Economic evaluation and priority setting in water and sanitation interventions

Economic evaluation guidelines for health studies developed by an Economic Evaluation Working Party for the British Medical Journal (BMJ) in 1996, are used to evaluate water and sanitation interventions. The author reviewed 24 studies on the economics of water and sanitation interventions. Three main types of study were identified: those evaluating cost-effectiveness or cost-of-illness of water and sanitation interventions; those measuring willingness to pay (WTP) for water and sanitation interventions; and those measuring WTP, cost and cost-effectiveness of water quality improvement. Several limitations or disadvantages are discussed when applying the BMJ guidelines to water and sanitation interventions. These included uncertainty about which costs and benefits to include in the cost-effectiveness ratio, and the choice of discount rate for future costs and effects. Also, the advantages and disadvantages of different benefit valuation methods need to be understood fully by those undertaking such research, and this chapter provides a brief discussion of issues. There are a number of characteristics of water and sanitation interventions that make them particularly difficult to estimate cost-effectiveness with any degree of certainty, including the lack or poor quality of current evidence on costs and effects, and uncertainty associated with generalizing cost-effectiveness across settings. In terms of adapting international guidelines to national regulations the author suggests that valuation should play an important role in the process if standards are to be cost-effective and appropriate to local circumstances.