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New ownership models for water and sanitation services

Published on: 07/06/2016

What can the sector learn from circular economy visionary Thomas Rau?

Thomas Rau and Catarina Fonseca. Photo: IRC

On May 25th, the Dutch WASH sector stepped out of its comfort zone to listen to the renowned Dutch architect and circular economy visionary Thomas Rau. The event “Is the end of ownership near? A water and sanitation perspective” was co-organised by VIA Water and IRC.

Mr Rau began by emphasising that the term “end of ownership” was actually a misnomer. In his view it is all about manufacturers taking ownership or responsibility for their products.

A passport for materials

Thomas Rau confronted the 70 participants at the event with existential questions about our role as temporary guests on earth – a closed system with limited resources. He portrayed nature as a bank, not for money but for materials. Ideally all materials should have an ID so that we can track their (re-)use. Old buildings are material “mines”, new buildings can be transformed into material “depots”. Rau has formulated these principles in the Universal Declaration of Materials Rights, which he plans to submit to the United Nations on 10 December 2017.

Kolommen Launch Roller Coaster (left) and the steel skeleton of the prize winning “Alliander” project, Duiven. Photo: CSM Steelworks

In 2014, Mr. Rau designed the world’s first building constructed as a demountable material “depot” with a material “passport”. He sought the help of CSM Steelstructures, a company that began as builders of roller coasters, which by nature are required to be demountable and light. Thanks to CSM’s technical expertise, the amount of steel required for the building was reduced by 20-25%.

A service economy

In Rau’s circular economy model, manufacturers are made responsible for the materials they use and remain owners of their products. This paves the way towards a new economic model based on performance-based usage contracts, also known as servitisation. Manufacturers supply services rather than products – light instead of bulbs, 

All this sounds good for consumers: If your washing machine breaks down, it’s the supplier’s problem not yours. Rau assured us that it was good for suppliers too, who can make more money from service provision than product sales. This is because servitisation spurs innovations that reduce material and energy costs. Producers retain a stock of raw materials, which can either be reused directly or resold. In this way materials retain at least part of their value.

So how can Rau’s circular economy and servitisation principles be applied in the water and sanitation sector?  Water stewardship and ecological sanitation are well-established circular economy concepts in our sector. IRC and many like-minded organisations are protagonists of a service delivery approach while donors are increasingly adopting performance-based principles such as output-based aid (OBA) and value-for-money approaches.

Water and sanitation models

IRC‘s Head of International and Innovation Programme Catarina Fonseca reflected on the relevance of “end of ownership models” in the sector.  Are handpump or latrine “subscriptions” feasible options?  Subscription models could, in principle, partly solve the long-standing problems of financing infrastructure and capital maintenance peaks of small water and sanitation systems, she said.

Hydro Vergnet installation and repair teams. Photo: Hydro Vergnet

Mrs. Fonseca presented several examples of “end of ownership” type arrangements in the water and sanitation sector, mostly from Sub-Saharan Africa (fig. 1). The  examples are described in more detail in the briefing note of the IRC-VIA Water event. The Vergnet Hydro model incorporates an element of Mr. Rau’s material bank principle Vergnet Hydro gives a 3 year warranty on hand pump spare parts, which are replaced in exchange for broken parts.

Fig. 1. Examples of water and sanitation service models

VIA Water partner Sanivation provides an example from the sanitation sector. This social enterprise leases out toilets and collects waste twice a week; households pay for the emptying service.

Mrs. Fonseca stated that end of ownership models allowed sharing of risks between manufacturers and consumers. She concluded that there is definitely a business appetite to move from selling handpumps and toilets towards selling services to the rural poor. This mainly occurs in areas without formal regulation. The question is whether these service models will also work for users who cannot afford higher levels of service involving piped water supply and sewerage.

Sanivation toilet repair serviceman. Photo: Sanivation

Though not mentioned at the event, there is a successful example of servitisation in the high-end wastewater market. A small British company has moved away from just selling their equipment, to offering performance-based lease agreements. Haigh Engineering provides proactive maintenance, equipment upgrades and a monthly payment plan, supported by web-enabled remote monitoring.  When Haigh provides upgrades, they recycle or refurbish old equipment, thus reducing the environmental impact.

Asking the right questions

At the end of the VIA Water-IRC event, participants asked the speakers Thomas Rau and Catarina Fonseca about some of the constraints to the introduction of service models. Isn’t it hard for small and medium enterprises (SMEs) to get finance for the required up-front investment?  Mr Rau said he was currently discussing financing options for SMEs with banks. Another constraint is that full cost recovery in service models is limited by the fact that water and sanitation are human rights.

The Sustainable Development Goal (SDG6) for water and sanitation is universal access by 2030. We should not ask ourselves if this is possible but decide which system changes are needed to achieve access for all.  We need to ask the right questions about what universal access means in terms of quality of service, quality of water, sustainability. There must be real political will to make it happen.

See below a video impression of the VIA Water-IRC  event including short interviews with Thomas Rau, Catarina Fonseca, Saskia Reus (Aqua for All, Africa Funded), Gert de Bruijne (Netherlands Water Partnership, Daily Business,) and Joanna Bouma (Pelagia Communications).

To learn more about Thomas Rau's ideas and projects go to to his company website Turntoo.

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