THE TRUE COST OF
POOR SANITATION
with a contribution fromUDPATE SEPTEMBER 2016

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THE TRUE COST OF POOR SANITATIONPREFACEThe UN Global Goals on Sustainable
Development are a promise to eradicate
extreme poverty and create a fairer, moresustainable world by 2030. Among these isGoal 6, to reach everyone everywhere withsafe water and sanitation, without leaving
anyone behind. Looking at past progress rates,
providing adequate and equitable sanitation
for all looks like a daunting challenge. But weknow it is achievable if sanitation is prioritized,
adequately financed and innovative ways toreach the unserved are found.
The fundamentals haven’t changed sincethe 19th century when early industrialisingcountries implemented sanitation
programmes. More recently, East Asian
economies that have transitioned from low tohigh income status in the last 50 years havedemonstrated that: political prioritizationis critical (Korea’s President Park issued new
decrees building up sanitation policy almost
every year, integrating it with education andrural development); innovative financing isneeded, such as long-term government loans, local
tax collection, and cross-sectoral subsidies ( forexample, through subsidised improved housing
in Singapore); and new regulatory structures
are required, developing accountability
between the powerful and the poor.
The significant amount of funding mobilized
played a role in these success stories, andsimilarly a step change is now required toextend sanitation coverage to those unservedby 2030. Some will say it will be too expensive.
But the costs of failing are far greater, as thisreport highlights.

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In addition to prioritization and finance,
we need creative, innovative approaches toextend sanitation coverage to those living
in challenging environments and facing
environmental and resource constraints. This
includes those living in slums and water-scarceor flood-prone areas, who are increasing in
numbers as a result of urbanisation dynamics
and the effects of climate change. Innovativetechnologies and services are an importantpart of the solution in these contexts.
The private sector has an important roleto play. Global corporations like LIXIL cancollaborate in platforms that advocate forthe political prioritization of sanitation.
With the taxes they pay, they contribute tostrengthening national revenue systems thatcan finance sanitation services. And they can
use their strong expertise and innovative ethos
to solve some of the obstacles to making accessto sanitation universal.
Kaoru Takahashi
Executive Director
WaterAid JapanFOREWORD
It is increasingly well understood todaythat poor sanitation results in poor healthand unnecessary deaths. From John Snow’s1854 discovery that disastrous outbreaks ofdiarrhea, cholera and dysentery could be
prevented simply by removing the pump ona drinking well – preventing the inhabitantsof London’s Soho from drinking fatallycontaminated water – to the latest ‘space-age’technologies supported by the Bill and Melinda
Gates Foundation’s ‘Reinvent the Toilet
Challenge,’ creative thinking and innovation
have been central to the history of sanitationand to saving a countless number of lives.

New research in this report, building on pioneering workfrom the World Bank’s Water and Sanitation Programme,
underscores the hidden costs of poor sanitation. Death anddisease are tearing families apart. Children drop out of school
and fail to reach their potential, especially young girls. The
research shows how poor sanitation has a substantial impact
on the economy. Countries with poor access to sanitation arelosing significant proportions of their GDP – in India, this figure
is over 5%.

However, for all the headway made in the last century, every
day thousands of people die needlessly from diseases causedby poor sanitation. The human capacity to innovate seems
limitless. And yet, while we have sent spacecrafts to explore
worlds beyond our solar system, 1/3 of us living on this planet
today still do not have a safe and clean place to go to use thetoilet. One billion of us still defecate in the open. If we believethat access to a safe and clean toilet is about basic humandignity, the current situation is simply not acceptable. And weknow that the lack of access to basic sanitation has significant
implications for society and our economies.

Jin Montesano
Chief Public Affairs Officer
LIXIL Group Corporation

With such significant social and economic costs associatedwith poor sanitation, the argument for addressing this challenge
cannot be ignored. More investment is needed, not just in termsof capital investment, but also in terms of a broader dialogue anddiscussion among governments, international organizations andthe private sector about the need to prioritize this urgent issue.
The time for concerted, coordinated action is now.

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THE TRUE COST OF POOR SANITATIONRESEARCH
METHODOLOGY
The research cited within this report was conducted by
Oxford Economics on LIXIL’s behalf. The work uses the same
economic assumptions from previous research undertakenby the World Bank’s Water and Sanitation Program (WSP)1,
and uses modelling techniques to build on this prior work to
produce an up-to-date and comprehensive estimation of thecost of poor sanitation.
Oxford Economics carried out bespoke econometric analysis toassess the relationship between costs estimated in the WSP study
and a variety of driver variables. The Oxford Economics model
calculates costs associated to poor sanitation in relation to four ofthe most significant dimensions originally analysed by the WSP:

1. MORTALITY:

2. PRODUCTIVITY:

The economic costfrom related instancesof premature death due
to poor sanitation.

The value of economic
activity lost due tosanitation-related
sickness.

3. HEALTHCARE:

4. ACCESS:

The cost of treating
sanitation-related diseases
including both public- andprivate- sector treatment.

The value of time
foregone due topeople not having
access to a toilet.

This analysis was then used to update the estimated costin countries covered by the WSP research; and create costestimates for other countries not covered in the WSP.
The research looks at the costs of poor sanitation for a totalof 110 countries.

POOR SANITATIONCOST THE WORLD
US$222.9 BILLION
IN 2015Lack of access to sanitation cost the global
economy US$222.9 billion in 2015, up from
US$182.5 billion in 2010, a rise of over
US$40 billion in just five years. This figure
constitutes an average 0.9% of gross domestic
product (GDP) of the countries impacted bypoor sanitation, which is a modest decline
from 1% of GDP five years ago.

US$222.9 billion is more...

US$
222.9
billionThat’s a rise of over

US$40 billion
in just five years

US$
182.5
billion...than 50 times
the cost of the
Rio Olympics...than the
Chinese defense
budget...than the
US educationbudget...than the GDP
of Portugal, Greeceor Vietnam

2015
1

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Economics of Sanitation Initiative, Water and Sanitation Program (WSP),
World Bank http://www.wsp.org/content/economic-impacts-sanition#top

2010
5THE TRUE COST OF POOR SANITATIONThe cost dimensions that leadto such significant costs include:

MORTALITY

WHERE DO
THESE COSTSCOME FROM?
Poor sanitation has a range of negative impacts onsociety and the economy, from causing debilitating anddeadly diseases via the contamination of drinking water
sources and food with pathogen laden human waste,
to associated losses in productivity due to sickness
and toilet access, and increased healthcare costs fromcaring for the sick. Equally important, though difficult
to measure in dollar terms, is the risk of attack faced by
women and girls who must find a secluded place awayfrom their homes to relieve themselves, children andyoung adults missing out on education because there
is nowhere private to manage menstruation with dignity,or children suffering from malnutrition caused bydiarrheal disease.

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US$122.8 BILLION
Diarrhoeal disease, of which unsafe
water, inadequate sanitation and poor
hygiene are the major contributing
factor, is significant in communities
with poor access to sanitation and
it is according to the World HealthOrganization (WHO) the 7th biggest
killer in the world, responsible for 1.5
million deaths in 2012, higher thantuberculosis (900,000 deaths in 2012)and malaria (438,000 deaths in 2015)2.
Every life lost needlessly because ofpoor sanitation has an incalculable
emotional cost on the family of thedeceased. Each premature death also
puts economic strain on the family andcountry of residence, calculated by thediscounted potential income lost due toeach life unlived to its full potential.

PRODUCTIVITY

US$16.5 BILLIONHEALTHCARE

US$56.6 BILLIONACCESS TO
SANITATION

US$27 BILLION

Aside from diarrhea related mortality,
millions of people are unable tomaximize their economic productivity
due to sickness and disease causedby the pathogens contained in humanwaste. Billions of hours of labor are
lost every year, with a significant
impact on the global economy.

Treatment for sanitation relateddisease, whether provided
by the state or paid for by theindividual (in a child’s case, theirguardians) through insurance or
direct payment, takes money out of
the economy that could otherwise
have been spent differently.

In many countries, a significant
proportion of the population does
not have easy access to a toilet andtherefore must use public facilities,
which they must queue for, or finda place for open defecation. Bothqueuing and looking for a site foropen defecation take time that could
otherwise be used for economic
pursuits, and therefore have anegative economic impact.

2

www.who.int/mediacentre/factsheets/fs310/en/

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THE TRUE COST OF POOR SANITATIONMORTALITY: 52%,
US$11.5 BILLIONMORTALITY: 51%,
US$4.6 BILLION$9

PRODUCTIVITY: 2%,
US$0.39 BILLION

billionHEALTHCARE: 43%,
US$9.6 BILLION$22.2

PRODUCTIVITY: 3%,
US$0.29 BILLIONHEALTHCARE: 45%,
US$4.0 BILLIONACCESS: 3%,
US$0.73 BILLIONACCESS: 1%,
US$0.07 BILLIONFORMERLYSOVIET STATES

billionRegionally, in terms of total US$ value,
the economic burden of poor sanitationis heaviest in Asia Pacific, which isaccountable for a cost of US$172.3 billion,
over 3/4 of the total amount.

EASTERNEUROPE

Latin America and the Caribbean, and Africa account for
approximately 10% of the global cost each, with costsin Latin America and the Caribbean being US$22.2
billion and US$19.3 billion in Africa. Combined, Eastern
Europe, the formerly Soviet states and the Middle Eastaccount for the remaining US$9 billion of the global
cost of poor sanitation.

MIDDLEEASTCARIBBEAN
AFRICAIn terms of losses to regional GDP, Asia Pacific suffers
the greatest losses at 1.1% of GDP. The impact on
African GDP caused by poor sanitation is a loss of 0.9%,
in Latin America and the Caribbean it is 0.6% of GDP
and 0.4% in Eastern Europe, the formerly Soviet states
and the Middle East.

ASIA
PACIFICLATIN
AMERICAOn a national level, in terms of total cost, India suffers
by far the most, with US$106.7 billion wiped off GDP
in 2015, almost half of the total global losses, and5.2% of the nation’s GDP. While India comes out top
with huge losses in both total US$ economic losses andas a % of GDP, the rankings of countries by GDP and
total US$ diverge significantly due to the relative sizeof national economies, as shown by the tables on thefacing page.

GLOBAL RANKING: Top 10
COUNTRY
COST(US$ millions)India

106,700

China

35,900Brazil

10,600

Pakistan

7,900

Indonesia

7,400

Mexico5,800

Bangladesh

5,300

Nigeria

3,800

Turkey2,500

Thailand

2,300

GLOBAL RANKING: Top 10
COUNTRY

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COST(Share of GDP)

India

5.2%

Lao PDR

3.2%

Pakistan

3.0%

Niger

2.7%

Sudan

2.6%

Bangladesh

2.4%

Eritrea

2.3%

Haiti

1.7%

Senegal

1.7%

Central African Republic

1.7%

ASIA PACIFICCARRIES THE
HEAVIESTBURDEN OF POORSANITATIONMORTALITY: 75%,
US$14.5 BILLIONMORTALITY: 54%,
US$92.2 BILLION

PRODUCTIVITY: 2%,
US$0.3 BILLION

PRODUCTIVITY: 9%,
US$15.5 BILLIONHEALTHCARE: 16%,
US$3.2 BILLIONACCESS: 7%,
US$1.39 BILLION$19.3

billionHEALTHCARE: 23%,
US$39.7 BILLIONACCESS: 14%,
US$24.8 BILLION$172.3billion

US$1 invested insanitation would givea global economic
return of US$5.5 3.

3
WHO (2012) Global costs and benefits of drinking-water supply andsanitation interventions to reach the MDG target and universal coverage (p4).

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THE TRUE COST OF POOR SANITATIONHOW CANWE TACKLE THE
SANITATIONCRISIS?
Working with our partners from acrossthe spectrum of business and civil society,
we have defined three priority areas thatare key in ensuring sustainable sanitation
solutions for all.

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LIXIL is developing sanitation solutions for regions
where water intensive systems are not appropriate.

1 LITRESEPARATORMICRO-FLUSH
TOILET SYSTEMLIQUIDSOLID

FERTILIZER

SOILCONDITIONER‘GREEN TOILET’
SYSTEMINNOVATION
Often, existing sanitation products are unsuited to the contextsof those living without access to a toilet. For instance, thetypical ‘western-style’ flush toilet uses around 13 litres of waterfor each flush. With around 1/5 of the world’s population livingin areas of water scarcity – often coinciding with areas that
also suffer poor sanitation coverage – such technology is not
appropriate for the circumstances. Sanitation solutions thatmeet the specific needs of underserved communities must be
developed, with considerations including, but not limited to:
»»
»»
»»
»»

Limited water / waterless flushingIntegrating faecal sludge management considerations
Adaptations for various cultural / religious contexts
Reduced cost of purchase, installation and maintenanceOf course, innovation is not limited to designing new sanitation
hardware. There is a key role for novel thinking in supply chainsand logistics to ensure sanitation products reach the end
consumers, in creating social enterprises suited to marketingproducts according to local contexts and in financing on boththe supply and demand sides.

The Micro-Flush Toilet System
improves the water efficiency of
toilet and sewage systems.
Another is the Green Toilet System, designed
to treat human waste in an environmentallyfriendly way by separating liquid and solid
waste and treating solid waste with a local
microorganism to kill pathogens. Users
are encouraged to complete the recycling
process by bringing the solid waste to a
nearby composting site and then using thecompost to fertilize farmland.

SaTo

LIXIL has developed three retooled versions of the SaTo, thefirst of which was launched in Uganda in January this year, withthe others to be commercialized in January 2017. These toilets
provide the same benefits - eliminating the smell and sight ofwaste - but fit the constraints of sub-Saharan Africa, whereconcrete can be more expensive and water is too precious acommodity to use for toilet flushing.

POLITICAL PRIORITIZATIONThe social and economic impacts of improving sanitation
are irrefutable. Politicians at international, national andlocal levels must put sanitation firmly at the top of theiragenda, and reflect this in national planning and budgeting.
The research in this paper shows that sanitation impacts
a range of development areas. The economic boost from
improving sanitation would have a multiplier effect acrossthemes as diverse as gender equality and education,
nutrition and healthcare.
Ensuring the sustainability of new and existing services iscritical to achieving universal access, and this requires
national governments to establish and support themonitoring, operations and maintenance systems needed toensure service failures are quickly and efficiently fixed, andprovision is extended equitably and affordably.
With the 193 UN member states unanimously agreeing on
the Sustainable Development Goals (SDGs) in September
2015, there is unprecedented political will to deliver thepoverty reduction agenda by the 2030 deadline. Goal
6.2 seeks to “achieve access to adequate and equitable
sanitation for all.” This is no mean feat. Of all theMillennium Development Goals, the target for sanitation
was missed by the widest margin. With the SDG targets
now agreed, the focus has shifted to developing robust
implementation plans.
There have been notable successes in delivering vastly
improved sanitation coverage guided by high-level politicalleadership. Governments and policy makers seeking toemulate this success can look to Singapore, South Korea,
Malaysia and Thailand and learn from their experiences.4“If we are able to provide access to basic sanitation,
we will reduce the health risks that people are exposed to.
It will also mean that school attendance will be much more
frequent and, even for the adult population, absence fromwork due to illness will decrease, so it improves their ability
to put food on the table and increases their productivity.
Health affects productivity. So, if we reduce that exposure
to health risks, then certainly we are giving people a betterchance to improve their economic status.

LIXIL is at the forefront of innovating to address the sanitation
crisis. One of the solutions currently on the market is the SaTo(for Safe Toilet) pan, a low-cost, high-quality plastic pan for
use with pit-latrines, initially developed by LIXIL’s American
Standard. The counterweighted trapdoor fits over the holein the concrete slab, allowing waste to flow through, while
sealing shut to keep out flies, other insects and odors. Since
2013, over 500,000 SaTo toilets have been donated tonongovernmental organizations for installation in homes andschools in Bangladesh, and another 530,000 have been soldaround the world to consumers for less than $2 each.

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LOCAL SOLUTIONSFOR LOCAL CHALLENGES

There is value for government in working with the private
sector on this issue. If we could have resolved this issue
alone, we would have done it a long time ago. Innovation
is in the hands of the private sector and civil society.
By seeking synergies between private companies, civilsociety and government, we stand a chance of coming up
with innovative solutions to the problems we are facing
currently. Government must create an environment where
this kind of collaboration can take place.”

SaTo

Mr. Patrick Tom Odongo
Nairobi County Executive Committee,
Member for Urban Renewal and Housing

4
For more information, see WaterAid, Achieving total sanitation andhygiene coverage within a generation – lessons from East Asia, 201611

THE TRUE COST OF POOR SANITATION

3COLLABORATION & COORDINATION
Addressing the sanitation crisis is a complex issue thatno single person or institution could hope to solve alone.
Collaboration among diverse players with different skill sets
will drive disruption and encourage the innovation the situationneeds. Coordinated efforts led by national governments working
alongside intergovernmental organisations, NGOs, academia
and the private sector will ensure brainpower and funding is put
behind the most promising solutions. This approach enables
each stakeholder to efficiently leverage their core skills, thereby
ensuring that effective programmes can be taken to scale with
the necessary speed.
The Sanitation and Water for All partnership, a global
partnership to achieve universal access to clean waterand adequate sanitation, has endorsed four ‘collaborative
behaviours’ that governments and donor agencies should
practice to ensure that financing can be as efficient andeffective as possible.

A. ENHANCE GOVERNMENT LEADERSHIPOF SECTOR PLANNING PROCESSES:

Government leadership is essential for directing andcoordinating resources – including external support – aroundnationally agreed sector priorities, strategies and plans.

B. STRENGTHEN AND USE COUNTRY SYSTEMS:

Core country systems (i.e. management of public finances,procurement and contracts) need to be made more effective
and transparent. These systems are key to financing
expenditures for water and sanitation services as well as formonitoring and regulating these services.

The global private sector has an important role to play.
Fundamentally, the private sector must contribute in three
mission critical areas:»» Businesses have the global reach and supply
chains to deliver sanitation solutions to those incommunities with no access to toilets.
»» Companies have the research and development
resources, and capabilities to develop innovative
services and products, turning a concept into amarketable product with the speed needed toaddress the sanitation crisis.
»» Creating a ‘new normal’ in behaviour and attitudes
through marketing and market development
activities. Many global corporations have thecritical skillsets to increase consumer demandfor proper sanitation by changing what areconsidered to be social norms in off-gridcommunities. There is good work being donein this area, but greater resources and more
research needs to be committed to create thechange we want to see – making access to safe
sanitation the ‘new normal’.
One example of public-private collaboration to tackle sanitationis the Toilet Board Coalition, co-founded by LIXIL and partners
in 2014. The Toilet Board Coalition seeks to catalyse a new
sector for innovative technology and business models that
improve access to toilets in a commercially sustainable way.

C. USE ONE INFORMATION AND MUTUALACCOUNTABILITY PLATFORM:

In order to decide where to invest and how to sustain andimprove water and sanitation services, it is critical that
sectors have reliable data and hold each other to accounton progress.

D. BUILD SUSTAINABLE WATER AND SANITATIONSECTOR FINANCING STRATEGIES:

Transparency and predictability of resources is important inallowing governments to exercise a leadership role. Sector
financing strategies that incorporate financial data on taxes,
tariffs and transfers and realistic estimates for all costs are
critical components of effective sector planning in the medium
and longer term.

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13THE TRUE COST OF POOR SANITATION

IN CLOSING
Decisive actions guided by determined
political leadership are needed tocreate sustainable, transformativechange in sanitation coverage.
Governments will need support froma range of actors, and LIXIL as wellas other like-minded partners arecommitted to playing a part.
LIXIL aims to make its own contribution byenabling improved access to sanitation andhygiene for 100 million people by 2020. Productinnovation is where the company’s strength lies,
and innovations like the SaTo portfolio will help it
achieve this target.
However, more organizations in both the public
and private sector need to take sanitation more
seriously and recognize the impact of improving
access to sanitation, both economic and societal.
As this report makes evident, there is significant
value in addressing one of the most pressing
social and public health challenges of our time.
But only with all sectors of society working together
can we tackle the myriad of issues relating to poor
sanitation and begin to drive change.

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LIXIL is the most comprehensive and connected global
company in the housing and building industry, with
operations encompassing more than 80,000 employees
in over 150 countries. Delivering core strengths inwater, housing, building and kitchen technologies, ourbrands including LIXIL, GROHE, American Standard
and Permasteelisa are leaders in the industries andregions in which they operate, bringing better living
solutions today and for future generations.
www.lixil.com

Oxford Economics was founded in 1981 as acommercial venture with Oxford University’s businesscollege to provide economic forecasting and modellingto UK companies and financial institutions expanding
abroad. Since then, it has become one of the world’s
foremost independent global advisory firms, providing
reports, forecasts and analytical tools on 200 countries,
100 industrial sectors and over 3,000 cities. Oxford
Economics’ best-of-class global economic and industry
models and analytical tools give an unparalleled ability
to forecast external market trends and assess theireconomic, social and business impact.

WaterAid’s vision is of a world where everyone hasaccess to safe water and sanitation. The internationalorganisation works in 37 countries across Africa, Asia,
Central America and the Pacific Region to transform lives
by improving access to safe water, hygiene and sanitation
in some of the world’s poorest communities. Since 1981,
WaterAid has reached 23 million people with safe water
and, since 2004, 21 million people with sanitation.
For more information, visit www.wateraid.org.

Edited and designed by salt communications
Published August 2016