Which WASH finance solutions for serving the poor work?

Published on: 15/03/2012

Financing water and sanitation improvements for the very poor remains a major challenge over large areas of the globe. IRC and WSUP would like to show that effective solutions to this challenge do exist! See discussion paper: Financing water and sanitation for the poor: six key solutions.

Based on the feedback received during this session Catarina Fonseca and Guy Norman indicated that they will review the paper.

Participants of this session were asked the following question: “Which of the following six key solutions do you think has the greatest potential to overcome this challenge?”

1. 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.
2. Maximise local small-scale private-sector involvement in water and sanitation service provision for the poorest.
3. Introduce innovative water tariff systems that ensure financial sustainability and affordability for the poorest.
4. 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).
5. 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.
6. 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.

This 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.  Are you interested to see which of the proposed solutions was perceived most promising? Follow us on Twitter @FonsecaCatarina and you will soon see what the result of the voting session is!