8 Cost effectiveness analysis as a methodology to compare sanitation options in peri-urban Can Tho, Vietnam

Authors: J Willets, N Carrard, M Retamal, C Mitchell, Nguyen Hieu Trung, Nguyen Dinh Giang and M Paddon

It is challenging to make decisions about sanitation scale and technology choice for urban areas, however costing analyses have an important role to play in assisting determination of the most appropriate systems for a given context. The most appropriate technological system is the one that finds a locally acceptable balance between social (e.g., public health) outcomes, environmental (e.g., pollution, resource use and resource recovery) outcomes, and financial and economic outcomes (i.e. the costs and benefits for individuals, public and private organisations, and local society).  There are many costing methods available. This paper describes the use of a cost-effectiveness analysis built on integrated resource planning principles. This method is suited to situations where the overall goal is already clear (in this case, that a wastewater service is required) and the analysis is conducted to identify the least cost solution to reach this goal. This costing method was used in conjunction with a deliberative sustainability assessment process that addressed non-monetary factors.

The paper outlines the analytical approach adopted in the cost analysis as well as providing detailed discussion of the many decisions inherent in undertaking such an analysis. It describes how the analytical system boundaries were constructed, what level of detail was adhered to and how different cost perspectives and time value of money were taken into account.

The explanation of the methodology is grounded in a case study undertaken in Can Tho Vietnam. The cost analysis results indicate that for the particular case study context, the ‘least cost’ solution was a combination of centralised and decentralised systems. Following discussion of the findings of this costing study, the challenges and limitations of the methodology employed are outlined.

Finally, the authors note the need for a greater number of costing studies of this type to broaden the evidence base for decision-makers about the most cost-effective infrastructure options.