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Published on: 17/09/2013

There is a funding gap worth US$ billions to achieve development targets for water and sanitation. For at least the last ten years, discussions around funding have ranged from increasing donor funding to development in general, to how the water sector might attract more donor dollars (presumably to the detriment of other social sectors), to how international and domestic private finance might be attracted. At the same time, donors – who spend on average US$6 billion a year in the sector – are increasing their demands for value for money and aid effectiveness, adopting language and approaches more commonly found in venture capital and financial markets. 

To be credible, discussions and activities focused on finance and investment must be grounded in the nuts and bolts of comparable costs and accounting frameworks. Early on, we recognized that there wasn’t a consistent way to compare projects, programs, and investments, which we believe contributed to the lack of public and private investment.

Communities, governments, private investors, and donors were being asked to fund water and sanitation projects without a clear understanding of the associated costs and risks. With support from the Bill & Melinda Gates Foundation, we developed, tested, and proved an accounting model called the Lifecycle Costs Approach, complete with benchmarks drawing on data from Burkina Faso, Ghana, Mozambique and India.  

We created the Life-Cycle Cost Approach (LCCA) as the foundation for better finance and investment for services. Costing data needs to be included in planning and budgeting processes, to help diversify investment to support the full life-cycle cost of a service, not just the capital expenditure costs of installing something. 

Once equipment for water and sanitation is installed, it will need to be maintained over time. We have led the way in recording the information needed and created tools like the WASHCost calculator to help everyone cost meaningfully.

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