Published on: 15/06/2015
This blog has been written by Jeske Verhoeven and Erma Uytewaal of IRC.
That is the shared view of the main Dutch water and sanitation actors on the future of the water and sanitation sector. It is one of the outcomes of a consultation process, led by IRC, with the main Dutch water and sanitation actors on the future of the water and sanitation sector and the role of the World Bank in water and sanitation (1).
The Directorate General of International Cooperation of the Netherlands asked IRC to lead this consultation process with the Dutch water and sanitation sector to inform their engagement with the World Bank. In October 2014 the Dutch government and the World Bank signed a strategic partnership agreement. An integral part of this agreement forms the commitment of US$ 50 million from the Dutch government for the coming five years to the World Bank's new Global Water Practice. The Global Water Practice was established in October 2013 as part the Banks new strategy and brings together irrigation, water resources management, water and sanitation service delivery. The Dutch Ministry of Foreign Affairs wants to spend this contribution to the Global Water Practice in a coordinated manner with input from the Dutch water sector.
This blog is first part of a series of three blogs (all published in June 2015) which share the main outcomes of the consultation process with the main Dutch water and sanitation actors on the future of the water and sanitation sector and the role of the World Bank in water and sanitation. As the first blog in the series, it shares the common Dutch view on the future of the water and sanitation sector. The second blog shares the main ideas of the Dutch water and sanitation sector around the role of the World Bank in leading the paradigm shift discussed in this blog. The final third blog encloses the possible Dutch input in implementation of the Water Global Practice new strategy.
Parallel to the development of the World Bank's Water Global Practice strategy evolves the still ongoing process of defining the new development goals for the next 15 years; the Sustainable Development Goals (SDG).
While negotiations on the final definitions of the different goals are still ongoing, it's generally expected that the UN General Assembly in September 2015 will accept one explicit goal for water which includes sanitation and hygiene (SDG 6). SDG 6 is envisioned to propose universal access to clean drinking water and sanitation services for all by 2030. The agenda for the water and sanitation sector for the coming years will therefore be defined by the processes and activities needed to attain Sustainable Development Goals 6 by 2030.
The Dutch actors highlighted that the new water and sanitation agenda, encompassed by SDG 6, is extremely ambitious and identified the following challenges that will need the highest attention in the coming years, to make universal access for all happen by 2030. In short this can be summarized by:
Dutch actors concur in their opinion that current approaches and resources are insufficient and inadequate to address these enormous challenges. Therefore, it is argued that a new way of working is needed to tackle the fundamental impediments that withhold the sector of achieving universal sustainable water and sanitation coverage by 2030. Business as usual will not be good enough, agree the Dutch organizations.
The way forward according to the main Dutch water and sanitation actors is by establishing strong country sector systems in which all stakeholders work together in a coordinated way, under leadership of the government, towards the achievement of a set of commonly accorded sector goals.
This way forward implies a process of systemic change or sector reform that relies on strong government leadership from the very start. Part of the challenge will be to nurture and develop this leadership.
Strengthening government-led processes implies support to central and decentralised governments in developing a template consisting of a sector policy, regulation and accountability framework including development partners, civil society organisations, and private parties' participation and collaboration. Building the sector "system" implies government and external support agencies prioritising investments to transform the sector, including finalisation of sector reform and decentralisation processes with capacity building for local governments and professionalization of service providers.
Part of a strong country sector "system" is also enhanced allocation of public finance (= money derived from national or local taxation). Adequate public finance is needed to build the institutions and bridge the gaps that the market can't fill, and/or to create frameworks that allow markets to work. Long term financing of the services needs to be guaranteed through a mix of nationally generated public funding, tariffs and external support (transfers).
As countries achieve middle income status it will probably gradually reduce or evolve from grants to loans. The sector reform process will build on the acknowledgment that donor funding (Oversees Development Assistance) is not sufficient to reach the proposed sector results and targets for the Sustainable Development Goals' in the water and sanitation sector. Alternative financing arrangements including, domestic resources mobilisation, raising local taxes and levies but also leveraging private sector investments and financing from the capital markets will be needed.
Sector transformation processes will need to address developing and strengthening national capacities for financing equitable and sustained service delivery. This could include amongst others the establishment of national Water Financing Facilities, and other facilities to enable private and capital market investments. Strong sector systems are needed to target (the reducing) Oversees Development Assistance to the areas where it is most needed.
Strengthened sector "systems" are the only way to overcome the structural impediments that hold the sector back from performing better. The Dutch organizations identified the following current main bottlenecks that will need to be overcome:
Political economy. Too much of the water, sanitation and hygiene sector's dynamics and political economy remain focused (in practice if not in theory) on first time provision of water and sanitation hardware with unrealistic, and untested assumptions about the ability to sustain hardware for services over time. These unrealistic and untested assumptions include financing for longer term recurrent expenditures, scale of intervention and the over-reliance on community management or small scale private sector.
Planning of projects, institutional arrangements and provisions for the longer- term financing of service provision, beyond project implementation, are seldom made. Pilot interventions are rarely embedded and supported by an appropriate scaling-up strategy that deals with the broader political and institutional environment. Similarly, projects exclusively focus at service provision at (individual) community level but cannot/ do not address systemic sector change. A better understanding of the political economy and how the sector is being managed, taking into account both political and economic factors is needed to address the main triggers for improved sector performance.
Aid effectiveness. Too much aid remains ineffective. Aid is split across projects and programmes that are driven by donor rather than national government priorities. This results in fragmented interventions with limited or no longer term impact on sector performance and development.
Government leadership. The effect to a deficiency in aid effectiveness, and a partial cause of it, is lack of government prioritisation and leadership in directing and coordinating all sector actors and interventions according to the countries' policy priorities. Low priority for water, sanitation and hygiene services on the national development agenda and limited public funding for the water, sanitation and hygiene sector are expressions of low levels of country ownership for the sector.
If we want to make universal and sustainable access to water and sanitation for all happen by 2030, the main Dutch water and sanitation actors agree that also the following main challenges will have to be tackled:
Even in countries with relatively higher coverage levels, inequity in service delivery is a challenging reality. The unserved often concern population living in dispersed rural areas and in pockets of poverty in urban areas and peri-urban areas. Alternative approaches and services models are therefore needed to reach these people. These alternative approaches and models are likely to be more cost intensive, requiring alternative financing models.
Progress in reaching the poorest and most vulnerable with access to water, sanitation and hygiene services has been slow. The challenge is how to overcome inequalities and how to reach vulnerable groups and counter exclusion based on gender, race, poverty, religion, caste, age, migrants, etc. Current practices in water and sanitation sector planning and resource allocation often fails to address the specific needs and bottlenecks the extreme poor and other vulnerable groups encounter in accessing water, sanitation and hygiene services services. Political commitment and adequate approaches are needed to plan and monitor progress in improved service delivery for those groups.
To ensure sustainable service delivery, the water, sanitation and hygiene sector in some countries is well on its way in shifting focus from realising first-time access to water and sanitation infrastructure to the provision of lasting and good quality water and sanitation services. At the same time, many countries are still stuck with project based planning and implementation approaches. In these places, adoption of a service delivery approach will enable actors work to together and to make long term institutional arrangements for planning, financing and monitoring of the entire life-cycle of services.
Water, sanitation and hygiene services need to be addressed as part of the broader water resources development agenda. Drinking water service delivery is often addressed with a narrow focus without sufficient attention to water resource management. Provision of improved sanitation facilities (on- or off site) will need to address sustainable solutions for environmentally safe waste water and sludge management after containment.
The sustainability of service delivery will also come more and more under threat by water scarcity. Many countries are already water scarce and many more will face acute water shortages unless they lower demand and drastically increase the efficiency of water use (UNESCO and UN Water 2012). To manage water resources efficiently, a strong sector system is essential.
New approaches need to be developed in the water, sanitation and hygiene sector that provide for the integration of water, sanitation and hygiene service delivery within the broader water resources development. This implies considering the interrelation of water, sanitation and hygiene service provision with adjacent sectors such as with energy, agriculture and tourism. It also means putting sanitation and hygiene behaviour at the core to making water, sanitation and hygiene interventions sustainable.
Current funding levels in the water, sanitation and hygiene sector are not insufficient for the achievement of the Sustainable Development Goals. Sector financing is inadequate to cover all life-cycle costs from construction to operation, maintenance and eventually rehabilitation and replacement. Sustainability of service delivery will not be achieved without improvement in levels of tariff payment. At the same time, domestic resource mobilization, particularly more public funding for water, sanitation and hygiene services will have to increase. But it is still unclear how public funding can best be used to catalyse (domestic) private funding. To finance development, inefficiencies in tariff collection and non-revenue water reduced will also have to be reduced. To what extent can tariffs be raised is very context specific.
To facilitate the Dutch organization in their visioning process, IRC carried out a trend analysis. The following future trends that affect the environment in which water, sanitation and hygiene services are provided in the future were identified.
Demographic alterations. During the 20th century alone, the population in the world has grown from 1.65 billion to 6 billion. It now stands at 7.2 billion. Increasing population pressure, demand for better livelihoods across the globe together with the effects of climate change, will increase demand for water related services, and deepen water-related problems.
The year 2008 was the first year in which more people lived in cities than in rural areas worldwide. The strong trend towards urbanisation is set to continue and rural population is expected to start to decline. With various settlement types in between urban and rural such as small towns and intermediate cities, the different types of settlements will have varying demands on and will require different capacities for public services such as water, sanitation and hygiene.
Changing climate. The sustainability of poverty reduction and shared prosperity is threatened by climate change (WB, 2013). Vastly uneven distribution of freshwater resources, combined with changes due to climate change, is already deepening water-related problems and is likely to increase in the future (Parker, 2010).
Economic growth. Developing countries' strong economic performance is shifting the world's economic centre of gravity. Asia, Latin America and Africa are the engines driving the world economy. They are expected to account for nearly 60% of the global economy by 2030. China is forecast to overtake the USA and become the largest economy in the world in 2016.
Along with enhanced spending capacity, people demand higher levels of water and sanitation services, increasing the pressure for better managed services. However progress in sharing prosperity is decidedly mixed: in many countries growth is accompanied by rising inequality. For instance of the 900 million people still living below the poverty line, three-quarters of them live in middle-income countries, especially India and China.
Changing aid architecture. The above described trend in economic growth has changed the traditional aid landscape drastically with new donor entrants such as China, India, Brazil and South Africa coming in. Financing for development is coming from more diverse sources (WB, 2013).
At the same time residents of donor countries are clamouring for evidence of the success of aid, and demand greater accountability from donors and recipient countries. While public and political support for development assistance has been falling in recent years, the global financial crisis—which began in 2008 in Northern (European) countries— has increased pressure for results.
The relative importance of aid as compared to other sources of finance has diminished. Private investment has become the dominant mode of capital transfer worldwide (WB, 2013). Private financial flows from developed to developing countries have begun to outstrip official development flows in the mid-1990s. Since then the increase in Official Development Assistance has been outpaced by private investment, private philanthropy, and remittances. There is also an increased awareness that public funding is necessary to realise sustainable water and sanitation services.
New Information Communication Technology. A global community has emerged through major increases in connectivity (WB, 2013). Information Communication Technology tools have prompted growing initiatives to improve water, sanitation and hygiene services delivery. These include water point mapping, monitoring service delivery through mobile phones, making payments through mobile phones, and online project monitoring. New and improved technologies, beyond Information Communication Technology, offer potential for reducing costs and improving quality in WASH service delivery.
These global trends (named above) provide a changing context for the water and sanitation sector, playing out differently in geographical regions, countries and specific population groups. IRC envisions the following scenarios:
Many low income countries are experiencing unprecedented levels of economic growth. Along with enhanced spending capacity, demand for higher levels of water and sanitation services will increase putting more pressure on better managed services.
However, economic growth displays huge disparities between geographical regions and urban and rural areas. The demand for water and sanitation services is also strongly differentiated. Hence countries must develop varying models and strategies to meet the demands of the different population groups.
Economic growth is accompanied by accelerating rates of urbanisation and industrialisation. As economies and populations grow, use of water resources will increase. Inevitably waste water will be released after use. Environmental pollution will become more widespread. Water scarcity is likely to become an ever bigger factor affecting sustainability of water, sanitation and hygiene services.
Over the past decades almost all countries have, decentralized the responsibility for the delivery of social services, including water supply, to local government. But this is happening at different speeds, levels of intensity and with varying degrees of fiscal decentralisation. Despite this continued trend, local government's capacity to adequately fulfil their role in supporting service providers and monitoring service delivery often remains limited.
Aid is increasingly directed towards low-income countries—sub-Saharan Africa received 38% of water and sanitation Oversees Development Assistance in 2012, compared to 27% in 2010 (WHO, 2014). As a consequence of the reduced grant money to lower middle income and middle income countries, domestic investments need to increase as aid reduces or transitions to the form of loans.
Given that private sector investment in water supply remains negligible- apart from the investments made by private households and individuals which are very substantial though largely overlooked- more realism about the limited role of the private sector as an investor in water supply and sanitation is apparent. There is a need for a greater role for public finance in the water and sanitation sector, particularly in covering a significant part of replacement costs of technologies, alongside a larger share of the costs of direct support to service providers.
1. Organisations who participated in the consultation meeting in January 2015 were Simavi, Royal Haskoning DHV, Aqua for All, Waste, Both Ends, Netherlands Water Platform, UNESCO-IHE, Waternet, World Bank, UVW and Directorate General of International Cooperation of The Netherlands.
Directorate General of International Cooperation (DGIS), 2014. Netherlands and World Bank join forces on water issues, Clean drinking water and sanitation for 200 million people. Website article. Available at: < https://www.government.nl/news/2014/10/11/netherlands-and-world-bank-join-forces-on-water-issues.html >
World Bank, 2013. World Bank Group strategy.Washington, DC, USA: World Bank. Available at: < https://openknowledge.worldbank.org/bitstream/handle/10986/16095/32824_ebook.pdf >
World Health Organisation and UN-Water, 2014. UN-Water global analysis and assessment of sanitation and drinking-water (GLAAS) 2014 report : investing in water and sanitation : increasing access, reducing inequalities. Geneva, Switzerland: World Health Organization (WHO). Available at: < https://www.who.int/water_sanitation_health/publications/glaas_report_2014/en/ >
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