Economic Assessment of Sanitation Interventions in Vietnam - WSP

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