Supply side costs of water and sanitation

Review of Week 3 of Water Supply and Sanitation Policy in Developing Countries Part 1: Understanding Complex Problems (University of Manchester, Coursera)

An informative module. Here’s a summary:

Costs (as well as benefits) of water supply are hard to estimate. But these can be inferred from contract bidding documents, because contractors are often asked to break down the cost components.

Calculating costs starts with choosing the unit of analysis (e.g. cost per household per month). Economies of scale and discounting (cost of capital) should be considered, because financing represents a large proportion of the cost. Concepts such as present value, amount of loan, annual payment and cost recovery factors are important.


Cost components of a piped water supply system include the raw water supply, storage and transmission, treatment, and distribution, as well as collection of the wastewater, treatment and damages associated with discharge.

Real costs of piped water and sanitation services are high, but people are usually unaware of these costs because their payments are subsidised or utilities running deficits. Wastewater externalities add to the real cost of such services, but are often overlooked.

There are also non-piped technologies that include on-site water supply systems (e.g. borehole wells) and point-of-use treatment technologies (e.g biosand filters).


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