The water sector’s Orpheus complex – and what it costs

Published on: 06/05/2012

Unlike Orpheus, the engineers are able to repeat this trick over and over again, at great costs. Where does this complex come from? And, what can be done about it?

As engineers, we are used to thinking in terms of a life-span of a piece of infrastructure. It may take, let’s say, 20 years for a water system to go from cradle to grave. By then, the wear and tear of the system will have exhausted the infrastructure and it has come to the end of its functioning life. The exact number of years may differ a bit: a pump will last shorter, but distribution pipes last longer. This life span can also be extended a bit, if the system is taken care off well. But sooner or later, it is the end of story. Moreover, the effective life span of a water committee may be much shorter. Many cease to function effectively already after a few years. Without a water committee, the system becomes brain dead – water may still flow but that is about it; no more preventative maintenance takes place; water quality tests may no longer be done and billing stops. The effective life-span may be reduced to maybe 10 years. When systems have collapsed, the Orphean engineer comes in to revitalise the system, by replacing major parts, reconstituting the water committee, and helping the system to resuscitate. This can be done reasonably successfully, but after a few years of a well-functioning system, the cycle of decline and fall repeats itself.

But, do we have to go through these ritualistic motions of life, death and renewal?

Does a handpump first have to break down before it can reincarnate as a motorised pump? Why does a water committee first have to stop functioning before it can be resurrected as a new one? Does a latrine first have to overflow, before a new one can be raised as a Phoenix from the ashes? Is there not another way to go about it?

There are two answers to the last question. The first is a half-hearted yes. At a certain point in time asset renewal will have to take place. There is a physical end to the life-span of a system. However, we do not have to wait until the system breaks down completely, to bring it back across the Styx. The physical life-spans of the components of a water system are different. The problem becomes more manageable it asset renewal takes place in a more continuous manner, by spreading it out over a longer time, replacing bit by bit. The real problem lies in the fact that the casting of the Orpheus role is done in the wrong way – and the whole sector knows this. The common discourse says users should pay a tariff for “operation and maintenance” so the water system can be “self-sustainable”.  However, most sector professionals know that the typical tariffs are barely enough to cover operation and maintenance costs, let alone the costs of asset renewal. By investing heavily in rehabilitation, governments (either supported by donors or not) do take up this role de facto. But more often than not, this is too little, too late. There can be better clarity on the sharing of costs between government and users, but this will not be straightforward.

The second answer is a whole-hearted yes. There are ways to extend the life-span of water committees, which in turn may be able to do more preventive maintenance, carry out more asset renewal (though not all) and in that way, extend the life span of infrastructure, or at least, spread the costs of renewing water infrastructure over a longer time. A main way of ensuring a longer life-span of water committees, is through post-construction support. That may help water committees to increasingly perform better, anticipate problems earlier and even gradually improve the levels of services they provide.

So far for the myths. Now, let’s go to the hard economics of it all. This week, my work in Honduras was all about the life-cycle of rural water and sanitation services and their costs. Colleagues from various government agencies and NGOs here have been doing some database analysis of costs of developing water supply and sanitation systems and presented these in a seminar. Although more detailed analyses are needed, the first results do provide some important insights in the orders of magnitude. The per capita costs of infrastructure development was found to be around 220 US$/capita for both water (typically gravity-fed piped schemes) and sanitation. In most cases, this concerned developing infrastructure in places where already a system was in place, but which had either broken down almost completely, and/or which needed to be extended. If some overhead costs are added, this figure comes close to 300 US$/capita. The costs of setting up, training or strengthening a community-based service provider is around 30 US$/capita as a one-off cost. The ideal costs of post-construction support are around 2-3 US$/year, as seen in earlier studies and confirmed in this workshop.

Let’s use these figures now for a back-of-an-envelop calculation. We assume an initial investment of 300 US$/capita in water and sanitation infrastructure plus 30 US$/capita for setting up and training a service provider. If the system doesn’t receive post-construction support, the real life-span may be 10 years. Earlier studies showed that in fact many systems receive investments every 5 years or so, but 10 years seems to be a reasonable average. After that, the whole investment needs to be re-done, which would then to be equivalent to 33 US$/capita/year – not taking into account interest- rates. If through post-construction support the life-span can be extended with another 5 years, the whole investment would have been 300 US$$ plus 30 US$ plus 15 times 3 US$/year, or 375 US$/capita, but spread over 15 years, hence only 25 US$/capita/year. In other words, in Honduras the water sector’s Orpheus complex costs around 8 US$/capita/year.

The problem lies in the fact that most financing in the sector comes in the form of investment programmes, with a duration of 4-5 years.  The seminar showed that these typically have a component of post-construction support, but only for the duration of 3-6 months after system completion. No doubt that these first 3 to 6 months are important in getting the system going. The hard part though, when most support is needed, comes after 8 or 10 years. The 2-3 US$/capita/year needed for continuous post-construction support are more difficult to finance, as they cannot come from programmes but have to come from long-term commitments, such as government coffers. Limiting “post-construction support” to 3-6 months, without long-term commitments, is therefore nothing more but a sign of a (premature) death foretold.

Obviously, the problem is more complex than just investing a bit more and longer in post-construction support. For example, how to go about estimating the value of all the assets in place and the time at which these will need to be renewed? If, indeed, users cannot cover the costs of asset renewal through tariffs, how to set up mechanisms to share these costs with public investments? Or, how to go about the need to extend systems, which also requires investments? These and other questions related to the costs and financing of WASH services are now firmly on the radar of our partners in Honduras. By turning these back-of-an-envelop calculations into back-of-an-EXCEL-sheet calculations, we can get better insight into the relation between post-construction support and asset renewal. This in turn should be used of re-balancing financing of life-cycle costs in such a way that we move from the current cradle-to-grave-and-back-to-cradle-again cycle into a life-cycle, which avoids the graveyard of broken pumps altogether.