Published on: 03/06/2013
Life-cycle costs represent the aggregate costs of ensuring delivery of adequate, equitable and sustainable WASH services indefinitely to a population in a specified area. These costs include:
Planning and budgeting for life-cycle costs is an essential aspect of a service delivery approach. The life-cycle costs approach raises awareness about the real costs of delivering a service and makes all life-cycle costs visible; from construction of new systems to short-term and long-term maintenance, district-level and national-level administration and planning, extension and improvement of services and eventual replacement of the infrastructure.
All of these costs, taken together, form the total cost of providing a sustainable level of service. By monitoring how each cost component affects the overall costs of the service, governments, investors, donors, service providers and service authorities can plan for sustainable and appropriate levels of service and keep service levels high.
For example, increasing expenditure on capital maintenance and direct support may reduce overall costs, especially where neglect is causing premature failure of the infrastructure. Timely repairs and replacement limit interruption of service so that people do not turn to unsafe water sources or revert to open defecation.
Recent research by the WASHCost project shows that capital expenditure benchmarks for preparing and installing a borehole and handpump (at 2011 prices) range from US$ 20 per person to just over US$ 60 per person. For small piped schemes, including mechanised boreholes, costs range from US$ 30 to just over US$ 130 per person.
By comparison recurrent costs(that is everything else except for capital investments) benchmarks range from US$3 to US$ 6per person per year for boreholes and handpumps, and from US$ 3 to US$ 15 per person per year for piped schemes. Over a lifetime of a system, say 25 years, recurrent costs actually represent 2 to 3 times more in order of magnitude than capital expenditure.
Defining mechanisms for recurrent expenditure to ensure (financial) sustainability is complex. The only way to have relevant, up to date costs which relate to actual service levels is for reporting systems to change considerably to accommodate indicators over time.
Only with this data to hand can we address the bigger questions around the levels of service and how life-cycle costs can be financed through a mix of tariffs, taxes and transfers.
