Impact entrepreneurship

The COVID-19 pandemic provides a stark reminder of the critical importance of safe sanitation, in or close to homes, and has amplified concerns about the spread of disease, particularly in densely populated areas. This basic need is still denied to 4.2b people today,¹ contributing to 432,000 diarrheal deaths annually,² even before the pandemic struck. With sewerage not always feasible or cost-effective in urban slums, the need to scale CBS is more urgent now than ever.

CBS is a service-based business model built around standalone toilets that store waste in sealable, removable containers. These toilets may be provided in people’s homes (household-level CBS) or as facilities used by multiple households (shared CBS). In both cases, CBS enterprises provide the toilets and maintain a managed service for collection of full containers, their replacement with empty ones and the transport of full containers to facilities for safe treatment, disposal or reuse of the collected waste. CBS is well suited to areas that are densely populated, suffer from flooding, have high water tables or rocky terrain. As a result, it has huge potential to ensure safely managed sanitation access for some of the world’s least-served populations.

While CBS has gained high-level recognition as being essential to addressing the global sanitation crisis, it’s often perceived as more expensive or less effective than other options, such as sewers, pit latrines and septic tanks. Many governments, funders and investors still think of sanitation in the same way as they think of traditional public infrastructure investments and their investment structures are wired accordingly — i.e., based on high upfront capital outlay, with smaller ongoing costs for operation and maintenance, which are often not fully funded. With CBS models typically the exact opposite, and their cash flows very different from traditional sanitation infrastructure, this can lead to the perception that they are more expensive over the long-term, hampering investment in the approach.

A lack of clear cost comparisons has inhibited investment, and the adoption of policy and regulatory environments conducive to fostering CBS. So, working with the Container-Based Sanitation Alliance (CBSA), an EY team set about answering a very simple question: how do the costs of CBS compare with other sanitation options?

Using the Climate and Cost in Urban Sanitation (CACTUS)³ methodology and field data as a baseline, the EY team gathered further standardized cost information through company financial data and in-depth interviews. They then used this to build an extensive, like-for-like cost comparison of different sanitation options in urban slums and other low income communities in Haiti, Ghana, Kenya, Peru and Madagascar. Key insights are that:

1. CBS is the lowest cost form of safely managed sanitation

“Safely managed” sanitation is the gold standard for sanitation development outcomes. As currently classified by the Joint Monitoring Programme (JMP) for Water Supply and Sanitation, this involves people having access to an improved sanitation facility that:

• Hygienically separates excreta from human contact
• Isn’t shared by other households
• Allows for excreta to be safely treated and disposed of in situ, or safely transported and treated off site

On this basis, the JMP classifies household-level CBS services as safely managed sanitation. These services are best compared to toilets that are connected to sewers or septic tanks, since they are most likely to be able to provide household-level sanitation with temporary storage, and safe transportation of waste for treatment or disposal.

On a like-for-like direct costs basis,⁴ the safely managed, household-level CBS models examined are considerably lower cost than sewers, costing between 37% and 83% less per household per year. The majority, specifically those operating at larger scale,⁵ are also less expensive than pit latrines and septic tanks, by up to 38% and 74% per household per year respectively (figure 1).

Figure 1: Percentage difference in annual cost per household of CBS services vs. other forms of sanitation⁶

2. CBS arguably compares even more favorably vs. other traditional forms of sanitation

It’s worth noting that the benchmark sewer costs used for comparison are conservative. For example, analysis assumes new connections would be made to existing main sewers for transport of waste to a treatment plant. It doesn’t factor in the huge costs that would be involved in constructing a main network where none currently exists, as would be the case in Haiti, for example.

Regarding comparisons between household-level CBS models and pit latrines, these treat both as being safely managed forms of sanitation. However, while pit latrines can meet safely managed criteria, the reality is that they rarely did in the locations studied. The vast majority would be classified as “basic.”

This leads to a further point concerning JMP criteria, which currently dictate that no shared sanitation option can be classed as safely managed, even if it hygienically separates excreta from human contact and provides for safe treatment or disposal. They also don’t clearly account for other dimensions of safety that CBS services can provide beyond separation and treatment of waste — for example, resilience to climate variations, such as floods, which can render pit latrines, septic tanks and sewer lines unusable.⁷

Given the dearth of data on shared sanitation provision, shared CBS models were also compared to household-level pit latrines, septic tanks and sewerage. Shared CBS models examined are respectively 65%, 79% and 93% less costly per household per year (figure 2).

Taken together, CBS services, both household-level and shared, compare very favorably with traditional forms of sanitation.

Figure 2: Percentage difference in annual cost per household of shared CBS vs. other forms of sanitation

3. Scale matters

The CBS models included in this study were analyzed based on existing operational data and current operating scales, which are relatively small. While the favorable cost comparisons above are notable in and of themselves, they’re even more significant when you consider that CBS is still a relatively new model of provision, compared with other more mature technologies. EY modeling suggests that CBS enterprises will gain further efficiencies as they mature and scale.

As the 2019 World Bank report on the potential of CBS noted, most CBS services are still in the relatively early stages of development. This is primarily attributable to the serious challenges of operating an innovative utility service focused on the urban poor. In many ways, CBS providers are currently both building and serving markets as they operate in very challenging environments, where adequate and appropriate financing, policy and regulation are not yet in place.

Analysis demonstrates that if these barriers are addressed, and enterprises are empowered to scale, this will unlock greater cost savings. As enterprises scale, capital and operating costs to service toilets remain unchanged on a per household basis. Assuming excess capacity means that absolute management and sales can be held constant as installations increase, every additional 100 toilets reduces the annual cost of CBS per household by 3-12% of total yearly household costs, depending on an organization’s current footprint.

Further emphasizing how scale impacts affordability, analysis shows that both shared CBS services and household-level services delivered at scale can be provided at well below the World Bank’s definition of water, sanitation and hygiene (WASH) affordability (see figure 3). Benchmarked at 3%-5% of gross national income (GNI) per household, this is a critical measure, as it assesses affordability relative to household incomes in a particular country.⁸

Figure 3: Percentage of annual household income spent on CBS services, by sanitation value chain segment

Scale matters to job creation, too. Staffing accounts for between 34% and 59% of the annual cost per household of providing CBS services (see figure 4), which suggests that investment in scaling CBS is also an investment in scaling jobs in low income communities.

Figure 4: CBS costs by category as a percentage annual cost per household