Guidance Notes on Services for the Urban Poor · sanitation and health services, and widespread...

August 2009

Guidance Notes

The Water and Sanitation Programis an international partnership forimproving water and sanitation sectorpolicies, practices, and capacities toserve poor people

Guidance Notes onServices for the Urban PoorA Practical Guide for ImprovingWater Supply and Sanitation Services

ACKNOWLEDGMENTS:

These Global Guidance Notes have been peer reviewed by Dennis Mwanza, Glenn Pearce-Oroz, Rosemary Rop, andElizabeth Blackett (WSP); Anup Wadhawan and Antti Inkinen (formerly WSP); Prof Sohail Khan (Water, Engineering andDevelopment Centre, Loughborough University, UK); Robin Rajack (World Bank); Ashna Mathema and Arnab Roy(Kolkata Urban Services to the Poor Program).

This document has been edited by Anjali Sen Gupta.Page design is by Write Media, and printing by PS Press Services Pvt. Ltd.

DISCLAIMER:

Water and Sanitation Program (WSP) reports are published to communicate the results of WSP’s work to the development community.Some sources cited may be informal documents that are not readily available.

The findings, interpretations, and conclusions expressed herein are entirely those of the author and should not be attributed to theWorld Bank or its affiliated organizations, or to members of the Board of Executive Directors of the World Bank or the governments theyrepresent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations,and other information shown on any map in this work do not imply any judgment on the part of the World Bank Group concerning thelegal status of any territory or the endorsement or acceptance of such boundaries.

The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent [email protected]. WSP encourages the dissemination of its work and will normally grant permission promptly.

In 2006–07, the Water and Sanitation Program (WSP) initiated research to identify barriers to service

delivery for the urban poor. The findings of the research were presented in the Guidance Notes on

Improving Water Supply and Sanitation Services to the Urban Poor in India. The Urban Global Practice

Team of WSP decided to expand the work to a global context. The Guidance Notes provide a systematic

analysis of the barriers to service delivery for the urban poor and recommend practical solutions and

strategies to overcome these barriers. The Guidance Notes are based on an in-depth research of various

initiatives from Africa, East and South Asia, and Latin America. An accompanying volume,

Global Experiences on Expanding Services to the Urban Poor, is a documentation of ‘Global Case

Studies’ and ‘Consultations with Urban Poor Communities’.

Guidance Notes onServices for the Urban PoorA Practical Guide for ImprovingWater Supply and Sanitation Services

Executive Summary 5

Section 1: Introduction 8

Purpose of these Guidance Notes

Overview of the Current Situation

Obstacles to Improving Services for the Poor

Section 2: Give the Poor a Voice 14

Promote Meaningful Participation in Planning and Design

Publish Stories of the Poor

Inform and Educate Poor Communities

Empower the Poor to Act within and beyond Their Own Communities

Getting Started: Actions and Resources

Section 3: Build Support for Improving Services 22

Incorporate Informal Service Providers into the Solution

Create Political Support for Change


Section 4: Eliminate Administrative and Legal Barriers 28

Delink Service Provision from Land Tenure

Institutionalize Simplified Procedures and Provide Assistance


Section 5: Strengthen Capacity, Autonomy, and Accountability ofService Providers and Provide Incentives to Serve the Poor 34

Separate and Clarify the Responsibilities of the Actors

Strengthen Capacity

Recognize and Work with Alternative Providers

Introduce Accountability and Performance Monitoring Systems

Regulation by Contract

Other Regulatory Mechanisms


Contents

Guidance Notes onServices for the Urban Poor

Section 6: Adopt Appropriate Investment Finance,Cost Recovery, and Subsidy Policies 48

Adopt Realistic Cost Recovery Policies and Targeted Subsidies

Develop a Cost Recovery Strategy

If Necessary, Subsidize Investments, not Consumption

Restructure Charges and Payment Practices to Accommodate the Poor

Reduce the Connection Charges for Poor Households

Introduce Frequent Collection of Water Charges

Eliminate Distorted Tariffs for Poor Households

Legitimize and Provide Finance for Small Private Service Providers


Section 7: Overcome Physical and Technical Barriers 58

Protect Water Resources

Adopt Alternative Technologies and Delivery Systems

Adopt Modular Planning


Section 8: Summary of Policy Issues 64

The Policy Framework

List of Policy Issues Associated with the Proposed Strategies

Give the Poor a Voice

Take Vested Interests into Account

Eliminate Administrative and Legal Barriers

Strengthen Capacity, Autonomy, and Accountability of Service Providers

Make Appropriate Investment Finance, Cost Recovery, and Subsidy Policies

Overcome Physical and Technical Barriers

Resources 69

List of Acronyms

BWSSB Bangalore Water Supply and Sewerage Board

CAESB Water and Sanitation Company of Brasilia

CBO Community-Based Organization

CRC Citizen’s Report Card

GPOBA Global Partnership on Output-Based Aid

IDA International Development Association

KIWASCO Kisumu Water and Sewerage Company

LWSC Lusaka Water and Sewerage Company

MBK Maji Bora Kibera (Better Water Supply for Kibera)

MDGs Millennium Development Goals

NGO Nongovernmental Organization

NWSC National Water and Sewerage Corporation of Uganda

O&M Operation and Maintenance

OBA Output-Based Aid

OPP Orangi Pilot Project

PERPAMSI Professional Organization of Water Enterprises of Indonesia

SANAA National Autonomous Water and Sewerage Service of Honduras

SLBE Small Local Business Enterprise

SONES National Water Company of Senegal

SPSP Small Private Service Provider

SSIP Small Scale Independent Provider

WBI World Bank Institute

WSS Water Supply and Sanitation or Sewerage

WUP Water Utility Partnership for Capacity Building in Africa

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To meet the Millennium DevelopmentGoals (MDGs) for water supply andsanitation, project planners and serviceproviders and the poor themselves indeveloping countries will have toovercome a number of barriers thatimpede the improvement of services forthe poor. These Guidance Notesidentify a number of institutional, legal,financial, and technical barriers toproviding adequate services to theurban poor and propose practicalsolutions based on the experience of anumber of relevant cases. These Notesare aimed primarily at project planners,service providers, and communityleaders but provide some suggestionsfor policymakers. A summary of policyissues is included in the last section.

The CurrentSituationIn 2006, nearly 1 billion people were stillusing water from unimproved sourcessuch as shallow wells, rivers, streams,ponds and drainage ditches—with theirattendant health and safety risks. Eventhose who have access to improvedwater supply infrastructure do notnecessarily get adequate services.Large numbers of those who lackaccess to improved water supplyinfrastructure live in urban slums. Thesituation for sanitation is even worsethan for water supply as sanitation hashistorically received substantially lessattention, funding, and priority thanwater supply in virtually every country.In 2002, 2.5 billion people—47 percentof the population of the developingworld—lacked toilets and other forms

Executive Summary

of improved sanitation. They defecatein plastic bags, buckets, open pits,agricultural fields or public areas intheir communities. In 2005, slightlymore than one-third of city dwellers—almost 1 billion people—lived in slums,in conditions characterized byovercrowding, high levels ofunemployment or underemployment,lack of land tenure, poor water,sanitation and health services, andwidespread insecurity, includingviolence against women. Improvingservices in the slums around large citiesis essential. It is also now widelyrecognized that, to slow the growth ofslums in large cities, more attentionmust be focused on improving servicesfor the poor in towns and small cities.

Give the Poor a Voice; BuildSupport for Improvements;Eliminate Administrativeand Legal Barriers

• The voice of the poor is often notheard, and misperceptions aboutthe poor persist.

Getting the poor engaged is essential.Project designers and service providersoften assume they know what type ofservices the poor want and are willingto pay for. Their assumptions are notalways correct and often result in costlyand unsustainable supply-driven publicprograms to provide services. Givingthe poor the opportunity to participatein planning and design can make thedifference between success and failure.This can happen only if adequate timeand resources are allowed formeaningful consultation during thepreparatory phases of projects.

The poor are often unaware of officialpolicies and their attitudes and behaviormay impede their access to services.Educational programs that provideinformation develop skills as well aspromote constructive attitudes andbehaviors are an essential componentof any effort to improve services andgive the poor a voice. A number of well-documented cases demonstrate thewillingness and ability of the poor tocreate and/or manage their ownservices. Community-basedorganizations (CBOs) and federationsof CBOs can help the poor take actionon their own behalf.

• Water vendors, organized crime,public officials, and utility staff mayhave a vested interest in preventingbetter services for the poor.

Vested interests will naturally opposeany changes to the status quo thatthreaten their sources of revenue orpolitical support. Sometimesconfrontations can be avoided by givinginformal service providers and othervested interests new roles or incentivesthat bring them into the formal system.Public awareness campaigns may helpto build political support.

• Land ownership and tenure issuesoften create barriers to the provisionof services to the poor.

Legal reform is needed to enable thepoor to gain secure tenure, adequatehousing, and services but in themeantime, innovative strategies to getaround land tenure requirements cansometimes be found at the local level.One such approach is to allow

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alternative documentation. Forexample, as part of its program topromote connections in slums, theBangalore Water Supply and SewerageBoard agreed to permit residents topresent lease documents and other‘proof of occupancy’ documents suchas ration cards, identity cards, electioncards or electricity bills instead of landtitles and tax receipts.

• The poor may be unaware ofadministrative and legalrequirements, or find it difficult tounderstand them and comply.

Simplified, client-friendly procedures forconnection, billing, and collection helpthe poor to gain and retain access toservices. Creating a dedicated unitwithin the utility and/or engagingnongovernmental organizations (NGOs)to communicate with poor communitiesand facilitate access to services hasalso been effective.

Strengthen andRegulate Service Providers

• Public service providers sometimeslack the autonomy, financial andhuman resources, and incentives toprovide services to the urban poor.

• Municipalities and utilities are notheld accountable for the provision ofsatisfactory water supply andsanitation services.

• The services provided by smallprivate service providers (SPSPs)are not recognized, encouragedor regulated.

The poor performance of water supplyand sanitation (WSS) services is oftendue to an inappropriate institutionalframework, lack of regulatorymechanisms, an absence ofappropriate attitudes and skills, and alack of explicit directives and incentives

to serve the poor. Many governmentshave taken steps to restructure thesector by separating and clarifying theroles of policymakers, regulators, andservice providers and adoptingaccountability mechanisms. In anumber of countries, the largest serviceproviders have been converted intoautonomous public or privatecompanies. In a few, more attention isbeing devoted to improving theperformance and sustainability ofservices in the smaller towns. Suchrestructuring entails far more than achange in legal status—substantialinternal restructuring, includingmanagement reforms and performanceincentives for staff, is required to createa sustainable service provider. Trainingmust focus on improving service quality,access and sustainability—rather thanon engineering solutions.

Effective accountability andperformance monitoring systemsneed to be put in place and propoorregulatory approaches should beadopted to ensure the availability,affordability, and sustainabilityof services for the poor. In mostplaces, formal utilities will beunable to satisfy the demand of100 percent of urban households forthe foreseeable future, especially inpoor neighborhoods. Taking advantageof the services of SPSPs can be anessential component of strategies toexpand and improve services to theurban poor.

Working with SPSPs may requirefinding innovative ways of linking themwith formal utilities, providing smallamounts of investment finance,introducing appropriate regulatorymechanisms, and adopting strategiesfor eliminating illegal and abusive SPSPactivities (if they exist) without drivingSPSPs out of business.

Adopt Appropriate InvestmentFinance, Cost-Recovery,and Subsidy Policies

• Tariffs do not cover the full cost ofefficient services.

• Poor households find it difficult topay upfront connection fees.

• Poor households find it difficult topay monthly bills.

• Increasing block tariffs penalizeshouseholds that share asingle connection.

• Small-scale service providers lackadequate finance to extend networksinto peri-urban informal settlementsand small towns.

Targets for cost recovery that arerealistic and charging methods that takethe constraints faced by the poor intoaccount can lead to financial viabilityas well as improved accessfor the poor. Cost recovery can beimproved by reducing costs throughincreased efficiency, improvingcommercial performance, and chargingan average tariff that reflects all costs. Ifa large tariff increase (in real terms) isrequired, even after taking into accountthe effects of efficiency improvementsand increased connections, theincrease should be phased over aperiod of time and accompanied byperceivable improvements in service.

Prices affect consumption behavior, sotariff structure and cross subsidies mustbe designed carefully to minimizeeconomic distortions or changes inconsumption patterns that wouldundermine the financial performance ofthe utility. Expanding services to thepoor may result in a higher average costbecause of physical conditions, highercollection costs, and lower averageconsumption from connections inpoor households. This creates

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a dilemma that needs to beacknowledged and dealt withrealistically. Practices that reduce thecost of serving poor neighborhoods,such as community management ofbilling and collection, may be needed.While individual household connectionsfor water and sewerage are often thepreferred options, when manyhouseholds are served through a singlewater connection, water consumptionper connection may be higher than theutility’s average and make up forsome of the higher costs in poorcommunities. Likewise, block toiletsincrease economies of scale. Ingeneral, subsidies should be targetedat the poor and should be limited andtemporary. Subsidizing investmentsand/or connections in poorneighborhoods is preferable tosubsidizing monthly consumptionbecause the former is both targetedand limited in scope, and is generallysufficient to ensure that the poor will beconnected and stay connected. If thevery poor have difficulty accumulatingcash to pay monthly fees, it may bepossible to increase the frequency ofcollection by organizing dailyor weekly collection by communityrepresentatives. Rising block tariffs aregenerally intended to provide a lowlifeline tariff for basic essentialhousehold consumption and todiscourage excessive use by thosewho consume more than a basicvolume of water. However, such tariffsmay penalize the poor when severalhouseholds use one connection.Administrative or regulatory actionsmay be required to eliminatethese distortions.

Legitimizing and providing finance toSPSPs can be an effective way topromote the expansion of acceptableservices to unserved neighborhoods.

Overcome Physicaland Technical Barriers

• The overexploitation anddegradation of water resourcesaffect the poor disproportionately.

• Physical and technical challengesand the high investment cost ofconventional technologies makeextending formal piped water supplyand sewerage networks intoinformal and unplanned settlementsmore difficult.

Inadequate attention to managingwater resources is leading to theoverexploitation and degradation ofwater resources and exacerbatesthe already difficult service andenvironmental conditions in poor urbanneighborhoods. As water becomesscarcer and its quality degrades, thepoor must go farther and pay more tosatisfy their basic needs. Mostcountries have adopted the DublinPrinciples regarding the need forintegrated water resourcesmanagement to protect theenvironment, and the economic pricingof water to ensure efficient use of waterresources, but further action is neededto implement these principles. Mostgovernments are still operating in thereactive mode—responding to near-disasters. Public authorities and utilitiesshould adopt comprehensive forward-looking strategies for reducing waterlosses and encouraging the adoption ofwater saving technologies and low-costsanitation at the household andcommunity level.

A number of low-cost and physicallyadaptive alternative technologies havebeen developed for poor and marginalcommunities. A few examples are pour-flush latrines, condominial seweragesystems, low-cost sewage treatmenttechnology adapted to local conditions,

rainwater collection systems, bulkwater and sewerage connections at theboundary of poor communities, streetor block metering arrangementswhereby individual households arebilled for water on the basis of averageconsumption. These have already beensuccessfully used in many places.Modular planning, by which systemcomponents are initially designed withonly limited excess capacity, has beenadvocated as a method to reduce initialinvestment costs in water supply andsanitation infrastructure. The underlyingprinciple is to construct only when theinvestment leads to increased revenuesin an acceptable timeframe. Subject tocertain considerations, such aseconomies of scale, components aredesigned so that they can beexpanded or upgraded as needed.

Policy IssuesThe guidelines recommend practicalstrategies for overcoming obstacles toimproving water supply and sanitationservices for the urban poor. But inmany cases, overcoming the obstacleswill require more than the strategies.It will require changes in policies orlegislation—for example, to increasetransparency, promote better servicesfor the poor, reform land tenure rules,require better cost-recovery, and allowadaptive standards and technologies.Even when policy reform is notessential, the proposed strategiescould benefit from a more supportivepolicy or legal environment. In manycases, while current policiesthemselves may be adequate,their implementation is weak, orthey may not be understood andappreciated by the key actors. Inthose cases, strategies to improvethe implementation of policies maybe needed.

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Section 1

Introduction

Purpose of theseGuidance NotesAs policymakers and service providersin developing countries take action toimprove water and sanitation servicesfor the urban poor, they can takeadvantage of experiences from severalother countries. There are relevantexamples, from all the developingregions, of initiatives that have led toimprovements for both the poorpopulation and the service providers.1

Taking advantage of these lessons, andadapting them as appropriate, can bean important component of strategiesto meet the Millennium DevelopmentGoals (MDGs) for water supplyand sanitation.

These Guidance Notes are aimedprimarily at project planners, serviceproviders, and community leaders butprovide some suggestions forpolicymakers as well. They identifybarriers to providing adequate servicesto the urban poor and proposepractical solutions based on theexperience of a number of relevantcases that have been reviewed forthis purpose.

These Guidance Notes focus onpractical actions—many of which canbe implemented, at least partially, withinexisting policy frameworks. Promotingpolicy reform per se is not the primaryobjective, though more appropriatepolicy frameworks would improve theenabling environment, and are essentialfor long-term sustainability of servicesfor the poor and especially foraddressing many of the financialbarriers discussed in Section 6. For this

reason, desirable policy initiatives arelisted at the end of each section and afinal section summarizes them.

Overview of theCurrent SituationThe lack of water supply and sanitationservices for the urban poor representsa daunting challenge and multiplestrategically targeted initiatives will berequired to meet the MDGs. During2000 to 2006, the proportion of thepopulation with access to an improveddrinking water source in developingregions rose from 74 percent to84 percent. However, nearly 1 billionpeople were still using water fromunimproved sources such as shallowwells, rivers, streams, ponds anddrainage ditches—with their attendanthealth and safety risks.2 Large numbersof those who lack access to improvedwater supply infrastructure live inurban areas.

• In 2005, 8 million of Indonesia’s 9.6million poor urban households didnot have access to piped water.3,4

Even those who have access toimproved water supply infrastructure donot necessarily get adequate services.Water from standpipes and kiosks, keysources of access for the poor, is notalways available 24 hours a day. As aresult women, especially, spend hoursfetching water and must frequentlyadjust their work schedules andsleeping patterns, sometimes stayingup late at night. Intermittent service,

which results in unreliable availabilityand inadequate volumes of oftencontaminated water, affects the richand poor alike. As a result, largenumbers of households store water inhousehold reservoirs and supplementpiped water with water from tankeroperators and water vendors.

Small private service providers (SPSPs)play an important role in filling servicegaps. They include tanker operators,private kiosk operators, householdresellers, door-to-door vendors, andoperators of small boreholes andprivate piped networks. Many providegood quality service under competitiveconditions, but the price of waterprovided by SPSPs is usually muchhigher than that of the main water utility.Due to their informal and unregulatednature, alternative suppliers sometimesimpose significant social costs:uncontrolled abstraction of water byalternative suppliers may undermine theeffective management and protection ofwater resources, and theft of waterfrom the utilities undermines theirfinancial viability. Other resources mayalso be misappropriated by SPSPs.

• In Chennai, India, more than 13,000tankers mine the surroundingfarmland for water, usinggovernment-subsidized powerintended for agricultural use.

The situation for sanitation is evenworse than for water supply assanitation has historically receivedsubstantially less attention, funding,and priority than water supply invirtually every country. In 2006,2.5 billion people—47 percent of thepopulation of the developing world—lacked access to improved sanitation.They defecate in plastic bags, buckets,open pits, agricultural fields, and public

1 This note mentions primarily initiatives funded by the WorldBank and its partners, such as the Water and SanitationProgram. There are undoubtedly many other good examplesthat merit examination and adaptation.

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2 United Nations. The Millennium Development Goals Report2008. p. 42.3 Indonesia. 2006. Enabling Water Utilities to Serve the UrbanPoor. The World Bank, East Asia and Pacific Region.4 Not all piped water is safe for human consumption.Conversely, not all water abstracted from natural sources isunsafe. However, particularly in urban areas, access to pipedwater is often used as a rough indicator of access tosafe water.

The Guidance Notes focus on practical actions—many of which can beimplemented, at least partially, within existing policy frameworks.


areas in their communities.5,6 Thelack of proper sanitation in crowdedslums contributes to serious healthand environmental risks for the entirepopulation, but the poor areparticularly vulnerable to infectionfrom contaminated water and otherdisease vectors.

• In Rio de Janeiro, Brazil, recentoutbreaks of the mosquito-bornedisease dengue fever (spread bymosquitos which thrive in even smallamounts of standing water) haveprimarily affected residents of thecity’s large slums, and children aged5 to 12 are the most susceptible.7

The U.N.’s Millennium DevelopmentGoals Report 2005 reported that urbanpopulation was projected to exceedrural population in developing regionsby 2007 and was growing at more than3 percent per year, three times fasterthan the population of rural areas.8 In2005, slightly more than one-third ofcity dwellers—almost 1 billion people—lived in slums, in conditionscharacterized by overcrowding,high levels of unemployment orunderemployment, lack of land tenure,poor water, sanitation and healthservices, and widespread insecurity,including violence against women.9

• In Africa, which is urbanizing fasterthan any other region, more than60 percent of the urban population

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5 United Nations. 2008. op. cit., pp. 40-43; and U.N.Millennium Project, Task Force on Water and Sanitation. 2005.‘Health, Dignity, and Development: What will it Take?’Earthscan, the United States and the United Kingdom, p. 79.6 The MDG Reports do not define ‘improved sanitation’. TheU.N.’s promotional document, ‘Tackling a Global Crisis:International Year of Sanitation 2008’ defines sanitation, at aminimum, as ‘the safe management of human excreta, usuallyby means of a toilet that confines feces until they arecomposted and safe, or enables them to be flushed away intoa sewer’. Its fuller definition includes environmental cleanliness,handwashing, garbage removal, and wastewater disposal.7 April 3, 2008. ‘Brazil’s Military Mobilizes against Dengue’,The Washington Post. Section A, p. 8.8 United Nations. The Millennium Development Goals Report,2005. p. 34.9 United Nations. 2008. op. cit., p. 43.

lives in housing with at least one ofthe four defining characteristicsof slums.10

The picture is complicated by the factthat the demand for sanitation (definedas willingness and ability to pay) isusually lower than the cost of provision.Many observers have suggested thatsanitation is not a high priority for poorhouseholds, in part because they maynot understand the consequences ofbad hygiene. It is true that health is notusually the most important factor indemand for improved sanitation. Otherfactors, such as convenience, privacy,dignity, safety, and community statusare more important. In many cases,households with limited resources haveto choose from many competingneeds—and convenience, privacy, andthe safety of women are not theirhighest priorities. This is related toanother constraint on demand forsanitation: gender inequality. The limitedpolitical and personal power of womenin many developing countries meansthat sanitation’s strongest advocateshave little influence over thedecisionmaking and priority-settingprocesses. Given the constraints ondemand, services must be carefullydesigned: mismatches betweendemand for improved sanitation andthe type of services provided oftenresults in unused or underusedsanitation infrastructure.11

Attempts to improve sanitation servicesin slums have tended to be sporadicand have often been undertaken asgood works, or to improve the public

image of the service provider or publicofficials, rather than as part of astrategy to provide sustainableservices. As a result, when slum areasreceive services, they are typically oflow-quality and create a net drain onutility resources. There are increasingcalls from the poor and organizationsthat represent their interests to addressthis problem in a more sustainablemanner. While partial subsidies may benecessary and can be justified, it isincreasingly evident that people arewilling to pay for sanitation if planningtakes their preferences and constraintsinto account.

A number of governments have shownthat it is possible to improve watersupply and sanitation services for slum-dwellers through practical strategiesthat target key barriers. It is also nowwidely recognized that focusing moreattention on improving services for thepoor in towns and small cities isessential to slow migration to the slumsaround large cities.

Obstaclesto ImprovingServices for theUrban PoorWhy do poor people not get access toservices? Consultations with a broadrange of stakeholders in developingregions revealed a general consensuson the most common obstacles toimproving services to the poor. Theseobstacles have been grouped under sixproposed action areas:

1. Give the Poor a Voice

• The voice of the poor too often isnot heard, and misperceptionsabout the poor persist.

2. Neutralize Vested Interests

• Water vendors, organized crime,public officials, and utility staff mayhave a vested interest in preventingbetter services for the poor.

3. Eliminate Administrative and

Legal Barriers

• Land ownership and tenure issues

often create barriers to the provision

of services to the poor.

• The poor may be unaware ofadministrative and legalrequirements, or find it difficult tounderstand and comply with them.

4. Strengthen Capacity, Autonomy,and Accountability of Service Providersand Provide Incentives to Serve the Poor

• Public service providers sometimeslack the autonomy, financial andhuman resources, and incentives toprovide services to the urban poor.

• Municipalities and utilities are notheld accountable for the provision of

10 The four defining characteristics of urban slums are (a) lackof improved sanitation; (b) lack of improved water supply;(c) lack of durable housing; and (d) lack of sufficient living area.(United Nations. 2008. op. cit., p. 43.)11 U.N. Millennium Project, Task Force on Water and Sanitation.2005. ‘Health, Dignity, and Development: What will it Take?’Earthscan, the United States and the United Kingdom,pp. 81-82.

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12 Detailed case studies are presented in theaccompanying volume.

satisfactory water supply andsanitation services.

• The services provided by SPSPsare not recognized, encouraged,and regulated.

5. Adopt Appropriate Financial Policies





• Small-scale service providerslack adequate finance to extendnetworks into peri-urbaninformal settlements andsmall towns.

6. Overcome Physical andTechnical Barriers

• The overexploitation anddegradation of water resourcesaffect the poor disproportionately.

• Physical and technical challengesand the high investment cost ofconventional technologies makeextending formal piped watersupply and sewerage networksinto informal and unplannedsettlements more difficult.

What can be done to remove these

barriers? Practical strategies are

proposed in the following six sections

of this document. These are

illustrated by case examples of

initiatives to deal with the obstacles.12

Each section ends with suggestions

for getting started: (a) a list of relevantactions and strategies that the keyplayers (policymakers and projectplanners; governance bodies andservice providers; and communityleaders, spokespersons who representthe poor and other advocates for the

poor) can implement; and (b) a list ofadditional cases. The final section liststhe policy reforms that would help toenhance and consolidate the successof these efforts. Resources, includingpublications and organizations, arelisted at the end of the paper.

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Section 2


ObstacleThe voice of the poor, too often, is notheard and misperceptions aboutthe poor persist.

Getting the poor more engaged isessential. Project designers and serviceproviders often assume they know whattype of services the poor want and arewilling to pay for. It is often assumedthat the poor cannot pay for services,which should be provided free ofcharge. Such assumptions are notalways correct and often result in costlyand unsustainable supply-driven publicprograms to provide services. Incontrast to common perceptions,evidence shows that it is feasible formany of the poor to become legitimatecustomers who pay their bills. Topromote that objective, it is essentialthat their opinions be heard.

PromoteMeaningfulParticipationin Planningand DesignGiving the poor the opportunity toparticipate in planning and design canmake the difference between successand failure, so adequate time andresources should be allowed formeaningful consultation during thepreparatory phases of projects. Projectdesigners need to be aware thatconsultation takes time and resources.In their haste to qualify for funding orachieve quick results, governmentofficials and utility managers maybypass the time-consuming andpotentially messy participatory processunless it is required as a condition of

funding.13 Project designs sometimesinclude a requirement that a certainpercentage of residents make an initialcontribution to capital costs or sign a‘commitment to connect’ to services asa sign of their interest in the project, butthere is a distinct difference betweenpressuring residents to sign up for aproject vs. enabling a community totake some initiative and contributeproject design.

Meaningful consultation involveseliciting ideas from the beneficiariesprior to the design of a project orprogram. It helps to ensure that theproject design is responsive to demandand that beneficiaries understand and

13 See, for example: Baindur, Vinay. September 5, 2005.‘For the People, by Diktat.’ India Together op-ed.http://www.indiatogether.org/2005/sep/gov-nurm.htm

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accept their roles and responsibilities.Rallies, essays by school children,drawing and painting competitions,radio talk shows, articles innewspapers, and information postedon a web site are good ways topublicize a project and build awarenessbut they do not necessarily constitutemeaningful consultation per se.Likewise, surveys may provide usefuldata for assessing demand andattitudes, but do not constitute activecollaboration or create communitycohesion. A model of a bottom-upapproach that promoted meaningfulparticipation in Brazil is described inBox 1. Another example of effectiveconsultation in the context of a slumsanitation project in Mumbai, India, isdescribed in Box 2.

Giving the poor the opportunity to participate in planning and design canmake the difference between success and failure of an initiative.


Box 1: Brazil, PROSANEAR Project: People Were Asked What They Wanted

Prior to planning water supply and sanitation projects, PROSANEAR (a Portuguese acronym for the Water and SanitationProgram for Low-Income Urban Population) teams went into communities to ask what kind of water project the peoplewanted, if any, and what kind they would be willing to support with their money and labor. Residents were allowed to talkabout the full range of problems they faced, but once the discussion turned to the importance of water supply andsanitation, they were generally eager to hear how PROSANEAR could help them. Neighborhoods were allowed to choosefrom a range of simple, innovative systems that made water and sanitation affordable and environmentally appropriate forpoor crowded settlements. There were no blueprints. In many places, groups of households were batched together in acreative condominial sewerage system approach that not only made the networks more efficient and affordable but alsoforged new bonds among neighbors. PROSANEAR sought to make a permanent impact by mobilizing local clubs, as wellas women’s, sports, and religious groups to educate people about the importance of sanitation and to teach them how tooperate and maintain their new systems. The results were powerful, and they went far beyond the better health andgreater convenience enjoyed by 1 million people newly connected to water taps and toilets. For example, getting formalpostal addresses and water bills in their names meant they had graduated from squatter status to resident—a new statusin society.

Source: World Bank. 2006. Community Participation and Low-Cost Technology: Bringing Water Supply and Sanitation to Brazil’s Urban Poor. Water andSanitation Feature Story #10. See also Case Study 3, accompanying volume.

Box 2: Stakeholder Participation in the Slum Sanitation Program in Mumbai, India

The Slum Sanitation Program initiated by BrihanMumbai Municipal Corporation in 1995 with World Bank support wasbased on a demand-driven and participatory approach, in which the municipality would provide the initial capital to buildcommunity toilet blocks, while community-based organizations (CBOs) or small local business enterprises (SLBEs) wouldtake full charge of O&M.

NGOs were engaged to mobilize communities, facilitate relationships with the local government, and train thecommunities in essential skills and attitudes. They initially carried out a general information campaign and assessed thewillingness and readiness of the communities to participate in the sanitation scheme. Once communities mobilized anddemonstrated an interest, CBOs/SLBEs were created (if not already existing and active). These organizations were thenregistered to obtain the legal status, which would allow them to manage the community sanitation block (that is, obtainwater, sewerage and electricity connections, sign a memorandum of understanding with the municipal corporation,open and maintain a bank account to deposit the maintenance fund and earnings, pay utility bills, and so on).It was only after the CBO or small enterprise had collected at least 50 percent of the expected maintenancefund from prospective users and had developed a technically sound and community-endorsed plan for thetoilet block, that the municipal corporation issued the building permit and the actual construction of the communitytoilet block began.

Participation in the formal process of planning the services, creating a viable business entity, having it registered, openinga bank account, and working with the municipal corporation provided invaluable experience, created confidence, andinspired further entrepreneurial and community activities on the part of participants. In one case, a small enterprise thatoperates the toilets has also established a pre-school in the new community center that was built adjacent to the toilet block.

Source: Nitti, Rosanna, and Shyamal Sarkar. 2003. Reaching the Poor through Sustainable Partnerships: The Slum Sanitation Program in Mumbai, India.World Bank, Urban Notes No. 7. See also Case Study 2, accompanying volume.

17

PublishStories ofthe Poor

The stories of the poor themselves givestatistics a human side and can beused to improve the impact of researchreports and policy papers. Sectoractors should capture anddisseminate, with the media’s support,stories that translate service deliveryinefficiencies and deficits into theirimpacts on daily life at the human orhousehold level. Poignant examples ofthe contrast between those householdswithout easy access to safe drinkingwater and sanitation services and thosewith access can help to create anenvironment for making politicallydifficult or unpopular decisions viable,especially when combined with astrategic communication campaign topromote the expansion of services andmore flexible approaches to serving theurban poor. A few representativeexamples of the daily impacts of poorservice provision were recentlycollected in India:14

• In a community where thecorporation does not provide water,most residents pay off the plumberand get a water connection to acommon point near their homes.The rest get their water from thetanker mafia.

• In one area, there are 28 toilets thatwere funded by the World Bank, thestate and the local authority, andeight World Bank-funded toilets forchildren. These toilets areinadequate for the 25,000 people,

but at least they have reduced opendefecation to some extent.

• One woman said it took her half-an-hour to fill two buckets of waterfrom the handpump. Each day, herfamily requires up to 10–15 buckets.In the morning, she fetches waterfor the morning chores andimmediate needs. After returningfrom work, she fetches water for therest of the day.

• Women dislike defecating in theopen in broad daylight. They go ingroups during the night.

• Because of the lack of water, theresidents do not bathe every day,which causes health problems—skin rashes, boils, and so on. Theywash clothes once in a fortnight.

Inform andEducate PoorCommunities

The poor are often unaware of officialpolicies, and their attitudes andbehavior may impede their access toservices. Like many users, they mayhave misperceptions about the need topay for public services. They may notbe fully aware of the health impacts ofpoor sanitation practices. Many areilliterate and unaware of their rights.Educational programs that give thepoor the information and skills theyneed to participate as well-informedcitizens are an essential component ofany effort to promote their participationin planning and management ofservices. Programs to promoteconstructive attitudes and behaviorsthat will enhance their chances ofgetting good services and makingeffective use of them (for example,

regular payment of bills and goodhygiene) are also essential. Educationthat builds such skills and attitudes notonly has positive effects on access towater and sanitation services, it canalso help develop basic financialmanagement skills with broaderapplications and development impacts.

Empower the Poorto Act withinand beyondTheir OwnCommunities

Community-based organizations(CBOs) and federations of CBOs canhelp the poor take action on their ownbehalf. All of the strategies describedabove involve some form of outreach tothe poor. These are essential to ensurethat the formal structures anddecisionmaking activities actively seekto serve the poor better. But it is equallyimportant and effective for the poor totake action for themselves. By doingso, they gain self-respect and importantskills as well as better services. Theyalso dispel commonly held notions thatthe poor are helpless or lack initiative.Self-help activities can be initiated by adynamic individual within thecommunity and/or a nongovernmentalorganization (NGO) that is committed tothe interests of the community.However, when an outside organizationinitiates action, it is essential that thecommunity actively expresses itsdemand and willingness to pay forservices and that the leadership beassumed quickly by someone in thecommunity. There is no blueprint forcreating such organizations becausethe social dynamics in each communityare often unique and only a savvy

14 These and other examples were collected during field workconducted between December 2006–January 2007 in Mumbaiand Vadodara, India.

18


resident is likely to appreciate themfully. In fact, initial success oftenhinges on a single individual’scommitment and leadership skills.

A number of well-documentedcases demonstrate the willingness

19

and ability of the poor to create and/ormanage their own services. The OrangiPilot Project (OPP) in Karachi, Pakistan,was one of the first to demonstrate thatthe poor want good quality services andare willing and able to pay for them. InZambia, taking advantage of lessons

learned under an earlier program topromote management of water supplyservices by slum communities, theinternational NGO, CARE, developedthe Water Trust Model, which has beensuccessfully introduced in sixlow-income settlements in Lusaka.

20

Box 3: Community-Based Management of Services: The Orangi Pilot Project in Karachi, Pakistan

Orangi is the largest katchi abadi (informal settlement) in Karachi, Pakistan, and has a population of 1.2 million. The OrangiPilot Project (OPP) was established there in 1980 by Dr. Akhtar Hameed Khan, the renowned Pakistani social scientist. TheOPP provided social and technical guidance to enable low income families to construct and maintain an undergroundsewerage system with their own funds and under their own management. The project has shown that poor people canfinance and build sewers in their communities. Working together internally as well as with the government to achieve theirobjectives has given community members dignity as well as confidence in themselves. To date, the people of Orangi havelaid down 1.3 million feet of sewer line and invested about PKR 57.2 million (US$2.2 million). About 900,000 people in94,122 houses have benefitted. The average cost of the system is very low—about PKR 1,000 (US$31) per household. Theresidents of Orangi maintain the system themselves at no cost to the government. The OPP Research and Training Instituteis currently assisting initiatives in a number of other areas in Pakistan and other countries. Training in the OPP model hasbeen provided to groups from Nepal, Cambodia, Vietnam, Sri Lanka, Thailand, the Philippines, Central Asia, Zimbabwe,and South Africa.

Source: Case Study 5, accompanying volume.

Box 4: Community-Based Management of Services: The Water Trust Model in Lusaka, Zambia

Lusaka, Zambia, has 33 peri-urban areas where about 1 million of the 3 million inhabitants of the city live. Water trusts arecommunity-based water supply service providers in peri-urban areas of Lusaka. They currently serve 600,000 people in13 peri-urban areas. Starting in early 2002, the trusts were set up with the assistance of the international NGO, CARE, inpartnership with the Lusaka City Council and Lusaka Water and Sewerage Company (LWSC). The CARE project fundedinfrastructure and community capacity building. Since LWSC is responsible for providing services throughout the city and isthe only licensed service provider by the regulator, the water trusts operate under LWSC’s license, though the relationshiphas not as yet been formalized. The city council is a signatory to the trust accounts, facilitates the recruitment andappointment of board members and management staff, audits the books, and provides legal advice. Each water trust isgoverned by a board of trustees that provides policy direction, develops service strategies, and employs a schememanager. The manager hires and supervises staff such as water vendors/tap attendants, plumbers, and cashiers. Eachwater vendor/tap attendant signs a contract for the operation and maintenance of a water point and receives a percentageof monthly sales. Residents may buy water on a daily basis or make a monthly prepayment. In some schemes, householdconnections are also an option. Tariffs and connection charges are regulated by the National Water and SewerageCommission which is also supposed to regulate service quality—though the trusts are not in fact subject to effectivescrutiny. An evaluation of the trust schemes, implemented by CARE in 2004, found that service levels in water trust areaswere higher than in areas served by LWSC and that 76 percent of respondents were satisfied with the level of service. Thetrusts’ model has also resulted in a substantial improvement in cost recovery for water supply service.

Source: Lidonde, Rose. March 2008. Community-Managed Schemes—The Water Trust Model—Facilitating Access to Water and Sanitation Services for theUrban Poor in Lusaka, Zambia. Water and Sanitation Program–Africa Region.

An important feature of both OPP andthe Water Trust Model is their effectiveinterface with the formal serviceproviders (see Boxes 3 and 4). Whilelocal community user groups are useful

for solving local problems, federationsand networks enable poor communitiesto act beyond their boundaries toinfluence policies or access sourcesof development assistance. In

Tiruchirapalli, India, a network ofself-help groups is enabling poorresidents to get funding and assumeresponsibility for local sanitation (seeCase Study 7, accompanying volume).


21

Getting Started:Actions andResourcesThis section suggests the followingactions for sector actors:

Policymakers and Project Planners

• Avoid top-down planning.

• Require meaningful participationby project beneficiaries in whichthey help determine project designand demonstrate ownership ofproposed solutions.

• Allow adequate time forconsultation and participationby beneficiaries.

• Hire qualified NGOs to facilitatemobilization of poor communities.

• Publish information for the generalpublic about the living conditions

and accomplishments of the urbanpoor, and strategies to improveaccess to services.

• Make information available informats that are accessibleto the poor.

• Plan for an effective interfacebetween community-managedservices and the formalservice provider.

Governance Bodiesand Service Providers

• Create a specialized unit within theutility to communicate with poorcommunities and facilitate accessto services.

• Develop a client-oriented culturewithin the utility.

• Train staff in effective client relationsskills, particularly for servingthe poor.

• Develop a supportive frameworkfor interfacing with community-managed services.

Spokespersons for the Poor, andCivil Society Organizations

• Act as intermediaries betweenservice providers andpoor communities.

• Deliver educational and awarenessprograms aimed at enabling thepoor to act on their own behalf.

• Identify and work with dynamicindividuals in the communityto provide leadership forself-help initiatives.

• Encourage participation inpolitical processes.

• Promote networks amongcommunity organizations withcommon interests.

Table 1: Relevant Case Studies in Accompanying Volume

Case Study Topic

Brazil (Case Study 3) Community participation in project planning

Karachi, Pakistan (Case Study 5) Self-help organizations, self provision of services

Temeke District, Dar es Salaam, Tanzania Federation of water user associations(Case Study 14)

Tiruchirapalli, India (Case Study 7) Community managed toilets

Manila, the Philippines (Case Study 4) Federation of water associations

Mumbai, India (Case Study 2) Community and local enterprise operation of toilets

Hyderabad, India (Case Study 8) Public meetings, grievance resolution system

Lusaka, Zambia (Case Study 18) Community managed water supply services with supportof the formal utility

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Section 3

Build Support forImproving Services

Water vendors, organized crime, publicofficials, and utility staff may have avested interest in preventing betterservices for the poor.

When the poor cannot get piped watersupply services legally they are forcedto provide for themselves in someway—legal or illegal. In cities witha high percentage of unservedpopulation, such as Dhaka, Manila, andKarachi, the amount of money thatpasses hands informally in the watersector to provide water to the unservedpopulation is reportedly greater thanthe revenue of the formal serviceprovider. Existing vendors and othervested interests will naturally opposeany changes to the status quo thatthreaten their sources of revenue orpolitical support. Sometimesconfrontations can be avoided by givinginformal and alternative serviceproviders new roles or incentives thatbring them into the formal system.Ultimately, improving transparencyreduces opportunities for illicit activities.

IncorporateInformal ServiceProviders intothe SolutionInstitutional arrangements and legalreforms that incorporate informalservice providers into the formalsolution reduce opposition and improvetransparency. Such arrangementsbenefit both sides: the informalproviders gain security and legitimacy,and the utility or alternative serviceorganization can take advantage of theknowledge and skills informal providers

24

Institutional arrangements and legal reforms that incorporate informalservice providers into the formal solution reduce opposition andimprove transparency.

Obstacle


Box 5: Water Kiosk Operators Unite in Kenya

In the informal settlement of Kibera in Nairobi, Kenya, more than half-a-million poor people get water from more than

650 informal local water kiosks. The kiosk operators lay pipes, as much as 1,500 meters, to connect their storage tanks

to the local utility network. Although the utility recommends that water be sold for Ksh 1 per jerrycan (about US$0.10), the

prevailing price is usually Ksh 2 (the equivalent of US$1.30 per m3, or eight times the utility’s domestic tariff), primarily

because of the costs associated with establishing and running water kiosks: capital investment, bribes paid to utility staff

to obtain and retain a connection, and the high tariffs associated with higher consumption blocks. During water

shortages, the prices are even higher, soaring to Ksh 5 or even Ksh 10 per jerrycan.

The utility historically had little incentive to address the problems in Kibera, because revenue collection in the settlement

was negligible; there were many illegal connections; and the water delivered to Kibera was estimated to be less than

10 percent of the city’s total consumption. Instead, the utility simply used water rationing to limit its losses. Until recently,

the utility considered kiosk operators to be part of the problem and driving them out of business was seen as an effective

measure to reduce unaccounted-for water.

In May 2004, following an intervention by WSP–Africa, kiosk operators decided to form an association, which they called

Maji Bora Kibera (MBK)—Swahili for ‘better water services for Kibera’—drafted a constitution, formed an executive

committee, and applied for official registration. Soon a joint taskforce was formed with members from the utility, MBK, and

WSP–Africa. At the suggestion of the utility, MBK wrote a letter stating clearly the problems faced by water vendors and

offering to cooperate with the regularization of their connections, pay bills regularly, stop paying bribes, report leakages,

and expand services to unserved areas. The utility was asked to provide a regular supply of water, adopt better billing and

collection practices, and provide engineering advice for network improvements. The letter was a watershed in

vendor-utility relations. MBK and the utility continue to build their relationship. MBK is working on a number of initiatives to

strengthen self-regulation and address remaining barriers to good services.

While there remains some concern that the association could be an obstacle to long-term change in Kibera (if the

members were to protect their own interests at the expense of consumers), there is also a recognition that both the utility

and vendors can gain from further collaboration.

Source: Brocklehurst, Clarissa. June 2005. Rogues No More? Water Kiosk Operators Achieve Credibility in Kibera. Water and Sanitation Program Field Note.

handle day-to-day operations.15

The case of water kiosk operatorswho entered into formal servicearrangements with the Nairobi WaterCompany in a slum in Nairobi, Kenya(Box 5), provides another potentiallypromising example.

15 Triche, Thelma, Sixto Requeno, and Mukami Kariuki.December 2006. Engaging Local Private Operators in WaterSupply and Sanitation Services, Initial Lessons from EmergingExperience in Cambodia, Colombia, Paraguay, the Philippines,and Uganda. Water Supply and Sanitation WorkingNote 12, World Bank, p. 16.

25

have accumulated. Regularization ofinformal service providers often helpsutilities to reduce illegal connectionsand corrupt practices by staff, lowerwater prices, and improve the reliabilityof services—especially if adequateoversight or regulatory arrangementsare introduced. Such solutions must betailored to each situation but there are anumber of cases that might providemodels that are adaptable to other

environments. In a few places, formalutilities have hired vendors who losttheir markets when piped services wereextended and improved.

In Paraguay, local private firms that woncontracts to build and operate newwater supply systems in previouslyunserved neighborhoods wereencouraged to hire small-scale serviceproviders (known as aguateros) to

26



Case Study Topic

Ahmedabad, India (Case Study 1) Politicians who undermine the scaling up of theprogram by providing funds outside the program

Dhaka, Bangladesh (Case Study 11) Difficulty with mastaans, musclemen orinfluential persons who control slum areas

Temeke District, Dar es Salaam, Resistance of water vendors to waterTanzania (Case Study 14) services improvement program

Create PoliticalSupportfor ChangePublic awareness campaigns andconsultation may help to changeattitudes or create new politicalconstituencies for change. Targetingthe poor, especially those who havesettled illegally, can be an expensiveand controversial undertaking that mayundermine the governing party’spolitical support from key conservativepolitical constituencies and campaignfinanciers. Campaigns to change theattitudes of politically powerful groups,or ensure that their interests aretaken into account, may help toneutralize opposition.

Getting Started:Actions andResources

This section suggests the followingactions for sector actors:


• Take the role of informal serviceproviders and other vested

27

interests, and the contributions theycan make, into account whileformulating policies and regulationsand planning projects.

• Assess the business dynamics ofexisting informal operators todetermine why their activitiesare so lucrative.

• Determine whether owners of rentaldwellings have a vested interest inthe status quo and determine whatis necessary to gain their support.

• Incorporate existing vested interestsinto solutions, where feasible, as ameans of increasing transparency,neutralizing opposition, andreducing costs.

• Use neutral intermediaries who aretrusted by both parties (such as

respected local or internationalNGOs, WSP, or professionalmediators) to promote dialogbetween formal and informalservice providers.

• Implement public awarenessand education programs thatdemonstrate the benefits ofimproving services for the poor tobuild political support among themiddle class and the wealthy.


• Hire disenfranchised vendors towork in the utility when expansioneliminates their markets.

• Team up with informal serviceproviders to improve services andcost recovery in marginal areas.

Spokespersons for the Poor,and Civil Society Organizations

• Act as intermediaries betweeninformal service providers and theformal sector.

• Help informal service providers tocreate institutional structures thatwill promote cooperation amongthem, and enable them to negotiatewith formal structures.

4

Section 4

Eliminate Administrativeand Legal Barriers

Obstacles• Land ownership and tenure issues

often create barriers to the provisionof services to the poor.

• The poor may be unaware ofadministrative and legalrequirements, or find it difficult tounderstand and comply with them.

Municipal policies often prevent utilitiesfrom providing connections to residentswho do not have legal tenure. Mostlegislation on land tenure is outdated,irrelevant to current realities, andcannot be enforced. Complexprocedures not only constitute a barrierfor the poor, they create opportunitiesfor bribes to be extracted from existingor prospective users, and such bribesrepresent a heavier burden for the poorthan for the nonpoor.

Delink ServiceProvision fromLand Tenure

Legal reform is needed to enable thepoor to gain secure land tenure,adequate housing and services but, inthe meantime, innovative strategies toget around land tenure requirementscan sometimes be found at the locallevel. One such approach is to allowalternative documentation. TheBangalore Water Supply and SewerageBoard (BWSSB), India, had a longstanding requirement that only slumresidents presenting both land titledocuments and recent property taxreceipts could qualify for individualwater and sanitation connections.But, as part of its program to promote

connections in slums, it agreed topermit residents to present leasedocuments and other ‘proof ofoccupancy’ documents such as rationcards, identity cards, election cards orelectricity bills instead. (See CaseStudy 10, accompanying volume.)Ahmedabad Municipal Corporationallows connections and otherimprovements to proceed onceresidents obtain a ‘no objectioncertificate’ from the owner of the land.NGOs working with the municipalcorporation have helped thecommunities to obtain certificates. (SeeCase Study 1, accompanying volume.)

In African countries (for example,Tanzania, Ethiopia, and Ghana) wheretenure is traditional and security oftenure is not equated with a title deed,utilities have installed connections inunplanned settlements withoutdocumentation and no legal problemshave developed.16 When lack of legaldocumentation is an obstacle, anotherapproach to get around it is to makea single bulk water or sewerageconnection at the border of the

community and allow communities orsmall-scale service providers to operateservices. Several of the previously citedcases (the Orangi Pilot Project inPakistan, Tiruchirapalli in India, andKibera in Nairobi, Kenya) used thismodel. Box 6 describes an interestingexample in Tegucigalpa, Honduras.

InstitutionalizeSimplifiedProceduresand ProvideAssistanceFormal institutions can be veryintimidating for the poor unless specialarrangements are made to promoteand facilitate access. Connecting alarge unserved population is a majorlong-term undertaking that will requireongoing support and assistance evenafter poor residents are connected. Aspart of this long-term effort, utilities andmunicipal service providers need toadjust their systems to attend to this

30

Most legislation on land tenure is outdated, irrelevant to current realities,and cannot be enforced. Complex procedures also constitute a barrier forthe poor.

16 Better Water and Sanitation for the Urban Poor, GoodPractice from Sub-Saharan Africa. Water Utility Partnership forCapacity Building (WUP) Africa, July 2003, p. 33.


Box 6: Community Managed Services in Tegucigalpa, Honduras

About 380,000 people live in poor peri-urban areas of Tegucigalpa. One-third of these peri-urban residents do not have

direct access to the water supply network and most do not have access to sewerage. Many of the peri-urban settlements

cannot be connected because of the topography (hillsides with steep slopes and unstable terrain), others because of their

illegal status, and some because of the lack of adequate resources to extend the network. The population of these areas

obtains water from a number of sources, including tankers, rainwater catchments, and community wells.

With the assistance of several international development agencies and NGOs, the National Autonomous Water and

Sewerage Service (SANAA) is introducing alternative water and sanitation systems in these areas. These systems receive

bulk water from SANAA or its tankers but are managed internally by the community. Three water supply models are used.

The preferred model involves a metered connection to SANAA’s network that feeds a community storage tank, to which the

secondary network within the community is connected. Where connection to the network is not feasible, the community

storage tank is supplied by tankers. The third option is a rainwater catchment and filtering system.

A revolving fund is used to finance construction and the beneficiary community repays the fund at zero interest over

5 to 10 years. Communities that wish to benefit from this program must establish a water administration board with four

officers selected by the community. The water boards operate and maintain the systems, collect fees from the users to

cover their own costs as well as the bulk water charges and the capital cost. They organize committees and/or engage

staff to maintain the system, operate community water taps, collect fees, and prevent theft. Committees are also

established to educate the community about water use and hygiene.

Source: Rivera, Kenneth. Field Research in Seven Latin American Cities, Improving Water Supply, Sanitation, and Health Services for Low-IncomeUrban Communities in Latin America, Tegucigalpa Case. Building Partnerships for Development, draft of May 2006. (See also Case Study 15,accompanying volume.)

31

Box 7: The Social Development Unit in Bangalore Water Supply and Sewerage Board, India

The Bangalore Water Supply and Sewerage Board (BWSSB) has a Social Development Unit, which focuses on connecting

households in slums to piped water and sewerage. This unit is headed by a proactive senior development specialist who

interacts directly and effectively with key community groups, NGOs, and influential individuals to implement connection

programs. The unit also uses NGOs as intermediaries between the utility and the community. To promote connections, the

unit has introduced a reduced connection fee and simplified connection procedures. It also accepts ‘proof of occupancy’ in

lieu of the requirement for land tenure.

Residents of slums are encouraged to connect to the BWSSB water supply system and are actively discouraged from

resorting to illegal means. Connection charges vary on the basis of house size: Rs. 550 (the equivalent of about US$13) for

houses of less than 150 square feet, Rs. 800 (about US$19) for houses of 150–600 square feet, and the full rate of

Rs. 1,800 (about US$42) for houses over 600 square feet. Slum dwellers are allowed to pay the connection charges in

two installments.

Source: Water and Sanitation Program–South Asia. January 2007. Bangalore Water Service Delivery, Ingenious Model Shows the Way. Case Study.(See also Case Study 10, accompanying volume.)

new, potentially large, customer base.Simplified procedures for connection,billing, and collection and maintenanceservices are part of the institutionalprocess of recognizing the differencesbetween customers in planned areas ofthe city and customers in unplannedareas of the city. A permanent bodythat can help to institutionalize effectiveapproaches throughout the utility willmake it less likely that changes inmanagement or political leadershipwill undermine or reverse thisinitiative for expanding services in asustainable manner.

Hyderabad Metropolitan Water Supplyand Sewerage Board, in India, createda Single Window Cell to receive,process, and coordinate water andsewerage connection applications.The Single Window Cell distributes atwo-page brochure that clearlyexplains the application procedures. Adedicated team of staff and contractlaborers installs all approved newconnections for which payment hasbeen received. These reforms havereduced the time required to processconnections from six months to threeand have significantly increased thenumber of applications processed. (SeeCase Study 8, accompanying volume.)

Another potentially effective model is adedicated unit within the utility thatcommunicates with poor communities,promotes appropriate services andliaises with other stakeholders. TheSocial Development Unit in theBangalore Water Supply and SewerageBoard, India, described in Box 7 is agood example. After an initial pilotphase tested the approach to workingwith slums to improve services, theSocial Development Unit wascreated and charged with scaling up theprogram. NGOs were engaged to assistin implementing the program. Onecomponent of the NGOs’ role was toassist slum residents to completeapplication forms. (See Case Study 10,accompanying volume.)

Successful programs have involvednot only changes in organizationalculture and staff attitudes but alsothe establishment of client-friendlymechanisms that facilitatecommunications with customers.The Citizen’s Report Card, a tool forassessing customer satisfaction thatwas originally used in Bengaluru, India,has been introduced in several othercountries. (See discussion and Box 13in Section 5.)

Getting Started:Actions andResources

This section suggests the followingactions for sector actors:


• Initiate land tenure reforms.

• Amend municipal laws andregulations that make it difficultor impossible for the poor toget services.

• Authorize alternative documentationrequirements for connections.


• Adopt alternative documentationrequirements, such as proof ofresidence or non-objection of theowner of the land, to allow thosewho lack land tenure to qualify forservice connections.

• Explore alternative service modelssuch as installing bulk water orsewerage connections at theborder of poor communities from/towhich a CBO or small-scale

32



Case Study Topic

Ahmedabad, India (Case Study 1) Alternative documentation

Bengaluru, India (Case Study 10) Alternative documentation; dedicatedunit in utility to promote services to the poor

Hyderabad, India (Case Study 8) Dedicated unit in utility to promote connections

Karachi, Pakistan (Case Study 5) Bulk connection at border of community

Tegucigalpa, Honduras (Case Study 15) Bulk connection at border of community

Tiruchirapalli, India (Case Study 7) Bulk connection at border of community

private operator can takeresponsibility for the operationand maintenance of networkservices within the community.

• Simplify procedures and forms, andtranslate forms and instructions intolocal languages.

• Create dedicated user-friendly unitsto promote services to the poor.

• Design access mechanisms(for connections, complaints,and so on) that are appropriatefor the poor, and appointqualified professionals or engageNGOs to assist the poor withprocedures and forms.


• Assist poor residents to obtaindocumentation requiredfor connections.

• Support communities to negotiatewith the utility for the establishmentof a bulk connection and to createCBOs or engage small-scale privateoperators to operate services.

• Develop programs to assist thepoor with procedures and forms.

33

4

Section 5

Strengthen Capacity,Autonomy, andAccountability of ServiceProviders and ProvideIncentives to Serve the Poor

Obstacles• Public service providers sometimes

lack the autonomy and financial andhuman resources, and incentivesrequired, to provide services to theurban poor.

• Municipalities and utilities arenot held accountable for theprovision of satisfactory watersupply and sanitation services.

• The services provided by smallprivate service providers (SPSPs)are not recognized, encouraged,and regulated.

The poor performance of water supplyand sanitation (WSS) services is oftendue to an inappropriate institutionalframework, lack of regulatorymechanisms, inadequate financialresources, an absence of appropriateattitudes and skills, and a lack ofexplicit directives and incentives toserve the poor. Until recently, theemphasis in the sector was typically oncreating infrastructure, rather thanpromoting strong institutions, financialviability, efficiency, service quality,customer relations and specificallytargeting the poor. Reflecting this, anddespite recent sector reforms, manytraining programs still focus primarily ontechnical and engineering skills; onlyrarely do they address commercial,managerial, and strategic aspects ofWSS services, let alone strategies forserving the poor. In the absence ofefficient autonomous service providers,the distinction between the utility andthe municipal administration is blurredand managers of the services do notcontrol the resources required toprovide the services and cannot beheld accountable. In such cases,targets for service quality are not

typically established and monitored.Tariffs rarely cover costs and,therefore, financial viability andsustainability are undermined. As aresult, many urban utilities fail toprovide satisfactory services to a largepart of the population—particularlythe poor.

Many governments have taken steps torestructure the sector and, in a numberof countries, the largest serviceproviders have been converted intoautonomous public or privatecompanies, for example, in Brazil,Cambodia, Colombia, Ecuador,Mozambique, Senegal, Uganda, andYemen—to name only a few. In a few,more attention is being devoted toimproving the performance andsustainability of services in the smallertowns. Such restructuring entails farmore than a change in legal status—substantial internal restructuring,including management reforms andperformance incentives for staff, isrequired to create a sustainable serviceprovider. In many, effective regulatorysystems have likewise been, or arebeing, put in place and, perhaps moreimportantly, strategies and targets forserving the poor are being adopted.Propoor regulatory approaches arebeing adopted to ensure the availability,affordability, and sustainability ofservices for the poor. SPSPs are activethroughout the developing world, fillingin part of the large gap betweendemand and the formal utilities’ abilityto provide services. Since, in mostplaces, the formal utilities will be unableto satisfy the demand of 100 percent ofurban households for the foreseeablefuture, taking advantage of the servicesof SPSPs should be an essentialcomponent of strategies to expand andimprove services to the urban poor.

Working with SPSPs will requireinnovative ways of linking them withformal utilities, the introduction ofappropriate regulatory mechanisms,and strategies for eliminating illegal andabusive activities without driving SPSPsout of business.

This section will focus primarily oninstitutional, regulatory, and capacityissues. Mechanisms to address costrecovery are discussed in more detail inSection 6 because a strategy toimprove cost recovery must alsoaddress the financial constraints andaffordability issues that are specific toproviding services to the poor.

Separate andClarify theResponsibilitiesof the Actors

The roles and responsibilities ofpolicymakers, service providers,governance bodies, and regulatorsneed to be clearly defined andseparated to ensure the autonomy andaccountability of service providers.Whereas in small towns with simplesystems and limited human resources,it is not always realistic or meaningfulto completely separate these roles, it ismore important in large urban areas,and particularly in large countries withmany large urban centers. In the lattercontext, clearly distinguishing amongthe following actors and their rolesis recommended:

• Policymakers set overall servicecoverage and quality objectives,social policies, and cost-recoverypolicies. They should set guidelines,establish programs, and createinstitutions to promote and regulate

36

If financial viability and sustainability are undermined, many urban utilities failto provide satisfactory services to a large part of the population—particularlythe poor.


the achievement of serviceobjectives, financial viability, andefficiency. The respective roles andresponsibilities of policymakers atthe state and municipal levels needto be clear and complementary.

• Governance bodies (for example,boards of directors) represent assetowners. They provide strategicdirection, mobilize investmentfinance, approve annual budgets,and appoint the management teamin a manner that is consistent withestablished policies. Governancedecisions should be based onlong-term strategic and financialcriteria rather than short-termpolitical interests.

• Service providers plan andsupervise the development ofinfrastructure, and manage andoperate services on the basis oftechnical and financial criteria toachieve the objectives set bypolicymakers and their governancebodies. To do this, they needadequate autonomy (for example,control overstaffing, financialresources, procurement) andprotection from political interference.Their financial accounts should bering-fenced to promote financialviability and accountability.

• Utility regulators (or economicregulators) compensate for thelack of competition in monopolyservices by ensuring that tariffs arereasonable, that is, commensuratewith the cost and quality of services,and enforcing service standards.A good regulatory system ispredictable, credible, andtransparent. The roles of state andmunicipal governments regardingregulation should be clear and

37

any conflicts or overlapping

responsibilities should be eliminated.

• Other specialized regulators usually

enforce technical, labor, health, and

environmental standards. Here, too,

the respective roles of state and

municipal governments should

be clear.

• When two or more service providers

carry out complementary

Box 8: Engaging Local Private Operators for Water Supply and Sanitation Services

Contracts with private operators, if well-designed and appropriately monitored, can be an effective way to introduceautonomy and accountability. Until recently, tenders for private operators of water supply and sewerage services wereaimed at large international firms, but in a number of countries tenders are increasingly aimed at local private operators,particularly in small towns with 10,000 to 50,000 residents. A recent study examined the experiences of Colombia,Paraguay, and Uganda where local firms have been engaged to operate water supply services in large urban orperi-urban areas with poor populations.

In Colombia and Paraguay, local private operators have been engaged to construct or rehabilitate the infrastructure andoperate the services for 15 to 20 years. In Uganda, local private operators were contracted to operate and manage,under low-risk, three- to five-year contracts. In Colombia, most of the operators are companies with experience inproviding other urban services, such as solid waste management. In Paraguay, large construction companies havesought the contracts but they usually engage an experienced small local private operator (aguatero) to manageoperations once construction is complete. In both countries, it is estimated that private operators contribute about20 percent of capital costs. The remainder is financed by grants from the national or local governments, using their ownfunds or the proceeds of World Bank loans. In Uganda, the infrastructure was built under separate contracts withfunding from donors, and the operators can take advantage of output-based aid grants to expand connections.

In Colombia, the municipal government contracts the private operator. In Paraguay and Uganda, they are contracted bycommunity-based user associations. In all three countries, the national governments provide support to the localentities during the preparation and procurement process, but the local entities assume full responsibility for day-to-daysupervision of the operators. The contracts include very specific service targets that the operators are requiredto achieve.

The contracts were in their early stages at the time they were reviewed in 2005, but initial results were mostly positive.Previously unserved neighborhoods and small towns were getting connections. In Paraguay, the cost of governmentinvestment subsidies had been cut in half. One of the lessons learned in Paraguay and Uganda was that, initially, userassociations need intensive training and support to ensure proper monitoring and a healthy relationship with theoperator. In addition, user associations that receive a small percentage of the tariff revenues are most likely to beproactive and provide effective oversight.

Source: Triche, Thelma, Sixto Requena, and Mukami Kariuki. December 2006. Engaging Local Private Operators in Water Supply andSanitation Services, Initial Lessons from Experience in Cambodia, Colombia, Paraguay, the Philippines, and Uganda.World Bank, Water Supply and Sanitation Working Notes, No. 12.

functions—for example, when oneentity is responsible for assetmanagement and another foroperations, or when a large utilityprovides bulk treated water andSPSPs manage distribution andcommercial activities—theirrespective responsibilities need to beclearly delineated.

Institutional reforms should be tailored tofit the country and local context. There is

a great deal of literature and anaccumulated body of experience oninstitutional reform of water supply andsanitation services, covering topicssuch as the creation of autonomouspublic companies, governance,contracting private operators, andcreating regulatory frameworks.However, while the basic principles—separation of roles, managerialautonomy and accountability, andfinancial viability—are universally

38


Box 9: Successful Performance and Incentive Contracts in a Public Company:Uganda’s National Water and Sewerage Corporation

The National Water and Sewerage Corporation (NWSC) is an autonomous state company that provides water andsewerage services in the larger towns and cities of Uganda. Until 1998, in the absence of an effective accountabilityframework, the NWSC had made a number of poorly conceived investments. The company was very inefficient andfinancially unsustainable: its fixed assets were underutilized; unaccounted-for water was at 51 percent; it was grosslyoverstaffed; and it was unable to service its debt. In 1998, a new general manager began to introduce performanceincentive programs and a client-oriented culture with a strong emphasis on service quality. Substantial improvementsresulted, but by 2000 it was clear that achieving financial sustainability would take several more years of effort. In 2000, theGovernment of Uganda and the NWSC agreed to a three-year performance contract under which the latter’s debt serviceobligations were suspended in return for continued performance improvements.

The performance contract specified the actions that the NWSC must take and the targets it was expected to meet withregard to a number of key operational and financial indicators. A Performance Contract Review Committee wasestablished to monitor and report on the NWSC’s performance. In 2003, the Review Committee found that the NWSC hadperformed very well with regard to qualitative targets such as updating the asset registers, introducing incentive contractswith its area managers, and outsourcing noncore activities. It had met or come close to meeting quantitative targets forcollection efficiency, connections, metering, and staff per 1,000 connections, but had fallen short with regard to financialperformance, and remained unable to service debt. Nevertheless, the performance contract and the internal managementinitiatives that had been introduced had established a solid foundation for further improvements.

The government and the NWSC entered into a second performance contract for 2003–06, which introduced moremeaningful financial indicators based on ratios rather than absolute results. In 2003, the NWSC also began to introduce aninnovative strategy for improving its area managers’ accountability and autonomy. In January 2004, following an internalcompetitive bidding process in which all area managers were allowed to participate, two-year Internally DelegatedManagement Contracts were awarded for all NWSC service areas.

By 2004, as a result of consistent improvements in operations and cash management, the NWSC’s revenues exceededoperating costs (including depreciation) for the first time and the company was on the road to financial sustainability.Compared with performance in 1998, by 2006, coverage in the NWSC’s service areas increased from 48 percent to

68 percent. Total connections increased from 50,826to 125,000. Unaccounted-for water was 31 percent(35 percent in Kampala and 16 percent in otherservice areas). Annual turnover increased from aboutUS$11 million to US$30 million, and operating profitafter depreciation improved from a loss ofUS$0.4 million to a surplus of US$2.2 million.

The government and the NWSC agreed to a thirdperformance contract for 2006–09. This contractemphasizes the extension of services to the urbanpoor with the goal of achieving full coverageby 2015.

39

Sources: Mugisha, Silva. April 2006. Performance Assessment and Monitoring of Water Infrastructure: An Empirical Case Study of Benchmarking in Uganda;Triche, Thelma, and Steve Ostrover. March 2005. Assessment of the Long-Term Financial Sustainability of the NWSC. Report 1 of the Review and Updateof the Implementation Strategy for Reform and Divestiture of the NWSC, submitted to the Ministry of Finance, Planning and Economic Development. See alsoCase Study 9, accompanying volume, and the NWSC’s website: www.nwsc.co.ug

desirable and applicable, there are nouniversal blueprints or ideal institutionalmodels to achieve them. Care shouldbe taken to tailor institutional reforms toeach country and urban context.

The existence and potential role ofSPSPs should be recognized andtaken into account. Outsourcing themanagement of services to privateoperators or putting public operatorsunder performance contracts havebeen shown to be effective ways

of separating operations from

policymaking and regulation, as

well as promoting financial and

managerial autonomy.

The examples presented here (Boxes

8, 9, and 10) and in the case studies

and other listed resources, are intended

to promote an understanding of some

of the conditions that promote success

and to stimulate the exploration of

these and other models.

StrengthenCapacityThe content of training programs mustbe broadened to target a wider rangeof actors and, in contrast to thehistorical emphasis on engineering andtechnical skills, focus attention onimprovements in service quality,access, and sustainability. Programsto strengthen the capacity andprofessional development of sector

Box 10: Regulation by Contract: The Senegal Lease Contract

In 1995, the Government of Senegal launched wide-reaching reforms in the urban water sector. The state-run watercompany was dissolved; a new asset-holding company, SONES (Société Nationale des Eaux du Sénégal), was created,and a private operator was engaged to run the systems. These reforms resulted in significantly better services andfinancial health for the sector. The contractual framework included a concession contract and a sector developmentcontract between the government and SONES, and a contract with the private operator. This last, a 10-year affermage(usually referred to as a ‘lease contract’ in English—though this is not really an accurate translation), was innovative in that itprovided financial incentives for the private operator to achieve ambitious performance targets for leakage reductions andimprovements in billing and collection efficiency.

The regulatory framework was built into the contract and was coherent (that is, it linked service levels to tariffs), credible,and transparent. SONES’s monitoring capacity was strengthened through a practical training workshop early in thecontract period, and an objective outside conciliateur was engaged when needed to verify performance and resolveconflicts. (Figure 1, on Page 44, illustrates these arrangements.) The operator’s remuneration was based on itsperformance and, although it was independent of the tariff, the government committed to gradually increasing tariffs to thefull cost recovery level (including debt service) and had a strong incentive to respect this commitment because it wasessential to ensure the financial health of the sector and expand services. Tariffs for water supply were increased about 3percent (in real terms) per year over the period 1996–2002.

Several factors contributed to the success of the reform: the use of an appropriate form of contract that was tailored tolocal conditions; strong political will and good leadership within the government; a well-designed process; and flexibilityand innovation when it was needed. Design and preparation included the development of a financial model that could beused to set and revise performance targets, project revenue requirements, and calculate the associated tariff increases.Good relationships among the parties and an effective dispute resolution process meant that the private operator and thestate asset-holding company were able to reach an agreement on how the former was reimbursed for lost earnings whenthe latter experienced a delay in the completion of investments. The reform has had positive outcomes for the poor, in partdue to the nature of the operator’s incentives, and in part due to the government’s policy of subsidizing connections inlow-income neighborhoods. However, in 2004, some issues still remained due to the tariff inequities that result whenmultiple households use a single connection, and the fact that nonpoor households were benefiting from the subsidizedblock of the tariff, especially if they consumed no more than 10 cubic meters of water per month.

Source: Brocklehurst, Clarissa, and Jan G. Janssens. January 2004. Innovative Contracts, Sound Relationships: Urban Water Sector Reform in Senegal.World Bank. Water Supply and Sanitation Sector Board, Discussion Paper No. 1.

40


professionals and service providersshould include a variety ofcomplementary componentsand approaches.

• Broaden to focus on servicequality, efficiency, and servingthe poor: The content of trainingprograms for WSS staff andmanagers needs to be broadenedto include training in corporatization,private sector participation, tariffsetting, financial and commercialmanagement, benchmarking,customer and community relations,communications, and outreach tothe poor.

• Move beyond conventionalforms of training: Trainingprograms need to be scaled up andnew types of training mechanismsneed to be introduced to meet thegrowing needs of the sector and tomotivate and enable staff to servethe poor effectively. Intensivetraining programs, mentoring,on-the-job training, continuingeducation courses in formalinstitutions, short seminars, onlinecourses, and study tours tolocations where the poor are gettingadequate services are among themany innovative approaches thatcan be used to meet these needs.

• Create incentives and buy-in:Without incentives and prospectsfor promotion, training is not likelyto bring about any changes inservices for the poor. Internalcommunications and awarenessprograms and incentives for staff tosupport reforms and improveservices for the poor are essential.The creation of career paths thatinclude specialization in services forthe poor is also important to createprofessional pride and commitment.

• Target nontechnical audiences:In addition, training and awarenessprograms need to be aimed atpolicymakers, regulators,consumers and consumerassociations, consultants, NGOs,and private sector firms thatsupport the WSS sector.

• Take advantage of existingmaterials: A large body of trainingmaterials has been created by theWorld Bank Institute and by WSStraining institutes in other countries.The potentially relevant materials

need to be identified and adapted tothe local context.

• Professionalize: A professionalassociation of WSS serviceproviders similar to that created inIndonesia (Box 11) would helpcreate a professional identity and asector-specific constituency, providetraining and certification programs,and offer valuable opportunitiesfor networking. Promoting thedevelopment of local private serviceproviders should be an essentialcomponent of the strategy.

Box 11: Professional Association ofIndonesian WSS Service Providers

Municipal WSS services in Indonesia are provided by some 300 semi-autonomous municipal water utilities. After the financial crisis that hitthe country in 1998, most water utilities struggled financially; the qualityof the services provided deteriorated under the combined pressure ofpopulation growth, aging infrastructure, inefficiencies, and low revenue.Corporatization of the water utilities, improved performance andincreased accountability, and provision of timely and accurateinformation to decisionmakers are part of the challenges to be met.Water utilities are members of a Professional Organization of WaterEnterprises (PERPAMSI), headquartered in Jakarta with 28 provincialcenters. The mission of PERPAMSI is to assist its members improvethe management of their water supplies, assets and finances, toprovide training and to certify professional staff. In addition, PERPAMSIprovides training in public awareness, negotiations with localgovernments, and customer outreach. A strong PERPAMSI isconsidered a strategic element for improving WSS services throughoutthe country. Through a training arrangement, the World Bank Institute(WBI) assists PERPAMSI in the three areas of (a) publiccommunications and information services; (b) performancebenchmarking; and (c) utility staff training programs. The programincludes training of PERPAMSI’s trainers in its 28 provincial centers;trainers will in turn train staff in the member utilities. WBI also supportsPERPAMSI in building stronger ties with universities and traininginstitutions to strengthen their own capacity and engage them in thedelivery of appropriate training services.

Source: World Bank. January 2006. India Water Supply and Sanitation: Bridging the Gapbetween Infrastructure and Service. Background Paper, Urban Water Supply andSanitation, p. 41.

41

• Outsource: It is often practical andcost-effective to increase capacityby contracting outside entities toprovide specialized services. Thecontracting of NGOs to liaise withslum communities by the SocialDevelopment Unit in Bengaluru,India, is an example of effectiveoutsourcing (see Box 7).

Recognize andWork withAlternativeProviders

Alternative service providers, such assmall private service providers (SPSPs)and community groups, cancomplement the capacity of theconventional utility by providingservices in areas where large utilitiesare unable to operate. A number of

be appropriate for the local context andthe size of the market, and it should beconsistent with the legal frameworkand institutional arrangements for theprovision of WSS services.Independent regulators (with a highlevel of discretion) are often presentedas the ‘best practice’ but they are notsuitable to all environments. Theyrequire broad-based confidence (of thepolicymakers, the public, and theutilities) in their objectivity and fairness,and are best suited for regulating fullyautonomous utilities with very largemarkets. In other contexts, alternativessuch as a performance contractmonitored by an oversight agency, or acommunity-based monitoring system,may work better.

Regardless of the regulatory model,it should incorporate propoorregulatory principles and mechanisms.Propoor regulation:

• Provides a framework forcompetition so that a wide range ofservices are available.

• Creates incentives (or obligations)for the dominant operators to extendservices to poor neighborhoods.

• Allows a flexible approach to servicequality so that service providers canexperiment with alternativetechnologies and delivery modelswhile respecting basic servicequality requirements.

• Establishes tariffs that encouragehigher access to services withoutjeopardizing financial viability.

• Establishes a framework to dealwith the different circumstances andneeds of all customers.

In some countries, the larger cities mayhave the potential capacity to create or

17 See, for example: McGranahan, Gordon, Cyrus Njiru, Mike Albu, Mike Smith, and Dana Mitlin. 2006. How Small Water Enterprisescan Contribute to the Millennium Development Goals, Evidence from Dar es Salaam, Nairobi, Khartoum, and Accra. Water,Engineering and Development Center, Loughborough University. See also the list of resources at the end of this report.

recent publications have examined thecharacteristics of SPSPs and innovativeways of engaging them to better servethe poor.17 Several innovative projectshave incorporated SPSPs into servicedelivery models for serving the poor.The Nyalenda Water Supply Project inKisumu, Kenya (see Box 12), providessome useful lessons in this regard.

IntroduceAccountabilityand PerformanceMonitoringSystems

There are a number of regulatoryinstruments and institutional modelsthat can be used to promoteaccountability. Experience shows thatthe choice of a regulatory model should

42


engage service providers and monitorthem effectively. In others, particularly inthe poorer countries, municipalitiesstill require support from centralgovernments for creating effectiveoperating and oversight arrangements.In all cases, both politicians andmunicipal staff typically need training inconcepts and skills, particularly inregard to distinguishing the governanceof a public service provider by thepublic owners, on one hand, andeconomic regulation of either a publicor a private operator on the other. If theeconomic regulation of services is afunction of central, regional or stategovernments, it is easier to distinguishit from ownership governance bymunicipal or other local authorities.If local authorities share regulatoryresponsibility with central, regional orstate governments, their respectiveroles need to be clearly distinguishedand complementary.

Regulation by Contract

A well-designed and credibly enforcedcontract, whether a performancecontract with a public operator or acontract with a private operator, canprovide an excellent regulatoryframework without an independentregulator. The specificity of theirprovisions provides security andpredictability for all actors in places thatlack a regulatory track record or broadpublic support for independentregulation. Such contracts shouldspecify the responsibilities andobligations of the operator, thecontracting party and consumers;general service conditions; fees andtariffs to be charged by the operator;payments, if any, to be made to thecontracting party and/or to theoperator; and standards (or targets) forimproving service quality, coverage

(including specific targets for poorcommunities), technical efficiency,timeframes for outputs and, especiallyin the case of a public service provider,commercial and financial performance.The operator should also be required toestablish a system for responding tocustomer complaints and mechanismsfor facilitating access for the poor.Incentives for meeting targets, such aslinking payment to performance, shouldbe incorporated. The operator shouldreport its performance in formatsthat are understandable to localgovernments and consumers. A goodperformance contract (combined with a

dynamic utility manager) made a bigdifference in turning around theperformance of Uganda’s NationalWater and Sewerage Corporation(see Box 9).

Regulation by contract requires acompetent oversight entity that canmonitor performance, enforce thecontract and follow up on unresolvedcomplaints. However, an independentregulator (with a high level ofdiscretion) is not desirable whenregulation by contract is used. Theexperience with the concessioncontracts in Manila demonstrateswhy: the discretion of the regulator

43

Box 12: A Partnership Helps Reach the Poor in Kisumu, Kenya

In Kisumu, Kenya, a pilot project funded by the French Development Agency with the participation of the Water andSanitation Program (WSP) has pioneered public-private partnerships between small private operators and the local waterutility, KIWASCO, to extend and improve services in Nyalenda, a low-income community in Kisumu. WSP helped toprepare the project by assessing local conditions and identifying options for improving services. It then facilitated a dialogbetween KIWASCO and the participating communities that led to the choice of the partnership model. Under this model,the utility sells bulk water to private agents who are contracted to operate and manage the network in poor communities.Each private operator manages billing, collection, and minor maintenance; it also provides services such as privateconnections, shared standpipes, and commercial kiosks that are tailored to the needs of the local customers.

Results of phase 1 of the pilot project were encouraging: 2,700 people benefited; old ‘spaghetti lines’ rampant with leaksand illegal connections were eliminated; the cost of water consumed by the residents decreased and is now regulated;revenue collection increased three-fold; the likelihood of corrupt practices was reduced; the tracking and reduction ofunaccounted-for water was improved; and KIWASCO and the private operators are working collaboratively to solveproblems such as vandalism and illegal connections. The model has the potential for scaling up. Phase II which beganin 2007 targets 50,000 people. In addition, a local NGO has begun to apply the model in another low-income settlementin Kisumu.

Source: Water and Sanitation Program. A Partnership Helps Reach the Poor in Kisumu. Case Study 17, accompanying volume.

Source: Ehrhardt, David, Eric Groom, JonathanHalpern, and Seini O’Connor. 2007. EconomicRegulation of Urban Water and SanitationServices: Some Practical Lessons. World Bank.

contradicted the specificity of thecontractual provisions, creatinguncertainty and confusion.18 A goodexample of regulation by contractwith a private operator is the leasecontract in Senegal, which isdescribed in Box 10 and illustrated inFigure 1.

It is not normally appropriate for acontracting or regulating authority toverify every report or make frequentinspections, but some method ofverifying the operator’s reports,such as an annual independentperformance audit, is desirable.In Thailand, for example, theperformance agreement in placebetween the Ministry of Finance andthe Metropolitan Waterworks Authoritythat provides water supply services to

Bangkok is audited annually by aprivate firm, the Thai Rating andInformation Service. Finally, proceduresneed to be established for dealing withpoor performance by the operator andthe resolution of disputes.

Other Regulatory Mechanisms

There are several relatively simple andinexpensive regulatory mechanisms,such as regular feedback from usersand publication of performanceindicators, that are very effective formonitoring performance and stimulatingimprovements. The Citizen’s ReportCard (CRC) first used in Bengaluru,India, in 1994 is a good example. CRCsurveys systematically gather anddisseminate public feedback on publicservices that are not subject tocompetition and thus may lackincentives to be responsive tocustomers’ needs. CRCs can be usedas a combined advocacy and

Figure 1: RegulatoryOrganizations Supportingthe Contract in Senegal

44

18 Ehrhardt, David, Eric Groom, Jonathan Halpern, andSeini O'Connor. 2007. Economic Regulation of UrbanWater and Sanitation Services: Some Practical Lessons.World Bank, 2007.

Government

Sets tariffsand servicestandards

Services Tariffs

Arbitrator

ContractMonitoring

Committees

�

�

�

Utility

�

Consumers

Asset-holding Company

Contract


benchmarking tool. Through thismedium, citizens can collectively exertpressure for change. Successfulapplication requires (a) anunderstanding of the sociopoliticalcontext; (b) technical competence toexecute and analyze a survey; (c) acampaign to publicize the results andbring about change; and (d) follow-upsteps to institutionalize the mechanismand link it to public decisionmaking.The second Bengaluru CRC in 1999resulted in several positive responsessuch as the creation of the BengaluruAgenda Task Force by the stategovernment to monitor feedback fromCRCs, the initiation of trainingprograms on customer responsivenessby the Water Board, and theintroduction of regular consumersatisfaction surveys by the Karnataka(India) Electricity Board.19 CRCs havebeen introduced in several othercountries. Recent experience in Kenyais described in Box 13.

19 Waglé, Swarnim, Janmejay Singh, and Parmesh Shah.February, 2004. Citizen Report Card Surveys—A Note on theConcept and Methodology. Social Development Notes,Participation and Civic Engagement, Note No. 91, World Bank.

45

Box 13: Kenya’s Experience with Citizen’sReport Cards

Citizen’s Report Cards (CRCs) were used to collect feedback on water,

sanitation, and solid waste services from the citizens of Kenya’s three

largest cities—Nairobi, Mombasa, and Kisumu—in September and

October 2006. The Ministry of Water and Irrigation provided the

umbrella under which the CRC initiative was developed. In each city,

civil society organizations, resident representatives, and service

providers formed a consortium that managed the process at the local

level. The relevant national entities and donors deliberated the

outcomes and policy implications at the national level. The Water and

Sanitation Program–Africa brokered the process and provided

technical assistance.

The methodology incorporated both qualitative (focus group

discussions) and quantitative (survey) tools. An important objective was

to investigate differences in the access to, and the satisfaction with,

services of poor and nonpoor households. Among other findings, the

exercise revealed that poor households were more likely than nonpoor

to use kiosks. Less than 50 percent of kiosk users are satisfied with the

service; kiosk users shift to more expensive or unsafe sources of water

during periods of scarcity; and, for 70 percent of households that rely

on sources outside the home, the primary water collector is a

woman. The overwhelming majority of consumers treat their water,

demonstrating marked uncertainty about the safety of the water from

the network. Consumers are considerably less satisfied with sewerage

and solid waste services than with water supply service. People are

generally confused about where their toilet waste goes, but it is clear

that some toilets are being emptied into storm sewers, soak pits, and

cesspits. Consumers overwhelmingly prefer face-to-face interaction

with water company staff over other channels of communication.

The CRC exercise assisted the government of Kenya to identify urgent

priorities for national policy consideration, especially regarding services

for the urban poor. The stakeholders plan to issue the second CRC on

water and sanitation services in 2008 to measure progress and identify

further steps needed to improve services.

Source: Water and Sanitation Program. May 2007. Citizen’s Report Card on Urban Water,Sanitation and Solid Waste Services in Kenya, Summary of Results from Nairobi, Kisumu,and Mombasa.

Getting Started:Actions andResourcesThis section suggests the followingactions for sector actors:


• Clearly distinguish and definethe roles of key sector actors(policymakers, governance bodies,service providers, and regulators),separate or combine functionsas appropriate to promotetransparency and efficiency.

• Give service providers adequateautonomy to make management(input) decisions, combineservice development andpromotion activities with operations,and hold service providersaccountable for results throughtransparent mechanisms.

• Examine the potential benefits andchallenges of private participationincluding local small private serviceproviders (SPSPs) in urban WSSservices, and adapt strategies andcontractual forms developedelsewhere to fit the local context.

• Examine the potential benefitsand challenges of performancecontracting with public operators,and adapt strategies andcontracts developed elsewhere tothe local context.

• Carry out comprehensive capacityneeds assessments for key actors,and develop and implementstrategies to broaden and scale uptraining and capacity-buildingprograms with a new focus onensuring effective access to service,improving service quality, andpromoting financial sustainability.

46


• Take advantage of training materialsdeveloped by WBI and by serviceproviders and institutions in othercountries and adapt them to thelocal context.

• Design regulatory and accountabilityframeworks that fit into the existinglegal framework and have the broadsupport of policymakers, the public,and the utilities, including SPSPs.

• Promote and support the start-upof a professional association of WSSServices Providers.


• Develop effective internalcommunication, performancemonitoring, andimprovement systems.

• Evaluate capacity needs anddevelop human resources, training,and outsourcing strategies toacquire the necessary skillsand capacity.

• Create incentives for managersand staff to improve performanceand ensure that all staff supportsthe reforms.

47


Case Study Topic

Uganda (Case Study 9) Performance contract with public operator

Kisumu, Kenya Partnership between small private service providers

(Case Study 17) (SPSPs) and the utility

• Change the organizational cultureto focus on service quality andcustomer relations.

• Have performance audited annuallyand publish audited results.

• Strengthen skills for negotiatingwith policymakers andoversight bodies.

• Develop models for engagingwith SPSPs to provide servicesin areas where the utilitycannot provide services orwhere SPSPs can do somore effectively.


• Monitor and disseminateinformation on the service providers’performance in poor communities.

• Work with the regulator and/or theservice provider to developlicensing and performancemonitoring mechanisms that areappropriate for slums and poorcommunities, and give an accuratepicture of the quality of services inthose areas.

4

Section 6

Adopt Appropriate InvestmentFinance, Cost Recovery, andSubsidy Policies

Adopt RealisticCost RecoveryPolicies andTargetedSubsidiesDevelopment of a realistic strategy toimprove cost recovery and maintainfinancial viability while expandingservices to the poor requiresconsideration of a number of factors.Cost recovery can be improved by(a) reducing costs by increasingefficiency and adopting modularplanning and lower cost technologies;(b) improving commercial performance;(c) charging an average tariff thatreflects all costs; (d) structuring tariffs tobalance efficiency considerations withtargeted subsidies that promoteaffordability; and (e) introducingstrategies to improve the collection oftariffs, including billing and collectionstrategies that are tailored to conditionsin poor neighborhoods.

Regulators are understandablyreluctant to increase tariffs and must beconvinced that a tariff increase isjustified before giving approval. Ifpoliticians are playing the role of tariffregulator, the task is even morecomplex. Utility managers should learnhow to prepare tariff proposals thatjustify proposed increases within thecontext of a medium-term plan, identifythe risks associated with failing torecover costs, and provide evidencethat consumers are willing and able topay the proposed tariffs. They mustalso demonstrate that they are takingother steps to reduce costs andimprove cost recovery. It may bepossible to improve financialperformance without increasing tariffs

in real terms by improving the efficiencyof technical and commercial operationsand increasing connections. This willput the utility in a better position toattract additional finance for expansion.It will also provide resources to expandand improve services to the poor.

If a large tariff increase (in real terms) isrequired, even after taking into accountthe effects of efficiency improvementsand increased connections, theincrease should be phased in over timeand accompanied by perceivableimprovements in services. Realincreases should be in addition toautomatic increases to reflect inflation.Phasing a tariff increase over a fewyears may require a reliable operatingsubsidy and/or the temporarysuspension of debt service during theinterim. If this type of financialassistance is not available, a largerincrease may be acceptable ifcustomers support the reasons for theincrease. A well-planned publicawareness and educational campaignthat precedes the increase is essentialto build support.

The tariff structure may createeconomic distortions or underminefinancial performance of the utility,particularly if the lowest tariff does notcover the full cost of operations andmaintenance and/or if the tariff paid bythe largest consumers is so muchhigher than the full cost of providing theservices that large consumers have anincentive to reduce their consumption.Cross subsidies must be designedcarefully to minimize these effects. Inlocalities where there are not a sufficientnumber of higher income residents tosubsidize the poorest through areasonable surcharge, cross subsidiesare generally not a viable option.Colombia and Chile have developed

Obstacles





• Small-scale service providerslack adequate finance toextend networks.

Services that are not financially viablecannot be managed and operatedefficiently and will not be sustainable.Financial autonomy is an essentialcomponent of managerial autonomyand accountability. Managers who donot have adequate resources and/orhave little control over financialresources cannot make optimaldecisions. Dependence on publicsubsidies makes the servicesvulnerable to political intervention andchanges in political priorities.

Achieving financial viability maytake several years and requires amultifaceted strategy that might includeimprovements in financial management;improvements in operationalperformance; redesign of tariffstructures and connection charges;gradual tariff increases; and acampaign to increase connections.Targets for cost recovery that arerealistic and charging methods thattake the constraints faced by the poorinto account can lead to financialviability as well as improved access forthe poor. A few relevant strategicapproaches are proposed below.

50

Regulators are understandably reluctant to raise tariffs and must beconvinced that a tariff increase is justified before giving approval.


two different but viable approaches tosubsidies on the basis of householdincome. The need for cross subsidiesis minimized because the poor aresubsidized primarily by transfers fromthe central governments.20

Expanding infrastructure to provide24-hour water supply service to thepoor may result in a higher averagecost because of physical conditions,higher collection costs, and loweraverage consumption from connectionsin poor households. It should not beassumed that individual householdconnections will result in higher levels ofconsumption—such assumptions have

proven unfounded, especially when

cheap alternative sources are available.

This creates a dilemma that needs tobe acknowledged and dealt withrealistically. Practices that would reducethe cost of serving poor neighborhoodsmay be needed. Communitymanagement of billing and collection,and outsourcing the installation ofconnections have reduced costs insome locations. (Examples of these arementioned below.) Service levels alsoaffect financial viability. While individualhousehold connections for water andsewerage are often the preferred

options, when many households are

served through a single waterconnection, water consumption perconnection may be higher than theutility's average and make up for someof the higher costs. Likewise, blocktoilets increase economies of scale.Project designers should considermodular planning and lower costtechnologies (see Section 7) thatreduce investment costs. Projectplanning, financial projections, and thedesign of cross subsidies should reflectthese factors. Tariff rules should seek tobalance the need to ensure financialviability with the broader benefits ofdelivering services to the poor, andprovide for offsetting any negativefinancial effects on the utility.

General operating subsidies andblanket investment subsidies usuallybenefit the rich more than the poorunless tariffs are structured to ensurethat only the poor benefit from thesubsidies. In general, subsidies shouldbe targeted at the poor and should belimited and temporary. Subsidizinginvestments and/or connections in poorneighborhoods is preferable tosubsidizing monthly consumptionbecause the former is both targetedand limited in scope, and is generallysufficient to ensure that the poor will beconnected and stay connected. Manystudies show that the poor are willingand able to pay tariffs that cover the fullcost of operation and maintenance(O&M) of water supply services.Charging such tariffs not only promotesthe financial viability of the services; ithelps the poor to become legitimatecustomers and gives them a strongervoice. If subsidies for consumption areto be maintained over an indefiniteperiod of time, the source of fundingshould be reliable and should notundermine the financial viability ofthe utility.

20 Information on Chile and Colombia’s subsidy programs may be obtained from the respective water supply and sanitationregulators, the Comisión de Regulación de Agua Potable y Saneamiento Básico in Colombia, and the Superintendência de ServiciosSanitarios in Chile.

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Develop aCost RecoveryStrategyA cost recovery strategy includesefforts to reduce costs, commercialperformance, and the adoption of tariffsthat cover the cost of an efficientservice. Some of the key steps indeveloping a cost recovery strategyand a tariff proposal are:

• Evaluate demand of variouscategories of customers (includingpoor households) throughwillingness-to-pay studies, takinginto account seasonal variabilityand the availability of alternativesources of water and sanitation thatare free, or lower in cost, than theproposed services.

• Build a financial model that will beused to project costs (including

depreciation and/or debt service)and revenues and to calculate therequired average tariff to achieve thecost recovery objective for bothwater supply and sanitation, andappropriate tariffs for each tariffblock, if relevant.

• Evaluate operational andcommercial performance todetermine whether costs can bereduced and/or revenues increasedwithout a tariff increase, or tomitigate the required tariff increase.Propose a realistic program toimprove operational and commercialefficiency, and project its impact onfinancial performance.

• Evaluate tariff structure to determinewhether it promotes efficiency,unfairly penalizes any group ofconsumers, such as poorhouseholds who share a singlewater connection, or suppresses

the demand of large customersbelow levels required to maintainfinancial viability. If relevant, proposea more efficient and/or fair tariffstructure and project its impact ondemand and revenues.

• Justify any proposed investmentson the basis of expansion andimprovement priorities, technicaland financial feasibility, includingrealistic estimates of demand andcost effectiveness, and theavailability of investment finance.

• Evaluate the ability of poorhouseholds to pay upfront capitalcontributions or connectioncharges and to accumulateadequate funds to pay monthlybills, and propose mechanisms toaddress these constraints.

• Identify and secure sources ofsubsidies that will be offeredto promote expansions andconnections in poor neighborhoods.

• Taking into account all of the above,calculate the required average tariffsfor both water supply and sanitationand develop a strategy for increasingthe average tariffs to achieve thecost recovery objectives, includingthe identification of sources ofany temporary operating orcapital subsidies.

This type of model building and analysisrequires the services of a team thathas expertise in financial analysis,economics, operational efficiency,engineering, investment planning, andsociology. The Government of Senegalused a process similar to thatdescribed above to develop its costrecovery strategy. (See Box 10.)

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If Necessary,SubsidizeInvestments,not ConsumptionA full or partial subsidy for investmentsmay be justified in poor urbancommunities as long as the poorcustomers can pay tariffs that cover thecosts of operations and maintenance(O&M). There are a number of casesthat demonstrate that the poor arewilling and able to pay at least part ofthe cost of investments in water supply,so investment subsidies need not coverthe entire capital cost, nor should it be

assumed that they are needed in allcases. There are real benefitsassociated with requiring users tocontribute something, even if nominal,to the cost of investments, because itmotivates them to get more activelyengaged in the planning process.

Higher levels of subsidies may berequired for sanitation but can usuallybe justified because of the public healthand environmental benefits. It cannotbe emphasized enough that ifinvestments are subsidized, theyshould nevertheless be demand-driven,the result of meaningful participation ofthe community in the planning process.One way to structure investmentsubsidies is to provide them as

‘output-based aid’ (OBA). The OBAapproach has been tested in a numberof countries in Latin America, Africa,and Asia. The operator must prefinancethe investment and receive the subsidyafter the desired outputs are achieved.It is most often used to promote andreward investments that serve the poor.The subsidy is usually specified as anamount per connection and is paid onthe basis of the number of poorhouseholds that are actuallyconnected.21 A number of countrieshave introduced transparent, targetedsubsidies for investments that expandservices to the poor. Examples oftargeted subsidies are presented inBox 14.

Box 14: Targeting Investment Subsidies for the Poor

The governments of Colombia, Cambodia, Paraguay, the Philippines, and Uganda used the proceeds of World Bank Loansor IDA Credits to expand and improve water services for the poor while promoting the engagement of private operators. Inmost of the cases in Colombia, Cambodia, the Philippines, and Paraguay, private operators were selected on the basis of acompetitive process in which they specified the investment subsidy they required. In some of these, the subsidy wasspecified as lump sum investment, in others as an output-based aid (OBA) subsidy per connection. In either case, thesubsidy is paid after the investments are completed or customers are connected. These operators are required to operatethe systems under contracts that resemble concessions or lease contracts for 10 to 25 years and are responsible for allmaintenance and replacements during that period. The subsidy is not intended to cover the full cost of construction; theunsubsidized portion is recouped from users through connection fees and tariffs over the life of the contract.

In Colombia, tariff rules require that the average tariff include the full cost of replacement of assets even if the initialinvestments are subsidized and there is no debt service. However, the tariff structure is such that low-income households donot pay any charges for capital investments. Nonpoor consumers pay tariffs that cover the full replacement cost ofinfrastructure and those in the two highest income brackets pay, in addition, a surcharge to subsidize consumers in the twolowest income brackets. In this way, the higher income consumers do not benefit from the investment subsidies.

In Uganda, the government planned and bid-out the construction and operation of water supply systems for small townsseparately from contracts with private managers. The investments were largely funded by government grants using donorcredits or grants and tariffs are expected to cover only operation and maintenance costs. Since almost all residents of smalltowns are considered poor, all benefited more or less equally from the investment subsidy. However, the towns were requiredto mobilize a portion of the construction cost and relatively more affluent residents were generally required to contribute morethan less affluent residents. Uganda is now planning a pilot project under which the private firms would both construct andoperate the systems and would receive an OBA subsidy per connection.

Source: Triche, Thelma, Sixto Requena, and Mukami Kariuki, December 2006. Engaging Local Private Operators in Water Supply and Sanitation Services, InitialLessons from Experience in Cambodia, Colombia, Paraguay, the Philippines and Uganda. World Bank, Water Supply and Sanitation Working Notes, No. 12.

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21It is worth noting that OBA investment subsidies are sometimes referred to as ‘connection subsidies’ because they are paid on the basis of the number of connections installed. They are not necessarilyused to reduce or eliminate connection charges per se. In many OBA projects, users must still pay a connection charge.

RestructureCharges andPaymentPractices toAccommodatethe PoorReduce the Connection Chargesfor Poor Households

Connection charges that create barriersfor poor people may be reduced byimproving efficiency (that is, loweringthe cost of installing connections),subsidizing connection charges, andeliminating bribes. Upfront connectioncharges, and the bribes users mustpay to middlemen who facilitateapplications, can present barriers toaccess for the poor becauseaccumulating the required sum isdifficult for people who live from day-to-day. Plans that allow poor users to paythe connection charge in installmentsover a year or two are sometimesproposed but these may not be theoptimal solution, because they mayinclude high interest charges and canincrease monthly bills by as much as100 percent. High bills increase the riskof disconnection due to delinquency inpayments and undermine the objectiveof keeping the poor connected.

Sometimes, connection charges havenothing to do with the actual cost ofinstalling a connection per se. Highconnection charges may need to beevaluated to determine whether theyare justified and to bring them in linewith the actual cost of making aconnection. Collection charges may beexorbitantly high due to the inefficiencyof the utility. In that case, theappropriate strategy is to reduce costsby improving efficiency. In Bengaluru,

India, the Social Development Unit wasable to reduce its average cost ofconnections and introduce reducedconnection charges for smaller housesby hiring a private plumber to install theconnections (see Box 7).

However, when the charges reflectactual costs and efficiency is good,but the charge is still a barrier toconnection for poor households, thereis a growing recognition that reducingthe connection charge by subsidizingconnections is a viable and appropriatecomponent of a strategy. A number ofways have been used to structure andfund connection subsidies. Utilitiesoften find that the additional revenuesgenerated by new connections and thereduction of the costs of operatingstandposts more than compensate forinternally subsidizing connectioncharges. Allowing the charges to bepaid in installments that are free ofinterest is another solution. In Andhra

Pradesh, a grant from the state wasused to reduce the charge (see Box15). Faced with the problem ofextending services into poorerneighborhoods and towns, the largeurban water supply utilities in twoAfrican countries, Côte d'Ivoire andUganda, reduced connection chargesby adding a surcharge to the tariffs paidby all users. In some donor-financedprojects, part or all of the cost ofconnections may be financed by theproject.22 In Buenos Aires, Argentina,poor households were charged lowerconnection fees in return for providinglabor during the construction andinstallation process. Similarly, poorhouseholds in the peri-urban areas ofCiudad del Este in Paraguay earnedconnection vouchers when theyworked on the construction of thewater supply system.23

Removing bureaucratic barriersand improving the efficiency of the

Box 15: Subsidized Connections in Andhra Pradesh, India

In the late 1990s, the residents of Vijayawada (population 1 million) in theIndian state of Andhra Pradesh, got their water from about 900 private hand-bored wells and a municipal system serving 36,000 house connections and6,500 public standposts. Most of the standposts had lost any taps and rancontinuously. At that time, the municipality's charge for a house connectionwas Rs. 4,000 (about US$93), and the monthly consumption fee was Rs. 40(about US$1). The state government of Andhra Pradesh released funds underthe National Slum Development Project to provide a 50 percent subsidytoward the connection costs. When the Vijayawada municipality announcedthis program, there was an overwhelming response from slum dwellers, andmore than 5,000 came forward offering to pay the Rs. 2,000 (about US$46)as deposit. Using the cash inflow, the municipality was able to extend itsdistribution pipelines to several unserved areas.

Source: Arvind Kumar (Indian Administrative Service, Municipal Commissioner, Vijayawada MunicipalCorporation). April 9, 1999.

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22 It is worth noting that OBA investment subsidies are sometimes referred to as ‘connection subsidies’ because they are paid on thebasis of the number of connections installed. This is a misnomer because the subsidy is usually intended to cover the cost of themajor system components, not individual connections per se. In many OBA projects, the users must still pay a connection charge.

23 Triche, Thelma, Sixto Requena, and Mukami Kariuki. December 2006. Engaging Local Private Operators in Water Supply andSanitation Services, Initial Lessons from Experience in Cambodia, Colombia, Paraguay, the Philippines and Uganda. World Bank,Water Supply and Sanitation Working Notes, No. 12. (Vol. II, Unpublished case studies are available from the World Bank Energy andWater Department.)


connection application process mayalso reduce the cost to users,especially to those who have beenpaying bribes to utility staff ormiddlemen to speed up the process.The creation of a dedicated unitwithin the utility and the engagementof NGOs to assist the poor with theapplication process have producedgood results.

Introduce FrequentCollection of Water Charges

If the very poor have difficultyaccumulating cash to pay monthly fees,it may be possible to increase thefrequency of collection at thecommunity level. Reducing the tariffbelow the full cost of O&M is notdesirable or effective. More frequentcollection of charges may be aviable solution. For example, in theManggahan Floodway area of Manila,community representatives collectwater fees from connected residentson a daily or weekly basis and paythe monthly bills to the utility on behalfof the residents. A 15 percentsurcharge is added to the tariffto cover the cost of communityadministration. (See Case Study 4,accompanying volume.)

Eliminate DistortedTariffs for Poor Households

There are several situations in whichthe poor may have to pay relativelyhigh tariffs for basic consumption.Administrative or regulatory actionsmay be required to eliminate thesedistortions. Rising block tariffs aregenerally intended to provide a lowlifeline tariff for a basic essentialhousehold consumption and todiscourage excessive use by thosewho consume more than a basicvolume of water. However, such tariffs

may penalize the poor when severalhouseholds use one connection. Asystem of verifying the number of poorpersons or households using eachconnection and adjusting the applicabletariff accordingly can be introduced tosolve this problem.

Assuming the basic essentialconsumption for a family of five is10 cubic meters of water per month, iffive families of five share a singleconnection, the lifeline tariff would beapplied to a total consumption of 50cubic meters from that connection.Such a system is best administered atthe community level, perhaps by acommunity association, and thenumber of persons should be verifiedperiodically to prevent abuse.

Water charges may also be distortedwhen poor people pay their waterbills as part of their rent. Greatertransparency can be achieved byrequiring landlords to inform tenants ofthe amount of the water bill and tojustify the amount included in rent.

Resale of water by vendors who haveprivate connections (with or withoutlifeline rates) can result in excessiveprices if there is little or no competition.Legitimizing the resale of water and/orallowing communities to appointseveral authorized vendors wouldincrease competition and drive pricesdown. If effective competition cannotbe created, the regulator or thecommunity may set a maximum tariff tobe charged by vendors—taking intoaccount the vendor’s reasonable costs.In such cases, regulation andenforcement at the lowest level feasibleis preferable.

Posting the allowed on-sale tariff aswell as the tariff paid by the vendor forbulk water will help to prevent

excessive prices and makethe margin charged by the vendorstransparent. Allowing authorizedvendors to be eligible for the same tariffas individual households may also helpto reduce the on-sale tariff.

Legitimizeand ProvideFinance forSmall PrivateService ProvidersLegitimizing and providingfinance to small private serviceproviders (SPSPs) can be an effectiveway to promote the expansion ofacceptable services to unservedneighborhoods. Many SPSPs havetheir own source of bulk water, whichthey distribute.24 Others buy bulkwater and operate small pipednetworks. Many times, they areconstrained by lack of access toinvestment finance. Projects to promoteSPSPs often use the OBA approach.A recent report reviews the earlyexperience of several World Bank-supported projects that promoted thecontracting of local private operators—many of which are SPSPs.25 Similarinitiatives are being funded by theGlobal Partnership on Output-BasedAid (GPOBA) and other donors. Aninteresting characteristic of SPSPs isthat, because of the difficulty ofobtaining investment finance, they uselower-cost technology or adopt amodular approach to building andexpanding infrastructure. Fundingprograms should not underminethese approaches where theyare appropriate.

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24 Those who own their source are sometimes calledsmall-scale independent providers (SSIPs).

25 Triche, Thelma, Sixto Requena, and Mukami Kariuki, op. cit.

Getting Started:Actions andResourcesThe following actionsare recommended:


• Make cost recovery and long-termfinancial sustainability a high priority.

• Issue cost recovery and subsidyguidelines to clarify concepts andpromote standardization of methodsamong utilities. Standardization ofmethods will make it possible tocompare performance and establishbenchmarks across utilities facingsimilar conditions and will promoteexchange of ideas.

• Establish efficiency and costrecovery targets as a condition ofinvestment lending and grants.

• Approve tariff increases andchanges in tariff structure that areaimed at improving cost recoveryand long-term sustainability.

• Use OBA schemes to promoteconnections in poor communities,but scrutinize OBA proposals to

ensure that the connections aresustainable, that is, that poorhouseholds are willing and able topay monthly charges.

• Legitimize and support SPSPsto fill gaps in services to thepoor communities.


• Develop realistic financial modelsto project costs and revenues, andcalculate the required averagetariff to achieve full cost recoveryover time.

• Identify inefficiencies in operationsand commercial functions andfocus on improving those, whichwill result in greatest cost savings.

• Adopt lifeline rates that coveroperation and maintenance costs.

• Simplify and redesign tariffblocks to eliminate subsidies forcustomers who are not poor andextend the lifeline rate tohouseholds who share connections.

• Determine whether the connectioncharge is a barrier to householdconnections for poor households.Evaluate the feasibility and impact

of subsidizing connectioncharges without undermining thefinancial viability of the utility.Alternatively, adopt methods forcollecting connection chargesthat eliminate the barrier withoutincreasing monthly bills excessively.

• Work with poor communities toimprove collection of bills throughpractices such as daily or weeklycommunity collection.


• Carry out willingness and ability-to-pay studies to determine theconditions under which poorhouseholds want and can pay forhousehold connections.

• Support communities to organizeconnection campaigns, frequentcollection of bills, and otheractivities that make householdconnections a feasible solution.

• Assist households that share asingle connection to qualify forthe lifeline rate.

• Organize communities withoutaccess to piped services toappoint and negotiate withvendors to ensure fair prices.

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Case Study Topic

Manila, the Philippines (Case Study 4) Network of user associations that bill andcollect water tariffs within the community

Uganda (Case Study 9) Subsidized connection charges

Bengaluru, India (Case Study 10) Reduction of the cost of installing connectionsthrough outsourcing

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4

Section 7

Overcome Physicaland Technical Barriers

Obstacles• The overexploitation and

degradation of water resourcesaffect the poor disproportionately.

• Physical and technical challengesand the high investment cost ofconventional technologies makeextending formal piped water supplyand sewerage networks intoinformal and unplanned settlementsmore difficult.

Inadequate attention to managingwater resources is leading to theoverexploitation and degradation ofwater resources almost everywhereand exacerbates the already difficultservice and environmental conditions inpoor urban neighborhoods. As waterbecomes scarcer and its qualitydegrades, the poor must go farther andpay more to satisfy their basic needs.Most countries have adopted theDublin Principles regarding theneed for integrated water resourcesmanagement to protect theenvironment, and the economic pricingof water to ensure efficient use of waterresources, but further action is neededto implement these principles. Inparticular, far more attention needs tobe directed toward sanitation and thesafe disposal of wastewater.

Conventional distribution networks,sewerage, and septic tanks withsoakaways often cannot be used inslum areas. This may be due togeography or geology, or to the lack ofroadways under which pipes can belaid. The cost of conventionaltechnologies may also be prohibitive.Innovative alternative and low-costtechnologies are needed to overcomethese barriers. Governmentssometimes adopt high standards for

services that may not be realistic.Strategies and technologies thatallow for raising standards incrementallyare needed.

Protect WaterResources

Government and utilities shouldencourage the use of water-savingtechnologies and simple but safesanitation. Overexploitation of waterresources, which is already a seriousproblem in many places, increases thecost of water supply services, makingthe expansion of services to the pooreven more difficult than it is whenresources are plentiful. Recently, inChennai, India, the government made itcompulsory to construct rainwaterharvesting structures in every buildingafter the city faced an unprecedentedwater shortage. Two years later, thegroundwater levels in Chennai haverisen substantially.

Rather than reacting to near-disasters,public authorities and utilities shouldadopt comprehensive forward-lookingstrategies to reduce water lossesand encourage the adoption ofwater saving technologies and low-costsanitation at the household andcommunity level.

Adopt AlternativeTechnologies andDelivery Systems

Several alternative technologies havebeen developed and successfullyintroduced in poor and marginalcommunities. They include:

• Pour-flush latrines with septic tanks:On-site sanitation options are widely

used in urban areas where it isimpractical to lay sewers and whereresidential plots are large enough toabsorb effluents.

• Condominial sewerage systems:The unit to which service is providedis a group of houses, rather thanindividual houses. Small boreconnection branches that run fromthe main sewer through householdlots with a direct connection to eachhouse are constructed with smallerpipes and installed at shallowergrades than conventional sewers,resulting in cost savings (seeBox 16).

• Bulk sewerage: A sewerageconnection is provided at theboundary of the community intowhich the community-managedsewerage system is discharged.

• Interceptors and shallow sewers:These are appropriate forneighborhoods with septic tanks.

• Low-cost sewage treatmenttechnology adapted to localconditions, using low-cost materialsand construction techniques.

• Rainwater collection system:Roof channels divert rainwaterto a filter and then to a groundlevel storage tank from whichit is pumped by hand to anelevated tank.

• Community storage tanks:When service is unreliable orintermittent, large storage tanks canbe installed in poor communities toincrease the hours of availability.

• Bulk water supply: Water is suppliedto a community tank to which thecommunity connects its internal

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In addition to innovative alternative and low-cost technologies, governmentand utilities should encourage the use of water-saving technologies andsimple but safe sanitation.


distribution system. Consumptionis invoiced on the basis of amacro-meter at the tank, whichregisters the consumption of theentire community.

• Relaxed standards: In Manila, theprivate operators and communityassociations have installedwater pipes and connectionsabove ground.

Box 16: Condominial Sewerage in Brasilia

Between 1993 and 2001, Brasilia’s water and sewerage utility CAESB applied the condominial model on a massive scalein both low-income peri-urban neighborhoods and in more affluent areas of the capital. An estimated 188,000condominial connections benefiting 680,000 people were installed. Sewerage treatment capacity was also increasedusing adapted technologies and it was expected that universal coverage of sewage treatment would be achieved in 2004.

Substantial cost savings resulted from several alternative technical practices. For example, in Santa Maria, a largeneighborhood that typifies the system as a whole, the average public network length is about 2.8 meters per connection,compared with about 5.6 meters per connection for conventional systems. In addition, whereas conventional networkdesign usually calls for a minimum pipe diameter of 150 millimeters, pipes of 100 millimeters were used for 56 percent ofthe system. The pipes were also laid at a minimum depth of 0.5 meters, compared to the conventional 1.0 to 1.3 meters,and simple inspection chambers were installed instead of high-cost manholes for 84 percent of the inspection points.

Throughout the metropolis, the condominial branches conformed strictly to standards of pipe location, hydraulic capacitymaterial specifications, and building regulations, but a few exceptions were made to accommodate highly localizedphysical conditions. Residents at the level of each condominium were allowed to choose among three location options forthe branch routes: through the backyard, the front yard or under the sidewalk. Routing through the yard has theadvantage of being less expensive to install, but the household is responsible for maintenance. With the more expensiveoption of routing under the sidewalk comes the advantage that the utility assumes responsibility for maintenance.

As the cost of condominial branches (US$2.8 million) was borne by the beneficiaries, CAESB’s costs (US$1.7 million)were much lower than for conventional sewerage. However, it was estimated that consumers paid no more for thecondominial branches than they would have paid for conventional connections. About 1.5 percent of households opted toinstall the branches themselves and consequently paid no connection charge, but were expected to pay for materials.Finally, the regular sewerage charges for households that opted for routing through the yard were discountedby 40 percent.

Prior to undertaking investments, CAESB undertook a process of social intermediation. During a series of meetings, theapproach was explained and each community chose an option and signed the required agreements. This process did notresult in any delays in the execution of the works. Especially in the lower-income communities, the mobilization efforts ledto greater contact among neighbors and built social capital.

The alternative technical practices have resulted in neither a higher incidence of obstructions nor a higher cost ofmaintenance relative to the pre-existing conventional system.

Source: Melo, Jose Carlos. August 2005. The Experience of Condominial Sewerage Systems in Brazil, Case Studies from Brasilia, Salvador, and Parauapebas.World Bank.

• Street or block metering for watersupply: Meters are installed at theend of each street or block. Billing ofeach individual connection is basedon average consumption.

Policymakers should avoid land-useordinances or technical andenvironmental regulations that preventor discourage the use of alternativetechnologies. For example, in Recife,

Brazil, in the mid-1990s, anenvironmental policy that favoredtertiary treatment of sewage threatenedto block the construction of simplecondominial sewerage systems withprimary treatment in urban slums.Likewise, the requirement thatwastewater treatment plants be locateda minimum of 100 meters fromresidences made it difficult to build

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small-scale treatment plants in denselyinhabited slums. Project designerssuccessfully argued that primarytreatment was better than no collectionand/or treatment at all, but the distancerule remained a barrier.26 Since theobjective of the distance rule is toprotect health and avoid eyesores inresidential neighborhoods, it might bejust as effective to substitute stringentsafety measures and aestheticdesigns for a rule regarding distance.Regulation should be flexible enough toallow improvements. The best shouldnot be the enemy of the good.

Adopt ModularPlanningModular planning has been advocatedas a method for reducing initialinvestment costs in water supply andsanitation infrastructure. The TownWater Supply and Sanitation Initiativeof the Bank–Netherlands WaterPartnership explored this concept in

26 Establishment of a Regulatory Framework for Water and Sewerage Services in the Municipality of Recife, Initial Diagnosis. Reportsubmitted by Deloitte Touche Tohmatsu to the Secretary of Infrastructure and Public Services, Municipality of Recife, January 1997,Part VIII. A. Environmental Standards.27 Town Water Supply and Sanitation Initiative. Volume I: Principles of Town Water Supply and Sanitation, Part 1, pp. 30–33; andVolume II: Business Planning for Town Water Services, Guidance Manual. Bank–Netherlands Water Partnership Project #043,The World Bank Group, Washington, DC (2006).

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one of its final reports.27 Under amodular approach, design andconstruction are viewed as regularactivities, and include incrementalimprovements, rather than large,one-time investments. The underlyingprinciple is to construct only when theinvestment leads to increased revenuesin an acceptable timeframe. A modularapproach means that systemcomponents are initially designed with


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Case Study Topic

Lima, Peru (Case Study 16) Condominial sewerage

Tegucigalpa, Honduras (Case Study 15) Bulk water supply

Karachi, Pakistan (Case Study 5) Bulk sewerage connection

Manila, the Philippines (Case Study 4) Street or block metering

only limited excess capacitydetermined on the basis of:

• Economies of scale: There areusually long-term cost savings inbuilding a component as large aspossible, but there is a risk thatdemand may not grow as much oras quickly as predicted, or that thespatial distribution of the populationto be served will change.

• Mechanical reliability: Some excesscapacity is needed to cover forshort-term mechanical failure ofsimilar components, for example,reserve pumps or wells.

• Security against future availability:The component may not be readilyavailable at a future date.

• Uncertainty over the location offuture demand: It is not known inadvance where the component willbe needed.

Components are also designed so thatthey can be expanded or upgraded asneeded. The shorter planning horizon(less than five years for manycomponents) challenges currentpractices used for larger urban systems(which typically use a 20- to 25-yearplanning horizon). Sequentialimprovements are possible for bothwater supply and sanitation. Forsanitation, the location and design ofon-site facilities may reduce the cost offuture connection to a sewer system.As long as water consumption is low,

on-site disposal may be a reasonablefirst step; the choice depends onhousing density, soil, and groundwaterconditions. The location and design ofon-site systems should anticipatefuture conversion to waterborne wastedisposal, because with increasingfinancial resources householders canbe expected to increase waterconsumption to a level that exceedsthe capacity of on-site systems.Once the need for evacuating sewagearises, it is best to install sewers thatare big enough to meet future demand.The cost of installing sewers is veryhigh compared with the cost ofinstalling water mains becausesewers have to be laid to accurategrade at a greater depth than watermains. For water supply, costs canbe kept down by sizing pipes so thatextra transmission capacity can beadded later to increase the quantityof water delivered through thesame network.

Getting Started:Actions andResourcesThe following actions arerecommended:


• Adopt flexible standards that permitthe use of alternative technologies

and levels of service inpoor neighborhoods.

• Enforce land-use, technical andenvironmental standards in amanner that allows gradual andphased improvements.

• Endorse a modular approach toplanning and investments.


• Adopt aggressive programs toreduce water losses.

• Encourage the use of water-savingtechnologies and low-costsanitation by customers.

• Consider alternative technologieswhen faced with physicalconditions that prevent the use ofconventional technologies.

• Explore the possibilities formodular approaches.


• Assist communities to examinealternatives to conventionalinfrastructure and adoptappropriate solutions.

4

Section 8

Summary of Policy Issues

The PolicyFramework

Rapid urbanization has alreadyoutpaced infrastructure developmentand has been accompanied by aproliferation of slums, increasedhomelessness, growth in urban povertyand crime, and an increase in pollutionand ecological change. To date,efforts to address urban problemshave focused on the planning andimplementation of developmentprojects but too little attention has beenpaid to the people themselves.Many governments are now seeking toredress this by improving the quality oflife of urban residents through securityof land tenure, improved housing, andessential services.

This will require reforms in policies,laws, statutes, and procedures,particularly those that inhibit thefunctioning of land and housingmarkets, to align them withcontemporary urban reality. In addition,sector institutional reform or theconsolidation of recent reforms isneeded in many countries. Theperformance, autonomy, andaccountability of service providersand oversight entities need to bestrengthened. User charges that coverat least operation and maintenancecosts must be adopted and a higherdegree of community participationshould be incorporated intodecisionmaking processes. These aresweeping changes and their successwill depend on gaining the supportof all stakeholders.

These guidelines recommend practicaltactical strategies for overcomingobstacles to improving water supplyand sanitation services for the urbanpoor but, in many cases, overcomingthe obstacles will require more thantactical strategies. It will requirechanges in policies or legislation, ormore effective implementation. Evenwhen policy reform is not essential, theproposed strategies might benefit froma more supportive policy or legalenvironment. A diagnosis of national,state, and municipal policy andframeworks, and how they areimplemented, may be needed todetermine where the gaps, overlaps,and inconsistencies exist. Some policychanges and legal amendments willundoubtedly be warranted. However, inmany cases, while current policiesthemselves may be adequate, theirimplementation is weak, or they maynot be understood and appreciated bythe key actors. In those cases,strategies to improve the implementa-tion of policies may be needed.

List ofPolicy IssuesAssociated withthe ProposedStrategies

Some of the key policy issues that needto be addressed in the context of theproposed strategies have beenidentified in each of the previoussections of these Notes. These areconsolidated below.


The relevant policy reforms that wouldenhance the voice of the poor in

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Many governments are seeking to improve the quality of life of urbanresidents through security of land tenure, improved housing, andessential services.


planning and delivering serviceimprovements include:

• Establishing requirements forgreater transparency in all aspectsof service planning and delivery,and more public accessto information.

• Formulating local policies to printmaterials in local languages.

• Setting down requirements orincentives for utilities to create theinstitutional mechanisms to promotebetter client relations and specialunits to assist the poor.

• Empowering the poor to participatein elections and run for office.

Take VestedInterests into Account

Policy reforms that would reduceopportunities for the illegal activities thatinhibit reform include:

• Legalizing and regulating small-scale service providers.

• Initiating policies that wouldpromote more competition amongsmall service providers.

• Creating policies and procedures topromote transparency and publicaccess to information.

Eliminate Administrativeand Legal Barriers

Lack of land tenure is one of themajor barriers to access to servicesby poor households. Removing thisobstacle requires:

• Initiating land tenure reform.

• Linking service provision tolong-term occupancy, notland ownership.

• Streamlining or simplifyingprocedures for poor residents.

Strengthen Capacity,Autonomy, and Accountabilityof Service Providers

Legislation or de facto practicesregarding the respective roles of keyactors and their institutional formatsmay not clearly distinguish roles orpromote accountability.

This may result in gaps or overlappingresponsibilities. Regulations and/or theirenforcement may not allow foradequate flexibility in technicalsolutions. Reforms may be neededto ensure:

• Adopting management models thatpromote the autonomy andaccountability of service providers.

• Establishing effective tariffregulations, mechanisms formonitoring service quality, andincentives for service providers tooperate efficiently and providereliable services.

• Clarifying the responsibilities ofstates and municipalities andeliminating any overlaps, inconsist-encies, and gaps in their roles.

• Adopting minimum standards thatcan be adapted to local conditionsand needs.

67

Make Appropriate InvestmentFinance, Cost Recovery, andSubsidy Policies

All the recommended actions require asupportive and rational financialframework. Existing laws should beevaluated to determine whether theyallow and provide for:

• The principle of full cost recoveryfor services.

• Targeted subsidies for investmentsand connections (but not tariffsubsidies) for poor households,where warranted.

• Tariffs that recover all operating andmaintenance costs at the minimum.

• Reliable sources of subsidies sothat the financial viability of serviceproviders is not compromised.

Overcome Physical andTechnical Barriers

Improvements in the planning anddelivery of services are essential topromote more efficient use ofwater resources, but must becomplemented by an effectiveframework for overall waterresources management.

This requires national and regional aswell as local solutions. In poorcommunities this often has to do withthe specific local topography and/or

geology and requires local adaptationsand solutions.

Existing legislation should be evaluated

to determine whether it promotes:

• Coherent national, regional, and

local approaches to effective water

resources management.

• The reduction of water losses by

utilities and the adoption of

water-saving technologies

by customers.

• Flexibility for environmental

and technical standards and

management models to be adapted

to local needs and conditions.

68


RESOURCES

Overview of the Current Situation

United Nations. The Millennium Development GoalsReport 2005.

United Nations. The Millennium Development GoalsReport 2008.

U.N. Millennium Project, Task Force on Water and Sanitation.2005. ‘Health, Dignity, and Development: What will it Take?’Earthscan, the United States and the United Kingdom.


Baindur, Vinay. September 5, 2005. ‘For the People, byDiktat.’ India Together Op-Ed, http://www.indiatogether.org/2005/sep/gov-nurm.htm

Connors, Genevieve. 2007. Watering the Slums: How a Utilityand its Street-Level Bureaucrats Connected the Poor inBangalore. Ph.D. Dissertation. Massachusetts Instituteof Technology.

d’Cruz, Celine, and David Satterthwaite. 2006. ‘The Role ofUrban Grassroots Organizations and their NationalFederations in Reducing Poverty and Achieving theMillennium Development Goals.’ Global Urban Development,Vol. 2, Issue 1.

Lidonde, Rose. March 2008. The Water Trust Model:Facilitating Access to Water and Sanitation Services for theUrban Poor in Lusaka, Zambia. Water and SanitationProgram-Africa Region.

Water and Sanitation Program. February 2006. Connectingthe Slums: A Utility’s Pro-Poor Approach in Bangalore.Field Note.

Water and Sanitation Program. January 2007. BangaloreWater Service Delivery, Indigenous Model Shows the Way.Case Study.

Water and Sanitation Program. January 2007. SlumSanitation Program in Mumbai: Stakeholder ParticipationPaves Way for Sustainability. Case Study.

Build Support for Improving Services

Brocklehurst, Clarissa, Shagun Malhotra, and Alain Morel.June 2005. Rogues No More? Water Kiosk OperatorsAchieve Credibility in Kibera. Water and Sanitation Program,Field Note, www.wsp.org

Evaluation of Small-scale Providers of Water Supply andSanitation Services in Peru. WSP and Ministerio de Vivienda,Construcción y Saneamiento. Lima, June 2007.

Kariuki, Mukami, and Jordan Schwartz. October 2005.Small-Scale Private Service Providers of Water Supply andElectricity: A Review of Incidence, Structure, Pricing andOperating Characteristics. World Bank Policy Research

Working Paper 3727. Available online athttp://econ.worldbank.org

Triche, Thelma, Sixto Requeno, and Mukami Kariuki.December 2006. Engaging Local Private Operators in WaterSupply and Sanitation Services: Initial Lessons from EmergingExperience in Cambodia, Colombia, Paraguay, the Philippinesand Uganda. Water Supply and Sanitation Working Note 12,World Bank, p. 16.

Valfrey-Visser, Bruno, David Schaub-Jones, BernardCollignon, and Emmanuel Chaponnière. November 2006.Access through Innovation: Expanding Water Service Deliverythrough Independent Network Providers—Considerations forPractitioners and Policymakers. Building Partnerships forDevelopment, www.bpdws.org

Wampler, Brian. October 2000. A Guide to ParticipatoryBudgeting. http://www.internationalbudget.org/resources/library/GPB.pdf

World Bank. November 2006. Identifying Appropriate Policyand Regulatory Frameworks for SPSPs in the Water Sector:The Role of SPSP Associations? Synthesis Report. Water andEnergy Department.

Eliminate Administrative and Legal Barriers

Alfaro, Raquel. November 1997. Linkages betweenMunicipalities and Utilities: An Experience in OvercomingUrban Poverty. Working Paper, Water andSanitation Program.

‘Best Practices—Orangi Pilot Project.’ Water for Asian CitiesProgram web site: http://www.unwac.org/showhtml.php?filename=bestp_8

Better Water and Sanitation for the Urban Poor, GoodPractice from sub-Saharan Africa, Water Utility Partnership forCapacity Building (WUP) Africa, July 2003.

Brocklehurst, Clarissa, Shagun Malhotra, and Alain Morel.June 2005. Rogues No More? Water Kiosk OperatorsAchieve Credibility in Kibera. Water and Sanitation ProgramField Note. www.wsp.org

Caseley, Jonathan. December 2003. Blocked Drains andOpen Minds: Multiple Accountability Relationships andImproved Service Delivery Performance in an Indian City. IDSWorking Paper 211.

Connors, Genevieve. 2007. Watering the Slums: How a Utilityand its Street-Level Bureaucrats Connected the Poor inBangalore. Ph.D. Dissertation, Massachusetts Instituteof Technology.

Davis, Jennifer, and Sunil Tanka. The Hyderabad MetropolitanWater Supply and Sewerage Board. Massachusetts Instituteof Technology. A paper written for Henry Lee, Lecturer inPublic Policy at the Kennedy School of Government. Available

70


online at: http://ocw.mit.edu/NR/rdonlyres/Urban-Studies-and-Planning/11-479Spring-2005/3AFFDD6C-7096-4CC8-85ED-89839F8BAC15/0/pm2background.pdf

Dickson, Eric. November 2006. Management Models ofWater and Sanitation: Approaches to Decentralization inHonduras. International Development Research Center(Canada), Urban Poverty and Environment Program.

Gramalaya and WaterAid India. February 2007. TiruchirapalliShows the Way: Community-Municipality-NGO Partnershipfor Citywide Pro-Poor Slums Infrastructure Improvement.Policy paper.

School of Planning, Center for Environmental Planning andTechnology. n.d. Wealth Creation and Well Being Impacts ofSlum Upgradation and Improved Service Delivery to thePoor—A Case Study of Slum Networking Project,Ahmedabad. Ahmedabad.

Shukla, Shikha. 2005. Ensuring Access of Urban PoorCommunities to Basic Services. Water and SanitationProgram–South Asia, New Delhi.

Shukla, Shikha. June 2007. ‘Case Note on HMWSSB’s MetroCustomer Care.’ Prepared for Guidance Notes on GrievanceRedressal Mechanisms, for WSP-SA (PerformanceImprovement Program).

Water and Sanitation Program. January 2007. BangaloreWater Service Delivery: Indigenous Model Shows the Way.Case study.

Strengthen Capacity, Autonomy,and Accountability of Service Providers andProvide Incentives to Serve the Poor

Asian Development Bank. 2004. ‘The Role of Small-ScalePrivate Water Providers in Serving the Urban Poor’, CaseStudy No. 11 in Bringing Water to the Poor, Selected ADBCase Studies.

Barnes, Nancy, and Abdelkarim Asa’d. 2003. A ChallengingExperience in Organization Development, a Guidebook. Thisreport is based on the experience of the Jerusalem WaterUndertaking. For more information see: www.jwu.org orwww.gtz.de

Brocklehurst, Clarissa, and Jan G. Janssens. January 2004.Innovative Contracts, Sound Relationships: Urban WaterSector Reform in Senegal. World Bank, Water Supply andSanitation Sector Board Discussion Paper No. 1.

Brocklehurst, Clarissa, C.B. Evans, and R. Kariuki. 2003. NewDesigns for Water and Sanitation Transactions: MakingPrivate Sector Participation Work for the Poor. Water andSanitation Program and PPIAF.

Connors, Genevieve. Watering the Slums: How a Utility andits Street-Level Bureaucrats Connected the Poor in

Bangalore. Ph.D. Dissertation, Massachusetts Institute ofTechnology, 2007.

Ehrhardt, David, Eric Groom, Jonathan Halpern, and SeiniO’Connor. Economic Regulation of Urban Water andSanitation Services: Some Practical Lessons. World Bank,forthcoming, 2007. (Discusses the basic principles and thedesign of regulation to fit the local context. A shortpractitioners’ note is also being prepared.)

Mugisha, Silver. April 2006. Performance Assessment andMonitoring of Water Infrastructure: An Empirical Case Studyof Benchmarking in Uganda.

Pilgrim, Nick, Bob Roche, John Kalbermatten, Cathy Revels,and Mukami Kariuki. 2007. Town Water Supply andSanitation Initiative, Principles of Town Water Supply andSanitation (Vol. I); and Guidance Manual and TrainingModules (Vol. II). World Bank, Bank–NetherlandsWater Partnership.

Public Affairs Foundation. n.d. Citizen Report Cards:A Resource Kit. Bengaluru.

Tremolet, Sophie. May 2006. Adapting Regulation to theNeeds of the Poor: Experience in Four East AfricanCountries. Building Partnerships for DevelopmentResearch Series.

Tremolet, Sophie, and Jonathan Halpern. June 2006.Regulation of Water and Sanitation Services: Getting BetterServices to Poor People. OBA Working Paper Series, No. 8,Global Partnership on Output-Based Aid.

Tremolet, Sophie, and Catherine Hune. August 2006. TakingAccount of the Poor in Water Sector Regulation. Water andSanitation Working Paper Series No. 11, World Bank.

Warglé, Swarnim, Janmejay Singh, and Parmesh Shah.February 2004. Citizen Report Card Surveys—A Note on theConcept and Methodology. Social Development Notes,Participation and Civic Engagement, Note No. 91,World Bank.

World Bank. January 2006. India Water Supply andSanitation: Bridging the Gap between Infrastructure andService. Background Paper, Urban Water Supplyand Sanitation.

Adopt Appropriate Investment Finance,Cost Recovery, and Subsidy Policies

Brocklehurst, Clarissa, and Jan G. Janssens. January 2004.Innovative Contracts, Sound Relationships: Urban WaterSector Reform in Senegal. World Bank, Water Supply andSanitation Sector Board Discussion Paper No. 1.(Tariffs were increased gradually over several years whilesubsidies were gradually decreased until full cost recoverywas attained.)

71

Ehrhardt, David, Eric Groom, Jonathan Halpern, and SeiniO’Connor. Economic Regulation of Urban Water andSanitation Services: Some Practical Lessons. World Bank,forthcoming, 2007. (Discusses the basic principles and thedesign of regulation to fit the local context. A practitioners’note is also being prepared.)

Kingdom, Bill, Roland Liemberger, and Philippe Marin.December 2006. The Challenge of Reducing NonrevenueWater (NRW) in Developing Countries: How the Private SectorCan Help: A Look at Performance-Based Service Contracting.Water Supply and Sanitation Board Discussion Paper Series,Paper No. 8. World Bank.

Makino, Midori. 2002-03. Water Tariffs and Subsidies inSouth Asia. Papers 1 through 5, Water and SanitationProgram–South Asia.

World Bank. January 2006. India Water Supply andSanitation, Bridging the Gap between Infrastructureand Service. Background Paper, Urban Water Supplyand Sanitation.

Overcome Physical and Technical Barriers

Asian Development Bank, 2004. ‘Water for Slums: PrivateSector Participation in Manila.’ Case No. 11 in Bringing Waterto the Poor: Selected ADB Case Studies. (Flexible technicalstandards allowed the installation of connections to plasticpipes above ground.)

Center for Science and Environment. 2000. A WaterHarvesting Manual for Urban Areas: Case Studies from Delhi.New Delhi.

Center for Science and Environment. 2007. A WastewaterRecycling Manual for Urban Areas with Case Studies.New Delhi.

Dickson, Eric. November 2006. Management Models ofWater and Sanitation: Approaches to Decentralization inHonduras. International Development Research Center(Canada), Urban Poverty and Environment Program.(Describes the rainwater collection systems in Laguna delPedregal, among other innovations.)

Foster, Vivien. n.d. Condominial Water and SewerageSystems: Costs of Implementation of the Model,El Alto–Bolivia/Pilot Project. Economic and FinancialEvaluation, Water and Sanitation Program.

Godfrey, Amaka, ed. 2005. Low-Cost Toilet Options:A Catalogue. WEDC.

Melo, Jose Carlos. August 2005. The Experience ofCondominial Sewerage Systems in Brazil: Case Studies fromBrasilia, Salvador and Parauapebas. World Bank.

National Institute of Urban Affairs. June 2005. Status of WaterSupply, Sanitation and Solid Waste Management in Urban

72

Areas. Sponsored by Central Public Health and EnvironmentalEngineering Organization (CPHEEO), Ministry of UrbanDevelopment, Government of India.

Pickford, John. 1995. Low-Cost Sanitation: A Survey ofPractical Experience. WEDC.

Town Water Supply and Sanitation Initiative. 2006. Vol. I:Principles of Town Water Supply and Sanitation and Vol. II:Business Planning for Town Water Services, GuidanceManual. Bank–Netherlands Water Partnership Project #043.The World Bank Group, Washington, DC.

Water and Sanitation Program, 2001. Durban Metro Water,Private Sector Partnerships to Serve the Poor.

World Bank. January 2006. India Water Supply andSanitation: Bridging the Gap between Infrastructure andService. Background Paper, Urban Water Supply andSanitation, pp. 18-19.

Organizations and Institutions

American Water Works Association Research Foundation(www.awwarf.org)

Center for Science and Environment, New Delhi(www.cseindia.org)

Global Program on Output-Based Aid (www.gpoba.org)

Gramalaya, an NGO that promotes health and hygieneeducation, promotion of self-help groups among women,construction of low-cost housing and toilets; active in theslums of Tiruchirapalli (www.gramalaya.org )

National Water and Sewerage Corporation of Uganda(www.nwsc.co.ug)

Self-Employed Women’s Association (SEWA), a nonprofitorganization that advocates for the rights of women workingin the informal sector, conducts research on the contributionsand working conditions of women, and develops strategiesfor working with women who work in the informal sector(www.SEWA.org)

Thai Rating and Information Service(www.tris.co.th/index.html)

The Administrative Staff College of India (ASCI) has promotedthe creation of professional associations (www.asci.org.in)

The Orangi Pilot Project Research and Training Institute(www.oppinstitutions.org)

WaterAid, U.K.-based NGO that promotes access to safewater, sanitation, and hygiene education (www.wateraid.org)

Water, Engineering and Development Center,Loughborough University, the United Kingdom(www.wedc.lboro.ac.uk)


WSP OfficesWater and Sanitation Programc/o World Bank,1818 H St NWWashington, DC 20433, USAPhone: (+1 202) 473-9785Fax: (+1 202) 522-3313, 522-3228E-mail: [email protected]

Water and Sanitation Programc/o World Bank, Hill Park BuildingP.O. Box 30577-00100Nairobi, KenyaPhone: (+254-20) 322 6334Fax: (+254-20) 322 6386E-mail: [email protected]

Water and Sanitation Programc/o World BankJakarta Stock Exchange BuildingTower 2, 13th Floor JI. Jend. SudirmanKav. 52-53, Jakarta 12190, IndonesiaPhone: (+62-21) 5299 3003Fax: (+62-21) 5299 3004E-mail: [email protected]

Water and Sanitation ProgramLatin America and the Caribbeanc/o World Bank, Alvarez Calderón N. 185San Isidro, Lima 27, PerúPhone: (+51-1) 615-0685Fax: (+51-1) 615-0689E-mail: [email protected]

Water and Sanitation Programc/o World Bank, 55 Lodi EstateNew Delhi 110 003, IndiaPhone: (+91-11) 2469 0488/2469 0489Fax: (+91-11) 2462 8250E-mail: [email protected]

August 2009

WSP MISSION:To help the poor gain sustained accessto water and sanitation services.

WSP DONORS:Australia, Austria, Canada, Denmark, Finland,France, the Bill and Melinda Gates Foundation,Ireland, Luxembourg, Netherlands, Norway,Sweden, Switzerland, the United Kingdom,the United States, and the World Bank.

AUTHORS:Arthur McIntosh, Thelma Triche, andGeeta Sharma

TASK MANAGER:Geeta Sharma

TASK TEAM LEADERS:Anup Wadhawan (formerly WSP),Glenn Pearce-Oroz, and Dennis Mwanza

PHOTO CREDITS:WSP

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