By Marina Grossi and Edison Carlos

The situation regarding basic sanitation – the supply of clean water with sewage collection and treatment – in Brazil is one of unacceptable discrepancies. The seventh largest economy on the planet, the country ranks 112th among 200 nations assessed by the Sanitation Development Index. In the most recent assessment, in 2011, this indicator, which ranges from zero to one, with one being the ideal situation, gave us a score of 0.581, a performance that leaves us far from the desirable average of countries in North America and Europe and below some nations in North Africa, the Middle East and neighboring Latin America.

The indicator, which takes into account current sanitation coverage and its recent evolution, reflects negative impacts on areas vital to any society – health, education, productivity, income generation, environmental quality and even the United Nations happiness index. In short, sanitation directly and concretely interferes in the three main dimensions of sustainability – economic, social and environmental.

Our sanitation deficit is historic. Fifty years ago, only one in three homes was connected to the sewage collection network or the storm drain network. Regarding the destination of the collected sewage, the situation was even more dramatic: only 5% of liquid effluents received some type of treatment. The rest was dumped directly into the environment. We have evolved since then, but at a slow pace, when compared to the country's economic expansion, the increase in the number of inhabitants and the excessive demographic concentration in urban areas. Today, 55% of homes are covered by a collection network, but only 37.5% of sewage is treated. We have also not yet managed to universalize the water network: 17.6% of Brazilians do not have access to this service.

The negative consequences of the current sanitation situation for Brazilian society can be seen in multiple areas. They help to explain, for example, our very poor public health indicators, which are behind countries with much more modest economies. Both in terms of infant mortality, which is 12.9 deaths per 1,000 live births, and in terms of life expectancy, which is 73.3 years, we are in a lower situation than Latin American countries such as Argentina, Chile and Cuba.

The Trata Brasil Institute and the Brazilian Business Council for Sustainable Development (CEBDS) recently concluded the study “Economic Benefits of the Expansion of Brazilian Sanitation”, in which they compare real data extracted from Brazilian official agencies in various areas with a hypothetical (and desired) scenario of a Brazil with zero basic sanitation deficit. Ultimately, the study reveals that the cost of reaching this ideal level would be R$312.2 billion in today's values.

In 2013, according to DataSus, from the Ministry of Health, more than 340 thousand hospitalizations due to gastrointestinal infections were reported, of which 50% were children and adolescents up to 14 years old. If the country had universalized sanitation, the number of hospitalizations would fall to 266 thousand, the volume of expenditure of the Unified Health System would be reduced by R$$ 27.3 million with hospitalizations and we would have a 15.5% drop in the number of deaths of hospitalized patients.

The impacts of this problem on education are also evident. Students who live in areas without sanitation are more behind in school than their peers who live in sanitized neighborhoods. With universal access to sanitation, there would be a 6.8% reduction in school delay, thus improving the average level of education with positive long-term effects, both for students in adult life and for society.

The country's productivity is also significantly affected. In 2012, there was an estimated loss of 849,500 workdays due to absences caused by diarrhea or vomiting. The cost of this absence was R$1.11 billion in paid hours not worked. Universalizing water and sewage services would reduce the number of absences by 231,000 and costs by R$258 million.

The gap between those who have access to sanitation and those who are excluded from this service leads to a wage gap between the two groups. Workers without access to sanitation earn, on average, 10% less over the course of their careers than their colleagues in the same hierarchical bracket, reflecting a weaker education in the past and health problems in the present. With the universalization of water and sewage services, there would be a 6.1% increase in the country's wage bill (currently around R$1.7 trillion), enabling an increase in the payroll of R$105.5 billion per year.

The economic and social impacts can also be observed in the real estate market and tourism, two activities intrinsically linked to infrastructure and environmental quality. For example, there is a difference of 13.6% between the value of two properties – one with and one without access to sanitation. With universalization, the appreciation of properties would reach R$ 178.3 billion and would, as a consequence, increase the collection of taxes, such as IPTU and ITBI, calculated in today's values at R$ 1.02 billion per year.

In tourism, it is estimated that universalization would create almost 500,000 jobs, including placements in hotels, guesthouses, restaurants, travel agencies, passenger transport companies, etc. The income generated by these activities would reach R$7.2 billion per year in salaries and a GDP growth of more than R$12 billion for the country. Today, our foreign tourist flow rate is 27 visitors per thousand inhabitants, a performance well below that of some of our neighbors better served by sanitation, such as Cuba (238 tourists per thousand inhabitants), Chile (176) and Argentina (139).

The projections made for an ideal scenario lead us to see the size of our liabilities, but they indicate that it is possible to overcome the challenge of universalizing sanitation in the country. If we add up the financial benefits demonstrated in the study, together with the tangible and intangible gains in the social and environmental dimensions, we will conclude that these gains far exceed the amount needed to achieve universalization of these services.

A well-structured alliance between governments, companies and civil society is the best way to adapt our infrastructure to the size and strength of Brazil, in addition to, and most importantly, providing more dignified living conditions for Brazilians.

Marina Grossi is president of CEBDS (Brazilian Business Council for Sustainable Development) and Édison Carlos is president of Instituto Trata Brasil

Article published in Valor Econômico on April 30, 2014