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Uncovering and understanding the real costs of water, sanitation and hygiene services by using the life-cycle costs approach.

What is the life-cycle costs approach?

Lack of accurate information makes it impossible to estimate the true cost of extending sustainable and good quality water and sanitation services to the poorest. To address this challenge, IRC has developed and tested the life-cycle costs approach (LCCA) in many different contexts and countries over the past eight years. The LCCA can be used to analyse the real costs of water, sanitation and hygiene in rural and peri-urban areas in developing countries and, increasingly, in refugee camps and emergency settlements. The life-cycle cost data are assessed against service levels, which makes it possible to compare the costs within and across countries. Making these financial data available helps professionals to budget and make informed decisions on policies and implementation practices.

Life-cycle costs are the costs of ensuring adequate services to a specific population in a determined geographical area – not just for a few years but indefinitely.  All costs from construction, and installation, to maintenance, repairs and eventual replacement are taken into account, including payment for borrowed money either at household or national level government. Life-cycle costs also include costs for source protection, training and capacity development, planning and institutional pro-poor support. In short: the costs that it takes to deliver a service and not only to build infrastructure.  

Where has it been applied?

The LCCA was developed in the WASHCost project: a five-year action research project funded by the Bill & Melinda Gates Foundation. WASHCost teams in Burkina Faso, Ghana, Mozambique and Andhra Pradesh (India) collected and analysed cost and service level information for water, sanitation and hygiene in rural and peri-urban areas. WASHCost worked with service levels to help arrive at realistic calculations and benchmarks for costs that are required to achieve sustainability.  

Elements of the life-cycle costs approach have been adopted by more than 100 partners, including private sector organisations, universities, and national governments such as those of Sierra Leone, Uganda, Tanzania, DRC, South Sudan and Honduras. Among many INGOs and NGOs, BRAC (Bangladesh), WaterAid, CRS, Water for People and UNHCR are also using the LCCA elements to track costs and value for money.

Learn more about life-cycle costs

Introduction:

Do it yourself:  calculate the life-cycle costs in your country, district or programme through the Life-Cycle Costing tools or call us for support.

Background info:

Examples from around the world:

Other interesting recent documents on costs: