Economic Assessment of Sanitation Interventions in Vietnam - WSP

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Economic Assessment of Sanitation Interventions in Vietnam | Methodsbased on annualized investment cost (taking into accountthe estimated length of life of hardware and software components)and adding annual maintenance and operationalcosts. For data analysis and interpretation, financial costswere distinguished from non-financial costs, and costs weredisaggregated by financier. Information from the documentsof sanitation projects and providers as well as marketprices was supplemented with interviews with key resourcepeople to ensure correctness of interpretation, and to enableadjustment where necessary.For solid waste management, capital costs included construction,equipment and project management costs, whileoperation and maintenance costs included labor, rent offacility and warehouse, amortization, electricity, chemicals,repair, replacement, waste transportation and others.3.3.4 BENEFIT ESTIMATION METHODOLOGYEconomic evaluation of sanitation interventions should bebased on sufficient evidence of impact, thus giving unbiasedestimates of economic efficiency. Hence the appropriate attributionof causality of impact is crucial, requiring a robuststudy design. Annex Table A4 presents alternative study designsfor conducting economic evaluation studies, startingat the top with the most valid scientific approaches, downto the least valid at the bottom. Given that the most validscientific approach (a randomized time-series interventionstudy) was not possible within the timeframe and resourcesof this study, the most valid remaining option was to constructan economic model for assessment of the cost-benefitof providing sanitation interventions and of moving fromone sanitation coverage category to the next. A range of datawas used in this model, reflecting both households with andwithout improved sanitation, to ensure that before and afterintervention scenarios were most appropriately captured.This included capturing the current situation in each type ofhousehold (e.g. health status and health seeking, water practices,time use), as well as understanding attitudes towardspoor and improved sanitation, and the factors driving decisions.These data were supplemented with evidence fromother local, national and international surveys and data setson variables that could not be scientifically captured in thefield surveys (e.g. behavior and risk factors for health assessment).Figure 8 shows an overview of the methods for estimatingthe benefits of moving up the sanitation ladder. Theactual size of the benefit depends on the specific sub-type ofsanitation intervention implemented.The specific methods for evaluating sanitation benefits are describedbelow. For a mathematical representation of the methodology,refer to the aggregating equations in Annex A6.Health: For the purposes of cost-benefit and cost-effectivenessanalysis, three types of disease burden were evaluated:the number of cases (incidence or prevalence); the numbersof deaths; and disability-adjusted life-years (DALYs). TheFIGURE 8: OVERVIEW OF METHODS FOR ESTIMATING FIELD-LEVEL BENEFITS OF IMPROVED SANITATIONBENEFITCATEGORYPOPULATION WITHUNIMPROVED SANITATIONPOPULATION WITHIMPROVED SANITATIONBENEFITESTIMATEDHEALTHData on health risk per person,by age category & socioeconomicstatusGeneric risk reduction,using international literatureAverted health care costs,reduced productivity loss,reduced deathsWATERData on water source andtreatment practicesObserved changesin practices in populationswith improved sanitationReduced water sourcingand water treatment costsACCESS TIMEData on time to access toiletper person per dayObserved reductions in timeto access toiletOpportunity cost of timeapplied to time gainsINTANGIBLESAttitudes and preferencesof householders to sanitationBenefits cited of improvedsanitationStrength of preferences fordifferent sanitation aspectsand willingness to payREUSEPractices relatedto excreta reuseValue gained, based onsales or own use20Economic Assessment of Sanitation Interventions
Economic Assessment of Sanitation Interventions in Vietnam | Methodsdiseases included were all types of diarrheal disease, helminths,hepatitis A and E, trachoma, scabies, malnutritionand diseases related to malnutrition (malaria, acute lowerrespiratory infection, measles) (see Annex Table A7). Healthcosts averted through improved sanitation were calculatedby multiplying overall health costs per household by therelative health risk reduction resulting from the improvedsanitation and/or hygiene measures. Health costs weremade up of disease treatment costs, productivity losses andlosses through premature mortality. For cost-effectivenessanalysis, DALYs were calculated by combining the morbidityelement (made up of disease rate, disability weight andillness duration) and the mortality element (mortality rateand life expectancy). Standard weights and disease durationwere sourced from the Global Burden of Disease study, andan average life expectancy for Vietnam of 72 years was used(Vietnam GSO, 2008).• Rates of morbidity and mortality were sourced fromvarious data sets for three age groups (0-4 years, 5-14years, 15+ years), and compared and adjusted to reflectlocal variations in those rates (WHO, 2000).National disease and mortality rates were adjusted torates used for the field sites based on socio-economiccharacteristics of sampled populations. As not allfecal-oral diseases have a pathway from human excreta,an attribution fraction of 0.88 was applied forthese diseases. Skin diseases are attributed 0.80 dueto poor hygiene. Methods for the estimation diseaseand mortality rates from indirect diseases via malnutritionare provided in the ESI Impact study report(WSP, 2009).• Health care costs were calculated by applying treatment-seekingrates for different healthcare providersto the disease rates, per population age group. Thecalculations also took into account hospital admissionrates for severe cases. Unit costs of services andpatient travel and sundry costs were applied basedon treatment-seeking.• Health-related productivity costs were calculated byapplying time off work or school to the disease rates,per population age group. The economic cost of timelost due to illness reflects an opportunity cost of timeor an actual financial loss for adults with paid work.The unit cost values were based on the average incomerates per location. For adults a rate of 30% ofaverage income was applied, reflecting a conservativeestimate of the value of time lost. For children aged5-14 years, sick time reflects lost school time, whichhas an opportunity cost, valued at 15% of averageincome. For children under 5, the time of the childcarer was applied at 15% of average income. Valuesare provided in Table 11.• Premature death costs were calculated by multiplyingthe mortality rate by the unit value of a death.Although premature death imposes many costs onsocieties, it is difficult to value precisely. The methodemployed by this study – the human capital approach(HCA) – approximates economic loss by estimatingthe future discounted income stream froma productive person, from the time of death until theend of (what would have been) their productive life.While this value may undervalue premature loss oflife, as there is a value to human life beyond the productiveworth of the workforce, the study faced limitedalternative sources of value due to lack of studies(e.g. value-of-a-statistical-life 10 ). Values are providedin Table 11, including VOSL adjusted to Vietnamfrom developed country studies.• Risk reductions of illness and death associated withimproved sanitation and hygiene interventions wereassessed from the international literature, and wereapplied and adjusted to reflect risk reduction in localsettings based on baseline health risks and interventionsapplied. Risk reductions depended on whetherthe intervention provided a safe place to defecatewithout full isolation or treatment (basic sanitation),or whether a high degree of isolation and/or treatmentwas achieved (basic sanitation + wastewatermanagement). The reductions in diarrheal disease,other fecal-oral disease and diseases related to resultingmalnutrition were applied as follows: basic sani-5VOSL studies attempt to value what individuals are willing to pay to reduce the risk of death (e.g. safety measures) or willing to accept for an increase in the risk ofdeath. These values are extracted either from observations of actual market and individual behavior (‘hedonic pricing’) or from what individuals stated in relation totheir preferences from interviews or written tests (‘contingent valuation’). Both these approaches estimate directly the willingness to pay of individuals, or society, fora reduction in the risk of death, and hence are more closely associated with actual welfare loss compared with the HCA. No VOSL studies have been conducted inVietnam.www.wsp.org21
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Economic Assessment ofSanitation In
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Page 17: ForewordTarget 10 of the Millennium
Page 22 and 23: Glossary of TermsBenefit-cost ratio
Page 24 and 25: AcknowledgmentsThe Economics of San
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Page 38 and 39: PopulationSelected Development Indi
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Economic Assessment of Sanitation I
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VI.Costs of Improved Sanitationand
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ReferencesAcharya A, Paunio MK and
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ANNEX 1: PROGRAM APPROACH ANALYSIST
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ANNEX TABLESANNEX A. STUDY METHODST
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