| INTERNAL EVIDENCE | EXTERNAL EVIDENCE | |
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Income gains Improvements boost household finances through direct (selling water) or secondary (using water) income gains | 
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Time gains Improvements boost household finances through time gains, resulting in increased productivity |
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Direct cost savings Improvements lead to direct cost savings by costing less than old sources |
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Indirect cost savings Improvements lead to indirect cost savings, such as lower healthcare costs and less time spent caring for ill household members |
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Financial inclusion Water supply and sanitation microfinance leads to greater financial inclusion | 
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Universal access to clean water and sanitation requires serious investments worldwide. It is critical to highlight that the impacts of these investments pay off. Fortunately, they pay off in spades, with benefits far surpassing the cost of solutions and helping to break the cycle of poverty. Using WaterCredit data we can track multiple types of economic benefits to households. Some come through income-generating uses of an improved water supply. Then there are valuable time gains that can be redirected from daily water-collecting duties to income-earning activities. There are direct and indirect cost savings, and finally, there are possibilities of using water and sanitation microloans as a door to financial inclusion.
Readily available, clean water opens up income possibilities
Household water supplies can provide direct income from selling water but are much more commonly used for secondary income-generating activities. These benefits only start once domestic water needs are met. Above that threshold, each extra liter per household member per day generates an estimated $0.50 to $1 per year of income.
Household water supply can flow into all sorts of direct and secondary income sources, as long as the water is sufficient and easily available. This sometimes includes selling water itself, but also extends to activities like home gardening, livestock raising and small enterprises. Many households benefit from these secondary income gains, especially low-income households in rural areas. The economic benefits can be considerable.
The characteristics of WaterCredit programs make it likely that the use of water supply improvements for income-generating purposes are higher than for more conventional programs that make direct improvements to water supply services. WaterCredit-supported improvements reach mostly low-income and rural households, they reduce water collection times to a minimum, and they typically make more water available than households need for basic domestic use. A series of evaluations following programs in Kenya, Uganda, Bangladesh, India, and Indonesia have confirmed that most WaterCredit programs in these countries bring about noteworthy secondary income gains.
38%
of WaterCredit loan recipients report that their household income increased, taking into account all direct and secondary income sources.
(n = 1,343 households)
Time gains are highly valuable
Global studies estimate that time gains account for 69% of the economic value of accessing improved water supply, and 75% of the value of accessing improved sanitation. Achieving universal access to safely managed sanitation would lead to $660 billion in economic value by 2040 through these time gains alone.
Of the multiple routes through which WaterCredit programs boost household finances, time gains are the most significant. When households improve their water supply and sanitation – for instance, installing a tap at the household premises as an alternative to walking great distances to collect water in a jug – the time gains can be transformative, especially for the women and girls who contribute most of this time.
We have systematically collected data on WaterCredit programs’ impact on time gains, highlighting the positive impacts. More than half of water supply loan recipients, and 61% of sanitation loan recipients, report notable time gains. The prospect of these gains is an important driver for WaterCredit customers to finance and make improvements.
Freeing up time for productive activities is almost certainly the biggest way that these improvements impact household finances. This has been investigated by several of our evaluations in India, which provide statistically significant evidence of household members redirecting time to income-generating activities (though with a lot of variance between programs, ranging from 18% of respondents to 58%).
Water supply improvements saved the average household more than 267 hours per year.
Sanitation improvements saved the average household member more than 85 hours per year.
(n = 7,599 households)
Households save money – especially by staying healthy
Households usually save money when they shift away from informal private water vendors and paid toilets. However, the most substantial savings come from better health and the resulting lower costs of illness and healthcare.
Evidence from our evaluations shows that WaterCredit programs reduce households’ expenditures on more costly forms of water supply and, to a lesser extent, fees for using shared sanitation. These are known as direct cost savings. At the same time, echoing findings from global studies, we have stronger evidence of much more meaningful indirect savings on costs related to health problems.
It is clear why water supply and sanitation improvements lead to health-related cost savings: household members get sick less often from waterborne diseases and other negative impacts of unimproved water supply and poor sanitation. Ending these cycles of ill health relieves a major economic burden on many households.
We know that WaterCredit programs have consistently led to lower medical expenditures for loan recipients. We do not have the same systematic data on other important health-related indirect cost savings, such as reduced productive time losses from sickness, or even lives saved; however, the positive impacts on health in general allow us to infer these other likely benefits to households and their finances.
In a comparative study of households in Kenya, loan recipients saved:
(n = 1,117 households)
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