Making Services Work for Poor People:
Water and SanitationDecember 18, 2004
Junaid Ahmad
OECD, Paris
2
The Traditional Approach
Pricing services Level
Chilean subsidy Colombian subsidy Johannesburg mechanism
Pricing services Transition
Guinee-Conakry Time path for price increase
– Linked to service improvement– IDA financing
Access Lower connection cost
welfare losses arising from higher utility tariffs triggered by the reform, are more than compensated for by the welfare gains associated with expanding access to services (McKenzie and Mookherjee, 2002).
But subsidy and access for what?
3
Ground RealitySouth Asia as an example
Not one city or town in South Asia has 24 hour, 7 days a week water supply Hyderabad and Karachi : 3 hours every two days Delhi and Dhaka: 6-8 hours a day Intermittent supply: health implications
Unaccounted for water: over 50% Cities in South Asia: leaking bucket
Cost recovery: very low --- 20% of O&M Sanitation
Open defecation Little waste water treatment (less than 8-10%)
Decaying infrastructure: no O&M Scale without sustainability
30-40% not connected Use of infrastructure for patronage and politics!!
4
Re-defining the problem
The “ground realities” suggest that “pricing of services” is not the problem of making a system “pro-poor”
Making services work is essential to making services work for poor people Going from 15-16 hours of water a day to 24 hours (or increasing access by
10%) is a matter of money and technical solutions: it’s a managerial problem
Going from 3 hours every other day to 24 hours (or increasing access by 40%) is not a matter of money and technical solutions, it is an institutional problem
Don’t fix the pipes, fix the institutions that fix the pipes
5
Messages of the WDR
What kind of institutional reforms? Ones that ensure that the institutional relationships between key players in service delivery chain are such that they:
Empower poor people to Monitor and discipline service providers Raise their voice in policymaking
Strengthen incentives for service providers to serve the poor Pricing/subsidies/access are the tails that wag the dog
So, what are these institutional relationships?
6
A framework of relationships of accountability
Poor people Providers
Client power: short route of accountabilty
7
Poor people Providers
Policymakers
A framework of relationships of accountability
Long route of accountability
9
Mexico’s PRONASOL, 1989-94
Large social assistance program (1.2 percent of GDP)
Water, sanitation, electricity and education construction to poor communities
Limited poverty impact Reduced poverty by 3 percent Even an untargeted, uniform per capita transfer would
have reduced poverty by 13 percent
10
PRONASOL expenditures according to party in municipal government
Source: Estevez, Magaloni and Diaz-Cayeros 2002
12
Policymaker-provider:Contracting NGOs in Cambodia
Contracted out: NGO managed & could hire, fire, & transfer staff, set wages, procure drugs
Contracted in: NGO managed and could transfer but not hire and fire staff
Control group: Services run by government12 districts randomly assigned to each category
13
Contracting for Outcomes: health services in Cambodia
Source: Bhushan, Keller and Schwartz 2002
Use of facilities by poor people ill in previous month
16
Strengthening the compact in urban water networks
Government owns assets, sets policy, regulates, delivers: judge and the jury are one and the same
For accountability: Separate the policy maker and the provider
Decentralize assets Service and political jurisdictions fit each other better Regulation & service delivery can be separated by tiers Centre can use legislation & fiscal incentives to shape well-
benchmarked local compacts and capacity growth Freed of responsibility for service delivery, centre has incentives to
ensure local service delivery works Use private sector participation
Direct, powerful way of separating roles But information, good regulation, parallel sector reform needed Third-party regulation may be required Multi-tiered government provides further opportunities
Information and benchmarking
17
CENTRAL GOVERNMENT
SERVICE PROVIDERS
POOR PEOPLE
REGULATORY AGENCY
LOCAL GOVERNMENT
customer complaintsuser charges
18
Strengthening client power in urban water networks
User charges: back to where we started can increase accountability of providers strengthen voice Help separate policy maker and provider
Small independent providers can offer choice & competition Legalize No exclusive service contracts for formal providers Enable contracting between formal provider and independent provider Allow poor people to use subsidy to pay independent providers
21
Center/State
LG
Communities
Public AgencyCapacity SupportTransition Costs
Monitoring & EvaluationSociety
SRP
Rural Drinking Water
23
Measure rural sanitation outcomes correctly
Usually measured as building latrinesCreates incentives to construct, not to use
latrinesOutcome to measure: extent of open
defecationOrients accountability correctly
24
What does a latrine subsidy do?Sanitation is a community outcomeSo, co-production of sanitation is keyHousehold subsidy distorts community
participation and co-productionPaves the way for patronage
25
How to create community outcomes and co-production?
Techniques and mechanisms of mobilization of communities VERC in Bangladesh NGO Forum and others
Reward the community and co-production community subsidies for outcomes Nirmal Gram Purashkar program in India
Use local governments to facilitate community participation
27
Implications for urban sanitationSupply of sanitation, not demand, the
problem for networksProperty rights and regulation
Dar-es-salam cesspit cleaners Orangi style co-production linked to networks Community toilets in Pune
28
Donors and service delivery
Global funds
Community driven development
Project implementation
units
Poor people Providers
Policymakers
29
Poor people Providers
Policymakers
Services work for poor people when accountability is strong
http://econ.worldbank.org/wdr/wdr2004
30
Targeting Poor People: Minimum Service Delivery
Minimum standards and cost (India) 40 lpcd – 120 lpcd Choice of technology: hand-pumps to piped network Target uncovered areas, special groups, 90 percent capital costs
Expenditure on basic services (Chile) Below poverty level Expenditure < than 5% Through service provider Monitored by Local Governments
Support to poor people (South Africa) Grants to municipalities Based on number of people below poverty level Lump sump grants: service choice left to local governments
In the context of India, poor people are better served by making services work: focus fiscal transfers on institutional reform rather than poverty targeting
31
Reforming Institutions
Which path?
Through local governments: South Africa
Through the WSS: Chile
Which path for India?
32
Reforming Through Local Government: South Africa
City towns
towns
towns
State
capital
operating
capacity
incentives
Utilities,Departments,
Regional systems
33
Reforming Through Utilities: Chile
City towns towns
State
City Utility Regional Utility
consumers
Top Related