Pricing drinking water testing in northern Haiti: Financial sensitivity to operating costs, user demand, and economic conditions

Abstract

Safe drinking water availability is a concern in Haiti. Public systems have limited coverage and reliability. Private wells and local water sources are often of unknown or poor quality. Public health events, such as the 2010 cholera outbreak, demonstrate vulnerability to water contamination. To address these concerns, a drinking water laboratory was established at the Campus Henri Christophe in Limonade, a branch of the State University of Haiti, to meet water testing demands from local clients such as for-profit kiosks, institutions, industries, and municipal water systems. This study assessed the financial viability of a university-based drinking water laboratory in Haiti by calculating Internal Rate of Return and Net Present Value. Sensitivity analysis was used to identify the range of conditions under which laboratory revenues would cover operating costs. To achieve an acceptable profitability level, the laboratory must perform microbiological testing for routine monitoring samples and test an average of five samples per day. Price-based incentives for new clients have relatively small impacts on profitability. Finally, international and Haitian inflation cause some variation in profitability. These economic factors will be among the key drivers of laboratory operation costs. The results underscore the main factors that must be considered to make the laboratory successful and the importance of strategic marketing for laboratory managers to encourage clients to regularly test drinking water and emphasize microbiological testing.

Keywords: Drinking water laboratory; Financial sensitivity; Financial sustainability; Haiti; Internal rate of return; International development.

Fig. 1

Sensitivity of laboratory IRR to the number of samples received per day. Blue bars indicate a scenario in which only residual chlorine testing is performed on the samples and orange bars indicate a scenario in which microbiological testing is also performed.

Fig. 2

Sensitivity of IRR to monthly testing demand from kiosks depending on which tests are requested by the client.