Life-cycle costs approach : costing sustainable services

Estimating the true cost of extending sustainable WASH services to poor households is an on-going problem for WASH service providers. How can we achieve the most while spending the least? WASHCost addresses this challenge by developing and testing the life-cycle cost approach in rural and peri-urban areas of developing countries. Using the life-cycle cost approach enables service providers to consider a wider range of costs. The life-cycle cost approach compares effectively the different WASH delivery systems within a district, country or region. The approach can therefore be tailored to specific needs and critical issues in different countries.

This briefing note describes the life-cycle costs approach and why it was developed. It explains the main cost components for water and sanitation in rural and peri-urban areas. Detailed cost breakdowns are presented in the annexes. Different types of analysis can be made with disaggregated cost information : comparing costs of infrastructure components, comparing the cost of services delivered or comparing the costs of difference service delivery models. The briefing note explains the building blocks used in the life-cycle costs approach for all these types of analysis and explores how these fit with different accounting practices. It explains why the WASHCost Project has adopted a regulatory accounting approach to calculate aggregated total expenditure costs and provides a step-by step approach to comparing and reporting costs.

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