Social returns from drinking water, sanitation and hygiene education : a case study of two coastal villages in Kerala

The major share of financial resources needed for the provision of drinking water and sanitation in rural India comes from budget allocations earmarked mainly for the poor. This means that the distribution of these basic goods and services is governed by non-market principles. Such commodities are classified as merit goods in the public finance literature. Such goods are not allocated on the basis of investment criteria such as social rates of return/cost-benefit ratio. However, cost effectiveness is, whether practised or not, usually necessary for its provision. From the investment point of view, the criteria of cost effectiveness alone would not attract funds for the sector. The share of investment in GDP in the sector compared with that of other social sectors in India lends support to such a conjecture. This research strongly recommends that a capabilities approach should be used for the valuation of benefits from water supply, sanitation and hygiene education.
This document presents a methodology for estimating the social returns from investing in water supply, sanitation and hygiene education. It values the impact of such investment on poverty and health, arising from : 1) reduced travel time for accessing drinking water and sanitation and 2) averted expenditure on water and sanitation related illness. For the case study, two villages from the coastal belt of Kerala inhabited mainly by fishing community were selected : Adimalathura in Kottukal Panchayat and Pulluvila in Karumkulam Panchayat. The study shows that provision of WATSANGENE in the coastal belt qualifies even under commercial borrowing.