12/08/2014 03:15 pm ET Updated Feb 07, 2015

The Toilet Business

In his seminal work, A Theology of Liberation, Father Gustavo Gutierrez writes, "The poor countries are not interested in modeling themselves after the rich countries..." Those living in penury are constantly being asked to adopt one such model -- market based approaches -- to solve the development issues they are forced to endure. There certainly is a degree of utility associated with this method of development as these solutions provide the vital services that are so desperately needed in many parts of the world, while generating a revenue stream to help the service provider sustain its operations. Tom's Shoes is a model commonly lauded for creating impact and profit. But this paradigm is far from a panacea, a sober fact especially pertinent in the context of the global sanitation crisis.

In India, where this tragedy is especially apparent, 650 million indigent people endure the reality of having to defecate outside every single day. Disease spreading fecal contamination then kills hundreds of thousands of people every year while making millions more sick. The financial strains are also staggering, as health costs and lost productivity amount to a loss of over $50 billion for the nation every year. These statistics underscore the importance for immediate attention to this problem.

Unfortunately, business models will not address the exigencies of this problem, which are rooted in the socio-economic realities of the ground. For example, in the northeast Indian state of Bihar, 80 million people of the state's 104 million residents defecate outdoors. Most of these people live in rural areas where the average farming family of seven people earns a meager $400 to $600 per year. Sanitation solutions predicated on the pay per use model are destined to fail here. Even charging a "nominal" fee of just $0.05 per use would cost a family living here $0.35 per day, or $128 per year. No family can afford to pay such a significant portion of their annual income just to use the toilet. Charging anything less will severely undermine efforts to sustain toilet infrastructure.

Microloan schemes should also be viewed skeptically. I have seen programs designed for rural Bihar in which loan recipients were told they would be distributed $200 to build a household toilet with the expectation that this money be repaid in 12 to 18 months, an economic impossibility. Unawareness of the socio-economic context that tens of millions of people brave, on the part of the program designers, is embarrassing, and causes India's sanitation crisis to spiral in perpetuity.

Business models do very little to address the underlying structural problems that leave hundreds of millions of Indians defecating out in the open. Again, in Bihar, hundreds of thousands of people do not own the land they live on. Where can people be expected to build toilets if they do not own land? This particular failure is policy based, not tied to the absence of sanitation based market solutions.

Beyond the myriad of potential pitfalls inherent to business models, market-based approaches detract from the paradigm of development that should be espoused -- the strengthening of public institutions that are built to serve the public. The Indian government's Nirmal Bharat Abhiyan scheme, which is specifically designed to end outdoor defecation by building toilets for families, provides a reimbursement ranging from $170 to $250 per family to construct a household toilet. Bureaucratic red tape and corruption have weighed this program down, along with its failure to maintain toilets that have been built and sustain their long-term use. But these are not reasons to abandon the program. Resources should be allocated to ensure the timely and proper disbursement of funds to families who have built toilets under the guidelines of this program. Foundations and multi-lateral agencies should demand that significant portions of their funding to this scheme be used for developing methods that will encourage uptake and adoption of sanitation infrastructure.

Strengthening the democratically empowered institutions that have been designed to serve Indians will guarantee sustained efforts long after international development workers leave (something that happens with disconcertingly startling frequency). Re-directing funds and resources to those institutions put in power by the people will allow for the generation of culturally appropriate solutions. Doing so will also change policy and structural flaws that are so often responsible for the suffering endured by the poorest of the poor. The unique opportunity to end outdoor defecation in India by favoring the strengthening of public institutions over market based approaches should not be passed up. Doing so would amount to yet another injustice hundreds of millions of Indians would be forced to endure.