Strong Economies for Thriving Markets

 

Unimproved sanitation is a major barrier to economies worldwide. Global economic losses associated with inadequate sanitation are estimated at US$260 billion per year, costing countries between 0.5 percent and 7.2 percent of their GDP (WSP 2005, Sanitation Drive 2015 2014a). In 2006 in India alone, inadequate sanitation resulted in a loss of US$53.8 billion due to losses from health, water, time spent accessing sanitation services, and tourism, accounting for 6.4 percent of India’s total GDP (WSP 2011). From a business perspective, such economic losses suppress consumer purchasing power, hinder effective governance, and prevent investment in the infrastructure that underlies a stable business climate (e.g., roads, power generation, water storage).

If action is taken and the MDG target on sanitation is met, the global economic benefit is estimated at US$54 billion annually (Hutton 2012). This economic development translates into more investment, improved infrastructure and services that support business development, and potential consumers spending less on health care (and perhaps more on goods and services). The countrywide economic benefits from improved sanitation and hygiene practices are not only very important, but also often cost-effective, with a high return on investment. According to WHO, the global economic return on sanitation spending is US$5.50 per every dollar invested (ibid.), while other estimates suggest it may be even higher. This is more than double the return on investment for providing access to drinking water (see Figure 5) (ibid.). In short, sanitation interventions are sound long-term investments that help create and maintain economic development.