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‘The potential is clear’: Unlocking the economic value of sanitation

‘Sanitation is finally being recognised for what it can be: an opportunity that offers economic and social impact value for investors.’

Graphic image showing a photo of hands being washed in black and white. In the background is an image of coins some in gray and some in blue hues. Sofía Kuan/TNH

From hospitals and schools to homes and workplaces, 3.6 billion people right now need access to safely managed sanitation. That is a very large user base waiting for toilets, handwashing facilities, hygiene products, systems that move sewage, and much more. 

 

As leaders and decision makers gather in New York this week for the UN’s 2023 Water Conference, it is time for experts, funders, and policymakers to tap into the so-called ‘dirty’ side of water. 

 

Sanitation has long been sidelined as an intractable burden, but it is now finally being recognised for what it can be: an opportunity that offers economic and social impact value for investors, as well as access to basic human rights and services for those in need.

 

Approaching sanitation from an economic investment perspective can convert the cost of providing sanitation from $200 per person to a net value of $10 per person. According to a new report from the UN’s Sanitation and Hygiene Fund (SHF), an estimated $22 billion can be unlocked in economic gains, job creation, women’s empowerment, and environmental protection in five countries alone by 2030: Benin, Kenya, Nigeria, Sierra Leone, and Uganda. 

 

The cost of inaction is great. At the current pace, safely managed sanitation won’t be globally achieved until into the next century. Poorly managed sanitation and wastewater will continue to contribute to costly global catastrophes that include growing antibiotic resistance and escalating greenhouse-gases (faecal sludge and poorly managed wastewater contribute methane and nitrous oxide emissions).

 

The economics of sanitation

 

There are several components to the sanitation economy. One is the toilet economy, which encompasses products and services (public or private) that provide safe toilet and handwashing access for all, including those most in need.

 

Another component is the smart sanitation economy, which digitises sanitation and hygiene systems to optimise data for operating efficiency, plus consumer use and health information insights. 

 

There is also the circular sanitation economy, which connects multiple forms of biological waste — from collection to treatment to reuse and recovery of nutrients and water. This creates value-added products such as renewable energy and organic fertilisers.

 

In addition, there is also the menstrual hygiene marketplace. This covers menstrual hygiene materials and the development of related infrastructure, products and services, including disposal and femtech solutions.

 

“A functioning menstrual hygiene marketplace would offer women and girls the agency to choose, use, and dispose of the products they require, as well as opportunities to increase their own incomes.”

 

WaterAid offers compelling context on menstrual hygiene: On any given day, 800 million women and girls are menstruating, yet 300 million of them lack the facilities and supplies they need. 

 

A functioning menstrual hygiene marketplace would offer women and girls the agency to choose, use, and dispose of the products they require, as well as opportunities to increase their own incomes. In just the five countries assessed in the SHF report, the estimated value of the menstrual hygiene marketplace is expected to reach $3 billion when universal access has been achieved.

 

Human waste offers another untapped goldmine. Today’s technologies, combined with new business models, can convert waste into an array of marketable energy, agricultural, and protein-rich resources: biofuels, bio-gas, and electricity; phosphorus, potassium, and nitrogen – all fundamental nutrients in agricultural fertilisers. 

 

Instead, every year, 3.8 trillion litres of human waste that could be reused is wasted. And because people don’t always have drains, valuable waste creates breeding grounds for costly diseases – from malaria to polio and cholera, which is breaking records in places it has not been seen in decades. 

 

A new approach

 

Creating environments conducive to generating both financial and social impact is not new. There is a lot to be said in favour of the sanitation economy, which can offer far-reaching profits with impact where there is the highest burden and lowest means to respond, in urban and rural settings alike. 

 

To push things forward, entities like SHF are navigating a key missing link: catalytic financing to de-risk investments at scale, and new financing opportunities to leverage investments to unlock the massive market potential. 

 

“Putting the sanitation economy to work helps governments and investors alike see improved sanitation, hygiene, and menstrual health as not just a humanitarian need.”

 

Grant-based financing can be employed with financial intermediaries, such as Development Finance Institutions, Multilateral Development Banks, and government donors, using blended finance instruments to structure and co-finance bespoke investable opportunities.

 

Will this new approach work? No matter which way we’ve looked at it, the numbers look good, the potential is clear, and the benefits are far reaching.

 

Getting sustainable sanitation, hygiene, and menstrual hygiene management into more households, schools, healthcare facilities and communities will increase soil fertility and crop yields, reduce water pollution and increase water security, lower the disease burden, increase economic well-being, and benefit women and girls in particular, whose lives and education are burdened by a lack of basic sanitation that most of us take for granted. Promoting women and girls’ empowerment is key, and we want to see lots more inclusion and innovation.

 

Putting the sanitation economy to work helps governments and investors alike see improved sanitation, hygiene, and menstrual health as not just a humanitarian need. These investments are quite literally waste-not-want-not in action, an accelerator of jobs, economic growth, and new trade partners, as well as the economies they underpin.

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