Models of Aggregation for Water Supply and Sanitation Provision

1. Models of Aggregation for Water Supply and Sanitation Provision Capacity Building Module

2. Outline of the presentation • What is aggregation? • Aggregation models • The process of aggregation • Summary

3. Aggregated service provider aggregation What is Aggregation? Grouping of several municipalities into a single administrative structure for the provision of a service town A town B town D town C

4. Public private partnership Scaling up demand response approach Strengthening community management models Professional support to medium operators Aggregation of small towns Small scale independent providers Engaging the public sector Aggregation: one of many management models

5. Aggregation: Essential Pre-requisites • Political support and commitment • Identify a “Champion” to pilot the aggregation • Adapt approach to local culture & circumstances • Keep public informed of benefits attained and progress • Consider whether a carefully-constructed, well-implemented public consultation, education and communication program is necessary according to local circumstances

6. BOTTOM UP & TOP DOWN APPROACHES - DEMAND OR SUPPLY DRIVEN Government Driven (Supply) Central Government Province District Sub District Village (Customer Base) Customer Driven (Demand) Drivers for Aggregation (1)

7. Improved management systems & technology Cost sharing Access to water resources Economies of scale aggregation Access to private sector, local &/or international Access to professional & technical resources, in-house or procured Access to finance Drivers for Aggregation(2)

8. Outline of the presentation • What is aggregation? • Aggregation models • The process of aggregation • Summary

9. Aggregation: no standard blueprint • Each aggregation has a unique character • Tailor aggregation to specific circumstances and needs • Lessons can be drawn from other aggregations

10. SCALE Several Towns Regional Provider National Territory Two Towns Hungary, The Philippines, France Italy, England and Wales, The Netherlands Brazil Scale: The optimum size of utility

11. Scope of Aggregation SCOPE What services? A single service e.g. bulk supply All municipal services All water and sanitation services Nimes (France), The Netherlands only water Dunavarsany (Hungary), water first, waste water later Italy, England and Wales What functions? A single function e.g. procurement All functions Several functions

12. temporary permanent Governance arrangements Association Time-limited agreement for specific purpose Permanent aggregated structure

13. Governance arrangements: Voting rights in Board ….Or a mixture of the various methods

14. Outline of the presentation • What is aggregation? • Aggregation models • The process of aggregation • Summary

15. Process of aggregation PROCESS Voluntary with incentives Mandated Voluntary Hungary Italy, The Netherlands, England and Wales The Philippines, France, Brazil

16. Stages in the Aggregation Process • Initiate the aggregation process • Identify key drivers for aggregation • Identify aggregation candidates and stakeholders • Choose an appropriate consultation process • Establish group to lead the process • Choose an appropriate aggregation process Preparatory Phase • Assess drivers, constraints, and potential issues • Assess benefits and costs for each entity • Assess benefits and costs for alternative groupings Analytical Phase • Choose the most appropriate aggregation model • Define an aggregation plan • Define procedure to resolve disputes • Monitor Progress against that plan Implementation Phase

17. Entry and Exit Conditions • Entry and exit conditions must be carefully specified • Entry implies commitment and obligations to partners and should not be entered into lightly • Exit has potential to damage/weaken the aggregated entity and should be made difficult and expensive!

18. Is aggregation a suitable option? Adding up the pros and cons for the individual municipality

19. Essential Trade Off

20. Outline of the presentation • What is aggregation? • Aggregation models • The process of aggregation • Summary

21. Aggregation: define scale, scope and process SCALE National Territory Two Towns SCOPE A single service or function All services and functions PROCESS Voluntary Mandated

22. Potential Benefits • Improved efficiency of service delivery (economies of scale) • Enhanced professional capacity in service provision • Cost sharing to mitigate high-cost systems • Multiple utility ownership will enhance autonomy of the utility

23. The politics of aggregation • Need to balance interests of all participating municipalities to overcome resistance • Role of central government: assist; incentivize; and/or mandate • Aggregation without asset ownership transfer can overcome resistance (but gives aggregated utility less autonomy) • Aggregation must be seen as one element of broader reform process: • Requires corporatization • Might require reform of the oversight of service provider • Might require adjustment (standardization) of tariffs and subsidies • Sometimes combined with private sector participation Actual benefits depend on political & other local circumstances

24. More information Available from: www.worldbank.org/watsan