Economic Assessment of Sanitation Interventions in Vietnam - WSP

Economic Assessment of Sanitation Interventions in Vietnam | Executive Summary(ideal values). In rural sites, the actual BCR values rangefrom 2.0 to 9.7, and the ideal values are from 2.7 to 11.7.In both urban and rural areas, on-site sanitation facility ofpit latrines brings the highest BCR, thanks to the lowerrelative cost of rural sanitation technologies. Centralizedwastewater treatment plants require the highest investment,operation and maintenance costs compared withon-site sanitation facilities. Hygiene interventions addedto health benefits with a low cost per household covered,giving higher BCRs than with sanitation interventionsalone. The reuse of treatment wastewater and sludge alsoadds economic value at relatively low cost.The average payback period of investment in urban sitesranged from less than 1 year (moving up from open defecation[OD] to pit latrine) to 5 years (from OD to centralizedwastewater treatment system). The average paybackperiod in rural areas ranged from under 1 year (movingup from OD to pit latrine) to 2 years (from OD to biogasdigester).Different internal rates of return (IRR) have been found.IRR of over 100% were found in all technologies exceptwastewater management at both rural and urban sites. Suchrates of return are significantly higher than the return onmany other investments such as interest rates available fromthe banks or government bonds, showing the possibilitiesof mobilizing different financial sources to invest in sanitation.For urban wastewater management, rates of returnaveraging 50% were found, which is still a highly favorablereturn for the use of public investment funds.In both urban and rural areas, the economic benefits realizedby populations beginning with no or unimproved sanitationexceed the economic benefits seen by populationsmoving up from one improved sanitation option to another.This is because populations already using improvedsanitation have already seen some benefit, so moving themup the ladder leads to fewer marginal benefits. For example,urban populations with a toilet and septic tank alreadyenjoy time savings and some health benefits provided bythat option, and therefore the improved management ofwastewater (such as that provided by a centralized wastewatertreatment system) provides fewer marginal health benefitsand no access time savings. However, the quantitativeanalysis does not capture fully some of the key argumentsfor investing in improved wastewater management, such asintangible benefits, environmental and averted water pollutionbenefits. Furthermore, when current sanitation optionsbecome dysfunctional or costly to maintain and thereforeneed replacement, the policy maker should comparethe economic performance of alternative sanitation optionsto OD, because if the current systems cease to function,their benefits will also be removed.D2. SOLID WASTE MANAGEMENTFigure B presents BCR from projects supporting improvedsolid waste management. The actual BCR valuesrange from 0.9 to 2.5, while ideal BCR values range from1.4 to 4.5. Ideal values are 49% to 61% higher than actualvalues due to the low participation rates of householdsin projects. Sanitary landfill increases the value of BCRfrom both reduced water treatment costs and increasedFIGURE B: BENEFIT-COST RATIOS FOR SOLID WASTE MANAGEMENT IMPROVEMENT PROJECTS0 to 1(No SWM to SW collection & Unsanitary Landfill)Bac Giang (U6)2 to 4(SWM with source separation + Composting)Hanoi (U7)0 to 2(No SWM to SW collection & Sanitary Landfill)Cua Lo (U8)0 to 1(No SWM to SW collection & Unsanitary Landfill)Bac Giang (R1)BCR actualBCR ideal0 1 2 3 4 5BCR Valueswww.wsp.orgvii