Faecal Sludge Management in Developing Countries Financial and

Faecal Sludge Management in Developing Countries Financial and Economic Aspects of Faecal Sludge Management Dr. Doulaye Koné Eawag/Sandec Doulaye. Kone@eawag. ch www. sandec. ch 1

Contents 1 Cost for whom ? 2 How to make cost comparable 3 Costing examples 4 Financing mechanism 5 Savings + benefits of i. FSM 6 Agronomic aspects 2

The challenge 4 Which financing mechanism ? è All FS to designated treatment or disposal site è Septic tanks emptied at shorter intervals è Pit emptying affordable 4

Cost for whom ? 1 Household: cost for pit emptying (and reconstruction) Collector/hauler: Cost of vehicles and their O+M (incl. salaries) 5

Cost for whom ? 1 FSTP holder/operator: cost for treatment plant construction, O + M Farmer: Cost of organic fertilizer and organic fertilizer transport 6

2 How to make cost comparable Financial cost Economic cost Cost shaped to allow for comparison of treatment or management systems ? e. g. : Price charged to household for pit emptying 7

2 How to make cost comparable Cost elements: • Capital (or investment) cost • Annual O + M cost $ Systems not comparable $ p. year Cost elements: • Annualised capital cost $ p. year (~ “amortization”) • Annual O + M cost Systems still not comparable $ p. year Cost elements: • Annualised capital cost $ p. ton TS per unit FS treated • Annual O + M cost $ p. ton TS Systems now comparable ! 8

3 Costing examples Comparing cost of FS treatment alternatives • 100, 000 inhabitants 20, 000 m 3/yr - 500 t TS/yr • 20 % uncertainty range 9

3 Costing examples Comparing cost of FS treatment alternatives for Nam Dinh (2, 500 m 3 septage/yr ~ 50 t TS/yr) Treatment option A Constructed wetlands Investment cost * O+M cost p. year Land required Other • Cap $ 23, 200 m 2 • “Best” products • O+M need low • Plant care 290 m 2 • Polishing treatment required • O+M high 245 m 2 • Less pumping • organic fertilizer volumin. • O + M high • O+M 1, 400 B Drying beds + • Cap 24, 350 • O+M C Settling / thickening + ponds 2, 010 • Cap 24, 100 • O+M 6, 180 (* Note: Cost of one mini tug = $ 24, 000 !) 10

Which financing mechanism? In general, funds can originate from: 4 Which financing mechanism ? § General tax revenues § Subsidies and transfers § Direct user charges § Sanctions § Advance disposal fee § Income from sales or recyclables and recovered resources § Donor money § Tipping fees § License fees

Which financing mechanism? 4 Which financing mechanism ? Taxes § Centralized tax collection and distribution § Lack of transparency § Weak financial base and poor collection rates § Strong 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)

Principles of tariff calculation 4 Which financing mechanism ? Principle of Cost Recovery Principle of Equivalence calculation base: Process of service provision calculation base: Scope and type of service provided by provided to service Beneficiary (Public) Service provider charge / fee Beneficiary 1 Beneficiary 2 Beneficiary 3 Which costs should be included/ considered? Total cost How should costs be distributed amongst beneficiaries? Beneficiary n

Principles of cost recovery 4 Which financing mechanism ? BUT: Which costs should be included/considered in a charge or fee? External Cost Disposal Treatment of FS Replacement cost Operation and Maintenance cost Investment cost components Haulage Primary collection / Emptying handling stages AND: Which costs or which handling stages should be covered through taxes? § Appropriate Technologies to adjust overall cost to ability-to-pay! § What are lessons learnt from solids waste management?

Stakeholders analysis Households National Water & Sanitation Office (ONEA) 4 Which financing mechanism ? Farmers Engineering Departments Mechanical Emptiers (ADSI) Municipality Manual Emptiers Service Money Flux Waste Collection (NEERE) Leasing Control Fees Cooperation Donors Agencies Women’s Coordination NGO

Importance 4 Which financing mechanism ? Stakeholder analysis A B B 1 A 1 B 2 C 1 E 3 E 4 Primary stakeholders A 1 Municipality D 1 B 1 Mechanical emptiers B 2 Manual emptiers C 1 Farmers D E 1 D 1 Households Secondary Stakeholders C E 2 E 1: Official Engineering departments E 5 E 2: ONEA E 1 Engineering departments E 2: ONEA E 3: NEERE E 3 NEERE : E 4: women Coordination ’s E 4: Women Coordination E 5: Donors agencies : E 5 Donors agencies Influence

A planning tool helping to create the MARKET for a sustainable business Vehicle capital and O+M cost Collection company Household (pit owner) O+M cost Discharge premium Li ce ns in g Sanitation tax Capital cost FS treatment plant Subsidy Profits Administration, office cost, etc. Pit emptying fee 4 Which financing mechanism ? “Reversing the money flux” External Funds Biosolids sale Municipal authority Legend stakeholder cost revenue money flow 17

Financial sustainability of FS emptying service providers 4 Which financing mechanism ? Admin Ouahigouya Bukina Faso 2006 Fuel+oil Wages Bamako, Mali 2006 Fuel+Oil O&M 2% 15% 1% 2% 24% Police Wages Insurance Parking 20% 25% 11% License Administration Performance is largely influenced by : § Trucks status (2 nd-3 rd hand) § O&M skills and teams efficiency at work § Distance to disposal site § Police harassment §… 18

Sustainability of mechanical emptying need for improvement Current money flow and innovation ? Municipality FS sale Farmers 12 € O & M Costs 11. 5 € Mechanical Emptier Pit emptying fee Profit - 1. 0 € 1. 5 € Licence Capital cost 0€ Households 14 € Pit emptying fee National Water & Sanitation Agency (ONEA) Invest. 14 €

The solution: incentives and “sanctions” 4 Which financing mechanism ? “Reversing the money flux ? ” O+M cost Administration, office cost, etc. ? Transport and Truck capital cost ~30 21 (~10) Collection company ~15 ~30 27 FS treatment plant operator ~50 License charge Pit emptying fee Household (pit owner) FS delivery remuneration Capital cost Subsidy ~13 organic fertilizer sale ~5 ~45 Sanitation tax Authority Legend stakeholder cost revenue money flow (based on Kumasi, Ghana, FSTP @ 200 m 3/d) Jeuland (2002) and Steiner (SANDEC) 2002 Based on costing data from Ghana 20

5 Health savings and benefits Defining impacts and benefits Focus on health 22

5 Health savings and benefits Uncertainties • How 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 ? 23

Main questions 6 Agronomic aspects How much would the organic fertilizer cost ? Where can I buy organic fertilizer ? • Ability and willingness-to-pay for the hygienically safe organic fertilizer • Where and in what form do the farmers want to buy the organic fertilizer ? • What is the agronomic value of the organic fertilizer ? 26

6 Agronomic aspects Willingness-to-pay (WTP) • 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 kg • 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 27

6 Agronomic aspects Willingness-to-pay (WTP) • Nam Dinh study (2001): - Preferred: sale of organic fertilizer in 50 kg bags at coop outlets • Agron. value: % of dry solid (recent field studies): - N: Ghana 0. 5 – Argentina 1. 0 – Thailand 3. 0 - P 2 O 5. 0. 6 – 0. 4 – 1. 2 - Org. matter: 23 – 27 – 60 28

Thanks ! Dr Doulaye Koné Photo: toiletmuseum. com/techno. html Eawag/Sandec – Switzerland www. sandec. ch Doulaye. kone@eawag. ch Tel. +41 44 823 55 53