Measuring the Affordability of Water Supply, Sanitation, and Hygiene Services: A New Approach

One common method for assessing the affordability of water supply, sanitation, and hygiene (WASH) services is to compare a household's reported WASH expenditure, as a proportion of total household expenditure, to a predefined threshold. Another common method is to subtract this reported WASH expenditure from the household's total income (or expenditure), and then compare that result against a minimum amount needed to purchase other basic goods and services. The innovative, alternative approach to determining affordability introduced in this paper borrows from the method commonly used to draw the monetary poverty line. This offers five advantages over the common methods of investigating the affordability of WASH services. First, it defines a "basket" of WASH services that accounts for the type and level of WASH services that a household receives (and that involves a threshold quality of service, deemed necessary for health and well-being). Second, it makes use of the actual costs of service, therefore moving away from household estimates of WASH expenditure that tend to be inadequate and rarely reflect actual costs. Third, it considers both initial fixed costs and recurring consumption costs, each of which pose their own unique challenges to affordability. Fourth, it makes use of household-level data on access to WASH services, which allows for the grouping of households into categories with distinct policy implications. Finally, this approach facilitates scenario analyses, whereby the impact of different pricing policies can be assessed. This approach is then applied to rural Nigeria, using data from the General Household Survey (GHS) 2015-16, to demonstrate its utility as a tool to better focus policy reform on the actual affordability constraints of the unserved.