TRENDS IN RURAL Water SECTOR DEVELOPMENT

Harold LockwoodAguaconsult

Dr. Patrick Moriarty &Dr. Kurian Baby, IRC

Key findings from Triple S

TRENDS IN RURAL WATER SECTOR DEVELOPMENT

National Workshop on Sustainable RWSS

Government of Punjab, Chandigarh15 December 2011

WATER SERVICES THAT LAST …2

BACKGROUND TO TRIPLE-S

Six-year action research project - managed by IRC with partners

Funded by BMGF as part of WASH learning Contribute to shift from infrastructure to service

delivery approach:

Ghana, Uganda and Burkina Faso Global research and documentation Partnerships and advocacy


Range of sector reform, aid dependency and decentralisation

Analysis of trends – common opportunities and barriers to service delivery

Implications for policy and aid delivery

*Benin, Burkina Faso, Colombia, Ethiopia, Ghana, Honduras, India (Gujarat, Maharashtra and Tamil Nadu), Mozambique, South Africa, Sri Lanka, Thailand, Uganda and the USA

STUDY*


GLOBALLY POSITIVE PICTURE – WE ARE GETTING THERE

70% functional


RWSS DEVELOPMENT PHASE- ACROSS 13 COUNTRIES


RANGE OF SERVICE PROVIDER MODELS


CM PREDOMINATES, BUT PROFESSIONALISING

Increasing trend from volunteerism towards professionalised management:

Out-sourcing of specific functions (Honduras, Sri Lanka)

Applying good business practices (Programa de cultura empresarial Colombia)

Full out-sourcing of O&M and administration for more complex systems

Post-construction support is increasingly formalised part of sector policy - but not applied systematically and often under-resourced – positive emerging examples


POST-CONSTRUCTION SUPPORT – CRITICAL FOR RURAL OPERATORS

Institutional modality

Type of model Examples

Association of community-based service providers

Delegated model. In cases this is a de facto delegation and not formal

National Rural Water Association in the USA AHJASA and AJAMs in HondurasSistema Integrado de Saneamento Rural, SISAR, NE Brazil

Direct support by local government

Devolution model Uganda, Ghana, Thailand, Municipal promoter, Nicaragua ; Cali municipality, Colombia

Local government subcontracting a specialised agency

Delegation between local government and a specialised agency

Urban utility (e.g. in Colombia and Senegal).Private company or NGO as Support Services Agency (South Africa)

Government or parastatal agencies

Centralised or deconcentrated models

Circuit rider model, SANAA in Honduras; AyA in Costa Rica DDF (District Development Fund) in ZimbabweSENASBA in Bolivia. Regional utilities – Chile

NGOs and faith-based organisations

Delegated model. In most cases, this is a de facto delegation and not a formal one.

Ad hoc examples where NGOs have specific support programmes, for example through ASSA in El Salvador

Private sector Delegated model. In most cases, this is a de facto delegation and not a formal one.

Contracted by government agency - STEFI in Mali - or individual entrepreneurs providing post-construction support, particularly hand-pump mechanics or area-based mechanics (Uganda).


POST-CONSTRUCTION SUPPORT – AT WHAT COSTS?

Little (comparable) data – lack of disaggregated costs

PCS systems provide different functions/types of services – supply and demand based approaches

Costs vary with service level, technology and topography

Case Institutional modality

Estimated cost US$/capita/year

% of total costs of service

S.A. Alfred Nzo Private company 5.24 65%

S.A. Chris Hani Private company 9.94 53%

SISAR, BBA Brazil Association 3.63 33%

Ghana District LG 0.67 3 – 19%

Mali Private company 0.34 n/a

Mozambique District 0.0012 n/a


INCREASING ROLE FOR LOCAL PRIVATE OPERATORS

CWSA policy to establish sliding scale of private sector provision across 3 of 4 management options with full delegation in in largest (>10,000)

Rwanda - management by private operators increased from 7% in 2003 to nearly 30% at end 2007

Implications for regulation of service providers – early experiences from Colombia


DECENTRALISATION AND SECTOR REFORM

South Africa, ThailandColombia, IndiaUganda, Ethiopia

Comprehensive and planned reforms for rural water

Well defined roles supported by policy/legislation

Honduras, Burkina Faso, Ghana, Mozambique

Reform processes not supported politically

More fragmented application in practice

Lack of clarity/conflicting roles


SERVICE AUTHORITY FUNCTIONS

Transfer of authority to local government despite little capacity and resources to do the job - fiscal decentralisation is limited in practice; districts engaged in local planning processes which cannot be supported

Functions decentralised in policy terms, but resistance and confusion over roles and responsibilities; CWSA/MMDAs Ghana, PHEDs in some states in India, SANAA Honduras (MoIWD, Malawi)

Positive examples of structured support to local government – Uganda, South Africa


HARMONISATION IS IMPROVING

Aid-dependent countries in study show improving picture of coordination and alignment - SWAp/progammatic mechanisms in Uganda, Benin and South Africa – moving forward in Ghana, Mozambique and Ethiopia

Improved coordination and common funding allows systematic capacity development – putting in place elements such as common monitoring frameworks and post-construction support

NGO investment programmes can be significant and often not integrated with government systems


FOCUS ON CAPITAL INVESTMENTS

Capital investment (taxes and transfers + small user contribution) and minor OpEx costs – well defined

Long-term recurrent costs, specifically for support and capital maintenance are less well defined – Uganda with regularised rehabilitation funds (~8%)

Assumptions of full cost recovery under community management proven to be (wildly) optimistic - in reality rural water tariffs (barely) cover OpEx costs

Even in USA ~50% capital maintenance comes from sources other than tariffs


USA: PUBLIC SUBSIDIES FOR RURAL WATER SERVICES

System Type Funding Source Very Small

25-500

Small

501-3300

Medium

3301-10000

Large

10001-100000

Very Large

>100,000

Overall Average

for All Size Categories

Publicly Owned Systems

Current Revenue 45 53 50 56 65 51DWSRF & Other

Government Loans

11 19 14 12 6 15

Government Grants or Principal Forgiveness

30 15 16 6 2 17

Private Sector Borrowing

9 11 17 25 27 14

Other 6 3 2 0 1 3

Average Percentage of Capital Improvement Funded by Source

Source: Pearson, 2007 in Gasteyer, 2011


Capital expenditure dominates

Recurrent expenditure and support effort

dominates

Coverage rates

25% 50% 75% 100%

Danger zone: as basic infrastructure is

provided, coverage risks stagnating at around 60 – 80%

Danger zone: as basic infrastructure is

provided, coverage risks stagnating at around 60 – 80%

Capital maintenance expenditure dominates

Effort and costs/financing needs change with increased coverage

Towards Sustainable services that last..

Recommendations


Capital expenditure dominates

Recurrent expenditure and support effort

dominates

Coverage rates

25% 50% 75% 100%

Capital maintenance expenditure dominates

~ US$ 5/capita/year for hand pumps

~ US$ 20/capita/year for small piped networks

~ US$ 5/capita/year for hand pumps

~ US$ 20/capita/year for small piped networks

Recap – as coverage rises management becomes more important


CapEx

OpEx + support

25% 50% 75% 100%

CapManEx

CapEx

OpEx + support

25% 50% 75% 100%

CapManEx

CapEx

OpEx + support

25% 50% 75% 100%

CapManEx

RECAP - DIFFERENT COUNTRIES AT DIFFERENT STAGES OF SECTOR DEVELOPMENT

Group 1: increasing coverage

Group 2: transitioning

towards service delivery approach

Group 3: consolidating

service delivery


CapEx

OpEx + support

25% 50% 75% 100%

CapManEx

20

Recommendations for countries with low coverage: focus on increasing coverage

Provide capital investment for the construction of new hardware while preparing ground for service delivery

Strengthen CBM – legalisation and formalisation with local government

Emphasise and invest in structures for post-construction support

Align DP programmatic support, particularly around implementation approaches – avoid fragmentation

Improve monitoring systems to focus on services


CapEx

OpEx + support

25% 50% 75% 100%

CapManEx

21

RECOMMENDATIONS FOR COUNTRIES WITH HIGH COVERAGE AND MATURE RURAL SECTORS:

CONSOLIDATING SERVICE DELIVERY

Provide technical support and limited investment through harmonised approaches

Asset management planning Capacity support to local

government Financial mechanisms for capital

maintenance Life-cycle cost analysis and more

investment in direct and indirect support

Regulation – monitoring of services and service providers

Strategies to reach the last 10-15% of un-served


Recommendations for countries in transition

As first order coverage is achieved for the majority, capital investment must continue while sustainable service delivery requires support in three related areas1.Sector reform and institution building2.Decentralisation and diversification3.Life-cycle costing

CapEx

OpEx + support

25% 50% 75% 100%

CapManEx


1. SUPPORT TO REFORM AND INSTITUTION BUILDING

Sustainability requires clarity of roles, availability of information and space for experimentation•Clarify institutional/policy frameworks•Development of systems to monitor both functionality and service delivery•Creation of regulatory capacity•Impact evaluation, space for learning, adaptation•Promote harmonisation around agreed sector-wide approaches


2. SUPPORT DECENTRALISATION & DIVERSIFICATION

Sustainable services depend on sustainable decentralised institutions and organisations - which need to be created (e.g. private sector) and supported•Capacity building of local government as part of public sector reform•Encouragement and support of local private sector (including local NGOs)•Increase in % of financing flowed through decentralised system(s)•Differentiate ‘rural’ market: allow for different service levels•Reduce role of INGOs as primary service providers or channels for financing


3. Adopt life-cycle costing

Services will only be sustainable where finances balance: inflows >= outflows•Ensure that identified sources of financing >= estimated life-cycle expenditure at both sector and system scale•Systematically collect and make available data on life-cycle costs (benchmark)•Create mechanisms for post construction support


CapEx

OpEx + support

25% 50% 75% 100%

CapManEx

SUMMING UP

Status quo will only bring us so far in terms of increased coverage

Need a step-change in sector development to move from (sub) basic coverage levels

Shift emphasis of financing and advice from ‘new infrastructure’ to ‘sustainable services’. Provide support to:

• Sector reform and institution building

• Decentralisation and diversification

• Life-cycle costing

70% functional


WATER SERVICES THAT LAST

www.waterservicesthatlast.org

THANK YOU


BENEFITS OF POST CONSTRUCTION SUPPORT ?

ASSA study in 60 communities, El Salvador, (Kasyer et el 2010)

BNWP study in 400 communities, 2009 Inconclusive evidence of

direct correlation between PCS and performance

No significant difference between demand or supply-based systems of PCS

But 15% increase in consumer satisfaction where support provided to operators (Bolivia)

Inconclusive evidence of direct correlation between PCS and performance

No significant difference between demand or supply-based systems of PCS

But 15% increase in consumer satisfaction where support provided to operators (Bolivia)

Control

Circuit rider


Expenditure on WASH Sector: Share of Drinking water and Sanitation in the Budget

Plan expenditure dominates - focus on coverage and creation of infrastructure.

Relative share of drinking water in the budget has increased only marginally.

Share of non-plan expenditure has increased while the share of plan expenditure declined over the period.


Expenditure on WASH Sector: Composition

More than 80 percent of the allocations are devoted to infrastructure.

Allocations towards minor works, mostly O&M on declining trend

Shift focus from asset creation to maintenance and management.


Relative proportion of disaggregated costs

Capital Expenditure (Hardware) is the highest (56%) followed by Household Capital Expenditure on Hardware (19%) ( Storage structures, booster pumps)

Capital Maintenance expenditure i accounting to 10% - met from adhoc allocations

HH Support costs are as high as 6% -unreliability of the sources leading to alternatives including buying

If only public expenditure is taken CapEx and CapManEx take 90% of the allocation

Soft ware costs negligible


Disaggregated costs – Service Delivery India

Capital Expenditure (Hardware 56%), Household CapEx 19%, ( Storage structures, booster pumps)

Capital Maintenance expenditure accounting to 10% - from adhoc allocations

HH Support costs are as high as 6% -unreliability of the sources leading to alternatives including buying

If only public expenditure is taken CapEx and CapManEx take 90% of the allocation

Soft ware costs negligible


Skewed distribution of HH connections and service level – tail end pressure lowVillage also has a RO plant selling approx 11,000 l/day but not to all HHs

Village level realities- Case of Venkatapuram, AP India


Village level realities- Case Study of Venkatapuram


Evolution of Chris Hani District Municipality O&M Arrangements

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