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close this bookThe Value of Family Planning Programs in Developing Countries (RAND, 1998, 98 p.)
close this folderChapter Four - THE COST OF FAMILY PLANNING
View the document(introduction...)
View the documentPublic Expenditures
View the documentGovernment Involvement
View the documentDonor Commitments
View the documentContinuing Challenges


Expenditures on family planning across all developing countries are under US$10 billion, much of it paid by national governments or individual households. Equivalent to around US$1-2 per person per year, this is not large by many standards. Family planning is a cheap way to reduce fertility, although other approaches are also worth pursuing simultaneously. Governments have several good reasons to support family planning programs, for the benefits they provide users and the society as a whole. Donor countries also have a stake in moderating global population growth, with its threats to the environment, to economic progress, and to political stability in many critical regions. Although they do not cover the bulk of the costs, donor contributions have been critical in the past and continue to be indispensable.

Public Expenditures

Public expenditures on family planning in developing countries were estimated by several sources for 1990 at US$4-5 billion and are somewhat higher now (World Bank, 1993a). However, these estimates are difficult to make with confidence. Apart from the vagaries of government budgetary data in developing countries, the estimates are complicated by the difficulty of separating family planning from other health services, by the multiplicity of agencies involved in family planning and the many channels through which they may be funded, and to some extent by the definition of what activities should be counted. For the Cairo population conference, UNFPA (1994) estimated the cost of family planning programs in the year 2000 at US$10.2 billion and then added US$5.0 billion for reproductive services that can be provided as part of primary health care; US$1.3 billion for prevention of sexually transmitted diseases, including HIV/AIDS; and US$600 million for population data collection, analysis, and policy development.1

1Agency estimates of needed resources in their areas should normally be treated with caution and some skepticism. The family planning cost estimate appears somewhat high in comparison with 1990 estimates (on which there is reasonable consensus), but the reproductive health-services cost estimate is undoubtedly far too low. Various joint costs are counted under family planning rather than reproductive health (and further development of the methodology for apportioning costs is needed). In addition, the estimates for reproductive health are not meant to cover emergency obstetric services above the primary health-care level, which are critical in reducing maternal mortality. No comparable estimates of overall costs developed independently of funding agencies are available.

Expenditures are usually tied to the number of users and are expected to grow as the reproductive-age population grows - by about 2 percent a year currently, although the rate will slow to 1 percent around 2015. But one also has to allow for changing program costs. The initial years of a program require the heaviest investment; as the number of contraceptive users grows, it can become easier to serve them. But additional expenditures may be necessary to maintain the program's momentum and to reach new user groups, as well as to improve service quality and expand related reproductive health services.

Public family planning expenditures are quite variable across countries in comparison to public expenditures on health. Estimates around 1989 suggest that family planning is most often around 2 percent of the government health budget. However, many of the countries covered in these estimates have quite weak programs, and the proportion goes up to 20-30 percent for some extensive (and suc -cessful) programs, such as those in Indonesia and Bangladesh (Ross et al., 1993). Some countries have therefore had considerable scope to fund their family planning programs out of health budgets, but others have required considerable outside assistance.

Funds from international donors cover a fourth to a third of public expenditures on family planning throughout the developing world (the overall proportion is low because China and India provide so much of their own family planning resources). Donor commitments - designated support for population and family planning from industrial countries, as well as funds passing through multilateral institutions and development banks, plus funds from private donors - fluctuate from year to year. They appeared to increase substantially, to US$1.37 billion, the year after the 1994 Cairo conference (as they did after the previous world conference in 1984). However, comparisons are complicated by the expanded mandate from the Cairo conference to tackle reproductive health, funding for which was counted for the first time in 1995 and found to comprise 23 percent of donor commitments. Not counting such funding, donor commitments actually fell from 1994 to 1995 (by 7 percent in real terms; funding trends in current dollars are shown in Figure 13). Even counting reproductive health funding, substantially larger increases will be needed to meet the Cairo conference goal of donor support for a third of the cost of population and reproductive health programs by 2000 (UNFPA, 1997b).

Per capita, developing countries receive US$0.15 from international donors for population and reproductive health programs, but regional variation is considerable. Sub-Saharan Africa (with its relatively newer programs and smaller populations) receives more and absorbed almost 80 percent of the increases in 1995, and Asia (with older programs and larger populations) receives less (Figure 14).

Figure 13 - Trend in Donor Assistance for Population Programs and Goal for 2000 (billion U.S. $)

SOURCE: UNFPA (forthcoming) for trend and UNFPA (1994) for goal.

Government and donors do not cover all the costs of family planning. Households pick up some proportion of the costs, about as much as donors do, by one earlier estimate (Bulatao, 1985). In countries where commercial contraceptive supply is limited, the contraceptives available are unaffordable for most. But prices at pharmacies and smaller outlets decline as the number of users increases, and price decreases do stimulate demand (Lewis, 1985). The cost of public programs also goes down. The cost per user of program-supplied modern methods may be estimated roughly at US$20, but may range from US$50 to under US$15 as the number of contraceptive users increases (Figure 15).

To assess whether there are cheaper ways to reduce fertility, comparisons are sometimes made between family planning and other development interventions. For instance, the cost-effectiveness of family planning for reducing fertility has been contrasted with that of primary schooling for girls in 16 countries, mostly Asian and Latin American. The median cost of averting a birth through a family planning program, at US$58, was much lower than the median cost of averting a birth through female education, at US$548 (Cochrane, 1988).2 A similar comparison of family planning with several child-survival initiatives, including immunization, maternal and child health programs, and infant and child feeding programs, gave a similar result. The lowest-cost alternative among these mortality-reduction initiatives was still more expensive, per birth averted, than family planning, with only one exception across countries (measles immunization in Kenya). The median cost for family planning was again about a tenth of the median cost for mortality reduction (Cochrane and Zachariah, 1983).

2Average costs were used because marginal costs were not available.

Figure 14 - Trend in What Developing Regions Receive per Capita in Donor Support for Population Programs (constant 1990 U.S. $)

SOURCE: Estimated from UNFPA (forthcoming).

Figure 15 - Program Cost per Contraceptive User by Number of Users, Selected Countries

SOURCE: Unpublished studies of the EVALUATION Project at the University of North Carolina at Chapel Hill.

Such comparisons are seriously limited, since only the fertility effect, not the other effects of the interventions, is taken into account.3 What they point to, nevertheless, is the inability of general education and health programs to satisfy unmet need directly. Instead, they create over time a general desire for smaller families and the social climate in which such desires can be realized and therefore are a useful complement to family planning programs and have contributed powerfully to fertility decline. But their effects involve long lags: The long delay between a girl's schooling and her childbearing, and the many things that must intervene to allow her to limit her fertility, as opposed to the relatively immediate effects of family planning programs, account for the latter's advantage in such comparisons as those above.

3Knowles (1997) considers this "the main shortcoming of this type of analysis ... that the alternative investments compared to family planning provide a wide range of private and social benefits not incorporated into the analysis, so that the exercise risks being irrelevant." Arguably, however, family planning also provides a range of other benefits besides lower fertility, such as reduced mortality (for which its cost-effectiveness is noted below). Knowles does make other important points in his broad critique of such work, noting, for instance, that the alternatives to government financing are seldom clearly modeled. In addition, data for comparative analyses, such as the specific ones cited, always have some deficiencies.

Government Involvement

There are several arguments for government support of family planning - the utility of family planning programs for reducing fertility, the opportunities that lower fertility and dependency rates, and the resulting increased saving rates and reduced growth of expenditures on social programs. Paradoxically, however, these arguments are less compelling for poorer countries, which would benefit less because the amounts they could save are smaller relative to the cost of programs. In addition, any gains from family planning are strictly contingent, dependent first on the programs being well-run, and then on any opportunities opened up by lower fertility - for expanding enrollment, for instance - being used productively. This requires effective governance, which tends to be more difficult in more constrained environments.

In a different sense, however, government involvement in family planning is more critical in poorer countries. Commercial services are less likely to be available and more likely to be beyond the reach of individuals. Furthermore, family planning improves maternal and child health. By reducing exposure to pregnancy, family planning reduces maternal deaths at a cost below that of such programs as prenatal care and training of traditional birth attendants, particularly for poorer countries where maternal mortality rates are high (Maine, 1991). The cost per child death averted by a model family planning program is also quite low, being estimated at US$4-5 per added year of life in Mali, a poorer country, and at US$25 per added year in Mexico or Thailand. This is as cheap or cheaper than a model immunization program, which costs three times as much (US$12-17) per added year of life in lower-income countries and slightly more (US$25-30) in middle-income countries.4 Family planning services are therefore recommended as part of a primary health care package ensured for the entire population, most strongly although not only for poorer countries (World Bank, 1993b).

4These measures of added years of life are adjusted for disability and are therefore known as disability-adjusted life-years (DALYs). The comparison is with the EPI Plus cluster of interventions - the Expanded Programme of Immunization plus hepatitis B and yellow fever vaccines and vitamin A and iodine supplements, where these micronutrients are deficient (World Bank, 1993b, p. 74, 84-85). For some commentary on these estimates, see Haaga et al. (1996).

Whether to save money, to save lives, to guarantee reproductive rights and the reproductive health of women, or to temper environmental and social problems, governments in both the poorer and the more advanced developing countries, wherever fertility remains high, have strong reasons for financial support of family planning. Such support need not mean government provision of services. Many successful programs have been government run, but many government-run programs have also languished for years. Where appropriate private agencies exist or can be nurtured into existence, they could in principle take on some of this burden, with some public support, and enhance the performance of programs. But government does have an essential role in ensuring appropriate public education and an adequate flow of information about family planning, as well as in guaranteeing proper standards of care. Addressing both of these tasks adequately - which the private sector is generally not equipped to do - could help mitigate unfamiliarity with contraception and concern about its health effects, the two major reasons for the unmet need for contraception.

The majority of developing country governments do in fact take some responsibility for family planning, although their efforts have often been more notable at raising awareness levels than at ensuring quality services. Except in sub-Saharan Africa and scattered countries elsewhere, governments typically cover the bulk of publicly financed family planning expenditures in developing countries (Ross et al., 1993). The proportion of costs they cover tends to rise as programs develop: from under 30 percent to more than 60 percent of funding over the 1980s in Tunisia, for instance (Figure 16). But donor funds from industrial-country development assistance, international agencies, and private sources do fill critical gaps in funding.

Figure 16 - Government and Donor Spending on Family Planning, Selected Countries and Years

SOURCE: Donaldson and Tsui (1990, p. 27) and Ross et al. (1993, pp. 123-131).

Donor Commitments

International donors play an important role in getting programs started, and also later in helping them expand. Donor funding typically increases over time - although government funding generally rises much faster - as a program tries to reach a larger clientele and becomes more skilled and sophisticated in doing so. Donor funding usually declines when a program is fairly mature and well-established.

In several ways, donors find family planning programs ideal humanitarian programs. These programs benefit the poorest in society, those unable to afford such a basic service on their own, and they benefit women in particular. They provide households not only with a concrete service but also with the opportunity to better their lot and improve the prospects for their children. Programs now have a record of success in many countries, but still have a long way to go and require much further assistance in others. Besides their personal benefits for individuals and households, programs also open up opportunities for societal development through the reduced dependency burden. By releasing some pressure on resources, they allow societies the time and opportunity to develop more sustainable modes of interacting with their environments.

Family planning assistance is not comparable in its immediate commercial benefits to "foreign aid" programs that directly promote exports, but the benefits it does provide may be wider and longer lasting.5 If developing countries can be assisted in achieving low population growth and progressive economies, the benefits to the donor countries of growing markets, increasing international division of labor, and expanded export and investment opportunities could be considerable. In the United States, the leading donor in this area, a third of economic growth in the past decade has been generated by exports (Bergsten, 1997), and strong economies overseas have been essential to this. The American "economic future is increasingly tied to growing foreign markets,"6 as the stock market gyrations in October 1997 demonstrated. In addition, strong economies in developing countries promote political stability and facilitate cooperation on international problems, from drugs and crime to global warming to uncontrolled migration.7

5And they could be potentially greater, if the other programs involve significant trade diversion rather than trade creation.

6Joe Lockhart, in explaining Bill Clinton's foreign travel (Wall Street Journal, 15 Oct 1997).

7A list of such arguments for tax-supported foreign aid is provided by Cohen (1997). Quantifying such benefits is largely a speculative exercise, but if one considers all foreign aid from all sources, the benefits in trade promoted, wars avoided, and environmental damage averted are reportedly thousands of times the cost of the assistance (O'Hanlon and Graham, 1997). With regard to migration, it is not being argued that reducing migration produces economic benefits. Within limits and with qualifications, the reverse appears to be the case (Smith and Edmonston, 1997). But a lawful, controlled process - though not necessarily a restrictive one - is desirable.

In line with its activist foreign policy, the United States has been the leading international donor in population and family planning, with about half of all contributions and an overseas staff and technical advisers who constitute the bulk of such donor expertise in the field in developing countries. However, the U.S. share of contributions diminished in the late 1980s and has not recovered to previous levels. In fact, U.S. population assistance fell 20 percent from FY 1995 to FY 1996 and fell a further 10 percent in FY 1997.8 How other donor countries will react to this is difficult to predict.

8Reported figures for these years are US$541.6 million, $432 million, and $385 million. For FY 1998, no change is expected.

As the United States has become increasingly engaged with the rest of the world - through expanding trade and alliances; through international agreements on security assistance, drug enforcement, environmental protection, etc.; and through the growing band of American expatriates, whose numbers have risen by 50 percent in the 1990s9 - its commitment to assisting needy countries appears to have actually diminished. The United States devotes less of its GNP to all official development assistance than any of the other 20 leading industrial economies. Per capita, U.S. official development assistance in all areas is equivalent to a contribution of US$0.70 per week from each American, as contrasted with US$2.00 from each Japanese and more than US$5.00 from each Dane and Norwegian.10 U.S. assistance is declining at the same time that assistance from all OECD countries combined is also declining: by 6 percent from 1995 to 1996, leaving the OECD countries less than half way to their target of devoting 0.7 percent of their GNP to reducing world poverty (Randel and German, 1997).

9Excluding soldiers and diplomats (Knowlton, 1997).

10Estimates of official development assistance are for 1994 (World Bank, 1997a, p. 304) and are compared with the 1995 population.

Relative to other countries, the United States puts more of its development assistance into population - 4 percent in 1993, 5 percent in 1994, and a reported 9 percent in 1995 (when reproductive health began to be counted by UNFPA [1997a], and all U.S. development assistance fell by one-fourth11). Even the sharply higher proportion in that single year, however, meant that support for population and reproductive health in developing countries costs each American only a penny a day.

11According to OECD, net U.S. official development assistance fell from US$9.9 billion in 1994 to $7.4 billion in 1995, then recovered somewhat to $9.4 billion in 1996.

These pennies have added up and made a difference, but the U.S. role has been much deeper than that of a program financier. Many of the ideas and initiatives that carried international family planning from a long-shot, almost desperate attempt to alleviate developing-country poverty to the levels of sophistication and success it enjoys in some countries found their inspiration in U.S. think tanks and universities and their implementation with the support and advice of American agencies. U.S. support for strong population policies has been ubiquitous, sometimes pushing governments farther than they have been ready to go. Subsequent technical assistance has helped build institutions in certain countries that can contribute in a lasting fashion. The commitment of the United States and other donor countries to human rights and democratic principles has also been important in ensuring the voluntary character of these programs wherever these donors have been involved.

Continuing Challenges

Programs have already made a substantial contribution to welfare in developing countries. From 1960 to 1990, the number of young dependents (under age 15) per 100 developing-country workers fell from 75 to 60. If, as noted earlier, family planning programs have been responsible for about 40 percent of fertility decline (Bongaarts, forthcoming), they would be responsible for two-thirds of this reduction (Figure 17). An essentially similar conclusion can be drawn from overall dependency ratios, which include older dependents.12 Family planning has already reduced the burdens on and provided substantial opportunities for households and individuals in many countries.

12The argument is based on population projections over this period, separately for China and for all other developing countries, that assume that fertility decline is only 60 percent of that reported. Assumptions and methods follow World Bank (1997a).

But family planning programs still have much to accomplish. Each worker must still provide for 10 to 15 percent more dependents than in industrial countries, with all this implies in poorer health and obstacles to development. These burdens are projected to decline, but such projections are contingent on continued program success - on the family planning movement remaining as strong and innovative into the next century as it has been in the last decades of this century. If programs somehow disintegrate, the reduction in young dependents will be only half what it might be by 2020 and only a fourth of what it might be by 2050 (Figure 18 ). If somehow all fertility decline - due not only to programs but also to socioeconomic advance - came to a halt, the dependency burden would soon begin to rise.13

13This is shown in population projections for China and for all other developing countries that assume, in one case, that fertility decline will be only 60 percent of the standard projection and, in another case, that fertility will remain constant. Assumptions and methods follow World Bank (1997a).

Figure 17 - Effect of Family Planning Programs on the Dependency Burden in Developing Countries, 1960-2000

SOURCE: United Nations (1996) and projections using the World Bank (1997a) model.

The technical challenges for family planning programs have not all been solved. If each program has to capitalize on existing demand to reduce fertility - essential for success, as was argued earlier - each needs the skills to investigate this demand among individuals and households and to develop and implement indigenous responses. Programs also increasingly recognize the need to craft new approaches to reach young adults, say between the ages of 15 and 24. This group, a slightly larger proportion of the population in the 1980s and 1990s (Figure 19), will reach 900 million by the turn of the century and will have considerable influence on the future trajectory of population growth.

Figure 18 - Projected Trends in Dependency in Developing Countries Under Different Assumptions, 1990-2050

Source: Projections using the World Bank (1997a) model

Figure 19 - Trends in Age Distribution in Developing Countries, 1950-2050

SOURCE: United Nations (1996) and projections using the World Bank (1997a) model.

As fertility declines, it becomes concentrated among young adults. As total fertility fell from 7.3 to 6.9 children per woman in Uganda from the mid-1980s to the early 1990s the proportion of all births that were to women 15-24 rose from 46 to 52 percent. In India - where total fertility is much lower, at 3.4 children and where half of all young women are married before age 18 - this proportion has reached 58 percent.14 Many pregnancies at these ages are not intended and would be postponed if possible, even among married women. The unmet need for contraception is increasing among young adults relative to its levels among older women. Figure 20 gives the ratios of unmet need in each age group to overall unmet need, showing how these ratios are rising for young adults as overall contraceptive prevalence increases, even as they fall for older women.15

14Estimated from Uganda Demographic and Health Surveys (1988-1989 and 1995) and the India National Family Health Survey (1992-1993). An additional factor that exacerbates but does not entirely explain the Indian case has been the long failure to provide contraceptive methods useful for spacing births.

15The quadratic equations defining these curves were estimated across 27 countries with data (Westoff and Bankole, 1995, pp. 6, 9) that cover the range of contraceptive prevalence estimates in this graph. R2 for the equation for age group 15-19 was 0.68 and for age group 20-24, 0.72, both significant.

Figure 20 - Ratio of Unmet Need in Each Age Group to Overall Unmet Need by Level of Contraceptive Prevalence

SOURCE: Quadratic regressions estimated from data for 27 countries in Westoff and Bankole (1995, pp. 6, 9).

Much, though not all, of the need for contraception among young adults is for delaying or spacing births. With the realization that delaying births can help reduce fertility faster and further (Bongaarts 1994), programs face new challenges and a need to refurbish their goals and promotional approaches.16 Programs also face additional challenges in improving service quality; dealing with sexually transmitted diseases, including HIV/AIDS; and ensuring broader attention to women's reproductive health needs, as the world community called for at the Cairo conference. Assisting countries to meet such challenges will be difficult without American leadership and the continued engagement of American expertise.

16Any fertility reduction, whether or not due to birth delay, means that future population momentum will be less, or at least will not grow as much as it otherwise would.

Funds to assist developing-country family planning programs were first approved by the U.S. Congress three decades ago. The United States still provides almost half of all donor funding,17 but other countries have increasingly contributed: Europe now provides 40 percent of the total, and Japan, Canada, Australia, and New Zealand all add their shares. With the task of reducing fertility and dependency around the world only half completed, it remains to be seen whether the United States and its allies will stay the course and finish the job.

17The reference is to "primary" donor funding in 1995, which includes funds passed through multilateral agencies and international nongovernmental organizations (UNFPA, 1997a).