This joint WASHCost and Triple-S paper is about the costs of providing direct and indirect support to rural water service provision. It provides an overview of the features such support entails, how those features can be organised, what they cost and how they can be financed. It also provides recommendations to countries for strengthening support. The paper is based on a desk review of existing literature from seven countries and an analysis of primary cost data collected by the WASHCost project in Andhra Pradesh (India), Mozambique and Ghana in 2010 and 2011.

Support to service providers in the form of monitoring, technical assistance and (re)training of service providers is called direct support. Indirect support refers to aspects such as macro-level planning and policy making. Direct support can be provided in different forms: by specialised agencies, by local government or even by an association of service providers. However, the nature, scope and frequency of such support are often not sufficiently defined. There is, therefore, still little quantitative evidence that supports the premise that direct support has a positive impact on the quality and sustainability of services.

Successful cases of organising direct support are found in (lower) middle income countries in Latin America and Southern Africa. Though data needs to be interpreted with caution, an expenditure of some US$ 3 per person per year seems to be effective in those countries. Other countries, particularly those in Africa, were found to have levels of expenditure of less than US$ 1 per person per year, and this is considered too low to be effective.

No conclusions can be drawn on the most effective direct support mechanism, though the most successful support so far seems to come from dedicated agencies rather than local government. Since the costs of direct support are significant, it is likely that it cannot be financed through user tariffs alone, though users may provide co-financing.

This working paper introduces the concept of service levels, grouped as sequential rungs on a ladder, as a way of differentiating between broad and recognisable types (levels) of service. By developing this metaphor, a structure is provided to analyse the data being collected in different countries and settings, not just in terms of the technologies being used, but in terms of the domestic water services being received. The paper introduces water service levels and explains how these can be used as integral components of an analytical tool for applied research or benchmarking. It is best read together with Working Paper 3: Assessing sanitation service levels. Both papers are aimed at providing a framework for data analysis of life-cycle costs. This second edition reflects the experiences of applying this methodology in Burkina Faso, Ghana, Mozambique and India (Andhra Pradesh).

This briefing note describes the life-cycle costs approach and why it was developed. It explains the main cost components for water and sanitation in rural and peri-urban areas. Detailed cost breakdowns are presented in the annexes. Different types of analysis can be made with disaggregated cost information: comparing costs of infrastructure components, comparing the cost of services delivered or comparing the costs of difference service delivery models. The briefing note explains the building blocks used in the life-cycle costs approach for all these types of analysis and explores how these fit with different accounting practices. It explains why the WASHCost Project has adopted a regulatory accounting approach to calculate aggregated total expenditure costs and  provides a step-by-step approach to comparing and reporting costs.

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This report provides an overview of key issues related to financing the water and sanitation sector in both developed and developing countries (part 1), and presents tools and approaches developed by OECD for both policy makers and practitioners (part 2).

Part 1 is organised in three chapters. Chapter 1 identifies the investments required to build, operate and maintain the infrastructure for providing sustainable water and sanitation services. It then examines the health, economic and environmental benefits of water supply and sanitation (WSS).

Chapter 2 assesses the current state of WSS and examines investment needs, identifies the financing sources, and estimates the financing gaps to reach internationally agreed targets.

Chapter 3 examines where the money is going to come from, including from a combination of efficiency gains, adjusted targets and additional financial resources; the “3Ts” – tariffs, taxes and transfers; and repayable financing.

In part  2, chapter 4 begins by introducing the tools developed by OECD to address the key financing issues described in part 1.

Chapters 5 to 10 include brief descriptions of the following tools:

• Strategic Financial Planning for WSS at national or regional level – the FEASIBLE tool
• Financial planning tool for water utilities
• Multi-year investment planning tool for municipalities
• Guidelines for performance-based contracts
• Water Utility Performance Indicators (IBNET)
• Private sector participation in water infrastructure – checklist for public action

The challenge was issued by Dr. Kiran C. Patel during the congress’ opening ceremony to over 600 delegates from around the globe. (To access more details, conference photos, and press coverage go here)

The challenge welcomes pre-proposal submissions through March 2012. Five applicants will be shortlisted and awarded up to US$ 8,000. The five finalists will be invited to prepare full proposals that will be reviewed by an international panel of experts at a major event. The winning proposal will receive up to US$ 100,000.

More on the Patel Grand Challenge and the Patel School of Global Sustainability can be found at www.psgs.usf.edu

Full details of the 2011 Patel Grand Challenge will be made available on 15 December 2011 at:
www.psgs.usf.edu/patel-center/section/patel-grand-challenge1

The four-day meeting will include an African Workshop on the pricing of water and sanitation services and sanitation, a ministerial dialogue, a round table of donors, and the launch of an African Forum on innovative local solutions in the field of hygiene, sanitation and drinking water supply.

Read the full announcement (in French)

Next year € 86 million will go to bilateral water sector aid in 10 countries:

Bangladesh (€ 22.12 million); Mozambique (€ 17.20 million); Indonesia (€ 13.10 million); Benin: (€ 9.35 million); Yemen € 5.94 million) ; Mali (€ 5.50 million); Kenya (€ 4.45 million); Viet Nam (€ 4.02 million); Ethiopia (€  4.00 million); Ghana (€ 0.25 million) [2].

The Netherlands has chosen water as one of its policy spearheads for development aid, together with food security, security and the legal order, and sexual and reproductive health and rights (SRHR) (incl. HIV/AIDS) [3]. The selection of water as one of the spearheads can be partly attributed to the successful lobby of the Netherlands Water Partnership (NWP).

See two recent videos of Dutch-supported drinking water programmes in Benin and Mozambique.

[1] Aan de slag met het nieuwe ontwikkelingsbeleid, Netherlands Government press release [in Dutch], 20 Sep 2011

[2] HGIS-nota 2012, Netherlands Government [in Dutch],  20 Sep 2011

[3] Ministry of Foreign Affairs – Dutch development policy

The AWF will fund up to ten projects that promise to address the needs and to sustainably improving the sanitation situation of a densely populated urban poor community, or of a small to medium size town relying mainly on latrines and septic tanks.

The funds allocated will vary from € 800 000 to € 1 200 000, for a duration of 24 to 36 months.

The submission deadline is September 30, 2011

Who is eligible?

i)        Urban authorities and local governments in which municipalities or towns will be the lead Executing Agencies for the projects (potentially in collaboration with other stakeholders); or

ii)      Other urban sanitation service providers such as the private service providers and utilities with the endorsement of the municipality.

iii)    Partnerships – various service providers may submit joint proposals in order to benefit from their combined strengths.

For more information and application details download the full announcement on the AWF web site.

The African Water Facility (AWF or Facility) is an initiative of the African Ministers’ Council on Water (AMCOW). It is hosted and administered by the African Development Bank (AfDB).

In July 2011, the Bill & Melinda Gates Foundation awarded the AWF a grant of US$ 12 million to finance projects to advance water and sanitation services across Africa.

This is the conclusion of a study conducted among 21,121 households by the Human Development Research Centre (HDRC) with the support of WaterAid, UNICEF, and the Ministry of Local Government Division.

Economist Abul Barakat, who led the research team, said a Union Parishad, the lowest tier of the local government, receives Tk 145,000 [US$ 1,910] while a Pourashabha or municipality gets Tk 292,000 [US$ 3,840] a year in sanitation subsidy. “But the allocation is not properly utilised.”

Barakat attributed the ineffective use of the subsidy to an ‘unclear’ definition of the target groups, local government leaders’ lack of knowledge about the strategy and the fact that subsidy allocations were too low to purchase latrine materials.

Based on the study findings, Barakat said, the ‘eligibility’ criteria of getting government subsidised latrines should be fixed as poor families still cannot access sanitation.

He also mentioned that poor sanitation costs Bangladesh over Tk 295 billion (US$ 3.88 billion) a year which amounts to 6.3% of the total GDP,

The study stated that 17% of the subsidised latrines are not working.

In many upazilas, still, the subsidy went to the mosques and market places rather than to the households. “It’s because there is no clear definition of eligibility criteria.”

The findings also show, in rural areas 35 percent hard-core poor built latrines on their own while it is 37 percent in urban areas.

Some 24% of the households surveyed do not have any improved latrine in villages while the rate is 21 percent in urban areas.

Wateraid representative in Bangladesh Dr Md Khairul Islam said that the local government division needs to revise the current Tk 520 [US$ 7.10) subsidy for a latrine.

“It’s almost a third of the present market price,” he said, adding due to poor allocation local leaders sometimes refrain from providing latrines as they cannot buy a quality product with such ‘paltry’ amount.

The government started subsidising in the sanitation sector in 2004 aiming to ensure sanitation for all by 2010 but the target was later reset to 2013.

The study showed over the seven financial year (2004 to 2010) Tk 4 billion (US$ 5352.6 million0 was allocated through 42 projects.

According to the Bangladesh Bureau of Statistics, the sanitary latrine coverage in Bangladesh was 51.5 percent in 2010.

Source: bdnews24.com, 15 Aug 2011

OECD (2011). Financing water and sanitation : challenges, approaches and tools. (OECD report series). London, UK, IWA Publishing. 115 p. (paperback). ISBN: 9781780400327
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Publisher’s abstract

The investments needed to deliver sustainable water and sanitation services, including the funds that are needed to operate and maintain the infrastructure, expand their coverage and upgrade service delivery to meet current social and environmental expectations, are huge. Yet, most systems are underfunded with dire consequences for water and sanitation users, especially the poorest. Providing sustainable drinking water supply and sanitation services requires sound financial basis and strategic financial planning to ensure that existing and future financial resources are commensurate with investment needs as well as the costs of operating and maintaining services. Some of the key messages of this report are:

• WSS generate substantial benefits for the economy
• Investment needs to generate these benefits are large in both OECD and developing countries
• Tariffs are a preferred funding source, but public budgets and ODA will have a role to play, too
• Markets-based repayable finance is needed to cover high up-front capital investment costs
• Strategic financial planning and other OECD tools can help Governments move forward