TRENDS IN RURAL Water SECTOR DEVELOPMENT

1. Harold Lockwood Aguaconsult Dr. Patrick Moriarty & Dr. Kurian Baby, IRC TRENDS IN RURAL Water SECTOR DEVELOPMENT Key findings from Triple S National Workshop on Sustainable RWSS Government of Punjab, Chandigarh 15 December 2011

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

3. Study* • 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

4. globally positive picture – we are getting there 70% functional

5. RWSS DEVELOPMENT PHASE- ACROSS 13 countries

6. Range of service provider models

7. 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 culturaempresarial 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

8. Post-construction support – critical for rural operators

9. 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

10. 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

11. Decentralisation and sector reform South Africa, Thailand Colombia, India Uganda, Ethiopia • Comprehensive and planned reforms for rural water • Well defined roles supported by policy/legislation • Reform processes not supported politically • More fragmented application in practice • Lack of clarity/conflicting roles Honduras, Burkina Faso, Ghana, Mozambique

12. 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

13. 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

14. 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

15. USA: public subsidies for rural water services Average Percentage of Capital Improvement Funded by Source Source: Pearson, 2007 in Gasteyer, 2011

16. Effort and costs/financing needs change with increased coverage Danger zone: as basic infrastructure is provided, coverage risks stagnating at around 60 – 80% Sector effort and costs Recurrent expenditure and support effort dominates Capital expenditure dominates Capital maintenance expenditure dominates 25% 50% 75% 100% Coverage rates

17. Towards Sustainable services that last.. Recommendations

18. Recap – as coverage rises management becomes more important • ~ US$ 5/capita/year for hand pumps • ~ US$ 20/capita/year for small piped networks Sector effort and costs Recurrent expenditure and support effort dominates Capital expenditure dominates Capital maintenance expenditure dominates 25% 50% 75% 100% Coverage rates

19. Group 1: increasing coverage Group 2: transitioning towards service delivery approach Group 3: consolidating service delivery Recap - Different countries at different stages of sector development OpEx + support OpEx + support OpEx + support CapEx CapEx CapEx CapManEx CapManEx CapManEx 25% 25% 25% 50% 50% 50% 75% 75% 75% 100% 100% 100%

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 OpEx + support CapEx CapManEx 25% 50% 75% 100%

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 OpEx + support CapEx CapManEx 25% 50% 75% 100%

22. 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 areas • Sector reform and institution building • Decentralisation and diversification • Life-cycle costing OpEx + support CapEx CapManEx 25% 50% 75% 100%

23. 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

24. 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

25. 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

26. 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 OpEx + support 70% functional CapEx CapManEx 25% 50% 75% 100%

27. Water services that last THANK YOU www.waterservicesthatlast.org

28. Benefits of post construction support ? BNWP study in 400 communities, 2009 ASSA study in 60 communities, El Salvador, (Kasyer et el 2010) • 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

29. 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.

30. 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.

31. 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

32. 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

33. Village level realities- Case of Venkatapuram, AP India • Skewed distribution of HH connections and service level – tail end pressure low • Village also has a RO plant selling approx 11,000 l/day but not to all HHs

34. Village level realities- Case Study of Venkatapuram

35. Evolution of Chris Hani District Municipality O&M Arrangements