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Policy Dialogue Session on Sustainable Sanitation in Asia

Dumaguete Case-Study on the socio-economic Spillover
effects from FSM

Vedanti Kelkar,
Research Associate, ADBI

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the
governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB
official terms.
Credits: World Bank Report, Consumer research for poor sanitation in Uttar Pradesh

Reliance on full-cost recovery through user-charges of large-scale solutions is leading to slow rate of
return thereby demotivating the movement of sanitation implementation

Limited high-cost intensive mechanisms making sectoral investments complex

Decentralization is misrepresented due to sunk costs
As Sewer network is expensive, on-site WWT systems are the best alternative

Implementation of hygienic city-wide on-site
programs is critical as there are

(i) intrinsic values to the de-sludging
programs: reduced amount of fecal waste
and pathogens discharged into the
environment

(ii) Ancillary impacts beyond intrinsic values:
sanitation improvements in community in
terms of tertiary values “ Spillover Effects”

STP in Sanpada, Navi Mumbai ( Clicked on 8 January 2018)

While most cities in Asia have septic tanks & pit latrines, many have begun to rely on planned WWT
systems

Yet, de-sludging in many places is ongoing in an unhygienic form

Government organized de-sludging activities are also rare
We feel that quantifying spillover effects can provide significant motivator to persuade local decision-making to
accelerate city-wide FSM programs

Dumaguete City-Wide FSM implementation capturing the spillover effects

Quick Facts:
- Dumaguete is located Negros Oriental Province
- Population: 130,000
- FSM Plant: Planning initiated in 2006 and operational in 2010
- City-wide FSM system that de-sludges most of the septic tanks in 5 year rotating Dumaguete
cycle
- Program was implemented in parallel to sanitation improvements by the
government

Prior to investments, bay fronting the downtown area experienced
degraded environmental health due to untreated sewage disposal, but
8 years post commissioning, there are sanitation improvements,
nuisance reduced and thousands use the waterfront park everyday
Cost-Benefit Analysis

Intrinsic value of
Internal savings through co-
Initial CAPEX (Only major cost) & project – improved
treatment efficiency
other O&M COSTS sanitation

+
Savings from program
efficiency
Internal effect savings

+
Property Property Livelihood Health Community
Spillover effect costs of benefits
values taxes development

True value of the project FSM program valuation shows total project value is i) intrinsic value
plus, ii) any internal benefits plus, iii) any spillover effects benefits

Spillover value = ( Ga-Go) x I x C x L
Ga-Go = 8% - 1% = 7% City’s net growth
Spillover value = ( Ga-Go) x I x C x L
( Ga-Go) x I x C x L = (8% - 1%) x 0.74 x 0.6 x 0.6 = 1.86% ( Spillover
Ga = Anticipated Growth value)
Go= Growth trend prior to the project
I = Impact variable That means, With a property worth 25 Million US dollars, increases
C= Likelihood of the project to succeed its value by 2% annually then 1.86% of that is attributed to
L=linkage variable sanitation

In this case, 1.86% of 25 M = 9300 USD

So, if we take 6 properties then FSM will contribute to 55800 USD in
annual increase in property value

Thus over 10 years, 558,000 USD = This far exceeds the initial
investment of 500000

So, in this case property values from 6 properties sum up to more than 500K$ and surpass the initial capital
investment of the septage treatment facility of 500K$.
Key Takeaways:

1. The project demonstrates the reality of spillover effects

2. Sustainability of FSM projects is widely measures by policy-makers through ex-ante and ex-post evaluations
from the functioning of project opposed to the tertiary impact on the community

3. With better understanding of the spillover effects, governments can be persuaded to act in a decentralized
fashion with the involvement of multiple stake holders including PPP mechanisms which may prove
attractive