An Environmental Investment Decision Face to Face With Two Competing Systems: Sanitation and Healthcare

Abstract

This study develops an economic relationship between public health and sanitation with the aim to provide arguments for environmental decisions on the most efficient allocation of available funds. The analysis addresses the specific case of illnesses originating from lack of sanitation. With data from a sample town in Brazil, it produces cost values for the competing systems of medical care and sewage collection, both of which being candidates to combat illnesses. The calculations assume that the existence of sanitary coverage is sufficient to eliminate illnesses, and are carried out with relative monetary units in order to make the procedure generally applicable. An illustrative numerical example shows, with the aid of opportunity cost accounting, how the relationship can be presented on a yearly basis to overcome the difficulty of comparing perpetual medical to sporadic sanitation expenditures. In conclusion, the proactive measure of investing in sanitation is shown to be economically preferable to the reactive provision of medical care for the kind of illnesses addressed.