Journal Issue
Finance & Development, March 1979

The World Bank and the world’s poorest: IV : The fourth and fifth articles in a continuing series that explains how the Bank is responding to the challenge of finding ways to reduce poverty in member countries

International Monetary Fund. External Relations Dept.
Published Date:
March 1979
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Yves Rovani

The problem of water supply and waste disposal

Life expectancy for many people living in the villages, slums, and shanty towns of developing countries has improved dramatically over the past few years. Smallpox and plague have been almost eradicated, while many other killer diseases have been contained. Infant deaths, though still high, have been reduced, while medical advances, better nutrition, and increases in income and wealth have increased adult life expectancy. But a productive life involves not merely being alive but being well. Medical advances imply that, until birth rates fall significantly, there will be rapid increases in population in the developing world; this, in turn, will put pressure on natural resources, especially water, and create ever-expanding problems of pollution, as waste disposal facilities buckle under the strain.

The rationale for Bank lending for water supply and waste disposal is that adequate supplies of safe water and sanitary waste disposal are essential conditions for achieving a reasonable level of economic and social development (although they are not, of course, sufficient by themselves). Thus the lending objectives in the sector are to provide these services for as many people as possible, to do this in the most efficient way, and to ensure that the full benefits of the services can be realized.

Lending for water supply and waste disposal has been increasing rapidly in recent years. The Bank’s first loan in the sector was in FY 1962, and 15 loans had been approved by FY 1968. During the following five years this number more than doubled and it has increased from 32 to 59 during the past five years. In all, 104 loans were made in the sector between FY 1962 and FY 1978 for projects costing a total of $6 billion, of which the Bank financed over $2 billion. In addition, many loans for agriculture, rural development, urban sites and services, and tourism have had water supply and waste disposal components.

In the early years of lending for water supply, the Bank was mainly concerned with ensuring the efficiency of investments in source, transmission, and conventional distribution works and in building up strong sectoral institutions. From the early 1970s, in response to Bank strategy first spelled out in Nairobi, there has been a shift in the emphasis of lending toward providing efficient and affordable water supply and waste disposal facilities for all, including the poor in the rural and urban fringe areas. This shift has been made possible, and supported, by an extensive program of research. This program has, for example, developed guidelines for water tariff systems to meet three goals simultaneously: (1) to enable the poor to receive basic service levels at prices they can afford; (2) to recover the investment costs of water supply networks and contribute to the expansion of these networks; and (3) to avoid waste of water. Extensive research has also been conducted into low-cost technologies for the disposal of human waste to improve both the health of people at all income levels and the quality of the environment in which they live.

This article reviews the nature and extent of the problems of inadequate supplies of safe water and of insanitary means of waste disposal in developing countries and discusses the Bank’s efforts to alleviate the situation.

The problems

Insanitary living conditions have debilitating effects which lower the productive potential of people as well as the quality of their living environment. The list of diseases related to deficiencies in water supply or waste disposal is terrifying (see Table 2); in many areas these diseases account for almost all infant deaths, a large proportion of adult deaths, and a very large proportion of adult sickness. In Bombay, which received a water supply loan in FY 1979, over 40 per cent of recorded deaths are related to inadequate water supply and sanitation. It is the poor, of course, who suffer most—those in the urban slums as well as those in the rural areas. They lack information on the real effects of insanitary conditions, their access to safe water and proper waste disposal is restricted, and they can afford neither to protect themselves from infection nor to cure it.

The productive potential of poor households is also reduced by the time and energy spent in obtaining sufficient quanities of water to meet basic needs. In many rural areas, drawers of water, most of whom are women, commonly walk up to five miles a day to their nearest acceptable water source and still have to join lengthy queues when they arrive.

Yet few countries have managed to overcome the deleterious effects of inadequate water supply and waste disposal facilities. Although the past 25 years have seen an expansion in the supply of water and sewerage services in some areas, the quality of service in many places has declined dramatically. Recent estimates suggest that fewer than 500 million of the 2,400 million people in the developing countries have access to adequate supplies of safe water and adequate waste disposal facilities, and the number of those without access is growing by 70 million every year.

Between 1970 and 1975, per capita investment for water supply in the developing world was between $10 and $20 in the towns and less than $5 in the villages, while investment in waste disposal was lower still. On the basis of estimates by the World Bank and the World Health Organization (WHO), construction costs for urban water supply (with a mix of house or yard connections and public standposts) are in the range of $50–150 in 1978 prices for each additional person served. A comparable range for simple piped systems in rural areas would be $30–50. Costs of waterborne waste disposal are, however, much higher; in towns and cities they may be as much as $600 per capita. Recent research by the World Bank has identified alternative sanitation technologies which may reduce this figure to below $100 and, in rural and urban fringe areas, to less than $40.

Given the magnitude of the service gap, meeting the population’s needs through conventional technologies has been a financial impossibility for many developing countries. That is why, for example, only one quarter of urban dwellers in these countries has waterborne waste disposal facilities. But there are many other reasons for low service levels and for the relatively low priority given to investment in the sector. One is that the health benefits from improved water supply and waste disposal are difficult to isolate and practically impossible to measure. In pursuing development objectives, there has been excessive concentration on “growth,” as represented by statistical measures of increases in income rather than measures of “real” increases in peoples’ standards of living. Moreover, these estimates of growth have been based on measures of commodity production, irrespective of whether these commodities satisfy the real needs of the poor.

International conferences have recently set objectives of providing reasonable access to safe water supply and adequate sanitation to everyone by 1990, but if these targets are even to be approached, three fundamental steps must be taken. First, national development priorities must be changed to ensure that considerably more funds are used for increasing investment in, and maintaining efficient operation of, water supply and waste disposal facilities.

Second, financial and economic policies must be adopted within the sector to enable it to sustain a rapid expansion. Third, countries must develop a long-term strategy for the sector which permits them to take full advantage of the many available, but hitherto unutilized, low-cost techniques, especially in waste disposal, in order to reach the greatest number of people in the shortest possible time.

Table 1Water supply and waste disposal loans and credits, FY 1962–78(In millions of U.S. dollars)
Water supplyWater supply & waste disposal 1Waste disposalTotal
1962–6812102.03 252.415154.4

Including engineering and other loans.

Includes two loans to East Pakistan that are excluded from the total; the loans were reappraised and were made to Bangladesh in FY 1973.

Including engineering and other loans.

Includes two loans to East Pakistan that are excluded from the total; the loans were reappraised and were made to Bangladesh in FY 1973.

Water supply

During the 1960s, Bank lending for water supply was almost exclusively for large cities and was generally regarded simply as a contribution to economic infrastructure, like investment in other public utilities such as power and telecommunications. The goals of lending for water supply and waste disposal have changed since the early 1970s. A major new aim is to ensure that the water produced is supplied to the entire population, while meeting concerns for health and environmental aspects of development. There has been a growing number of loans for small towns and villages. Increased emphasis has also been placed on distribution systems; the use of low-cost techniques designed to improve the access of the poor to water supplies has become an integral part of loans to countries in many parts of the world. In the past four years, for example, over half of the loans and credits have included finance for standposts (simple taps in public places) or other low-cost methods of providing water service.

In its own operations, the Bank recognizes that water supply contributes in several important ways to the economic and social development of any country. It is a basic need for all people for drinking, washing, and food preparation; it is also, at higher levels of consumption, a commodity like many others in the market. For nondomestic consumers—industry, agriculture, and services—water supply is to varying extents an essential input in the production process, while it is also used for safety purposes, such as fire fighting, and for contributing to a healthy environment. These various types of demand provide the framework and justification for many of the different pricing techniques and service standards which are often combined in a single project.

The Bank aims at building institutions capable of setting targets for the sector, formulating policies and programs, and implementing these programs by mobilizing the needed financial resources as well as attracting, motivating, and training staff. An important part of this task is to ensure that tariff policies are developed to meet financial, social, and economic objectives. A major financial objective is to make the sectoral institutions—be they state-owned companies, municipalities, or government departments—financially viable. This means that revenues from tariffs should cover all operating costs and debt service as well as a reasonable part of the institution’s investment program. A major social objective is to make the service affordable to everyone. This means that the cost of the first few liters of consumption should not be more than, say, 2–5 per cent of the disposable income of the poorest consumer. The economic objective (giving due regard to the other objectives) is to charge tariffs for most of the water consumed to cover the (usually increasing) costs to the economy of augmenting water supplies and extending distribution networks, and at the same time to discourage waste.

In general, the Bank has been able over the past few years to encourage borrowers to move toward tariff policies which take these considerations into account. This usually involves internal cross-subsidization—that is, setting tariffs high enough for the larger consumers in order to subsidize consumption by the poor. Since, in most countries, consumption of water by the poor is only a small part of total consumption, this cross-subsidization is generally possible without charging the larger users a price which would either be economically unjustified or politically infeasible. However, there are still many countries where water charges are so low that they subsidize all consumers. There is little justification for this where fiscal resources are limited and where much of the water produced is consumed by large residential and commercial users. Demands by these users should be met at the least cost to the economy. Indeed it may be essential to serve large users in order to realize economies of scale and to generate the financial surplus needed to subsidize services to the poor.

Table 2Diseases related to deficiencies in water supply or sanitation


man 1


man 1
Waterborne diseasesCholeraFO
TyphoidF, UO
LeptospirosisU, FP, O
Amoebiasis 2FO
Infectious hepatitis 2FO
Water-washed diseasesScabiesCC
Skin sepsisCC
Lice and typhusBB
Bacillary dysenteryFO
Enterovirus diarrheasFO
Paratyphoid feverFO
Whipworm (Enterobius)FO
Hookworm (Ankylostoma)F0, P
Water-based diseasesUrinary schistosomiasisUP
Rectal SchistosomiasisFp
Dracunculosis (guinea worm)CO
Water-related vectorsYellow feverBB mosquito
Dengue plus dengue hemorrhagic feverBB mosquito
West-Nile and Rift Valley feverBB mosquito
Arbovirus encephalitidesBB mosquito
Bancroftion filariasisBB mosquito
MalariaBB mosquito
OnchocerciasisBB Simulium fly
Sleeping sicknessBB tsetse
Fecal disposal diseasesHookworm (Necator)FP
FasciolopsiasisFEdible plant
ParagonimiasisF, SCrayfish
Source: R.J. Saunders and J.J. Warford. Village Water Supply: Economics and Policy in the Developing WorldThe Johns Hopkins University Press, 1976.

F = feces; O – oral; U = urine; P = percutaneous; C = cutaneous; B = bite; N ? nose; S * sputum.

Though sometimes waterborne, more often water-washed.

Source: R.J. Saunders and J.J. Warford. Village Water Supply: Economics and Policy in the Developing WorldThe Johns Hopkins University Press, 1976.

F = feces; O – oral; U = urine; P = percutaneous; C = cutaneous; B = bite; N ? nose; S * sputum.

Though sometimes waterborne, more often water-washed.

Since the provision of adequate supplies of safe water is only one element in the broader concept of sanitation, investment in water supply must also be examined in terms of its effect on the environment. The most direct environmental effect normally relates to the disposal of waste water which in most cases is, in turn, related to water consumption. The typical per capita consumption from a standpost or communal well is below 25–30 liters a day; this level of use normally does not produce disposal problems of any health or environmental importance. For a house connection, however, typical consumption is usually 100 liters or more a person daily and a sewer system is usually required to carry away wastewater. Thus, the disposal of the water introduced into a community must be considered at the time the water supply project is designed, even though the actual implementation of a wastewater disposal project may be some time in the future. For the same reason, the standards for levels of water supply service should be carefully evaluated to discourage unnecessarily high water consumption which would require an early introduction of sewerage.

Waste disposal

The provision of safe drinking water alone is not sufficient to control most of the debilitating diseases resulting from insanitary living conditions. They can only be eliminated as a major public health hazard if proper excreta disposal and training in personal and food hygiene is provided together with water supply services. This growing recognition of the value of adequate waste disposal, enabling the full benefits of water supply to be realized, is reflected in the changing pattern of Bank loans over time. The proportion of water supply projects with waste disposal components has rapidly increased from 41 per cent before FY 1974 to 60 per cent in the past five years.

Unlike water supply, which is accepted as absolutely essential for human health and well-being and about whose delivery few technical problems exist, excreta disposal suffers from misconceptions about objectives and the means to achieve them. The conventional technology, waterborne sewerage, evolved in industrialized countries as a vehicle for carrying away the large quantities of water used by households and industry. Because the flush toilet itself accounts for 30–40 per cent of a household’s water use, the disposal of the collected wastewater became a significant environmental hazard. Thus expensive treatment techniques were required to separate water from excreta before discharge. In a developing country, if community health were seen as the ultimate objective of waste disposal rather than user convenience, the collection and treatment of excreta could be accomplished with much less expense and fewer environmental hazards than those associated with sewerage. Where people do not need to use large quantities of water or do not have the facilities or incomes to do so, as is likely to be the case for some years to come in many developing countries, sewer systems may not be required. Despite that, waste disposal alternatives to sewerage are rarely considered. Given the high cost of sewerage (from three to five times the per capita cost of water), it is not surprising that investment in this subsector is lagging.

As a result, many urban areas have small sewer systems serving the affluent areas, with the urban poor and rural areas largely neglected and without formal means of waste disposal. In contrast to water supply where service levels for 75 per cent to 85 per cent of the popularion provide reasonably good service because the consumer who is not officially served at least has access to standposts, fountains, or connections belonging to friends and neighbors, someone without his own waste disposal facility generally has no access to public systems or those of friends. As a result, it is not unusual to find alleys, backyards, and even streets used as sites for defecation, endangering public health and the environment even in cities which nominally have a sewer system.

Another complicating factor is the varying perception different groups of people have about the role of waste disposal—a concept which includes proper disposal of human wastes as well as other types of animal, domestic, or industrial wastes. In many social contexts, human waste is a commodity, in demand like any other, for use as composting material, bio-gas generation, or directly as a fertilizer. In others, it is the obverse of a commodity; that is, people—and the community to which they belong—simply wish to dispose of it as cheaply and conveniently as possible. Even in communities where human waste is regarded as a commodity, it may not be so regarded at all levels of development or income, simply because cheaper or more convenient substitutes (such as chemicals in the case of fertilizer or other fuels in the case of bio-gas) may become available. In such cases, since human waste (unlike most other commodities) continues to be produced irrespective of the fact that the demand for it suddenly declines, the need for waste disposal facilities may arise very quickly indeed.

To cope with these complications and differing goals of the subsector, Bank projects include not only sewerage to dispose of wastewater and excreta in areas served with house water connections, but also provide means of excreta disposal in those areas which cannot be sewered in the foreseeable future—such as areas of low water consumption where residents cannot afford the high cost of sewerage. This probably includes the majority of rural communities and as much as 50 per cent of the urban areas. (According to WHO, of the 75 per cent of the urban inhabitants with adequate excreta disposal facilities, only about one third are served by waterborne sewerage.) On the other hand, sewers are occasionally justified where the high water consumption of part of the community and industrial/commercial development have resulted in gross pollution along the low-lying areas near rivers where most of the poor live. In such cases, sewerage investment does benefit the poor directly through connections or, more often, indirectly through improving their environment. The recent projects in Algiers and São Paulo are examples of sewerage schemes which clean up rivers flowing through massive slum settlements.

The institutional and financial aspects of waste disposal operations are similar to those of water supply; in fact, very often the water supply agency is also responsible for waste disposal. Charges for waste disposal services are often based on water consumption, particularly in the case of waterborne sewerage. The policies successful in water supply—low minimum tariffs for low-income customers and higher tariffs for the well-to-do—can be applied. In addition, it is not unusual to recover a part of the cost of waterborne sewerage by means of real estate or other taxes, such as an environmental improvement tax, because benefits accrue even to those inhabitants of a community not connected to the system through the general environmental improvement.

Research and operations

The change in emphasis of the Bank’s lending policies since 1970 toward providing adequate, convenient, and safe water supply and waste disposal at prices the poor can afford has been made possible by the findings of the Bank’s operationally oriented research program in the sector. A study on village water supply, which was one of its first major research projects, emphasized two areas: (1) the economic, social, financial, and administrative issues characteristic of rural water supply and waste disposal programs; and (2) the almost insurmountable problem of quantifying the benefits of investments in the sector so that they could be incorporated into project analysis (see Reading List). It became clear that there were two preconditions for rapid improvement in the access of low-income groups to adequate water supply and sanitation facilities: first, the acceptance of service standards that were not too high; and second, the introduction of appropriate (not necessarily advanced) technologies. Research into water supply and waste disposal has since been dominated by these two considerations. As an example, recent studies of the design of low-cost water distribution systems aim to provide designers with a kit of simple analytical tools to test the effect of various design alternatives on costs.

The largest research effort in the sector has been on low-cost waste disposal—a field which had, until recently, been largely neglected in both developed and developing countries. The work aimed at identifying the technologies appropriate for providing urban fringe and rural communities with socially and environmentally acceptable water supply and waste disposal services at a cost they could afford. The study covered 29 countries at various stages of development, with different cultural, industrial, and environmental features. It demonstrated quite conclusively that not only are low-cost waste disposal methods functioning successfully but that the potential for replication elsewhere is high.

Research has also been carried out on low-cost technology for water supply projects, such as developing simple rural hand pumps to replace existing ones—which tend to be expensive, difficult to maintain, and failure-prone—as well as new, cheaper types of well screens and wood bearings for pumps.

How can these research results be translated into practice? The World Bank is the executing agency for a United Nations Development Program Global Project demonstrating the feasibility of low-cost water supply and waste disposal techniques in rural and urban fringe areas. This will be achieved through the development of prototype systems in consultation with local communities and using local consultants. The methods identified consist of replicable technologies which will reduce the costs of providing water supply and waste disposal services and simplify operation and maintenance and which are economically and socially acceptable to the intended beneficiaries. The Project is currently being undertaken in 13 countries.

Some training or demonstration schemes have already been incorporated into Bank projects. One example is the loan made in FY 1977 to the Philippines to provide water supplies in provincial cities, which included $200,000 for training local staff in the rural areas to design, build, and operate small systems. Under the Bank’s loan to Nicaragua in 1978 for rural water supply and sanitation, the rural hand pumps and well screens developed under Bank research projects, as well as the wood bearings for pumps, are being tested. In addition, other aid agencies are proposing the trial installation of the well screens in several countries.

To date, the Bank has lent to 53 countries for water supply and waste disposal projects. The first few loans in a country usually have a significant impact on the financial viability and absorptive capacity of sectoral institutions in the country, and set the stage for more loans in the sector which will reach more and more people in these countries. Over 70 per cent of the Third World population which does not have adequate supplies of safe water or adequate waste disposal facilities is located in 20 developing countries. Therefore, to carry out the goals of serving large numbers of people and to provide the maximum number of people with basic water supply and waste disposal facilities in the shortest possible time, much of the Bank’s increased lending in the sector should be concentrated in a few countries, namely, Bangladesh, Brazil, Burma, Egypt, Ethiopia, India, Indonesia, Kenya, Nigeria, Pakistan, and the Philippines.

Over the next five years, it is expected that over 100 loans, for over $4,000 million, will be made for water supply and waste disposal, and that this program will double in the following five years. An increasing proportion of the proposed lending program will be directed toward expanding and redesigning public services so that the poor will have better access to them; as a result, it is estimated that the proportion of poverty-oriented projects in the sector will increase from 47 per cent in FY 1978 to about 75 per cent in FY 1983. There is probably no more direct or more evident way to improve the living standards of people than to provide them with safe water and sanitary waste disposal. Fortunately, this is a field in which the Bank has a strong base of constructive achievement from past efforts. Even if only this aspect of the Bank’s program to help meet the basic needs of the world’s poorest were achieved, much would be accomplished.

Selected Reading List

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