Toilets are taken for granted in the industrialised west but still are a luxury for a third of the world’s people who have no access to them, according to a report by the World Health Organisation and Unicef.

Those who make do without toilets continue to pollute water sources and jeopardise public health and safety for millions worldwide, contributing to malnutrition and childhood stunting, impairing 161 million children both physically and mentally every year.

“Until everyone has access to adequate sanitation facilities the quality of water supplies will be undermined and too many people will continue to die from waterborne and water-related diseases,” said the WHO’s public health department director, Dr Maria Neira.

Diarrhoeal diseases kill 700,000 children every year, most of which could have been prevented with better sanitation.

The joint report released by the UN agencies evaluates progress on global targets set in 2000 for giving everyone access to clean drinking water and sanitation facilities, along with other goals in areas such as poverty, hunger, disease and inequality. With those benchmarks expiring this year, the UN is leading efforts to come up with a new set of “sustainable development goals” that are expected to focus on how $2.5tn in development funds will be spent through 2030.

Past efforts to improve water and sanitation have seen some success, with 2.1 billion people gaining access to better sanitation facilities since 1990, according to the report. But another 2.4 billion people have seen no improvement, including 946 million people still relieving themselves outdoors – the vast majority among the rural poor.

India is by far the worst, with more than 640 million people defecating in the open and not necessarily due to a lack of facilities. Many men who have installed toilets at home still prefer going outdoors as they survey their farmlands or seek a few minutes of quiet.

While successive Indian governments have pledged to install toilets in every home, little has been done to educate people about the dangers of unsanitary practices. Diarrhoeal diseases kill 700,000 children every year, most of which could have been prevented with better sanitation.

India still needs to build 100 million toilets to provide everyone access, but experts say the country also needs to invest more in campaigns to change behaviours. Instead the government recently slashed its sanitation budget in half.

“There is a kind of a feeling among politicians that if we ignore the problem it will go away,” said Nitya Jacob, who leads policy for the Indian branch of the international charity WaterAid. “And so we’ve had years of poor funding, poor quality equipment and poor solutions being offered to the poor.”

India is also a victim of its own population growth, with 1.26 billion citizens now and counting. That “just wipes out any gains in sanitation, or on any development front”, Jacob said.

The world has done better in giving more people access to clean drinking water, with 2.6 billion people getting improved access since 1990.

Still, 663 million of the world’s poorest – more than the populations of the European Union and Russia combined – have seen no improvement at all. Instead, they are left to scavenge for water around broken pipes and stagnant ponds, may walk miles to the nearest spigot for clean water, or may be financially exploited by “water mafias” charging almost a full day’s wage for single cup of water.

India's population growth wipes out any gains in sanitation, or on any development front Nitya Jacob of WaterAid

Some analysts cautioned against seeing the report as evidence of failure, noting the tasks themselves were difficult and the goals ambitious. “It’s important not to lose sight of the fact that things have gotten much better” even if the goals haven’t been met in full, argued the controversial economist Bjorn Lomborg, founder of the Copenhagen Consensus Centre economic thinktank. For example, the world aimed to cut child mortality by two-thirds, but managed to reduce it only by half. “That’s still 6 million children now who don’t die every year. That’s still a big victory,” Lomborg said.