Economic Assessment of Sanitation Interventions in Vietnam - WSP

Economic Assessment of Sanitation Interventions in Vietnam | Costs of Improved Sanitation and HygieneIn this study, information about average household incomeshas been gathered from all urban and rural field sites.However, it was difficult to obtain adequate informationabout income from most urban households. Therefore, theproportion of households selecting different sanitation optionsby asset quintile was determined only for the ruralareas (see Figure 47).The income of surveyed rural households (in million VNDperyear) are divided into five quintiles: the poorest (withannual incomes of less than VND10 million; from 10 to 20million; from 20 to 50 million; from 50 to 100 million; andthe richest, earning above 100 million).The richest households prefer septic tanks. No householdsamong the richest quintile practiced OD. Households inthe fourth quintile households have all types of sanitation,but do not practice OD. All sanitation types were found inmiddle- and lower-income households.The average cost per sanitation option is presented as apercentage of household annual cash income, by quintile.Therefore, this analysis focuses on the financial costto households of each option, irrespective of whether thehousehold paid the upfront costs of the facility.Table 48 presents the average costs of two main sanitationoptions; wet pit latrines and septic tanks, in percentages ofannual rural household income, by quintile. There are bigdifferences between rich and poor households in terms ofthe percentage of income paid for the same type of sanitation.The poorest households have to pay more than 1.5years for a septic tank, and spend around 17% of theirincome (or the average income earned in nine workingweeks) for recurrent costs per year. The richest householdshave to pay only 5% of their income (or the average incomeearned over 2.5 working weeks) for a septic tank, andspend 2% of their income (or the average income earnedin one working week) on recurrent costs. Adequate financingmodels are needed to enable low-income householdsto pay for suitable sanitation, if the purpose is to increasesanitation coverage for the entire population. Successfulapplications of financing models have been demonstrated,such as micro-finance or revolving funds operated throughlocal authorities or local women’s union (see Chapter 7.2for more details). Since most investment during the projectperiod comes from households (see Chapter 6.2), softwareactivities should focus on enhancing household willingness-to-pay.6.5 COSTS OF MOVING UP THE SANITATIONLADDERTo move up the sanitation ladder and get a better sanitationsystem, further investment and recurrent costs mustbe met. In some cases, the operation and maintenancecosts associated with moving to a more advanced sanitationsystem are not necessarily higher than the existingsystem. Investment costs associated with moving up theladder are presented in Figure 48 for urban areas, and Figure49 for rural areas. The highest investment costs areencountered when moving up to centralized wastewatertreatment plants in urban areas, and, in rural areas, whenadopting biogas digesters. Similar results were found at allsurveyed sites.TABLE 48: PERCENTAGE OF RURAL HOUSEHOLD ANNUAL INCOME SPENT ON SANITATION, BY QUINTILEOptions1 st quintile (poorest) 2 nd quintile 3 rd quintile 4 th quintile 5 th quintile (richest)< VND10 mio. 10 – 20 mio. 20 – 50 mio. 50 – 100 mio. >100 mio.Wet pit latrineCapital (investment) 45.8% 15.3% 6.5% 3.1% 1.5%Recurrent (annual) 8.6% 2.9% 1.2% 0.6% 0.3%Average annual 18.2% 6.1% 2.6% 1.2% 0.6%Septic tankCapital (investment) 158.9% 53.0% 22.7% 10.6% 5.3%Recurrent (annual) 17.3% 5.8% 2.5% 1.2% 0.6%Average annual 59.3% 19.8% 8.5% 4.0% 2.0%Mio = Million86Economic Assessment of Sanitation Interventions