Financing Household Sanitation for the Poor

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WASH 2011 conference: Eduardo A. Perez
Senior Sanitation Specialist, WSP

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  • Big Questions: Who pays how much, in what way, and for what?Govt, HH share?Cash, credit, or in-kind?Basic slab, or full structure with washroom?
  • Impact on sustainable access to services: did the project contribute to increasing access to sanitation? Costs: are the costs of the resulting sanitation facilities reasonable and affordable by the beneficiaries? Effectiveness in the use of public funds: were public funds used in a way that maximized impact? Poverty targeting: did the program seek to target the poor and was the program effective at doing so? Financial sustainability: could the approach be sustained over time without the need for external support? Scalability: could scaling-up the approach to cover those who are not yet covered be done at a reasonable cost?
  • Bangladesh – Community Led Total Sanitation (CLTS): very basic rural sanitation, reward for outcome and upfront subsidy for poorest India (Maharashtra) CLTS: Very basic rural sanitation, sanitation-linked reward for outcome, and hardware subsidy for poorest after successVietnam (3 cities sanitation project): Revolving fund with subsidized loans in urban areas for HH bathroom and septic system Mozambique :Hardware subsidy to providers in urban areasSenegal : Hardware subsidy to users for various options in DakarEcuador : Hardware subsidy to users in rural areas for bathroom units ( with wash basins)
  • Financing Household Sanitation for the Poor

    1. 1. Financing Household Sanitation for the Poor<br />Eduardo A. Perez<br />Senior Sanitation Specialist, WSP<br />
    2. 2. Background<br />What: Field studies to review six programs with a history of success (Bangladesh, Ecuador, Maharashtra (India), Mozambique, Sénégal, Vietnam)<br />Big Questions: Who pays how much, in what way, and for what?<br />
    3. 3. What was assessed?<br /><ul><li>Whether the financial approach leveraged increased sanitation access?
    4. 4. Whether the costs were affordable by the beneficiaries and the government?
    5. 5. Were public funds used in a way that maximized impact?
    6. 6. Whether subsidies were effectively targeting the poor?
    7. 7. Whether the financial strategy was sustainable?
    8. 8. Could the financial approach be scale up?</li></li></ul><li>Six Different Approaches<br />Bangladesh – Community Led Total Sanitation (CLTS): reward for outcome and upfront subsidy for poorest <br />India (Maharashtra) CLTS: sanitation-linked reward for outcome, and hardware subsidy for poorest after success<br />Vietnam (3 cities sanitation project): Subsidized revolving loan fund for hardware in urban areas <br />Mozambique: Hardware subsidy to providers in urban areas<br />Senegal: Hardware subsidy to users in urban areas <br />Ecuador: Hardware subsidy to users in rural areas <br />
    9. 9. A Distribution of Financial Approaches<br />100%<br />E<br />Ecuador<br />Mozambique<br />S<br />Mo<br />Sénégal<br />Hardware subsidies as % of public investment<br />V<br />Vietnam<br />Ma<br />Maharashtra<br />100%<br />Bangladesh<br />B<br />50%<br />Public investment as % of total investment in HH sanitation<br />
    10. 10. Breakdown of Costs<br />
    11. 11. Types of Subsidy<br />% of sanitation costs<br />
    12. 12. Two Measures of Public Finance Impact<br />
    13. 13. Accessibility for the Poor & Equity<br />
    14. 14. Key Findings<br />Households (including the poor) are key investors in on-site sanitation; careful program design to create demand maximizes investments.<br />Public funding and related financial strategy have a profound influence on equity, scale, sustainability, levels of service and costs.<br />Software activities can have a substantial cost which public funding should take into account.<br />
    15. 15. Key Findings, continued<br />Credit schemes in urban areas can be effective at facilitating and leveraging substantial HH investment.<br />Effectively targeted hardware subsidies reached the poor and helped real affordability constraints – but hardware subsidies that comprised a large percentage of total latrine costs reached less HHs and were less sustainable.<br />The provision of output-based or outcome-based subsidies to sanitation entrepreneurs can stimulate demand. <br />
    16. 16. Key Findings, continued<br />Most relevant question: Not “subsidy” or “no subsidy” but rather, “How best can we invest public funds to maximize impact?”<br />
    17. 17. Operational Implications<br />Early planning and careful design of finance promote project realism and sustainability . . . don’t “leave for later.”<br />M&E critical to know performance and adapt financial approaches . . . know your numbers!<br />Programs must define the right level and form of public and HH investment . . . not just “who pays what?” but “how and when?”<br />Use this report as a starting point!<br />

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