I often hear people say “sanitation is a public good”, but sanitation services are not strictly speaking public goods according to the definition of such goods. In this post, I explain that it’s the excreta-free environment they enable which is the public good
A toilet (≠ sanitation) is a private good / asset. It is partially “rival”, meaning you can’t use it at the same time as someone else (in the same way you use a park, motorway or public radio), though many people can use one toilet. It is also excludable, meaning you can stop other people from using it (with a lock, or by having it inside your house). These two concepts (rivalry and excludability) are how economists define public goods. For public goods, both of these characteristics must be missing or weak.
A WASH-related example might be a dam. Sure you can shut it down to exclude people (or states). Likewise, if water demand increases substantially then benefits of the dam may become rival (just as a motorway or park can become congested). Ultimately, however, dams provide public goods most of the time.
What about sanitation, then? Taking its common definition as the separation of human excreta from human contact, sanitation as a broad concept arguably has public good characteristics. An excreta-free living environment is non-rival and non-excludable – everyone benefits and you can’t “use it up”. So if everyone uses sanitation and it is safely-managed the this can provide a public good.
Why does this matter? Private actors in the market will underinvest in public goods. This is because their benefits accrue society-wide and not only to the person making the investment. This is the key argument for public goods receiving public finance, e.g. investment or subsidies. Public finance is needed to overcome the fact that private investment is below the socially optimal level. The use of public finance is also justified when there are externalities – more on that another time.
Accordingly, there is a strong “public good” justification for sanitation (in its broad sense) receiving public finance. However, which aspects of sanitation should national or municipal governments fund? Which element of the service chain is the most underfunded by private individuals? Would public investment in one element “crowd out” private investment, and therefore distort markets? There are no easy answers.
In the below 2×2 matrix, I give some WASH/water examples (in red) within the rivalry/excludability framework. The ‘club goods’ quadrant is the only tricky one – think of it as you have to be part of the club to get the good (excludable), but once you’re in your use doesn’t diminish anybody else’s. My WASH example is piped water connection – you have to pay a fee to join the utility club. As with the dam example above, though, non-rivalry only goes so far (when there are limits to rivalry people sometimes call those quasi-public goods). For example, if there is excess water demand, then eventually everyone will suffer from intermittent supply (especially poorer people at the tail end of the network…).