Financial sustainability and affordability of WASH services: Indicator proposals for global monitoring
1. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring1 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Financial Sustainability and
Affordability of WASH Services:
Indicator Proposals for Global
Monitoring
Guy Hutton
Based on a review carried out for UN Office for the High
Commission on Human Rights and work of the JMP Post-
2015 Working Groups
2. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring2 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Two Key, Linked Issues
Financial Sustainability
Fundamental to
Sustainable Use of Improved
WASH Services
Investments that cannot be
maintained and operated
over the duration of their
design life is a waste of
resources
Affordability
Fundamental to the Human
Right and Achieving
Universal Access
Unaffordable: reduced
consumption and hence
many socio-economic
impacts
3. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring3 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Achieving the Right Balance Between
Financing (3 T’s) and Affordability
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Subsidy Household
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Subsidy Household
4. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring4 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
This presentation
Introduce the indicators proposed for
global monitoring post-2015
What do these indicators tell us? What do
they not tell us?
What should be the thresholds values?
How will these indicators be measured?
5. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring5 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Financial Sustainability: Indicators
Does revenue at least cover the recurrent costs?
Ratio of annual revenue to annual expenditure on
operating expenditures, capital maintenance, and debt
servicing
Are recurrent costs in balance with the infrastructure
costs?
Ratio of annual expenditure on operating expenditures,
capital maintenance and debt servicing to annualized
value of capital assets
6. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring6 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Example of data distribution (Indicator 1)
Ratio of Annual Revenue to Annual Recurrent Expenditure
68%of providers do
not cover their
operating costs
7. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring7 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Issues in Measurement & Interpretation
Are capital costs being recovered? Therefore, is
100% for Indicator 1 enough?
What evidence is there for the ‘right’ ratio for
Indicator 2? Would this vary across providers?
Data sources:
– Global and regional utility performance initiatives?
Aggregation: can we aggregate across providers to
get a national picture? Is aggregation meaningful?
8. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring8 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Affordability
“Any payment for water services has to be based on the principle
of equity, ensuring that these services, whether privately or
publicly provided, are affordable for all, including socially
disadvantaged groups. Equity demands that poorer households
should not be disproportionately burdened with water expenses
as compared to richer households.” (para 27)
General Comment 15, The right to water
How does actual WASH financial expenditure compare with
a universal ‘affordability’ threshold?
Percentage of population in the poorest quintile whose
financial expenditure on water, sanitation and hygiene is
below 3% of the national poverty line (rural and urban).
9. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring9 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Example of data distribution
Household WASH expenditure as proportion of Poverty Line
39%of households spend more
than 3% of NPL on WASH
10. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring10 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Can affordability indicators be measured?
Stats can be provided on expenditure for ‘representative’
populations sampled in national surveys
– Household budget surveys
– Living standards measurement surveys
But incomplete survey data for global monitoring
Current focus of survey questions makes it harder to monitor in
contexts where services are not networked
Expenditure is what people actually pay, not what they would
pay for a minimum service
– Some: affordable but not getting a minimum service
– Some: unaffordable, but that is for more than the minimum
11. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring11 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Comparing like-with-like?
WASH expenditure as proportion of National Poverty Line
No spending –
inadequate service?
High spending –
above minimum
service?
Therefore estimate lifeline costs? – Definition?
12. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring12 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Issues in Measurement and Interpretation
Is there a ‘right’ affordability threshold
–Variation in thresholds of countries/agencies
–Can there be a single threshold for all
population groups?
Should we monitor the non-poor? If so,
should we use NPL?
Indicator excludes several types of WASH
expenditure and also non-financial cost
items
13. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring13 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Expenditure items excluded
Captured in
Expenditure surveys
Water and wastewater
charges (regular costs(
Financial costs not
separately captured in
Expenditure surveys
Specific household
works; connection; soap
Non-financial costs
Access time; own labour
costs for construction
Most
commonly
incurred by
poor
households
Subsidies
14. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring14 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Global – national alignment ?
The interest for an affordability indicator is
potentially 2-fold:
• Is there an affordability problem nationally
(in representative sample)? E.g. proportion
of poor households paying more than 3%
• Where is improved programming needed to
relieve financial burden? E.g. identifying
specific households and neighbourhoods
that have affordability issues
2 different monitoring systems? => Need to
align interests of global and national monitoring
15. Financial Sustainability and Affordability
of WASH Services: Indicator Proposals
for Global Monitoring15 |
IRC Symposium “Monitoring Sustainable WASH”
– Addis Ababa 11.04.2013
Conclusions
Positive that these questions are in the post-2015
technical proposal and have been translated in 3 sub-
indicators only
Further research needed on existing proposals
– Thresholds (per provider type)
– Aggregation
– Measurability
Additional indicators can help fill in gaps
Editor's Notes
World Health Organization अप्रॆल 18, 2013
Before this slide: In the post MDG technical proposal there are two elements which relate with monitoring finance: 1)financial sustainability and 2 ) affordability Then introduce 1) financial sustainability and add something about how sustainability has different dimensions, how this time in the SDGs we actually need to monitor it, one of the dimensions is the financial one but... What kind of financial indicator can be meaningful measured at global level ?