FINANCING WATER

Increasing people's access to sanitation and drinking-water brings large benefits to the development of individual countries through improvements in health outcomes and the economy.
The impact of diarrhoeal disease on children is greater than the combined impact of human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS), tuberculosis and malaria; we also know that the provision of improved sanitation and drinking-water could reduce diarrhoeal diseases by nearly 90%. Latest estimates indicate that improvements in sanitation and drinking-water could reduce the number of children who die each year by 2.2 million. Huge savings in health-care costs and gains in productive days can therefore be realized by improving access to safe water and basic sanitation.
Despite these clear benefits for human development, many countries seem to allocate insufficient resources to meet the Millennium Development Goal (MDG) target for sanitation and drinking-water. When compared with other sectors, particularly the other major social sectors of education and health, sanitation and drinking-water receive a relatively low priority for both official development assistance (ODA) and domestic allocations.
Trends in aid for water and sanitation, education, and health/population/HIV/AIDS,as a percentage of total ODA commitments, 1995-2008
Historical data show that sanitation and drinking-water enjoyed more than 8% of total ODA in 1997. At that time, other social infrastructure sectors, such as health, education, population and reproductive health, received lower proportions of aid compared with sanitation and drinking-water. During the 11 years since 1997, however, the proportion of development aid allocated to sanitation and drinking-water fell from 8% to 5%, while development aid allocated to health increased from 7% to 11.5% and that for education remained steady at around 7%.
Source:
UN-Water Global Annual Assessment of Sanitation and Drinking Water (GLAAS) 2010. Targeting resources for better results. WHO, 2010
The benefits of investing in water and sanitation
The economic benefits of investing in drinking-water and sanitation come in several forms:
health-care savings by health agencies and individuals;
productive days gained per year (for those 15-59 years of age) and increased school attendance;
time savings (working days gained) resulting from more convenient access to services;
value of deaths averted (based on future earnings).
Source:
Evaluation of the Costs and Benefits of Water and Sanitation Improvements at the Global Level. WHO, 2004
Sanitation: the forgotten sister
Sanitation has been severely neglected. Estimates of the cost of achieving the 2015 Millennium Development Goal target for sanitation vary widely, due to differences in approach and a weak information base. The World Health Organization estimates the total annual cost of meeting the target at just over $9.5 billion. If estimates of current costs are correct, resources in the sanitation sector would have to be almost doubled to meet the 2015 target (although estimates of current spending probably underestimate the contributions by households to their own sanitation services). If the full cost of tertiary wastewater treatment for waste streams in urban areas is added, the total rises to $100 billion, the current value of total annual official development assistance (ODA).
In 2008, financing for sanitation comprised 37% of total aid funding for sanitation and drinking-water.
Sources:
3rd United Nations World Water Development Report: Water in a Changing World. Chapter 4. WWAP, 2009
UN-Water Global Annual Assessment of Sanitation and Drinking Water (GLAAS) 2010
Did you know?
Achieving the water and sanitation MDG target could bring economic benefits, ranging from US$ 3 to US$ 34 per US$ 1 invested, depending on the region
Additional improvement of drinking-water quality (e.g. point-of-use treatment), if sustained, could lead to a benefit t ranging from US$ 5 to US$ 60 per US$ 1 invested (http://www.un.org/waterforlifedecade/financing.html)