Financing Sanitation Projects Sanitation important Millennium Development Goal

Financing Sanitation Projects

Sanitation - important Millennium Development Goal Defining Sanitation • Safe management of human excreta. • Sanitation MDG target looks at improved sanitation facilities • Improved facility prevents contact with human excreta: – – Flush or pour-flush to latrine pit, septic tank or piped sewer Ventilated improved pit (VIP) latrine Pit latrine with slab Composting toilet • Having (access to) a toilet is important, but what happens after defecation is even more important • 66% of SE Asians have a toilet. Only 4% connect to piped sewer

800 million East Asians lack adequate sanitation Some dirty realities • 190, 000 deaths each year from diarrheal disease, mostly children • Millions suffer indignity and deprivation associated with the need to defecate in public • Many more millions, their neighbors, suffer the unpleasant outcomes • Marginalized poor are burdened most by invisible costs of inadequate sanitation • Reaching the Sanitation MDG is unlikely to benefit the worst-affected

Strategic investments needed to close sanitation gap In the past • Emphasis on building infrastructure rather than delivering sustainable improvements to sanitation services • Poor arrangements for operation and maintenance resulting in disrepair • Very little community involvement In the future • Promote self-financing of sanitation facilities by households • Use public finance to stimulate demand for improved sanitation, subsidize large scale public infrastructure to make it bankable • Involve private sector and stimulate innovative local solutions

Are sanitation projects bankable? • Micro-financing of household toilet and on-site disposal is especially feasible with households in dense urban areas • Communal discharge and treatment solutions can be feasible if users pay cost-recovering fees • Rehabilitation of defunct wastewater treatment plants is feasible if user fee is charged to those connected to sewer • Government subsidies may be needed to cover some capital costs User fees are key!

Sewer System & WWT Plant, Nuwara Eliya, Sri Lanka Project Profile • 6 kilometers of sewer lines • Anaerobic Baffled Reactor Tank • Mechanized treatment system Total estimated Cost - $250, 000 Pro forma: 280 Homes $250, 000 infrastructure cost 5% rule: Pay no more then 5% of annual income on WATSAN: subsidy amount • Annual income = $3750 Amount to borrow • Annual water bill = $75 $10, 000 Annual depreciation payment (10 years) $10, 000 Annual interest payment • Annual sewer bill = $80 $20, 000 Total annual payment • 5% of $3750 = $187. 50 $71 Cost per home per year TOTAL WATSAN = $155/yr $9 Operation cost per year 60% $100, 000 $0. 22 Dollars Per Day Is Project feasible? √

WTP and Sewer For Public Market, San Fernando, PH Project Profile • Treatment plant for 80 Cu. Meters/day • Two lift stations • 850 meters low-pressure pipeline Total estimated Cost - $110, 000 Pro forma: Expenses $29, 268 Annual Amortization Willingness to Pay & Sustainability: $9, 756 Operating Expense • Supported by Social Marketing Annual Expense • Strong support of Mayor Revenues • Good technology $25, 447 Market fee increase $12, 804 Comfort room fees • Positive balance sheet projections $39, 024 $2, 012 Connection fees $40, 263 Annual revenue Is Project feasible? √

Septage Management Program Dumaguete City, Philippines Project Profile • Desludging for 22, 000 homes • Project owned by city to be turned over to water district • Fee based on water consumption (2 pesos per cubic meter) • Fee will be collected as add on to water bill Pro forma: $414, 634 Costs Sustainability: Infrastructure cost • Project widely supported by community $80, 000 Annual Operating Cost 26, 829 Annualized capital cost $107, 300 Annual cost to be recovered Revenue $4. 91 22, 000 $108, 200 • Annual fee of $4. 91 (average) less then one day’s wage – very affordable • Project supported by IEC campaign Annual septage fee per house Number of houses Total Revenue Is Project feasible? √

ADFIAP / ECO-Asia MOU Help translate DFI interest into action • Member survey - determine interest in water/sanitation financing • Regional workshop – water/sanitation champions • Regional workshop - risk mitigation for water/sanitation financing • Development of toolkit on risk mitigation • Support development of water sector loan products • Facilitate co-financing and credit guarantees

THANK YOU! Niels van Dijk Deputy Chief of Party ECO-Asia T 662 651 8977 ext 113 E nvandijk@eco-asia. org