children to seek medical This study valued the loss of adult time at less than the rate help. The time lost by adults in accompanying children to for economic loss of an adult engaged in production, at 30 healthcare was assumed to be one hour per treated case. percent of the full daily valuation based on unemployment- Time lost by adults in caring for ill children was assumed adjusted labor share of GDP per worker. As in prior sanitation to be two hours per day of illness. The proportion of cases studies (Hutton, et al., 2008; Hutton, Haller, and Bartram, seen at a healthcare provider was estimated from NFHS-3 2007; Haller, Hutton, and Bartram, 2007), in this study time survey data. Monetary losses related to productivity loss for lost by children was valued at 50 percent of the adult rate. persons over 15 years were estimated by apportioning the For these valuations, this study used an eight-hour working value of time loss for persons above 5 years into the component day and 250 working days a year. attributable to those above 15 years. Of the population above five years of age, 73.38 percent are above 15 years (NSSO, Labor share of GDP was estimated for national, rural, and 2008). Monetary loss for this population is likely to be less urban areas by first estimating the average wage and number than 100 percent of the value of time loss when they are ill of workers, the wage bills, and the share of rural and urban with diarrhea. This percentage was assumed to be 60.6 percent. wage bills in the total wage bill. It was assumed that rural This is based on worker-to-population ratio for persons over and urban workers are paid the same percent of wages for 15 years. Using these numbers, the portion of value of time their contribution to output—that is, the ratio of wage to lost due to illness that can be attributed as a monetary loss to labor share of output is the same in rural and urban areas. working persons above age 15 was estimated. This was adjusted Thus, labor share of GDP at the national level was divided for unemployment and share of persons above 15 years. into rural and urban components according to their share in the wage bill, and the per-worker labor share of GDP was Productivity losses were estimated at the national level by estimated for rural and urban workers. using a one-hour loss of productivity per day over three weeks for all cases with high-intensity infection.21 As in the case of Productivity losses were estimated for direct loss due to illness diarrhea, less than 100 percent of time losses are likely to be from diarrhea, helminthes, and trachoma and for indirect loss monetary. The percent of adults having monetary losses due to from ALRI and malaria cases. Time loss per case was assessed ill days was assumed to be 60.6 percent. This is based on the for patients, adults accompanying children to healthcare, and workers-to-population ratio for the working-age population adults caring for the ill. Adults also have to spend time to care (NSSO, 2008). These monetary losses were adjusted for World Health Report 1999 mentions that in an Indonesian study, anemic men were found to be 20% less productive than non-anemic men (WHO, 1999). 21 92 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes unemployment. Helminthes infections can cause adverse (WHO, 2008a; Mathers, Lopez, and Murray, 2006). It was effects over long periods of time if left untreated. Therefore, assumed that 50 percent of all trachoma cases were treated these estimates are conservative. and that 10 percent of the cases lead to blindness and can be attributed to 2006. Treated persons are assumed to suffer The value of time for adults is `9.08 per hour. It is `6.68 in a loss of productivity over 10 days of treatment, while rural and `15.49 for urban areas. This value is 30 percent of untreated persons are assumed to suffer productivity losses the value of an hour based on the unemployment-adjusted over the entire year. Also assumed were two hours per day labor share of GDP per worker, 250 workdays a year, and of adult caring during 10 days of treatment for those treated on eight-hour workdays. The value of children’s time was and a half-hour of adult caring for the untreated visually assumed to be half that of adult time. impaired persons. Similar to the estimation for helminthes, monetary loss is estimated for the population above 15 years Trachoma is an eye infection that can potentially cause based on the share of the working-age population in the total blindness if left untreated. Case numbers for follicular or population (65.2 percent) and a worker-to-population ratio inflammatory trachoma prevalence are for people with low of 60.6 percent in this population. vision or blindness (corrected visual acuity in the better eye of less than 6/18). Cases of trachoma with visual impairment The estimation procedure for productivity losses from ALRI and blindness in the Indian population were estimated and malaria is similar to that used for diarrhea. There are no using the prevalence rate of 25.75 per 100,000 from the monetary losses associated with productivity loss reported for 2004 Global Burden of Disease Study by the World Health these diseases, because the indirect losses via malnutrition are Organization (WHO, 2008a). Losses from trachoma in the only estimated for children below five years. A part of the time present study are estimated only for trachoma-affected persons loss for parents caring for sick children could be monetary, but with blindness or low vision. For valuing loss from trachoma, they are treated as non-monetary in the present report. The it was assumed that visual impairment lowers productivity percent of ALRI and malaria cases treated at health facilities by 60 percent in blind persons and by 27.8 percent in those (hospitals, centers, or clinics), pharmacies, or by traditional with low vision. These values are based on disability weight medical practitioners was estimated from children’s records for blindness and low vision in studies of burden of disease from the NFHS-3 individual records. www.wsp.org 93 Economic Impacts of Inadequate Sanitation in India Annexes Annex 5: Water TABLE A.18 ASSOCIATION BETWEEN ACCESS TO WATER AND HEALTH Access Access measure Needs met Health concern No access: quantity collected often More than 1,000 meters or 30 Consumption cannot be assured. Hygiene Very high below 5 liters/person/day (L/P/D) minutes total collection time not possible unless practiced at source. Basic access: average quantity Between 100 and 1,000 Consumption should be assured. High unlikely to exceed 20 L/P/D meters or 5 to 30 minutes Hygiene: hand washing and basic food total collection time hygiene possible. Laundry/bathing difficult to assure unless carried out at source. Intermediate access: average Water delivered through one Consumption assured. Hygiene: Low quantity about 50 L/P/D tap on-plot (or within 100 m or all basic personal and food hygiene 5 minutes total collection time assured. Laundry/bathing should also be assured. Optimal access: average quantity Water supplied through Consumption: all needs met. Hygiene: Very low 100 L/P/D and above multiple taps continuously all needs should be met. Source: Howard and Bartram, 2003. Household treatment of drinking water is assumed that cooking fuel is also used for boiling drinking Household cost of treatment of drinking water at the national water. The fuel costs for boiling water are based on monthly level is the sum of estimated costs of household treatment costs of liquid petroleum gas or wood used by households for of drinking water in urban and rural areas. These costs are boiling drinking water (Clasen, et al., 2008b). estimated for different treatment methods separately: boiling; straining through cloth; using alum, bleach, or chlorine; using Direct monetary cost of boiling water using gas is `0.24 ceramic, sand, or other water filter; and using an electronic per liter, and indirect non-monetary cost is `0.18 per water filter. liter. Direct monetary and indirect non-monetary costs for households using wood for boiling are `0.19 and 0.70, Cost of boiling drinking water can be substantial for respectively. For rural areas all costs of wood are indirect households. This includes monetary costs of materials and non-monetary costs of `0.89 per liter. It is assumed that apparatus used for boiling water and non-monetary costs, like costs of wood and related fuels are monetary in urban areas those of fuel collection in rural and semi-urban areas and the and non-monetary in rural areas. It is assumed that boiling costs of time and effort spent in boiling and storing water. costs for liquefied petroleum gas also apply to boiling by Households use a mix of fuels for boiling water, and may also electricity, biogas, kerosene, and coal, and that boiling costs use different fuels for boiling water and for cooking. This kind for wood also apply to charcoal, straw, grass, shrub, crop of detailed information is not available for India; therefore, it waste, dung cakes, and other fuels. The amount of drinking 94 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.19 HOUSEHOLD SIZE, HOUSEHOLDS, BOILING, AND CHLORINE COST PER HOUSEHOLD Population Average Households Average Average boiling Average per Per HH cost household (number) boiling non-monetary HH economic of bleach/ size (number) monetary fuel cost per HH cost of chlorine cost per HH (annual, non- boiling (annual, `) (annual, `) monetary, `) (annual, `) India 4.79 233,472,198 594 2,945 3,779 40.82 Rural 4.90 161,918,134 130 4,235 4,365 41.77 Urban 4.56 71,206,661 1,099 1,540 2,639 38.85 Source: Household size from NFHS-3, household numbers based on household size and population from projections based on census, average annual costs as described in the text. water per person is therefore assumed to be 2.92 liters per Bottled water consumption day (Milton et al., 2006).22 The retail cost of chlorine, at For estimating the cost of bottled water consumption, the `0.08 per chlorine tablet used for treating 10 liters of water, annual number of bottles consumed by households were is based on a business plan for chlorine tablet production estimated and multiplied by cost per bottle in each wealth from the National Research Development Corporation. The category. Annual consumption was estimated by estimating average cost of straining cloth is assumed to be `365 per year daily bottled water consumption. This in turn was done by for household, or one rupee per day. This includes the cost estimating number of households using bottled water by of washing and cleaning the cloth, cost of storing utensils, multiplying the percent of households using bottled water and time spent in straining, storing, and dispensing water. times the total number of households, and multiplying Average household annual costs for cleaning water with this times the household size and bottled drinking water ceramic, sand, or other water filter is `650.61, including consumption per person per day of 2.92 liters. Percent of annualized cost of filter of `285.61 and `365 for storage households using bottled drinking water in rural and urban and handling costs. Annualized cost of electronic purifier is areas was estimated from NFHS-3 household data (Measure `1,538.73. Annualized costs of filter and purifier are DHS and IFC Macro, 2008). The cost for a 20-liter bottle inflation-adjusted 2006 costs based on previous research was assumed to be `4 for households in the lower 80 percent (Jalan and Somanathan, 2008). The total number of rural of the wealth distribution, `6 for households in the highest and urban households using drinking water treatment of a 20 percent in rural areas, and `40 for households in the particular type was estimated by multiplying the proportion highest 20 percent in urban areas. The mean cost of 20 liters of households using water treatment of a particular type of branded bottled water is `40 in urban areas. It is however by the total number of households. Estimates of the total unlikely that such high costs are paid by households below the number of rural and urban households were based on top 20 percent of the wealth distribution and in rural areas. It household size from NFHS-3 and estimates of rural and is likely that less well-off households and those in rural areas urban population from census population projections (IISP get water transported in jerry cans or other unbranded bottles; and Macro International, 2007) (TGPP and NCP, 2006). price of bottled water in these households reflects this. 22 This is based on 73.04 ml/kg/day from a study in Bangladesh in the South Asia region and an average weight of 40 kg. This is less than 4.5 liters per person per day for those engaging in manual labor in high temperatures: conditions typically found among those vulnerable to dehydration (Howard and Bartram, 2003). Average drinking water consumption is not known, therefore a more conservative estimate is used. www.wsp.org 95 Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.20 BOTTLED WATER CONSUMPTION, AND PERCENT OF HOUSEHOLDS USING BOTTLED DRINKING WATER Population Households using bottled Households using bottled Population consuming Bottled drinking water drinking water (percent) drinking water bottled drinking water consumption per day India 0.38% 879,824 4,212,102 12,299,339 Rural 0.14% 231,914 1,136,165 3,317,603 Urban 0.86% 611,800 2,787,922 8,140,733 Source: Estimates based on NFHS-3 household data (Measure DHS and IFC Macro, 2008). Piped water water production is assumed to be `4.91 per cubic meter The estimates of households using piped drinking and non- (1,000 liters) based on average water tariffs of water utilities drinking water are based on the percentage of households (Ministry of Urban Development and Asian Development using piped drinking and non-drinking water from their Bank, 2007).24 dwellings or yards, estimated from NFHS-3 household data. The amount of piped water per household is estimated by Households also seek piped water to their living premises multiplying per capita piped water production by average for reasons other than those related to sanitation, like household size. The present study conservatively uses the convenience. Therefore, only half of the piped water costs lowest per capita piped water production of 72 liters, as are assumed to be due to sanitation and the rest for other stated in the Asian Development Bank’s compilation of water reasons, like convenience. It is assumed that use of public utilities data (Ministry of Urban Development and Asian taps is primarily for convenience, and therefore not included Development Bank, 2007).23 Drinking water is assumed to in the estimates for piped water. However, a small portion of be 2.92 liters per person per day, and the remaining 69.08 the time-cost for fetching water from public taps is included liters for domestic uses other than drinking. The cost of piped in the costs of fetching cleaner water. TABLE A.21 ANNUAL PIPED WATER PRODUCTION (CUBIC METERS OR ’000 LITERS) Population Drinking piped Non-drinking domestic piped water Piped water production water production production (cum/’000 liters) (cum/’000 liters) India 292,014,100 6,965,965,358 7,257,979,458 Rural 99,867,385 2,377,487,159 2,477,354,543 Urban 175,458,912 4,189,640,447 4,365,099,359 Source: Estimates as described in the text. This publication states that the average per capita production is between 100 and 120 liters, and the average among water utilities is stated to be 244 liters per capita per day. 23. This is a conservative cost because the production cost is likely to be higher due to subsidies. The extent of water subsidies is not known. A study of six cities reports that the 24. production costs in Chennai of `13 and in Bengaluru of `17 per cubic meter (Brocklehurst and Pandurangi, 2002). It is, however, not possible to extrapolate from these studies to other urban areas. 96 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes Fetching clean water fetching water from the NFHS-3 household data. Total time This study assumes that half of the extra effort for fetching was estimated from the number of households fetching water water is due to sanitation-related reasons. For conversion and average time per round trip to fetch water was estimated of hours to days, eight-hour days are assumed. Number of from NFHS-3. The economic value of time spent fetching households fetching water was estimated from total number water is based on value of time discussed earlier. A proportion of households and the estimated percent of households of that value is then attributed to sanitation. TABLE A.22 TIME FOR FETCHING WATER AND PERCENT AND NUMBER OF HOUSEHOLDS FETCHING DRINKING WATER Households fetching Households fetching Average drinking water drinking water (percent) drinking water (number) fetching time per trip (minutes) india 48.45 114,315,762 19.20 Rural 57.67 93,382,123 19.38 Urban 29.40 20,933,640 18.44 Source: Estimates from NFHS-3, and as described in text. TABLE A.23 PERCENT OF HOUSEHOLDS WITH ADULT WOMEN FETCHING WATER Adult woman Adult man girl below 15 Boy below 15 Other India 39.42 6.12 2.16 0.55 0.20 Rural 47.90 6.18 2.73 0.65 0.21 Urban 21.91 5.98 0.97 0.35 0.18 Source: Estimates based on NFHS-3. Note: The percentages refer to the person “mostly� fetching drinking water for a household. www.wsp.org 97 Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.24 DOMESTIC WATER-RELATED ECONOMIC IMPACTS OF INADEQUATE SANITATION IN INDIA IN 2006, BY LOCATION AND TYPE OF IMPACTS Economic Monetary Cost type, location Cost Percent of Percent of total Cost Percent of Percent of (` billion) national national impacts (` billion) national total national impacts in impacts in impacts subcategory subcategory Household treatment 111.7 100.0 58.4 48.7 100.0 65.3 (national) Rural 68.0 60.9 35.5 19.8 40.7 26.6 Urban 43.7 39.1 22.8 28.9 59.3 38.8 Piped water 17.5 100.0 9.2 17.5 100.0 23.5 (national) Rural 6.6 37.6 3.4 6.6 37.6 8.8 Urban 10.9 62.4 5.7 10.9 62.4 14.7 Bottled water 6.0 100.0 3.2 6.0 100.0 8.1 (national) Rural 0.4 5.8 0.2 0.4 5.8 0.5 Urban 5.7 94.2 3.0 5.7 94.2 7.6 Hauled water 56.1 100.0 29.3 2.3 100.0 3.0 (national) Rural 36.6 65.2 19.1 0.6 27.0 0.8 Urban 19.5 34.8 10.2 1.7 73.0 2.2 Total (national) 191.3 100.0 100.0 74.5 100.0 100.0 Total rural 111.5 58.3 58.3 27.3 36.7 36.7 Total urban 79.8 41.7 41.7 47.1 63.3 63.3 98 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes Annex 6: Access Time The cost of excess time used to access shared toilets and number of girls in the age group 11-17 years was available open-defecation areas is calculated separately for persons in from population projections. The lower end of this age group three age groups (below age 5, 5-14 years, and 15+ years) in may not coincide with puberty, but this is the closest age urban and rural areas. Using NFHS-3 data and percentages group for which data could be found. Number of girls in of population in the three age groups, the percentages of this age group was combined with net attendance ratio for population in each age group in households practicing open girls at the secondary level of 59.5 percent in urban and 40.1 defecation or using shared toilet facilities were estimated percent in rural areas to estimate the number of girls in this (Measure DHS and IFC Macro, 2008). This information age group attending school. was combined with estimates of total population from census projections to yield numbers of persons in each age group School classifications could not be matched one-to-one with as well as numbers using open defecation and shared toilet age groups. The school classification that includes girls 11-17 facilities. Due to lack of existing empirical evidence, it was years combines upper primary, secondary (grades 6-10), and assumed that a person spends an extra 15 minutes in urban higher secondary (grades 11-12). Therefore, to estimate the areas and 20 minutes in rural areas to access open-defecation number of post-puberty girls attending schools without a facilities compared to a person with a private toilet; while the toilet for girls, percent of schools in this combined category extra time spent in journey and waiting to access shared toilets without toilets was multiplied times the number of girls was assumed to be five minutes in both urban and rural areas. aged 11-17 years who are attending school. This was the best One toilet trip per day was assumed. possible approximation with this data. It was further assumed that on average a post-puberty girl in a school without a girls’ School sanitation and hygiene toilet will miss 10 days of school a year due to the lack of This study estimated economic losses due to absence from sanitation and hygiene at school. The value of a school day school among post-puberty girls. The economic loss was missed that was used for estimating economic loss was based estimated only for school days missed by girls of post-puberty on the same value of time for children as in other estimations age due to lack of a girls’ toilet at school. The percentage and of this study. TABLE A.25 NUMBER OF PERSONS WITHOUT TOILET ACCESS OR USING SHARED TOILETS Persons without toilet access Persons using shared toilets Below 5 years 5-14 years 15+ years Below 5 years 5-14 years 15+ years India 77,838,164 168,672,153 391,963,497 13,868,004 27,242,219 82,777,472 Rural 73,178,021 154,760,934 356,998,824 5,618,106 9,902,994 28,169,648 Urban 6,145,157 13,911,220 34,964,672 8,249,898 17,339,225 54,607,823 Source: Estimates based on NFHS-3 household data. www.wsp.org 99 Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.26 PERCENTAGE OF CHILDREN AGED 6-17 YEARS NOT ATTENDING SCHOOL Male Female Total Age (years) Urban Rural All Urban Rural All Urban Rural All 6-10 12.4 16.4 15.4 11.7 21.5 19.0 12.1 18.9 17.1 11-14 17.2 21.4 20.1 19.2 33.6 29.6 18.1 27.4 24.7 15-17 47.9 52.9 51.2 49.5 72.3 65.6 48.7 63.3 58.7 6-14 14.6 18.5 17.4 15.1 26.6 23.6 14.8 22.5 20.4 6-17 22.9 25.3 24.6 23.9 37.1 33.6 23.4 31.2 29.0 Source: NFHS-3 (IIPS and Macro International, 2007). Note: The table presents percentage of de facto household population aged 6-17 years attending school in 2005-06. TABLE A.27 PERCENT OF SCHOOLS HAVING COMMON TOILETS IN SCHOOL, 2006-07 School types 2003-04 2004-05 2005-06 2006-07 Rural urban Primary only 36.16 41.43 47.55 53.75 52.82 63.09 Primary with upper primary 56.93 61.61 63.86 69.01 67.44 75.48 Primary with upper primary and 69.61 69.88 66.25 71.78 68.66 76.86 secondary/higher secondary Upper primary only 44.25 48.52 56.25 60.33 59.61 66.57 Upper primary and 63.61 60.49 64.39 66.91 64.73 73.80 secondary/higher secondary Source: School and facility-related indicators 2006-07 (National Institute of Education Research and Training, 2008). TABLE A.28. PERCENT OF SCHOOLS HAVING GIRLS’ TOILETS IN SCHOOL, 2006-07 School types 2003-04 2004-05 2005-06 2006-07 Rural urban Primary only 20.61 24.27 28.85 34.06 32.44 50.15 Primary with upper primary 41.86 46.76 49.09 55.37 51.05 73.12 Primary with upper primary and 72.48 76.55 76.28 74.49 68.20 84.45 secondary/higher secondary Upper primary only 32.91 36.91 46.58 52.62 50.62 69.91 Upper primary and 69.31 70.47 72.42 72.32 68.67 83.74 secondary/higher secondary Source: School and facility-related indicators 2006-07 (National Institute of Education Research and Training, 2008). 100 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes Workplace sanitation and hygiene Workplace sanitation and hygiene are important for employee more acutely. This study assumes that 10 percent of rural health and productivity. This study makes conservative and urban women will be absent for 10 days in a year, due estimates for days missed by urban and rural women due to lack of adequate sanitation and hygiene at the workplace, to lack of sanitation and hygiene facilities at work. Most of especially during their menstrual period. On average, this these days may be during the menstrual periods, when the loss is equivalent to one day per annum, for every working lack of sanitation and hygiene at the workplace may be felt woman in rural and urban areas. TABLE A.29 WORKER-POPULATION RATIOS (PERCENT) BY AGE GROUPS AND GENDER Age group urban Rural Male Female Male Female India 51.30 11.80 49.10 20.30 1-14 years 2.00 1.00 2.50 2.20 15-29 years 55.90 13.60 62.50 23.10 30-59 years 91.40 19.90 89.60 38.30 60+ years 33.50 6.40 58.20 15.60 15-59 years 75.20 17.10 77.10 31.70 15+ years 71.50 16.00 75.10 29.80 5+ years 55.80 12.80 54.70 22.60 Source: NSSO, 2008. www.wsp.org 101 Economic Impacts of Inadequate Sanitation in India Annexes Annex 7: Tourism Losses TABLE A.30 TOURISM INDICATORS FOR INDIA IN 2006 indicator Numbers Percentages Foreign tourist arrivals (numbers) 4,447,167 Tourists other than the nationals of Pakistan and Bangladesh 3,879,340 Purpose of visit Business 4,447 0.10 Education and employment 84,496 1.90 Tourism and others 4,358,224 98.00 Sea cruise passengers 179,840 Foreign tourist arrivals by mode of transport Air 3,873,483 87.10 Land 547,002 12.30 Sea 26,683 0.60 Foreign tourist arrivals from top 15 markets excluding Bangladesh UK 734,240 16.50 USA 696,739 15.70 Canada 176,567 4.00 France 175,345 3.90 Germany 156,808 3.50 Sri Lanka 154,813 3.50 Japan 119,292 2.70 Australia 109,867 2.50 Malaysia 107,286 2.40 Nepal 91,552 2.10 Singapore 82,574 1.90 Italy 79,978 1.80 Korea (South) 70,407 1.60 China (Main) 62,330 1.40 Netherlands 58,611 1.30 102 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.30 TOURISM INDICATORS FOR INDIA IN 2006 (CONTINUED) indicator Numbers Percentages Others 1,570,758 35.20 Foreign exchange receipts from tourism ` (million) 403,750 $ (million) 8,934 Foreign exchange earnings per tourist (`) 90,788 Foreign exchange earnings per tourist ($) 2,009 Indian nationals going abroad 8,339,614 Number of domestic tourist visits 461,700,000 Approved hotels, December 2006 Number of hotels 1,208 Number of rooms 75,502 Room occupancy 60.40 World World tourist arrivals 846,000,000 World tourism receipts (billion $) 735 Share of India in world tourist arrivals 0.52 Share of India in world tourism receipts 1.21 India’s rank in world tourist arrivals 42 India’s rank in world tourism receipts 21 Source: Ministry of Tourism, 2008. Traveller’s diarrhea is the most common disease related to Montego Bay (Jamaica) reports that infections caused by travel in developing countries. A study of long-term tourists E. coli were the most common, with shigella (10 percent spending more than two months in India estimated that over in Goa) and viruses (rotaviruses and enteric adenoviruses) 83 percent of the tourists had suffered from diarrhea during contributing significantly. High frequency of resistance of their stay (Hillel and Potasman, 2005). A study of illnesses bacteria to traditional anti-bacterial medicines is also reported among returning tourists that included tourists in India in these locations (Jiang et al., 2002). reports gastrointestinal symptoms in 34.6 percent of tourists and respiratory symptoms in 13.7 percent. It also reports that In a survey of tourists visiting Buddhist centers in India, both a visit to the Indian subcontinent doubles the risk of illness in domestic and international tourists mentioned toilet facilities returning tourists (Rack et al., 2005). Another study reports as a reason for dissatisfaction. In this survey a substantially that 55 percent of respondents travelling to Asia had diarrhea higher percentage of domestic tourists than international and that the risk was higher for the Indian subcontinent tourists stated that toilets were a reason for dissatisfaction. In (Redman, et al., 2006). Another study of stool samples from a passenger survey at airports—places that have better than tourists from Europe and North America who had acquired the country’s average in cleanliness and toilets—passengers diarrhea after travel to Mombasa (Kenya), Goa (India), and gave low ratings to cleanliness and toilets. www.wsp.org 103 Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.31 CLEANLINESS AND TOILETS AT AIRPORTS Ratings Cleanliness (percent of respondents) Toilets (percent of respondents) Non-Indians Indians Non-Indians Indians Very good 0 0 0 0 Good 10 22 0 0 Average 8 44 11 1 Poor 82 34 89 99 Source: Horizon International Consultancy Services, 2006. Losses to tourism was used to estimate tourism loss. This yields 25.6 percent Estimated economic losses to tourism from inadequate of domestic tourists and 33.55 percent of foreign tourists as sanitation are the difference between actual revenue earned by “somewhat or very dissatisfied� with their visits. the tourism sector and the counter-factual potential revenue that would have been earned by the tourism sector if there The midpoints of the percent across states for toilet facilities were adequate sanitation. Losses to tourism attributable to as a reason for dissatisfaction are 15 percent for domestic and sanitation were estimated using the assumption that tourists 9.5 percent for foreign tourists. Toilet facilities are one of the who are dissatisfied from their visit because of inadequate multiple reasons for dissatisfaction given by respondents. sanitation will not re-visit or will each discourage one other After scaling to 100, the relative percentages for dissatisfaction tourist to visit—eliminating either a repeat visit by the tourist due to toilets were 3.49 percent and 2.30 percent for domestic or a visit by another person known to them. The percent and foreign tourists, respectively. These percentages were of satisfied and dissatisfied tourists, along with reasons for used as an indicator of additional tourist visits that could dissatisfaction, is available for a sample of tourists visiting have materialized were there better sanitation in general, Buddhist centers located in all parts of the country.25 In and better toilet facilities in particular. Potential revenue this survey, tourists were also asked about reasons for their from tourism in the absence of inadequate sanitation was dissatisfaction. This data is not aggregated and is only estimated as the product of the potential number of tourists available for each state separately. The midpoint of percent and average spending per tourist, using Ministry of Tourism of “somewhat� or “very dissatisfied� tourists across states survey figures. 25 The survey reports were from tourists in the following states: Uttaranchal, Uttar Pradesh, Rajasthan, Madhya Pradesh, Karnataka, Goa, Chhattisgarh, Bihar, Assam, and Orissa. Buddhist centers about which questions are asked are spread across India. 104 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes TABLE A.32 ACTUAL AND POTENTIAL TOURIST VISITS AND AVERAGE ExPENDITURES Actual Potential international Number of tourists 4,447,167 4,549,497 Average spending per tourist visit 90,788 90,788 Domestic overnight Domestic bed nights 81,519,218 84,370,504 Expenditure per day 873.33 873.33 Day tourists Day tourist visits 59,739,366 61,828,861 Expenditure per day 104.23 104.23 (in `) Sources: Ministry of Tourism (Ministry of Tourism, 2008); tourism statistics for Uttaranchal, Uttar Pradesh, Chhattisgarh, Goa, Rajasthan, Orissa, Bihar, Assam, Karnataka, and Madhya Pradesh commissioned by Ministry of Tourism (AC Nielsen ORG-MARG, 2006a, 2006b, 2006c, 2006d, and 2007; JPS Associates, 2006a, 2006b; Intercontinental Consultants and Technocrats, 2006; Market Pulse Research, 2006; and Datamation Consultants, 2006). Losses due to tourists’ illnesses middle-income countries. The average gross national income The present study estimates economic losses from gastro- (GNI) per capita in high-income OECD counties is $38,120, intestinal illness affecting international tourists visiting India. and in low- and middle-income countries it is $2,000. The A study of international tourists reports that 34.6 percent of valuation of time lost in the current study was based on tourists got gastrointestinal diseases while visiting Kenya, unemployment-adjusted labor share of GDP. The ratio of per Tanzania, Senegal, the Gambia, India, Nepal, Thailand, or capita unemployment-adjusted labor share of income to per Brazil. The risk of getting ill was almost double if the tourist capita GDP was about 1.5 in India. This ratio was applied traveled to Nepal or India (Rack, et al., 2005). The present to GNI per capita to estimate unemployment-adjusted labor study assumes that 34.6 percent of tourists were estimated share of GDP of $56,872 in high income OECD countries to have been affected with an episode of gastrointestinal and of $2,984 in low- and middle-income countries. Per-day diseases while visiting India. valuation was estimated by dividing the annual numbers by 250 working days. As in other valuations, adult-time Total treatment cost for these episodes was estimated using valuation was taken to be 30 percent of the full value, and the treatment cost per episode of `609.87, based on a study children’s time was valued at half of adult time. Children of treatment costs in poor-resource locations, as discussed below age 15 were 9.6 percent of international tourists earlier for diarrhea-related health costs (Dror, van Putten- in 2006. Using this number, a weighted average value Rademaker, and Koren, 2008). For estimating productivity of time for arriving international tourists was estimated. and welfare losses, two days were assumed to be lost per This value was applied to the number of days lost due gastrointestinal episode for a tourist. About 60 percent of to gastrointestinal diseases to estimate the value of international tourists visiting India are from high-income productivity and welfare for international tourists due to OECD countries and the rest (40 percent) from low- and gastrointestinal diseases. www.wsp.org 105 Economic Impacts of Inadequate Sanitation in India Annexes Annex 8: Gains from Sanitation and Hygiene A review of 33 studies (103 cases) focusing on the health been shown to reduce the risk of diarrhea by 25 to outcomes from water and sanitation sector interventions 85 percent. was carried out by IEG and the World Bank (World Bank/ • Impacts of water-connection interventions IEG, 2008). The study noted the following: (household or nearby well, piped water, standpipe, etc.) have been subjected to relatively few studies, • Hand washing reduces the risk of diarrhea in and the evidence is mixed with some showing children in the household by over 40 percent, as positive effects. reported by Fewtrell et al. (2005) and Curtis and • One study (Fewtrell and Colford, 2004) argued Cairncross (2003) (with a range of the reduction of that the impact of combined interventions is no 24-63 percent). higher than that found in single-intervention • Far fewer studies have been conducted on studies, which shows that there is no intra-sector sanitation interventions—but these three studies complementarity. find reductions in diarrhea incidence of over 60 percent. Based on results from meta-analysis of studies by Fewtrell • Household water treatment (solar storage, and co-authors, this analysis estimated the range of values filtration, chemical treatment, and so on) has by which the risk of diarrheal diseases could be reduced. TABLE A.33. RELATIVE RISK REDUCTION FROM SANITATION INTERVENTIONS intervention Diarrhea risk reduction from intervention (%) Low Mid High Number of studies included Household treatment of water 54 39 19 8 Water supply 38 25 9 6 Sanitation 47 36 13 2 Hygiene 60 45 25 8 Multiple interventions 41 33 24 5 Source: Based on Fewtrell, et al., 2005. Note: Mid values are the estimates of diarrhea risk reduction. Low value is the lower bound of 95 percent confidence interval, and the upper value is the upper bound of 95 percent confidence interval. 106 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes These estimates are applied to health impacts for estimating can be potentially avoided by various interventions are potential gains. Similarly potential reductions in other costs listed in the following table, along with the percentages of are also estimated. The percentages of economic costs that reductions possible. TABLE A.34 BENEFITS AND AVOIDED COSTS FROM SANITATION INTERVENTIONS intervention Benefits and avoided costs Comprehensive sanitation and hygiene • 45% of health impacts • 100% of water-related impacts • 100% of welfare impacts • 100% of tourism impacts Improved access to toilets • 32% of health impacts • 100% of welfare impacts • 50% of tourism impacts Improved hygiene behavior (may also include toilet use) • 45% of health impacts • 100% of welfare impacts • 50% of tourism impacts Improved access to adequate quantity of water: Adequate water, better hygiene and • 25% of health impacts sanitation, better health, and toilet use/access • 100% welfare impacts • 50% tourism impacts Improved access to safe quality water: Water free from bacteriological contamination • 39% of health impacts • 100% of household water treatment cost • 100% of bottled water costs • 100% of costs of hauling water from cleaner sources Safe confinement and disposal of fecal matter (sewage treatment) • 32 of health impacts • 100% of household water treatment cost • 100% of bottled water costs • 100% of costs of hauling water from cleaner sources www.wsp.org 107 Economic Impacts of Inadequate Sanitation in India Annexes Annex 9: Sanitation Markets The unit prices of toilets are based on a recent study 2 percent for sewerage, and 0.5 percent for wastewater (WSP, 2008) and supplemented by the expert opinion treatment facilities. Yearly maintenance costs are assumed of professionals working on rural and urban sanitation. to be 1.5 percent of capital cost for sewer maintenance These prices are based on an average of unit prices from and for toilets with sewer connection or pits. Yearly various sources. An annual inflation of 5 percent is maintenance costs of 5 percent of capital cost are assumed assumed for the costs of toilets. Replacement rates are for septic tanks, and of 2.5 percent of capital cost for assumed to be 3 percent of capital for community toilets, sewage treatment plants. TABLE A.35 UNIT COSTS OF SANITATION PRODUCTS AND SERVICES IN SELECTED YEARS, 2006-20 Product/service unit 2006 2009 2012 2015 2020 WC with sewer connection ` per household 8,471 9,806 11,352 13,141 16,772 WC with septic tank ` per household 17,036 19,721 22,830 26,428 33,730 Soak pit for septic tank ` per household 454 476 500 525 551 Pit latrine ` per household 10,691 12,376 14,327 16,585 21,168 House sewer connection ` per household 2,773 3,210 3,716 4,302 5,490 Upgrade existing service/ ` per household 3,804 4,404 5,098 5,901 7,532 other latrine to sewer Upgrade existing service/ ` per household 12,369 14,319 16,576 19,189 24,490 other latrine to septic tank Upgrade existing service/ ` per household 4,610 5,336 6,177 7,151 9,127 other latrine to pit latrine Upgrade existing pit to septic tank ` per household 7,760 8,983 10,399 12,038 15,364 Community toilet ` per household 6,662 7,712 8,927 10,334 13,189 Sewerage construction ` per household 6,909 7,998 9,259 10,719 13,680 Wastewater treatment facility `/MLD 3,768,879 4,362,949 5,050,659 5,846,769 7,462,123 Community toilet annual maintenance ` per household/year 1,386 1,604 1,857 2,150 2,744 Sewer connected toilet maintenance ` per household per year 127 147 170 197 252 Septic tank maintenance ` per household per year 852 986 1,141 1,321 1,686 Pit toilet maintenance ` per householdper year 160 186 215 249 318 Sewerage maintenance ` per householdper year 104 120 139 161 205 Sewage treatment plant maintenance `/MLD per year 94,222 109,074 126,266 146,169 186,553 Source: Various sources and assumptions, as explained in the text. MLD = million liters per day. 108 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes Total rural and urban households are estimated for each applying the percent distribution of toilets to the total number year using information on rural and urban population of households. It is assumed that average wastewater used projections from the National Commission on Population, will be 135 liters per person per day in urban areas, and will and household sizes from NFHS-3 (TGPP and NCP, 2006) rise linearly from 40 to 60 liters per person per day in rural (IIPS and Macro International, 2007). NFHS-3 gives rural areas over the period. and urban household sizes as 4.8 and 4.3. These household sizes are used for 2006 to estimate the population’s water The annual size of the market is estimated by combining use and wastewater generated at an 80 percent return factor. information on the number of new or old households Household sizes from the 2001 census for rural and urban acquiring various types of toilets, the unit costs of new and residents were 5.4 and 5.1. The model for estimating the upgraded toilets, the number of households continuing to use sanitation market assumes that household sizes will decline various types of toilets, toilet maintenance costs, the capacity linearly to 4.1 in rural and 4.0 in urban areas by 2020. for collection and treatment of wastewater, and the unit cost Households using various toilet facilities were estimated by of building wastewater collection and treatment facilities. www.wsp.org 109 Economic Impacts of Inadequate Sanitation in India Annexes Annex 10: Population Distribution by Wealth Quintiles TABLE A.36 POPULATION IN WEALTH QUINTILES AND RURAL/URBAN LOCATIONS IN INDIA, 2006 All population (all ages) Total population Percent of total population india 1,117,734,000 100 Rural 793,250,994 71 urban 324,483,006 29 WQ1 213,491,298 19 WQ2 223,193,288 20 WQ3 226,207,844 20 WQ4 232,044,077 21 WQ5 222,797,493 20 WQ1 Rural 204,125,560 18 WQ2 Rural 202,668,771 18 WQ3 Rural 183,460,982 16 WQ4 Rural 138,642,464 12 WQ5 Rural 64,353,200 6 WQ1 urban 9,365,737 1 WQ2 urban 20,524,516 2 WQ3 urban 42,746,862 4 WQ4 urban 93,401,613 8 WQ5 urban 158,444,293 14 Source: Estimates based on NFHS-3 and population projections. 110 India Impact Study Economic Impacts of Inadequate Sanitation in India Annexes Annex 11: Sensitivity Analysis TABLE A.37 INPUT VALUES FOR LOW, BASE, AND HIGH ESTIMATES OF INADEQUATE SANITATION IN INDIA IN 2006 Parameter Low Base High Valuation of Average compensation Unemployment-adjusted Transferred value of statistical premature mortality per worker, from labor share of GDP per life (VOSL) based on lowest National Sample Survey worker (see methods) value after 1996 reported by an (NSSO, 2008) OECD study in a recent review by Bellavance (Bellavance, Dionne, and Lebeau, 2009), with income elasticity of 0.8. Value of lost time 30% of earnings 30% of unemployment- 100% of unemployment- of adults per worker adjusted labor share of adjusted labor share of GDP GDP per worker per worker Value of lost time 50% of adult value 50% of adult value 100% of adult value of children of time of time of time Piped water 2.92 liters for drinking, 2.92 liters for drinking, 72 4 liters for drinking, 123.3 consumption per 72 liters total liters total (see methods) liters total (based on WHO person per day recommendation and average consumption) Cost of piped water `4.91 per `4.91 per 1,000 liters `8 per 1,000 liters (based on 1,000 liters (see methods) cost/collection ratio of 1.63) Boiling per `0.34 `0.415 `0.49 liter—LPg Boiling per `0.52 `0.885 `1.25 liter—wood Source: Compiled by author from various sources. FiguRE A.3. LOW, BASE, AND HIGH ESTIMATES FOR HEALTH, WATER, AND ACCESS TIME ECONOMIC IMPACTS OF INADEQUATE SANITATION IN INDIA IN 2006 Access time High 2,014 Base 489 Low 293 High 400 Water Base 191 Low 143 High 4,486 Health Base 1,763 Low 1,348 0 1,000 2,000 3,000 4,000 5,000 (in ` billion) www.wsp.org 111 Economic Impacts of Inadequate Sanitation in India References and Bibliography A.C. Nielsen ORG-MARG. 2006a. “Collection of Domestic Tourism Almond, Douglas, Kenneth Y. Chay, and David S. Lee. 2005. Statistics for the State of Karnataka.� New Delhi: Market Research “The Costs of Low Birth Weight.� Quarterly Journal of Economics Division, Ministry of Tourism, Government of India. 120: 1031-83. ________. 2006b. “Collection of Tourism Statistics for the State of American Diabetes Association. 2008. “Economic Costs of Diabetes in Rajasthan.� New Delhi: Market Research Division, Ministry of Tourism, the U.S.� Diabetes Care 31: 596-615. Government of India. 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Geneva. 10: 139-40. www.wsp.org 125 Economic Impacts of Inadequate Sanitation in India References and Bibliography List of Abbreviations ALRI Acute Lower Respiratory Infection CPCB Central Pollution Control Board (Government of India) DDWS Department of Drinking Water and Sanitation (Government of India) ESI Economics of Sanitation Initiative GDP gross domestic product GNI gross national income JMPDWSS Joint Monitoring Programme for Drinking Water Supply and Sanitation MDG Millennium Development Goal MLD million liters per day NFHS-3 National Family Health Survey (2005-2006) NGO non-governmental organization NSSO National Sample Survey Organization OECD Organisation for Economic Co-operation and Development PPP purchasing power parity ` Indian Rupee UNICEF United Nations Children’s Fund VIP ventilated improved pit VOSL Value of Statistical Life WAZ weight-for-age Z-score WHO World Health Organization WSP Water and Sanitation Program 126 India Impact Study Economic Impacts of Inadequate Sanitation in India Economics of Sanitation The Economics of Sanitation Initiative 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 profile of sanitation, and acts as an effective tool to convince governments to take action. The first 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-benefit of alternative sanitation interventions and will enable stakeholders to make decisions on how to spend funds allocated to sanitation more efficiently. Due to the study’s successful traction, WSP carried out ESI studies in Bangladesh, India, and Pakistan. ESI studies are also planned for countries in Africa, Latin America, and the Caribbean. www.wsp.org 127 WSP FUNDING PARTNERS The Water and Sanitation Program (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 offices in 25 countries across Africa, East Asia and the Pacific, 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, Luxembourg, Netherlands, Norway, Sweden, Switzerland, the United Kingdom, the United States, and the World Bank. Water and Sanitation Program 55 Lodi Estate New Delhi 110 003, India Phone: (91-11) 24690488, 24690489 Fax: (91-11) 24628250 E-mail: wspsa@worldbank.org Web site: www.wsp.org