Economic impacts of sanitation in the Philippines : a five-country study conducted in Cambodia, Indonesia, Lao PDR, the Philippines and Vietnam under the economics of sanitation initiative (ESI)

The inclusion of health was based on well-established links between sanitation and disease incidence. Water impacts were deemed important because poor sanitation is one of the causes of water pollution. This, in turn, leads to costly avertive behavior in response to less usable water resources. Moreover, pollution also affects the productivity of water resources by way of lower fisheries output. Other welfare impacts were included because the absence of sanitary facilities affects people in terms of the time spent accessing facilities and productivity in work and school. Finally, tourism was included in the study because poor sanitation facilities could influence the country"s attractiveness as a tourist destination. The analysis interpreted sanitation as activities that are related to human waste, particularly excreta. However, there were instances in which sanitation as it relates to gray water and solid waste were also included. In measuring the impacts, the study used standard peer-reviewed methodologies. An attempt was also made to distinguish between financial and economic costs. Where possible, the analysis was conducted at the regional level and aggregated to the national level. Overall, the study estimated that poor sanitation led to economic costs in the order of US$1.4 billion or PhP 77.8 billion per year. This was equivalent to about 1.5% of GDP in 2005 and translated to per capita losses of US$16.8 or PhP 923.69 per year. The health impacts represented the largest source of quantified economic costs. Estimated to be about US$1 billion, this item explained about 72% of total economic costs. The second most important economic impact was on water resources, which accounted for about 23% of the total costs. The remainder was divided between impacts on other welfare impacts and tourism. (Author abstract, modified)