The economic factors affecting entrepreneurs are manifold, especially because they determine the capacity of making profit in a particular country. On an international level, it is important to recognise the stage in which the economy is: if the economy is going through recession, then environmental products and services, especially related to water and sanitation, probably fall to the bottom of the priority list. On the contrary, a boom period usually leads to business profits and revenues for most business in the economy, including your start-up. At a national level, it is of foremost importance to know how the sectors of the economy are divided (primary, secondary and tertiary) since it will indicate the dimension of your potential market. Let’s say you are selling an industrial wastewater treatment system based on leading edge technology, then your market might be located in those countries where the industrial sector is very strong, contributing heavily to their GDP.
As SSWM entrepreneurs, we must also understand the economy involved in water and sanitation in a particular country (see economic tools in water and sanitation). Are they public goods and a human right for all members of the society (see the right to water and sanitation)? Are they considered as having an economic value? This factor is really decisive, as this will indicate the willingness to pay for your products, especially if you are targeting the bottom of the pyramid (the poorest sector in society). Furthermore, you should scan factors such as employment, income, cost of living and inflation, interest rates, productivity, and wealth because these all influence the buying behaviour of consumers and institutions. For example, if you are selling household filters (see point of use water treatment), a decrease in disposable income may result in decreased sales, as your customers might resort to other (cheaper) types of water purification systems. However, the impact of economic recessions is not only to be seen in the sales of your start-up. Increasing costs of doing business, such as increased rental payments, bank fees, and utility bills, may result in tightened budgets. So, keep your eyes open when scanning the economic environment and start paying attention to these pieces of news.
There are a number of magazines focusing on economic trends and forecasts, including Business Week, The Economist, Fortune, The Monthly Labor Review, and Money, Inc. Check the monthly reports of the Chamber of Commerce of your locality, or pay a visit to the state and local governmental agencies that provide regional economic data.
This guide provides you with an overview of doing environmental scanning in your organisation. The aim is to allow you to build an understanding of the environmental scanning process and what is involved.CONWAY, M. (2009): Doing Environmental Scanning. An Overview Guide. Hotham Hill, Australia: Thinking Futures URL [Accessed: 22.08.2012]
This web article contains a thorough list of references regarding environmental scanning, as well as concepts and theories developed in the last decades. It also contains an interesting analysis of the external environment of Higher Education, which could be used for those planning starting up a business in the training sector of water and sanitation.MORRISON, J.L. (1992): Environmental scanning. In: WHITELY, M.A. ; PORTER, J.D. ; FENSKE, R.H. (1992): A primer for new institutional researchers. Tallahassee, Florida: 86-99. URL [Accessed: 22.08.2012]
The aim of this study was to estimate the economic costs and benefits of a range of selected interventions to improve water and sanitation services, with results presented for 17 WHO sub-regions and at the global level. The results show that all water and sanitation improvements were found to be cost-beneficial, and this applied to all world regions. The mainHUTTON, G. HALLER, L. (2004): Evaluation of the Costs and Benefits of Water and Sanitation Improvements at the Global Level. Geneva: World Health Organisation (WHO) URL [Accessed: 01.11.2012]
Over the past four years WASHCost teams in Burkina Faso, Ghana, Andhra Pradesh (India) and Mozambique have collected, validated and analysed cost and service level information for water, sanitation and hygiene. This Infosheet provides an overview of the minimum benchmarks for costing sustainable basic services in developing countries. The benchmarks are useful for planning, assessing sustainability from a cost perspective and for monitoring value for money.IRC (2012): Providing a basic level of water and sanitation services that last: cost benchmarks. (= WASHCost Infosheet , 1 ). The Hague: International Water and Sanitation Centre (IRC) URL [Accessed: 01.11.2012]
The "sanitation economics" approach used throughout the paper consists of applying economic principles, approaches and tools to evaluate a number of "sanitation markets" alongside the sanitation value chain. Each segment of the sanitation value chain can be conceived as a separate "sanitation market", with different actors demanding and providing sanitation services.TREMOLET, S. (2012): Sanitation Markets. Using economics to improve the delivery of services along the sanitation value chain. London: Sanitation and Hygiene Applied Research for Equity (SHARE) URL [Accessed: 18.06.2019]
The Economics of Sanitation Initiative, launched in 2007 with a WSP study from East Asia, found that the economic costs of poor sanitation and hygiene amounted to over US $9.2 billion a year (2005 prices) in Cambodia, Indonesia, Lao PDR, the Philippines, and Vietnam, affecting a total population of more than 400 million. The groundbreaking study was the first of its kind to attribute dollar amounts to a country’s losses from poor sanitation.WSP (2011): Economics of Sanitation Initiative: What Are the Economic Costs of Poor Sanitation and Hygiene?. Washington, D.C.: Water and Sanitation Program (WSP) URL [Accessed: 06.02.2012]
Review of Current Practices in Determining User Charges and Incorporation of Economic Principles of Pricing of Urban Water Supply
This report reviews current practices in determining user charges and researches how economic principles of pricing of urban water supply can be incorporates. It researches international practices in the UK, Australia and the Philippines and several cases in India.TERI (2010): Review of Current Practices in Determining User Charges and Incorporation of Economic Principles of Pricing of Urban Water Supply. New Delhi: TERI URL [Accessed: 03.05.2019]
This short leaflet presents water international statistics for water services, e.g. major cities’ water bills, abstraction sources for drinking water supplies, or a large comparison of water cycle charges.IWA SPECIALIST GROUP STATISTICS AND ECONOMICS (2010): International Statistics for Water Services. The Hague: International Water Association (IWA). [Accessed: 22.04.2012] PDF