SERVICE MODELS FOR PROVIDING WATER AND SANITATION . - EnergyToolbox

SERVICE MODELS FORPROVIDING WATER ANDSANITATION SERVICES TO THEPOOR IN URBAN AND PERIURBAN AREASMARCH 2008ARD, Incorporated

PROVIDING WATER AND SANITATIONSERVICES TO THE POOREXTENT AND IMPACT OF THE PROBLEMPhoto: Nepal, ARD, Inc.

EXTENT OF THE PROBLEM It is estimated that more than 1 billion people lack access to aminimal amount of clean water, surviving on an average ofonly 5 liters a day. Coverage rates are lowest in Sub-Saharan Africa, but thegreatest number of people without clean water live in Asia. The sanitation situation is even worse. About 2.6 billionpeople—half the developing world’s population—do not haveaccess to basic sanitation. Two-thirds of the people lacking adequate water and sanitationaccess are poor—living on less than US 2 a day. More than660 million people without sanitation live on less than 2 a day,and more than 385 million on less than 1 a day.

IMPACT OF THE PROBLEM Lack of access to adequate water and sanitation has a ripple effect on acountry’s human and economic development, and a disproportionateimpact on women and children. Key impacts, according to the UN,include:– Nearly 2 million children per year die as a result of diarrhea.– Children miss about 400 million schooldays yearly due to water-related illness.– Diarrhea and malaria (two water-related diseases) are major causes of workerillness and lack of productivity.– Women and children (especially girls) spend several hours a day collectingwater.– More than 1 billion women and girls lack safe and private toilets, both at homeand at school. Lack of these facilities forces women into unsafe situations orcauses them to miss school or work. Illness and loss of educational opportunities due to water and sanitationissues limits opportunities for households to move out of poverty.Furthermore, there are direct economic costs related to the treatment ofwater-related diseases and loss of economic activity.

IMPACT ON THE POORAccess to WSS by income quintile100%80%60%40%20%0%Poorest2nd3rdWater supply4thSanitationSource: WHO/UNICEF Joint Monitoring Program, Meeting the MDG Drinking Water and Sanitation Target: the Urban and Rural Challenge of the Decade, 2006.Richest

PROVIDING WATER AND SANITATIONSERVICES TO THE POORWHAT CAN WE DO?Photo: Burkina Faso, ARD, Inc.

FRAMEWORK FOR ACTION The Millennium Development Goals(MDGs): Call for halving “by 2015, the proportionof people without sustainable access tosafe drinking water and basicsanitation.” The Water for the Poor Act:– Signed into law in 2005, makes accessto clean water a focus of US foreignassistance.

ADDRESSING THE PROBLEM The World Health Organization (WHO) estimates thatan additional investment of US 11.3 billion per yearis needed to achieve the MDGs for drinking waterand sanitation at the most basic levels. Yet Investments in water and sanitation can generate ahigh return. It is estimated that for every 1 spent inthe sector, on average, another 8 is created in costsaverted and productivity gained.

CHALLENGESThere are inherent challenges to providing water andsanitation services to the poor:– The poor are typically not connected to the network.– The poor can be difficult to locate and survey.– Land tenure and the legal status of informal settlements can bemajor obstacles to network extension.– Available information on service preferences and priceconstraints is lacking: Service preferences may not be known. There are misperceptions about the ability of poor customers’ability and desire to pay for service.– Public authorities may not allow adequate prices to be chargedfor services to the poor, leading to an unsustainable financialsituation for the utility.

PROVIDING WATER AND SANITATIONSERVICES TO THE POORMOVING TOWARD SOLUTIONSPhoto: John Mendelsohn

STRATEGIC FRAMEWORK FOR ACTIONStrategies for expanding access and improving service should:– Examine tandem approach to improving the services through the main utility ANDthrough small service providers (SSPs) for whatever period they may be necessaryand/or efficient—short, medium or long term; and– Pay equal attention to the realistic rate at which the network can be expanded on asustainable basis and the potential to make small-scale services more effective.SSPSSPExistingServiceTo PoorMain Utility SSPs in tandemMain UtilityNetworkExpandedServiceTo PoorNoServiceCurrentShortMediumLong term

DEFINING THE TIME FRAMEImprove ExistingServices and Access(Short-term solution)Network Coverage(Long-term solution)

FINDING SOLUTIONSThe toolbox of solutions for reaching the unserved andunderserved includes the following categories ofinterventions:1.2.3.4.Policy, legal, and regulatory frameworks;Reforms at the utility level;Technical and service options; andFinancing mechanisms.The right solution, or mix of solutions, is determined through aprocess of study and consultation

INITIAL STUDIESInitial Analysis What is customer willingness/abilityto pay? How are the poor currently served? What are current/projecteddemands? What are the impediments toservice?TailoredPro-PoorSolutionsStudies inform policy, regulatory, utility, technical, and financial solutions

CONSULTATION Identify the right community voiceand method of inclusion. Liaise and educate on reformobjectives, service and pricinglevels, health impacts. Reassure community that effortswill be made to improve theefficiency and service of theprovider. Ongoing participation of communityis key to successful and sustainableimprovement.Photo: Angola community meeting,Okavango Project, ARD, Inc.Community consultation helps ensure ownership andsustainability of the solutions

PROVIDING WATER AND SANITATIONSERVICES TO THE POORPOLICY, LEGAL AND REGULATORYINTERVENTIONSPhoto: Angola, ARD, Inc.

POLICY, LEGAL AND REGULATORY CHALLENGESThe policy, legal and regulatory frameworks are often biased againstservice to the poor—either implicitly or explicitly:– Ministries and regulators may lack adequate information, specializedknowledge, and the coordination needed to develop pro-poorframeworks.– There may be a tendency to focus on the service provided by the mainutility(ies) rather than the smaller providers on which the poor depend.– There may be explicit policies and laws that discourage utility service tothe poor or prohibit SSPs from operating in the utility service area.– There may be a lack of attention to or understanding of the pricestructures and prices that truly benefit the poor.– Levels of service and standards may be based on information establishedby, and appropriate to, developed countries or higher-level incomegroups.

POLICY, LEGAL AND REGULATORY SOLUTIONS Government needs clearly defined objectives regarding the poor. Thestrategy to achieve universal service should be spelled out with cleardefinition of what this means, yet retain the flexibility to be adjusted. Legislation, regulations, and contracts may need to be reformed tocorrespond with those objectives. The necessary institutions should be created or strengthened with theappropriate mandate and resources. If the government accepts that SSPs have a necessary role for aperiod of time, this needs to be explicitly stated, and the governmentshould ensure that no laws or regulations impede this strategy.Key issues for consideration: cost recovery requirements, legal requirements/rights ofconsumers and providers, appropriate separation of powers, transparency andaccountability, safeguarding the interests of consumers

POLICY, LEGAL AND REGULATORY SOLUTIONS:ZAMBIA CASE STUDYThe national water regulator in Zambia, NWASCO, began functioning in2000, regulating 10 public commercial water providers, some privateutilities, and local authorities.– Giving a Voice to CustomersNWASCO created Water Watch Groups (WWGs) anddelegated power to resolve customer complaints. WWGs arevoluntary, independent consumer groups responsible forconsumer rights and dissemination of information. If the utilityis non-responsive, the WWGs coordinate with NWASCO.– Extending Service to the PoorNWASCO created the Devolution Trust Fund (DTF), afinancially separate institution responsible for providingfinancing for water supply operators to extend services to theurban poor. The DTF has also financed pilot sustainable waterkiosk schemes.– Regulating Small-Scale ProvidersIn Zambia, Water Trusts are SSPs established with donor andcommunity coordination in the peri-urban areas of Lusaka(serving 37% of Lusaka’s population). NWASCO isconsidering development of a MOU between the Water Trustsand Lusaka’s utility, and to regulate the trusts through theutility’s license.

PROVIDING WATER AND SANITATIONSERVICES TO THE POORUTILITY-LEVEL INTERVENTIONSPhoto: Panama, ARD, Inc.

UTILITY-LEVEL CHALLENGESImproving the overall management, operations and capacity of thenetwork utility can be critical to improving service to the poor:––––Public utilities remain core to water services, yet utilities in developingcountries may lose up to 50-70% of treated water due to poorinfrastructure or poor management—limiting the amount of water availableto unserved customers.“Lost” water is often used by unauthorized individuals and privateproviders.Low cost recovery and uncertain financing flows limit the utilities’ ability toexpand the network.Utilities struggle with inappropriately high technical requirements forservice while typical network service may be unaffordable for poorcustomers.

UTILITY-LEVEL CHALLENGESLow tariffs, low collectionConsumers use waterinefficientlyInvestment, maintenanceare postponedHigh usage and system lossesdrive up costsServices deteriorateCustomers are ever lesswilling to payUtility lives off state subsidiesManagers lose autonomyand incentivesSubsidies often fail tomaterializeEfficiency keeps droppingUtility can’t pay wages, recurrentcosts or extend systemMotivation and servicedeteriorate furtherSystem assets go “down the drain”Crisis, huge rehabilitation costsWater Supply and Sanitation Working Notes. World Bank Note 9, February 2006. Characteristics of WellPerforming Public Water Utilities. Aldo Baietti, William Kingdom, Mieke van Ginneken

UTILITY-LEVEL SOLUTIONS Improve utility performance (key to expanding utilitycoverage) through:– Financial sustainability,– Good governance, and– Clear and transparent service targets. Set realistic coverage targets. Have financing in place to meet targets. Create incentives to:– Innovate and develop suitable lower-cost technical solutions andstandards, and– Expand appropriate coverage and service to the poor.

UGANDA NWSC CASE STUDYThe national water and sanitation utility of Uganda,NWSC, began a dramatic reform process in 2000. Keyreform components included:– Targeted improvement initiatives;– Implementation of a performance contract betweenNWSC and the Government of Uganda;– Implementation of contracts between NWSC supportservice departments and delegated service contractswith management and staff of specific service areas;and– Creation of a reward system and financial incentives forthe best performing areas.Pro-poor achievements included:– About 40,000 connections added in the last five years;– Connection fee reduction for customers within 50 metersof the supply line;– About 400 water kiosks erected, primarily in poorercommunities; and– Increased utility revenue reinvested into networkexpansion.Photos: Courtesy of NWSC