Overview: Water & Sanitation

USAID & WATER

• Productive uses of water

• Water resources management (transboundary)

• Water supply, sanitation and hygiene

- Utility reform, financing, reconstruction

- Hygiene behavior change (handwashing)

- Point of use water treatment

- Basic Sanitation

• Humanitarian Assistance

Senator Paul Simon Water for the Poor Act 2005

• Requires strategy for USG investments in water internationally

• Focus “affordable and equitable access” to safe water and basic sanitation (MDG-like language)

• “within the context of sound water resources management”

• Act takes us through to 2015

ACCESS TO IMPROVED DRINKING WATER & SANITATION

Source: WHO and UNICEF 2004

Water

Sanitation

DEFINITIONS OF MDG INDICATORS

Improved drinking water sources • Household connection • Public standpipe • Borehole • Protected dug well • Protected spring • Rainwater collection

Improved sanitation facilities • Connection to a public sewer • Connection to a septic system • Pour-flush latrine • Simple pit latrine** • Ventilated improved pit latrine

Unimproved drinking water sources• Unprotected well • Unprotected spring • Rivers or ponds • Vendor-provided water • Bottled water* • Tanker truck water

Unimproved sanitation facilities• Public or shared latrine • Open pit latrine • Bucket latrine

* Bottled water is not considered improved due to limitations in the potential quantity, not quality, of the water.

** Only a portion of poorly defined categories of latrines are included in sanitation coverage estimates.

SERVICE DELIVERY MODELS FOR TOWNS AND RURAL AREAS

• Community-Based Organizations (CBOs): Community management is currently the dominant model.

• Private Small Service Providers:Dominant in urban areas, but rapidly gaining prominence in rural areas

• Households as Self-Service and Neighborhood Providers:Dominant in many rural areas.

CONTRACTING WITH SMALL SERVICE PROVIDERS

Water Authority and CBOsPrivate Service Providers and CBOs

Water Authority and Private Service Providers

URBANIZATION TREND

• This year the world passed a major milestone and the global population is more urban than rural.

• People are migrating to urban centers, particularly smaller cities and large towns in increasing numbers.

• Sub-Saharan Africa currently has the highest urban growth rate of any region.

Figure 4.1 Map of Harare, with particular reference to urban open spaces. Source: Agrocoplis, 2005, IDRC.

Adapted from Zinyama (1993, p10)

• In cities, the poor are often concentrated on the fringes or in pockets within the city center.

• Future growth in the the developing world, will be concentrated in urban areas in informal settlements.

• Much of this growth will be in secondary cities and towns.

TYPICAL URBAN WATER DISTRIBUTION SYSTEM

Source: WUP 2003

From Source to Household: How the Water Market Works in African Cities

Areas supplied by network water supplyor local networks

Main piped network

Outlying settlements in peri-urbanor non-networked urban areas

Borehole with small

localnetwork

River

Spring Well

Some ownersAsk for payment

PrivateHH

connection

Illegalconnection

Publicstandpipe

Privatestandpipe

Standpipe Manager Boreholes and HP

cart or rickshaw

Medium to highIncome

HouseholdsSupplied by

Network water(10-30%)

Low incomeHouseholds whoCollect and pay

For water(10-30%)

Medium to highIncome

Households whoHave waterdelivered(5-50%)

Very low incomeHouseholds

Who do not haveAccess to AlternativeSuppliers(5-30%)

Neighborhoodreseller

PERI-URBAN AREAS (POOR) ARE TYPICALLY NOT CONNECTED

River

Treatment Plant Reservoir

River

Treatment Plant

Creek

Storag e

TYPICAL WATER/WASTEWATER FUNCTIONS

MM

M

M

M

M

M

MSedimentatio

n

Highlift

M

Clear Water Storage

Contact Tank

Filters

Filters

Filters

Filters

Lagoons or Dewatering

Slud

geChlorine

Lowlift Fine Screen

Flocculatio n

Screen

Stabilization Ponds

PIPED SERVICE HAS LOWEST PRICE BY FAR

Source: WUP 2003

Water and sewerage utilities provide best hope for increasing access to water supply and sanitation

services in rapidly growing urban areas

BUT NOT WITHOUT MAJOR UTILITY REFORMS!

Illegal Connections - Indonesia Raw Sewage Leaking - Tanzania

LONG-LIFE ASSETS

Maintenance Repair Rehabilitation

Years

Func

tiona

l % MinimumService Level

Pumps – 15 yrsPipes – 25/40yearsCivil works – 50/100 years

DESIRED END STATE

A utility that is:

– Well managed– Operationally efficient– Able to meet demand /

extend service– At a reasonable

(optimal) price – Financially sustainable

• Decentralization• Corporatization & corporate

governance reform• Effective regulation• Incentive based operating contracts• Private sector participation• Shift from capital grants to

sustainable financing mechanisms

OBJECTIVE

• Autonomy

• Accountability

• Incentives

• Financial Sustainability

• Progressive improvement

TOOLS TO ACHIEVE OBJECTIVES

UTILITY REFORM

REQUIREMENTS FOR DECENTRALIZATION

Clearly defined transfer of assets, authority, and responsibility

Clearly defined performance standards

Effective regulatory arrangements

Workable financing mechanisms

17

Pipe laying in Dar

CORPORATIZATION DEFINED

Transformation of a public sector service provider to one with a commercial orientation

Guiding Principles

• Efficiency• Productivity• Financial sustainability• Accountability

KEY CHARACTERISTICS OF CORPORATIZATION

1. Distinct legal entity

2. Sound corporate governance

3. Sound financial management & accounting practices

4. Customer orientation

5. Use of data for effective performance measurement

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WIDE VARIETY OF ORGANIZATIONAL STRUCTURE

Who Owns Assets? Who Manages Assets?

What is Legal Status of Operator?

What is Legal Framework?

Govt. utility-direct management Govt. Govt. Govt. department Public

Public utility Authority Govt. Authority Public authority Public

Corporatized utility Govt. Corporate entity Corporation Public

Govt. utility-delegated management

Govt. Govt. or private Corporation Contract

Private Govt. /Private Private Corporation Contract

KEY ATTRIBUTES OF REGULATION

Coherence– Service standards and tariffs

are interrelatedPredictability and credibility

– Rules should be clear and unlikely to change

Legitimacy and accountability– Regulatory role and processes

need to be understood and accepted by customers

Degree of Private Sector Management Control

Level of Private Investment/ Risk

Management Contract

LeaseAffermage

Concession

Performance Agreement

Continuum reflecting: control, investment, risk

Private se

ctor arra

ngements

RANGE OF OPERATING CONTRACTS

REFORM TOOL SUMMARY

Decentralization – going local

Corporatization – acting private

Regulation – increasing accountability

Operating contracts – formalizing arrangements

Private sector participation – importing expertise

PRIVATE SECTOR ARRANGEMENTS

Type of Arrangement

Definition in the Toolkit of Operator Duties

Selected Responsibilities of

the Operator

Stylized Typical Profit Function for Operator

Selected Risks Typically Borne by the Operator – and Typical Share of Total

Project Risk

Ownership of Operating

Assets

Ownership of Infrastructure

Assets

Management Contract

Supplies management services to the utility in return for a fee

Providing management services to the utility

Fixed fee + bonus – managers’ salaries and related expenses

Depends on the nature of the performance bonus – very small

Contracting authority

Contracting authority

Affermage Runs the business, retains a fee (generally not equal to the customer tariff) based on the volume of water sold, but does not finance investments in infrastructure assets

Employing staff operating and maintaining the utility

(Affermage fee x volume of water sold) – operating and maintenance costs

Operating and commercial risks – significant

Operator Contracting authority

Lease Runs the business, retains revenue from customer tariffs, pays a lease fee to the contracting authority, but does not finance investments in infrastructure assets.

Employing staff operating and maintaining utility

Revenue from customers – operating and maintenance costs – lease fee

Operating and commercial risks – significant

Operator Contracting authority

Concession Runs the business and finances investment, but does not own the infrastructure assets

Employing staff operating and maintaining utility Financing and managing investment

Revenue from customers – operating and maintenance costs – finance costs– any concession fee

Operating, commercial, and investment-related risks – major

Operator Contracting authority

Divestiture Runs the business, finances investment, and owns the infrastructure assets

Employing staff operating and maintaining utility Financing and managing investment

Revenue from customers – operating and maintenance costs – finance costs– any license fee

Operating, commercial, and investment-related risks – major

Operator Operator

WATER & SANITATION SESSIONS

• Utility Reforms: what are the challenges and the solutions to improving utilities?

• Service Models for the Poor• Rural/Urban Water & Sanitation Issues• Water Operating Contracts• Water Resources• Sanitation & Hygiene• Operations & Maintenance

THANK YOU!