Cost-Benefit Analysis of the USAID/Uganda Water Infrastructure

USAID has been involved in development work in Uganda since the early 1960s and has provided significant support to the country's water sector over the years. The water sector has been a priority area for USAID in Uganda and help address water stress related challenges faced in the Karamoja sub-region of Uganda, USAID/Uganda is considering a resilience and water, sanitation, and hygiene (WASH) activity. USAID/Uganda mission tasked Mathematica and Integra to conduct a cost-benefit analysis (CBA) of four different water infrastructure technologies: (1) boreholes with handpumps, (2) boreholes with solar pumps, (3) subsurface storage (sand dams), and (4) surface storage (valley tanks).

We had three major accomplishments: (1) Produced a clear conceptualization of client investments: We provided clients with a clear conceptualization of the technologies they proposed reviewing. (2) Produced a clear and intuitively structured CBA model: We produced a high-quality cost-benefit analysis model. The model structure ensures clarity, usability and transparency of all data used for parameterization. 3) Transparency in data used. We ensured complete transparency of all data and assumptions used. 

The analysis finds that three of the four technologies have high returns. Borehole with handpump, borehole with solar pump and sand dam all have benefit-cost ratios that exceed two (every dollar invested returns over two dollars in economic benefits), driven by health benefits and agricultural benefits. Finally, we propose that a combination of two technologies (sand dams and borehole with solar pump) has the highest potential social benefits in addition to high benefit-cost ratio.