Financing water and sanitation improvements for the very poor remains a major challenge over large areas of the globe. IRC and WSUP show that effective solutions to this challenge do exist. See discussion paper: Financing water and sanitation for the poor: six key solutions.
Which of the following six key solutions do you think has the greatest potential to overcome this challenge?
- Use life-cycle costing approaches to ensure that all life-cycle costs of infrastructure and services are fully taken into account, and that maintenance is financed.
- Maximise local small-scale private-sector involvement in water and sanitation service provision for the poorest.
- Introduce innovative water tariff systems that ensure financial sustainability and affordability for the poorest.
- Use water revenues to cross-subsidise sanitation: incorporating sanitation charges into water bills is a key approach for financing sanitation services (including for people who could not otherwise afford them).
- Use output-based financing approaches: by making disbursements dependent on demonstrated delivery of services to the poorest, there is an incentive for funds to be spent more efficiently.
- Use progress-linked finance (PLF) approaches: the funder commits to provide concessional finance at a specified time in the future, on condition that the service provider has by that time demonstrated capacity for commercially viable service delivery to low-income areas.
These questions were posted to an audience of 150 participants at the session in 6th World Water Forum in Marseille, 2012. The dynamic session stimulated a very mixed group of participants to discuss the key solutions proposed. Some discussion points: Shouldn’t we call the life-cycle costs approach the life-cycle financing approach? What about having cross-subsidized systems for a life time? Wouldn’t the PLF require too much capacity building?
Based on these discussions participants were asked to vote which of the 6 solutions had the greatest potential to overcome the challenge of financing water and sanitation improvements for the very poor. Progress-linked finance approaches had the most votes followed by life-cycle costing approaches.