Investments aligned with this strategic goal aim to expand access and improve sanitation services by expanding sewerage and improving technology for its conveyance and treatment.

The sections below include an overview of the strategy for achieving desired goals, supporting evidence, a starter kit of metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

In 2017, just 45% of the world’s population had access to safely managed sanitation services, defined as improved facilities which are not shared with other households and where human excreta are safely disposed in place or transported and treated off site (1).

Sewers are piped networks that remove excreta from households, conveying domestic wastewater to treatment plants. Over 60% of the global urban population is connected to a sewer network (1). Even for those already connected to a sewer, however, excreta may not reach treatment plants. Many households flush waste into open drains. Inadequate containment may cause losses during transport, and inadequate treatment may cause unsafe discharge of wastewater into the environment (2).

By 2017, 80% of global household wastewater went through at least secondary treatment. However, in emerging markets in particular, wastewater treatment remains a challenge (1). Sewage that is unsafely discharged into open drains or bodies of water negatively affects the entire exposed community in terms of public health. Marginalized groups typically face the highest risk of exposure to untreated sewage. Untreated wastewater also threatens the environment, depleting oxygen and harming aquatic life. Wastewater is also a significant contributor to greenhouse gas emissions, representing 5% of global non-carbon emissions in 2010, the fifth-largest contributor (3).

To increase access to safely managed sanitation through sewerage, investments can:

  • expand conventional sewer coverage to areas with no piped networks;
  • develop low-cost, decentralized sewerage systems for areas with no piped sewer networks;
  • improve or upgrade existing systems to reduce leakage or discharge to open drains, increasing the amount of wastewater treated; and
  • through technology, increase the efficiency and safety of wastewater treatment and reduce emissions.

What is the scale of the problem?

As of 2017, more than four billion people lack access to safely managed sanitation (4), and less than half of wastewater is treated in most countries in sub-Saharan Africa and Latin America and the Caribbean (1).

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

Urban and peri-urban populations: Sewered sanitation is primarily a solution for urban and peri-urban settings. Besides those directly served by new or improved sewer connections, non-connected communities will still benefit from the reduced risk of water contamination by untreated waste.

Children: Access to safe water and sanitation contributes to positive outcomes in children’s health and education. Investments can prevent childhood deaths due to diarrheal disease—one of the top three causes of childhood death—when they target areas where people have little access to basic water and sanitation, as most cases are linked to a lack of these services (5, 6). Diarrhea related to lack of water and sanitation is also linked to stunting and chronic malnutrition, which affect more than 160 million children worldwide (7). One study attributed around 10% of the global decline in child mortality from 1990 to 2015 to sanitation improvements alone (8).

The environment: Adequate sewerage prevents discharge of wastewater without treatment into bodies of water. Discharge of untreated waste depletes oxygen in water bodies, reduces water quality, and damages aquatic ecosystems (9).

What are the geographic attributes of those who are affected?

Data on wastewater treatment from the World Health Organization (WHO) and UNICEF’s Joint Monitoring Programme show broad gaps in wastewater treatment across regions. In every SDG regional group other than Australia and New Zealand, at least one country treats less than half of wastewater. The rate of treatment is similarly low in most countries in sub-Saharan Africa and Latin America and the Caribbean (1).

However, proponents of citywide inclusive sanitation note that the conditions of every municipality demand a different, specific suite of sanitation solutions, such as traditional sewers, condominial or decentralized sewers, and non-sewered solutions (10,11). For more information on non-sewered solutions, see the strategic goal Increasing Access to Non-Sewered Sanitation Services. Investment considerations, among others, include population density, water availability, water table level, soil type, and capital availability.

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

Organizations investing in projects that improve access to sewered sanitation can contribute toward solutions by:

  • Signal that impact matters. By investing in projects targeting positive WASH outcomes, investors signal that impact matters within their portfolios.
  • Engage actively. Investors can use their expertise and networks to improve performance of businesses related to WASH outcomes. Engagement can include a variety of approaches ranging from dialogue with investees to hands-on management support. For further details, see A Guide to Classifying the Impact of an Investment.
  • Growing new or undersupplied capital markets: Water and sanitation receives relatively little investment compared to other infrastructure, and achieving safely managed sanitation in urban areas will cost an estimated USD 31 billion per year (16,17). Investments in this strategic goal--particularly those that can address the common mismatch between institutional investors' needs and the small ticket sizes typically offered in the space--can help close this gap in financing.
  • Providing flexible capital: Sewerage infrastructure often requires long-term financing through public–private partnerships, including blended financing arrangements with participation from the private sector, public sector, and development finance institutions. Long-term debt, guarantees, and credit enhancement facilities may all be required (17).

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

The global urban population, for whom sewerage is the optimal sanitation solution, is projected to grow by another 2.5 billion people by 2050, overwhelmingly in Asia and Africa (18). Improvements to urban sanitation infrastructure for these new city dwellers will be essential.

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

Outcomes related to investments in this strategy will vary by investment context, size, and design, among other factors. Examples of positive progress toward this strategic goal include the following:

  • Access to sewered sanitation leads to improved health. Examining data from Paris, one study found a significant, positive impact on life expectancy as neighborhoods gained access to sewer connections between 1886 and 1913 (12). A meta-analysis of 25 studies on the association between sewerage and diarrhea found a reduction in diarrheal disease by 30–60% from sewerage connection, depending on prior sanitation conditions (13).
  • Increasing the proportion of wastewater that flows through the sewer network and undergoes treatment improves health for the entire surrounding community, which was previously exposed to waste through open drains or leaks (14).
  • Worldwide, the economic return of a dollar invested in sanitation is at least USD 5.50, largely due to the decreased incidence of disease, which leads to productivity gains (15).
  • An estimated 50% of waste is discharged with treatment in many emerging markets, negatively affecting aquatic ecosystems in particular (1).

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What impact risks do investments aligned with this Strategic Goal run? How can investments mitigate them?

Impact risk factors identified by experts as material for this Strategic Goal include:

  • Execution Risk: Activities may not be delivered as planned, and the quality of service may not improve. Investors can mitigate execution risks by ensuring that investees have plans in place for operations, information management, and finance alongside qualified staff, competent engineers, dedicated management, and legal and political decision-makers.

  • External Risk: External risk factors may disrupt the investment’s expected impact. Where municipalities or local governments are paying a service contract, the threat of payment delay or interrupted revenue streams may affect operations. To mitigate this risk, investors should investigate the structure of any public–private partnership agreement or service contract to determine and counter any potential threats to revenue streams.

  • Endurance Risk: If the quality of the sewered network and treatment processes is not maintained, the project will fail to deliver the expected impact over time. To mitigate this risk, investors can consider implementing performance-based contracts or technology enhancements to improve the quality of service and maintenance.

What are likely consequences of these impact risk factors?

These risk factors could lead investments to fail to move households to safely managed access to sanitation.

Illustrative Investment

Aegea Saneamento provides water and sanitation services in Brazil. In 2012, the International Finance Corporation (IFC) first provided Aegea a loan to expand throughout the country, including to underserved regions in the north and northeast. Aegea now operates water contracts in 38 Brazilian municipalities in eight states, providing water and sanitation services for more than two million people. The expansion of Aegea’s network has been successful. For example, in the city Campo Grande, Aegea nearly doubled sanitation coverage to reach 66% of the population in six years, and local officials noted a reduction in water-borne disease as a result.

In 2018, Organica Water announced the successful activation of its 31,000 m3 per day Bhatpara Wastewater Treatment Plant in India, built by the Larsen & Toubro Company. Since its commissioning in March 2018, the treatment plant has processed wastewater needs for 52,000 households, supplying industrial and agricultural water to various developing industries. Due to its smaller physical footprint and ability to produce reuse-level effluent, this facility has entirely transformed India’s wastewater landscape. Besides mitigating pollution in the city of Bhatpara, this facility has helped rejuvenate the Ganges River.

Have an investment the GIIN should consider including here? Let us know!

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 4
Impact of drinking water, sanitation and handwashing with soap on childhood diarrhoeal disease: updated meta-analysis and meta-regression

Wolf, Jennyfer, Paul R. Hunter, Matthew C. Freeman, Oliver Cumming, Thomas Clasen, Jamie Bartram, Julian PT Higgins et al. “Impact of drinking water, sanitation and handwashing with soap on childhood diarrheal disease: updated meta‐analysis and meta‐regression.“ Tropical medicine & international health 23, no. 5 (2018): 508-525.

NESTA: 2
Effects of sewerage on diarrhea and enteric infections: a systematic review and meta-analysis

Norman, Guy, Steve Pedley, and Bahi Takkouche. "Effects of sewerage on diarrhea and enteric infections: a systematic review and meta-analysis." The Lancet infectious diseases 10, no. 8 (2010): 536-544.

NESTA: 2
Sewers' diffusion and the decline of morality: The case of Paris, 1800-1914

Kesztenbaum, Lionel, and Jean-Laurent Rosenthal. “Sewers’ diffusion and the decline of mortality: The case of Paris, 1880–1914.“ Journal of Urban Economics 98 (2017): 174-186.

NESTA: 2
Impact of drainage and sewerage on diarrhea in poor urban areas in Salvador, Brazil

Moraes, L. R. S., Jacira Azevedo Cancio, Sandy Cairncross, and Sharon Huttly. “Impact of drainage and sewerage on diarrhea in poor urban areas in Salvador, Brazil.“ Transactions of the Royal Society of Tropical Medicine and Hygiene 97, no. 2 (2003): 153-158.

NESTA: 2
A Fecal Contamination Index for interpreting heterogeneous diarrhea impacts of water, sanitation and hygiene interventions and overall, regional and country estimates of community sanitation coverage with a focus on low- and middle-income countries

Wolf, Jennyfer, Richard Johnston, Paul R. Hunter, Bruce Gordon, Kate Medlicott, and Annette Prüss-Ustün. “A Fecal Contamination Index for interpreting heterogeneous diarrhea impacts of water, sanitation and hygiene interventions and overall, regional and country estimates of community sanitation coverage with a focus on low-and middle-income countries.“ International journal of hygiene and environmental health 222, no. 2 (2019): 270-282.

NESTA: 2
Phosphorus recovery from municipal wastewater treatment: Critical review of challenges and opportunities for developing countries

Chrispim, Mariana Cardoso, Miklas Scholz, and Marcelo Antunes Nolasco. “Phosphorus recovery from municipal wastewater treatment: Critical review of challenges and opportunities for developing countries.“ Journal of environmental management 248 (2019): 109268.

NESTA: 2
Environmental impact of recycling nutrients in human excreta to agriculture compared with enhanced wastewater treatment

Spångberg, J., Pernilla Tidåker, and H. Jönsson. “Environmental impact of recycling nutrients in human excreta to agriculture compared with enhanced wastewater treatment.“ Science of the Total Environment 493 (2014): 209-219.

NESTA: 1
Pro-poor sanitation technologies

Paterson, Charlotte, Duncan Mara, and Tom Curtis. “Pro-poor sanitation technologies.“ Geoforum 38, no. 5 (2007): 901-907.

NESTA: 1
Decentralised Wastewater Treatment Systems (DEWATS) and Sanitation in Developing Countries

Gutterer, Bernd, Thilo Panzerbieter, Thorsten Reckerzugl, and Ludwig Sasse. Decentralised wastewater treatment systems (DEWATS) and sanitation in developing countries: a practical guide. WEDC, Loughborough University© BORDA, 2009.

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.