Economic report: unlock trillions of dollars with clean water, decent toilets and hygiene
Universal access to clean water, toilets, and hygiene would boost the global economy by trillions of dollars over the next two decades, reveals a new report out today from international aid agency WaterAid.
The new report, Mission-critical: Invest in water, sanitation and hygiene for a healthy and green economic recovery, was authored by McKinsey & Co (Vivid Economics) for WaterAid. It details for the first time how billions of dollars in time, productivity and health care costs would be saved with strategic investment in achieving universal access to water and sanitation:
- Ensuring everyone, everywhere has access to basic water, sanitation, and hygiene – a water point within a 15-minute walk, a household toilet, and soap and water to wash hands – would bring returns of 21 times their cost.
- Ensuring everyone has a toilet where waste is safely managed will generate $86 billion per year in greater productivity and reduced health costs, preventing 6 billion cases of diarrhea, increasing school and work attendance by three billion days each year, and unlocking USD $420 billion in productive value.
- Ensuring everyone has somewhere to wash their hands with soap and water will generate $45 billion per year, and reduce the spread of infections in a COVID-19-like epidemic by up to 20%.
- Ensuring everyone has a tap at home will yield $37 billion per year, with substantial health and timesaving benefits, especially for women and girls.
WaterAid is calling on the US Government to ensure WASH is central to plans to recover economically from the pandemic, bolster health systems, and protect themselves against future pandemics.
Guaranteeing access to WASH within healthcare centers was highlighted by the G20 as an essential measure for protecting the world’s poorest health systems in a declaration in May. This requires an investment of $6.5 billion – a relatively small sum with outsized benefits. This should be on the table for the G20 Finance Ministers meeting this week, as governments address the economic impacts of the pandemic especially on developing countries. The health-related benefits of WASH are tremendous, but the report indicates significant return on investment in other sectors too.
WaterAid’s report shows that investing in WASH is crucial for building climate resilience, a key priority for the Biden Administration and for COP26 in November. Protecting water and sanitation infrastructure from worsening flooding is one of the best ways to ensure the world’s most vulnerable people can withstand the impacts of climate change. For every dollar spent on strategic flood resilience upgrades, $62 in flood restoration costs can be avoided, along with preventing life-threatening contamination of drinking water sources.
Other key findings of the report include:
- The provision of even just a community water pump or well can free up the equivalent of 77 million working days per year that women and girls currently spend collecting water. Upgrading to a tap in every house would multiply these benefits, releasing 122 million working days’ worth of time annually. This would significantly reduce unpaid domestic work and increase women’s and girls’ educational and livelihood options – transformative for gender equality in the face of the reversal of progress caused by COVID-19 and climate crisis.
- Achieving the UN targets on sanitation could prevent up to six billion cases of diarrhea and 12 billion cases of parasitic worms between 2021 and 2040. Diarrhea kills more than 70,000 children each year, and hookworm – just one type of parasitic worms – affects 500 million people each year, meaning that every year four million years are lost to people through ill-health or shortened lives.
- Universal access to hand washing can reduce cumulative infections in a respiratory disease epidemic even if no other actions are taken - saving days that are vital for response and containment efforts, as COVID-19 demonstrates.
Kelly Parsons, Chief Executive, WaterAid America, said:
“Our research shows that investment in water, sanitation, and hygiene is incredibly cost-effective: it can unlock trillions of dollars of value in the global economy. Prioritizing water, sanitation and hygiene is mission-critical in ending this pandemic, preventing the next, and in fueling our own economic recovery.
It is time for the US government to recommit to water, sanitation, and hygiene as a top priority. We simply cannot afford to step away from the life-saving impacts and economic acceleration that WASH can spark on a global scale.”
The report includes a global and regional analysis of the benefits and costs of investing in WASH. Also included are case studies from Burie, Ethiopia, and Shyamnagar, Bangladesh , which show the positive health, economic and environmental benefits of WASH programs at local level. They have strengthened the resilience of marginalized communities to the impacts of climate change, with particular benefits for women and girls.
The research demonstrates in stark terms how a lack of clean water, sanitation and hygiene has a huge human and economic toll, in terms of increased health costs and lost lives, productivity, wages, consumption and economic opportunities. Investing in universal access to these services creates healthier populations, builds resilience to climate change and disasters, and lays the foundations for long-term, sustainable growth.
Caroline Vexler, Senior Economist at Vivid Economics, who led the analysis that fed into the report, said:
“Our global benefit-cost analysis demonstrates that investing in WASH is a triple win: it can unlock billions in economic opportunities and health savings at relatively low cost, it can address key objectives of stimulus spending post-COVID, and it can build resilience to increasing global risks.”
Mission critical: investing in water, sanitation and hygiene for a healthy and green recovery assesses three scenarios of global WASH coverage. Each scenario assumes that the coverage level described is achieved by 2030 and is maintained through 2040. These are as follows:
1. Basic service: The first scenario assesses the costs and benefits of achieving universal access to at least basic services. Basic water technologies include boreholes and tube wells to provide drinking water from an improved source, provided collection time is not more than 30 minutes for a roundtrip, including queuing. Basic sanitation technologies focus on pit latrines facilities that are not shared with other households. Basic hygiene ensures handwashing facilities are available to each household.
2. Safely managed service: The second scenario assesses the costs and benefits of achieving universal access to safely managed services, a higher quality WASH service than the basic scenario. For water services, this means access to an improved water source which is located on the premises, available when needed, and free from fecal and priority chemical contamination. The technology to achieve this is piped water supply. Safely managed sanitation requires the use of improved facilities which are not shared with other households and where excreta is safely disposed in situ or transported and treated offsite. The technologies build on the household-level provision of latrines achieved in the basic scenario to provide sewage systems, septic tanks, and the management and treatment of fecal matter.
3. Climate-resilient and safely managed service: Multiple climate change-related hazards threaten the reliability of WASH services, including flooding, drought, and sea-level rise. The analysis focuses on flooding as the most prevalent and damaging climate risk to WASH infrastructure. Severe flooding can render WASH services temporarily unusable and increase population exposure to waterborne diseases like cholera. A lack of WASH services also reduces local capacity to provide emergency services in the wake of a disaster. The third scenario assesses the costs of strategically upgrading safely managed service infrastructure to be flood-resilient in flood-prone areas, against the benefits of reducing flood service disruptions and flood damages to infrastructure. Although the climate-resilient scenario focuses on upgrading safely managed infrastructure, it is important to note that elements of basic service infrastructure can also be made more climate-resilient. The analysis focuses on increasing the resilience of safely managed infrastructure for two reasons: firstly, because achieving universal access to safely managed services is the target of SDG 6 and secondly, because the analysis relies on recent research on the costs of climate-resilient infrastructure, which also focuses on safely managed services.
A more detailed description of the scenarios, data sources and key assumptions can be found in the methodology appendix on page 39 of the report.
WaterAid is an international nonprofit working in 28 countries to change the lives of the poorest and most marginalized people. Since 1981, WaterAid has reached 27 million people with clean water and 27 million people with decent toilets. For more information, visit www.wateraid.org.