Schumpeter: A $300 idea that is priceless | The Economist

An interesting article in the economist. Schumpeter: A $300 idea that is priceless | The Economist.  Apparently some clever people in the States  have decided that the next poverty killing silver bullet will be a $300 house (presumably flat-packed and arriving with a small widget to assemble!).  What starts off as another article on technology/business gee-whizzery becomes more intersting towards the end where, having said what a good idea this all seems, the article goes on to identify the “three huge problems” that the people behind the idea have to deal with before the idea can fly, namely: getting business buy in (good quality housing for 300$ is not obviously easy to do); sorting out micro-credit (300$ remains a huge amount of money for the poorest); and, ‘weak or nonexistant property rights’ – annoying to have the flat-pack bulldozed all the time after all that effort to put it up in the first place.

In other words, having started out with ‘technology and business know how can save the world’ we are back to but we still need to sort out financing and governance!

The nice link to our own work is that (in the context of other nifty things that big business can do when it sets its mind to it) the article mentions that “Tata Chemicals has produced a $24 purifier that can provide a family with pure water for a year”.  Because it is focussing on the houses and not water supply, it does not go on to say that a 24$ filter might indeed be able to provide clean water for a year if three big (huge) problems could be solved: 1) making people realise that (bacteriologically) pure water is something they need; 2) setting up micro-finance so people can buy the filters; 3) making sure that there is an accessible water supply to get water into the filters!

On number 3, it is also interesting that our current ‘best order of magnitude’ estimate for what it costs to provide a basic (more or less OK quality) water supply to people is 10$/person/year – to which the 24$ water filter would add 40% for a family of six.

In short. Technology and Business have a lot to offer to the very poor, but only if Financing and Governance (and management!) can also be sorted.

3 Responses to “Schumpeter: A $300 idea that is priceless | The Economist”
  1. dietvorst says:

    At its launch in 2009, the Tata Swach filter was portrayed as a rural water purifier but in practice it is being marketed as a cheaper and better filter for the urban (lower) middle class. In 2010 Tata was selling 50,000 filters a month and it expects to sell over 3 million this year. If you read the Swach filter user manual, it is hard to imagine that Tata seriously considers targeting the (illiterate) rural poor. The filter also does not remove chemical contaminants like arsenic or fluoride, which are common in groundwater, used by 80 per cent of rural Indians.The Swach filter is designed to produce about 15 l of drinking water per day at a cost of less than US$ 8 a year for replacement of the filter cartridge. The technical limitations are a greater problem than the costs

    A more promising integrated technical solution are WaterHealth International’s WaterHealth Centres.-

    • WaterHealth’s centres are being piloted in Ghana. Interestingly at 10Gh peswas per bucket (0.10 Gh Cedis) the water costs approximately double that of the most expensive ‘community managed’ piped water schemes and a whopping 7 times more than the ‘lifefline’ urban tariff from the national water facility.

      • The WaterHealth Centre tariff does seem expensive, but could it be because it is based on full recovery of all costs including those for management, maintenance, local training and hygiene education? These services are part of the package WHI provides according to their web site. And what kind of service can you expect with such low ‘lifeline’ urban tariffs – figures over the past 20 years show a steady decline in the % of urban piped water connections?

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