Skip to main content

Disclaimer

The copyright of the documents on this site remains with the original publishers. The documents may therefore not be redistributed commercially without the permission of the original publishers.

Making the poor pay for public goods via microfinance : economic and political pitfalls in the case of water and sanitation

This paper critically assesses microfinance’s expansion into the provision of public goods. It focuses on the problem of public goods and collective action and refers to the specific example of water and sanitation. The microfinancing of water and sanitation is a private business model which requires households to recognise, internalise and capitalise the benefits from improved water and sanitation. This requirement is not assured. Water and sanitation, being closely linked to underlying common-pool resources, are public goods which depend on collective governance solutions. They also have shifting public/private characteristics and are merit goods which depend on networks to enable provision to take place. Two cases, from Vietnam and India, are presented and evaluated. Despite their dissimilar settings and institutional designs, evidence is found that both projects encountered similar and comparable problems at the collective level which individual microfinance loans could not address. The paper concludes that trying to make the poor pay for public goods runs into four pitfalls: politics, public capacity, values and equity. [authors abstract]

TitleMaking the poor pay for public goods via microfinance : economic and political pitfalls in the case of water and sanitation
Publication TypeMiscellaneous
Year of Publication2011
AuthorsMader, P.
Secondary TitleMax-Planck-Institut für Gesellschaftsforschung MPIfG Discussion Paper
Volume11/14
Paginationiv, 39 p.; 2 tab.; 2 fig.
Date Published2011-09-01
PublisherMax-Planck-Institut für Gesellschaftsforschung, MPifG
Place PublishedCologne, Germany
Keywordsfinancing, poverty, social aspects, social development, social marketing
Abstract

This paper critically assesses microfinance’s expansion into the provision of public goods. It focuses on the problem of public goods and collective action and refers to the specific example of water and sanitation. The microfinancing of water and sanitation is a private business model which requires households to recognise, internalise and capitalise the benefits from improved water and sanitation. This requirement is not assured. Water and sanitation, being closely linked to underlying common-pool resources, are public goods which depend on collective governance solutions. They also have shifting public/private characteristics and are merit goods which depend on networks to enable provision to take place. Two cases, from Vietnam and India, are presented and evaluated. Despite their dissimilar settings and institutional designs, evidence is found that both projects encountered similar and comparable problems at the collective level which individual microfinance loans could not address. The paper concludes that trying to make the poor pay for public goods runs into four pitfalls: politics, public capacity, values and equity. [authors abstract]

NotesBibliography on p. 35 - 38
Custom 1127

Downloads

Useful links

Disclaimer

The copyright of the documents on this site remains with the original publishers. The documents may therefore not be redistributed commercially without the permission of the original publishers.