Benefits, economic evaluation, health economics, Sanitation, Water

The intrinsic and instrumental value of water & sanitation

Value is a critical concept in economics and philosophy. Economics is a discipline concerned with resource allocation informed by the value placed on alternative uses of those resources. In welfarist economics, value is taken as the strength of preference for a good or service (Brouwer et al., 2008). In that paradigm, strength of preference can be measured as the amount of money people are willing to pay (or accept) to have (or forgo) something. In other words, value is the benefit provided to an individual by something. Alternatives approaches to welfare economics exist, such as the capability approach (Sen, 1980), which focuses on individuals being able to achieve the kind of lives they “have reason to value”. In all approaches however, value is a relative concept in which some things are more valuable/important than others.

Whichever welfare economic paradigm is used, the concept of value is different to how it is used in philosophy to mean a principle or moral standard (Baker et al., 2021). In this post, I draw on the distinction between intrinsic and instrumental value in normative ethics. Something has instrumental value if it a means to an end (i.e. to achieve something else), and intrinsic value if it is desirable in and of itself (Weber, 1921).

Health has intrinsic value in that having less than full health brings disutility (e.g. being in pain, being depressed), but also in that “being healthy” is an important part of a good life regardless of utility.* However, health also has instrumental value in that it enables productive work or full enjoyment of family life (Table 1). Health therefore has both intrinsic and instrumental value. Health care, however, is a service (or commodity) which has only instrumental value through its ability to improve health. So demand for primary care (GP) appointments is a derived demand for health itself (Grossman, 1972).**

Instrumental value for:Intrinsic value in:
Healthenabling work, participation in family lifehaving a good level of health
(mobile, not in pain/depressed etc.)
Waterenabling time savings (for school/work/leisure) and prevented diseasehaving a good level of water security
(feeling safe / not worrying about water)
Sanitationenabling time savings (for school/work/leisure) and prevented diseasehaving a good level of sanitation (feeling safe / not worrying about sanitation)
Table 1: instrumental and intrinsic aspects of value of health, water, and sanitation

I think water brings both intrinsic and instrumental value from the household perspective. Its instrumental aspects are more often emphasised, e.g. in preventing disease and enabling time savings. However, “being water secure” has intrinsic value in that since water is necessary for life, being water secure is part of being human. In addition, worrying about having enough water, or feeling unsafe in water collection, bring disutility (Table 1). Water supply is analogous to health care in being a service/commodity only of instrumental value through how it supports water security. The same thinking applies to sanitation (Jain and Subramanian, 2018). Sanitation services have instrumental value in the same way as water (Table 1), but sanitation as a state of being has intrinsic value (Caruso et al., 2017; O’Reilly, 2016).

In benefit-cost analysis (BCA) of sanitation and water interventions, it is usually the benefits of instrumental value which are quantified (e.g. time savings, avoided morbidity/mortality). In health BCAs, however, the value of health is regularly quantified in monetary terms, e.g. US$ (Robinson et al., 2019). For example, willingness to pay for a quality-adjusted life year (QALY), a regularly-used measure of the value of health, can be estimated as through methods such as contingent valuation (Bobinac et al., 2010). A review identified 24 QALY monetary valuation studies with a trimmed median of 24,000 Euros in 2010 prices (Ryen and Svensson, 2015). Such monetary valuations can be summed with other benefits in BCA, just as disability-adjusted life years (DALYs) have been for some water supply BCAs (Whittington et al., 2017). I have a pre-print in which I make the case for using a new “water-adjusted person year” to quantify the value of water for people’s quality of life (Ross, 2022). I think that capturing the monetary value of water security in such a way could better reflect the quality of life gains from water supply interventions in BCA, just as is done with the monetary value of QALYs.

*To illustrate, it is worth quoting Brouwer et al. (2008) in full: “Health is pursued and valued by policy makers for its own sake (and possibly because of its impact on productivity) rather than because it yields utility or merely to the extent that it yields utility. Although good health certainly also contributes to welfare and, for that matter, to opportunity for welfare, it is valuable in itself as an important characteristic of human beings. Indeed, especially in the context of health it has been claimed that utility is an unsuitable guide to policy, if only because a person may adjust his expectations to his condition.”

**Of course, health care may have intrinsic value for a small minority of people who appreciate their problems being listened to, regardless of health consequences (Ball et al., 2018).

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