Economic Assessment of Sanitation Interventions in Vietnam - WSP

Economic Assessment of Sanitation Interventions in Vietnam | Discussionrural survey sites. Only at Lai Xa (R7) was a different (ruralcluster wastewater management) system applied. Doublevaultcomposting toilets are quite popular in Quang Ngai(R3) and Hue (R9) where sanitation projects have been carriedout with well-organized IEC activities associated withinformed choice for households.Household sanitation options, and prices paid, are expectedto vary by wealth quintile. The richest households preferseptic tanks, and none of the richest quintile householdspracticed OD. All types of sanitation were found in middleandlower-income households.There are big differences between rich and poor householdsin terms of the percentage of income paid for the same sanitationtype. The poorest households take more than 1.5years to pay for septic tank construction, and spend around17% of their income on recurrent costs each year. The richesthouseholds have to spend only 5% of their annual incomefor the construction of a septic tank, and spend 0.6%of their income annually on recurrent costs.Effectiveness of sanitation interventions: Actual benefitsper US$1 spent on all urban sanitation options amountedto more than US$1, while the average BCR ranged from2.4 to 6.8. In the ideal scenario, average BCR values rangedfrom 2.7 to 8.6. The highest BCR was found in moving upfrom OD to an on-site pit latrine (ideal 8.6, actual 6.8).Hygiene interventions added to health benefits at low cost,and ratios were higher for sanitation plus hygiene than forsanitation alone.The possibility of reusing treated wastewater and sludgeadds value to the benefits of improved sanitation. In practice,it takes time to establish a complete wastewater managementsystem in any area. The actual value of moving upfrom a septic tank or another on-site treatment facility to acentralized wastewater treatment system realizes a BCR ofbelow 0.5, because high investment and running costs areinvolved, while incomplete wastewater collection and treatmentreduces public health and environmental benefits.At rural sites, the ideal benefits per US$1 input from allsanitation options were more than US$1, while the averageactual BCR ranged from 3.4 to 6.4. The highest actualBCR was associated with on-site pit latrines (ideal 8.0, actual6.4).The actual payback period at urban sites ranged from lessthan 1 year (moving from OD to a pit latrine) to 4.9 (ideal)and 5.1 (actual) years (moving to a centralized wastewatertreatment system). The actual payback period in ruralareas ranged from less than 1 year (moving from OD to apit latrine) to 2.2 years (moving to a biogas digester). Thepayback period associated with a biogas digester is mostlyaccounted for by the complexity and high construction costinvolved in its construction. The payback period of a biogasdigester under the ideal scenario is only 1.8 years. Sucha short payback period should make decision makers andinvestors as well as public service utilities very interested ininvesting in sanitation.Different internal rates of return (IRR) have been found.Thanks to the comparatively low cost of moving up fromthe OD, the highest IRRs were associated with on-site pitlatrines and double-vault composting toilets (more than100%). IRR values were much higher than bank interestrates and returns from government bonds, showing the possibilityof mobilizing different financial resources to investin sanitation systems. However, very low rates of returnare associated with other sanitation options, such as septictanks, cluster wastewater collection and treatment doublevaultcomposting toilets. This shows that special financialpolicies should be applied in order to increase interest ininvestment for sanitation improvement, and to enhanceparticipation. The private sector may not be interested ininvesting in rural sanitation if it does not see sufficient benefitsfrom doing so. Sanitation sector practices have shownthe success of different models of financial resource mobilization,such as revolving funds in cities and towns, and micro-financein rural areas, where households can get loanswith favorable interest and payback conditions.In relation to solid waste management projects, while movingup from conventional solid waste collection and sanitaryland filling to source separation and composting of organicfraction of solid waste, the BCR value varies from lessmarginally less than 1, to 2.5 (actual scenario) and as highas 4.5 under ideal scenario. The major benefits of sustainablesolid waste management include compost products, re-www.wsp.org103