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Dr. Doulaye KonEawag/[email protected] www.sandec.ch/ Financial and Economic Aspectsof Faecal Sludge ManagementFaecal Sludge Management in Developing Countries
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1Cost for whom ?5Savings + benefits of iFSM2How to make cost comparable3Costing examples4Financing mechanism6Agronomic aspectsContents
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4Which financing mechanism ? Indiscriminate and illegal dumpingHealth risks and water pollutionThe challenge
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All FS to designated treatment or disposal site
The challengeSeptic tanks emptied at shorter intervalsPit emptying affordable4Which financing mechanism ?
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1Cost for whom ?Household:cost for pit emptying (and re-construction)Collector/hauler:Cost of vehicles and their O+M (incl. salaries)
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1Cost for whom ?FSTP holder/operator:cost for treatment plant construction, O + MFarmer:Cost of organic fertilizer and organic fertilizer transport
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2 How to make cost comparablee.g.: Price charged to household for pit emptyingCost shaped to allow for comparison of treatment or management systems?Financial costEconomic cost
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2 How to make cost comparableCost elements:Capital (or investment) cost $Annual O + M cost $ p. yearSystems not comparableCost elements:Annualised capital cost $ p. year(~ amortization)Annual O + M cost $ p. yearSystems still not comparableCost elements:Annualised capital cost $ p. ton TSper unit FS treatedAnnual O + M cost $ p. ton TSSystems now comparable !
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3Costing examples100,000 inhabitants20,000 m3/yr - 500 t TS/yr20 % uncertainty rangeComparing cost of FS treatment alternatives
_1099310717.doc
0
10
20
30
40
cost [US$/t TS]
Settling/ thickening tank
Settling ponds
Constructed wetlands
Settling pond, Buobai
Drying beds
Annualised capital cost of different FSTP
_1099311670.doc
0
10
20
30
40
cost [US$/t TS]
Settling/ thickening tank
Settling ponds
Constructed wetlands
Settling pond, Buobai
Drying beds
Annualised capital cost
_1099310873.doc
0
5
10
15
20
25
30
cost [US$/t TS]
Settling/ thickening tank
Settling ponds
Constructed wetlands
Settling pond, Buobai
Drying beds
Annual O+M cost for different FSTP
_1099311788.doc
0
5
10
15
20
25
30
cost [US$/t TS]
Settling/ thickening tank
Settling ponds
Constructed wetlands
Settling pond, Buobai
Drying beds
Annual O+M cost
_1099310528.doc
0
5
10
15
20
25
30
cost [US$/t TS]
Settling/ thickening tank
Settling ponds
Constructed wetlands
Settling pond, Buobai
Drying beds
Annual O+M cost for different FSTP
(20% uncertainty range)
20
30
40
50
60
cost [US$/t TS]
Settling/ thickening tank
Settling ponds
Constructed wetlands
Settling pond, Buobai
Drying beds
Total annual cost
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3Costing examplesComparing cost of FS treatment alternativesfor Nam Dinh (2,500 m3 septage/yr ~ 50 t TS/yr)Treatment optionAConstructed wetlands
BDrying beds +
CSettling / thickening + pondsInvestment cost *O+M cost p. yearCap $ 23,200O+M 1,400
Cap24,350O+M2,010
Cap24,100O+M6,180
Land required200 m2
290 m2
245 m2
(* Note: Cost of one mini tug = $ 24,000 !)OtherBest productsO+M need lowPlant care
Polishing treatment requiredO+M high
Less pumpingorganic fertilizer volumin.O + M high
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In general, funds can originate from:General tax revenuesSubsidies and transfersDirect user chargesSanctionsAdvance disposal feeIncome from sales or recyclables and recovered resourcesDonor money
Tipping feesLicense feesWhich financing mechanism?4Which financing mechanism ?
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TaxesCentralized tax collection and distributionLack of transparencyWeak financial base and poor collection ratesStrong competition for budget shares User charges give the solid waste agency some autonomy by eliminating the need to compete with all other government agencies for their share of general revenue. User charges also may render the solid waste agency more directly accountable to residents for the cost and value of services that they provide. (Cointreau-Levine 1995) Which financing mechanism?4Which financing mechanism ?
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Principles of tariff calculationProcess of service provision(Public) Service providerPrinciple of Cost RecoveryWhich costs should be included/considered?calculation base:provided byTotal cost4Which financing mechanism ?
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Principles of cost recoveryBUT: Which costs should be included/considered in a charge or fee?AND: Which costs or which handling stages should be covered through taxes?cost componentshandling stagesOperation andMaintenance costInvestment costAppropriate Technologies to adjust overall cost to ability-to-pay!What are lessons learnt from solids waste management?Replacement cost4Which financing mechanism ?
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ServiceMoney Flux Leasing Control Fees CooperationFarmersHouseholdsManualEmptiers Waste Collection(NEERE)MechanicalEmptiers (ADSI) National Water& Sanitation Office (ONEA) MunicipalityEngineering Departments DonorsAgenciesWomensCoordination NGOStakeholders analysis4Which financing mechanism ?
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Secondary StakeholdersE1: Official Engineering departmentsE2: ONEAE3: NEEREE4: womens Coordination E5: Donors agenciesCE1BASecondary StakeholdersE1: Official Engineering departmentsE2: ONEAE3: NEEREE4: womens Coordination E5: Donors agenciesCE2E5BA1D1AB1B2C1 E3 E4Secondary StakeholdersE1 Engineering departmentsE2: ONEAE3: NEEREE4: Women CoordinationE5: Donors agenciesE 1InfluenceImportanceStakeholder analysis
Primary stakeholdersA1 Municipality
B1 Mechanical emptiers
B2 Manual emptiers
C1 Farmers
D1 HouseholdsD4Which financing mechanism ?
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A planning tool helping to create the MARKET for a sustainable business 4Which financing mechanism ?
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Financial sustainability of FS emptying service providersPerformance is largely influenced by :Trucks status (2nd-3rd hand)O&M skills and teams efficiency at workDistance to disposal sitePolice harassment4Which financing mechanism ?
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Sustainability of mechanical emptying
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Jeuland (2002) and Steiner (SANDEC) 2002The solution:incentives and sanctionsReversing the money flux ?Household (pit owner)FS treatment plant operatorTransport and Truck capital costAdministration, office cost, etc.O+M costCapital coststakeholdercostmoney flowLegend revenue?~30 FS delivery remuneration~15 AuthoritySubsidySanitation tax~50~45Pitemptying fee~30 Collection companyLicense charge~5 organic fertilizersale~13(~10)(based on Kumasi, Ghana, FSTP @ 200 m3/d)Based on costing data from Ghana4Which financing mechanism ?
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If the dumping of FS is remunerated (Blue line), how much external money (i.e. sanitation tax) is needed to finance a treatment plant and what is the correspondent emptying fee or WTP? Money flux model for decision making (Ouahigouya)4Which financing mechanism ?
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5Health savings and benefits Defining impacts and benefitsFocus on health
_1099375874.doc
Improved FS Management
Health sector
morbidity and mortality reduced
Environment
less pollution
Population
higher amenity
(less odours, emptying affordable, etc.)
Better livelihood
Saving on med. medmedical
treatment cost
Higher productivity
Water res. protected protection
Impact quantification
Monetary
valuation
of :
Monetary
valuation
of :
Monetary
valuation
of :
_1099377359.doc
Improved FS Management
Health sector
morbidity and mortality reduced
Environment
less pollution
Population
higher amenity
(less odours, emptying affordable, etc.)
Better livelihood
Saving on med. medmedical
treatment cost
Higher productivity
Water res. protected
Impact quantification
Monetary
valuation
Monetary
valuation
Monetary
valuation
_1099377448.doc
Improved FS Management
Health sector
morbidity and mortality reduced
Environment
less pollution
Population
higher amenity
(less odours, emptying affordable, etc.)
Better livelihood
Saving on med. medmedical
treatment cost
Higher productivity
Water res. protected
Impact quantification
Monetary
valuation
Monetary
valuation
Monetary
valuation
_1099377505.doc
Improved FS Management
Health sector
morbidity and mortality reduced
Environment
less pollution
Population
higher amenity
(less odours, emptying affordable, etc.)
Better livelihood
Saving on med. medmedical
treatment cost
Higher productivity
Water res. protected
Impact quantification
Monetary
valuation
Monetary
valuation
Monetary
valuation
_1099376353.doc
Improved FS Management
Health sector
morbidity and mortality reduced
Environment
less pollution
Population
higher amenity
(less odours, emptying affordable, etc.)
Better livelihood
Saving on med. medmedical
treatment cost
Higher productivity
Water res. protected
Impact quantification
Monetary
valuation
Monetary
valuation
Monetary
valuation
_1099373941.doc
Improved FS Management
Health sector
morbidity and mortality reduced of excreta-rel. infections
Environment
less groundwater and
surface water
contamination
Population
higher amenity
(less odours, emptying affordable, etc.)
Better
quality
of life
Saving on medical
treatment cost
Higher
productivity
due to less illness
Environment protection
savings
Impact quantification
Monetary
valuation
of :
Monetary
valuation
of :
Monetary
valuation
of :
_1099374649.doc
Improved FS Management
Health sector
morbidity and mortality reduced
Environment
less pollution
Population
higher amenity
(less odours, emptying affordable, etc.)
Better livelihood
Saving on med. medmedical
treatment cost
Higher productivity
Environmental protected protection
Impact quantification
Monetary
valuation
of :
Monetary
valuation
of :
Monetary
valuation
of :
_1099373829.doc
Intervention
Improved FSM
Health sector
morbidity and mortality
reduction of excreta-
related diseases
Environment
less groundwater and
surface water
contamination
Population
higher amenity
(less odours, affordable
emptying, etc.)
Better
quality
of life
Saving on medical
treatment cost
Higher
productivity
due to less illness
Environment protection
savings
Impact quantification
Monetary
valuation
of :
Monetary
valuation
of :
Monetary
valuation
of :
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5Health savings and benefits UncertaintiesHow much does i - FSM reduce diarrhoea incidence ?How to value gained productivity ?Reliability of input data (e.g. cost of 1 diarrhoea case) ?Are there additional important cost and benefits ?
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5Health savings and benefits Estimating impact and benefits from reduced diarrhoea incidenceAssumption:improved FSM (i-FSM) 3 % reduction of morbidity from diarrhoeaSavings and benefits in $ / ton TS
Type of benefit
AFRO-D (Ghana)
SEARO-B (Thailand)
AMRO-B (Argentina)
Averted health treatment cost
67
65
98
Gained days from less illness (productivity gain)
36
56
83
Averted fatalities (productivity gain)
52
17
19
Sum of benefits
155
138
199
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5Health savings and benefits Benefit-cost ratioBenefits and cost in $ p. ton TS:GhanaThailandArgentinaSettling + stab. pondsConstr. wetlands + stabilization pondsSettling ponds + co-treatment with wastewater in pondsFS treatm. cost439259
Haulage cost283838Disposal373737Total cost 108167134Total benefit155138199Benefit-cost1.40.81.5
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6Agronomic aspects Ability and willingness-to-pay for the hygienically safe organic fertilizerWhere and in what form do the farmers want to buy the organic fertilizer ?How much would the organic fertilizer cost ?Where can I buy organic fertilizer ?Main questionsWhat is the agronomic value of the organic fertilizer ?
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6Agronomic aspects Nam Dinh study (2001):-Farmers indicating that they do need organic fertilizer-Organic fertilizer from FS and org. MSW accepted-WTP depends on potential agron. benefit and distance to sales outlet-Tentative WTP max. 15,000 VND (~ $ 1) / 50 kgWillingness-to-pay (WTP)Kumasi (Ghana) study (2001-02):-Peri-urban veg. farmers wtp $ 3.0 / bag of 50 kg or $ 84 p. year-Urban staple crop farmer wtp $ 2.0 /bag of 50 kg or $ 10 p. year
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6Agronomic aspects Nam Dinh study (2001):-Preferred: sale of organic fertilizer in 50 kg bags at coop outletsAgron. value: % of dry solid (recent field studies):-N:Ghana 0.5 Argentina 1.0 Thailand 3.0-P2O5. 0.6 0.4 1.2-Org. matter: 23 27 60Willingness-to-pay (WTP)
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Dr Doulaye Kon
Eawag/Sandec [email protected].+41 44 823 55 53Photo: toiletmuseum.com/techno.htmlThanks !