Rural Water Supply & Sanitation Program

Overview

Reference: P-ET-E00-006
Approval date: 21/12/2005
Start date: 21/08/2006
Status: On goingOnGo
Country: Ethiopia
Sector: Water Supply & Sanitation

Objectives

To improve access to rural water supply and sanitation services in Ethiopia to reduce poverty and enhance productivity.

Benefits

Ethiopia has a population of 71 million, growing at 2.4% per annum, 84.3% or 59.9 million of whom live in rural areas (communities with population of less than 2000 inhabitants). However, only 24% of the rural population has access to adequate water supply only 8% to adequate sanitation. The national Short-Term Programme (STP), which covers the period 2005-2007, will benefit the 8.5 million rural population in Ethiopia without access to adequate water supply and sanitation services. However, through the Bank's financing 1.8 million people will benefit from water supply facilities and 2.0 million people will benefit from the sanitation program.

Other beneficiaries include the federal and local government institutions whose capacity will be enhanced; artisans who will be trained and assisted to establish companies; and the entrepreneurs who will benefit from selling spare parts.

The STP will generate positive impacts that will enhance the livelihood and well-being of the target population. Readily accessible potable and affordable water for domestic use, especially to the rural population has been proven by many studies to have a direct impact on human health and indirectly on labour productivity. Equitable and readily available water will also reduce drudgery of women and children who are usually responsible for collecting water in rural areas. It has been found that the average load carried per trip by an adult is 21 litres and the average trip (two-way) time for fetching water is 6 hours, including 30 minutes of waiting time.

Furthermore, per capita consumption in rural areas will increase from 10 litres/person/day to 20 lit/person/day. Travel times o fetch water is also expected to decrease from 3 hours on average to 1 hour. Hence the burden of fetching water by women and children will be significantly reduced. The provision of water supply and sanitation services will also impact positively on the other MDGs, such as reducing poverty, improving health and access to education, and promoting gender equity.

The economic analysis of the STP, has been prepared under "with" and "without" project scenarios based on estimates of the costs and benefits that would accrue to various sectors as a result of the interventions to improve water and sanitation services in Ethiopia's rural areas. The analysis also takes into account the impact of the project on the health and education sectors, as well as productivity and income effects to rural households. Gains related to fewer deaths are recognised but have not been included in the analysis due to lack of data. The STP posts an Economic Net Present Value (ENPV) of ETB 2.82 billion and Economic Rate of Return (EIRR) at 38%. Being significantly higher than the 10% discount rate, which is the proxy opportunity cost of capital in Ethiopia, these results indicates that the project is economically viable.

The analysis also shows that the benefits are mainly attributable to time savings for households (64% of total estimated benefits) stemming from the convenience of having better access to water and sanitation services. This is followed by direct benefits (22% of total benefits) accruing from incremental water and sanitation services provided. Significant health sector benefits, in the form of health sector cost savings and patient costs saved (11.4%), and education sector cost savings (2.2%) are also derived from the STP. The analysis further indicates that the interventions under the STP are cost effective, with the return on ETB 1 investment estimated at ETB 12. These results are generally consistent with WHO regional and global estimates.