Background
Both rural and urban areas in developing nations face issues with water distribution and quality. Many lack the water infrastructure or the facilities they need to supply, treat, and deliver water to consumers as well as remove and treat wastewater [1]. However, even communities with existing water infrastructure face inequalities in water. Many existing water distribution systems in developing nations are inefficient and unmaintained and lead to the overall decrease in water access. The deterioration of the old pipes for instance leads to increases in water loss, which in turn leads to decreases in the availability of water the further one goes from the main water treatment facility [2]. Also, many pipe systems designed for continuous, or constant, water flow are used for intermittent water flow instead. As a result, less water flows through the pipes the further they are from the main water distribution center, decreasing the number of people that have access to drinkable water [3]. Additionally, rural communities in developing nations often lack the capital, expertise, and sufficient infrastructure to increase and rehabilitate their water systems [4][5]. 80 percent of the people that lack access to potable water live in rural areas [6].
Solutions to increase water access will be discussed below. First, methods to build and improve water systems will be addressed for rural communities with low funding, and then urban and rural communities in general. Regulations, incentives, and strategies to increase community ownership will be explored next and ultimately, a range of costs and a timeline of solutions will be proposed.
Decentralized Water Distribution Systems
In rural communities where it is too costly to build water infrastructure with private involvement, water access can be improved with the installation of decentralized water distribution systems [7]. Rain collection, water recycling, well construction, and pump construction are several options that such communities can take [8]. The local community can form democratic cooperatives with an elected board of officials to decide on the implementation and financing of water systems [9][10]. Funding for the projects that the community agrees upon would come from resources that the community members pool together. Each community member would have a vote and a say in what will be built in their community. Community members would form the workforce to construct and maintain new water infrastructure and materials for the infrastructure would be purchased from local businesses. As a result, the rural community would gain ownership over its new water distribution system due to participation in the cooperative. Additional funding would come from community members, nongovernmental organizations, and/or social action funds [11] (see Water Management Systems).
Social action funds are large development programs that help local governments and communities build infrastructure. Most are in the form of charitable organizations and receive their funding from grants and loans from agencies such as the World Bank. The Malawi Social Action Fund (MASAF) works with multiple regional governments in Malawi. After funding was secured by a social action fund, local nongovernmental organizations (NGOs) and/or local technical advisors would then train the community members in operating and maintaining their new facilities.
This has been done for small rural communities in Malawi since 2002. Small towns form community project committees to decide on the new water system that the community needs. The local social action fund would then help pay for part of the construction of shallow wells, pipes, and/or boreholes. While the social fund and/or NGOs pay for most of the initial cost, the community pays for the operating and maintenance costs with the aid of local businesses and banks. As a result, the initial cost of a small piped water system from MASAF is usually less than $15 per person, much more affordable than those offered by the government [11].
Small rural communities in Malawi were able to increase their water access by forming these community project committees, a variation of a democratic cooperative, to decide on the implementation of new water distribution systems. The project was paid because funding came from the community as a whole with additional aid from a social action fund. Finally, the new water systems were better sustained through community commitment as the local NGOs trained the community members in operating and maintaining the new systems.
General Solutions for Urban and Rural Communities – Centralized Water Distribution Systems with Public-Private Partnerships
Water access can be improved with the addition of centralized water distribution systems within each community. The construction and/or rehabilitation and funding for these new water systems can often effectively be done through a Public-Private Partnership (PPP). A PPP is a relationship between a local government and a private operator to provide a service to the community that would be too difficult for the local government to perform alone. In the case of water, a private operator would build, maintain, and update and help fund water services for people living in rural towns [4][12]. Trident Limited was one such operator that helped bring water facilities to communities in Uganda. In certain PPPs, financing for the initial cost is partially covered by government subsidies, community funds, loan agreements with local banks, and/or grants from international organizations such as the World Bank [4][11]. To form a PPP, the local government should apply for a contract with a private operator for 5-25 years to install and/or rehabilitate new water systems. The content of the contract would depend on the requirements set by the government [4][13]. For instance, Niger has a general “Water Sanitation Affermage Type Agreement” for PPP contracts with operators [14]. Contracts can also be facilitated by NGOs or international organizations – the International Finance Corporation (IFC) from the World Bank is one such group [11].
Rural and urban communities can choose an operator through a bidding system. In the bidding system, many operators are contacted about forming a PPP and asked to submit a proposal. The operator whose proposal best fits the community’s goals and with the lowest bid price is then chosen [12]. Communities can instead choose to team up with local private operators instead if they prefer working with individuals that are more knowledgeable of the culture of the region [4]. In Busembatia, Uganda, the PPP operator was chosen from three local companies through a bidding system. In 2010, the IFC awarded the 5 year management contract to Trandint Limited, which fulfilled the technical requirement, secured a financing arrangement with local banks, and offered a bid price lower than the subsidy of $300,000. Four hundred new water connections were installed in 2012 without tariff increases until 2015 as a result of this contract [12].
Rural and urban communities can choose four types of contracts. The choice of contract depends on the contract requirements set by their governments and what would work best with the community in question (see Water Management systems for more management related logistics).
- In management contracts (mentioned previously), operators receive a fee from the government and/or community to operate and maintain the water system.
- In a lease-affermage contract, the operator pays for operating and maintaining the water system but can keep a certain percentage of the revenue.
- In a build-and-operate contract, operators build, fix, and/or design a water system and then manage operations through a lease-affermage contract.
- In an invest, build, and operate contract, operators pay a large portion of the investment costs, pay for operation and maintenance, and get to keep their revenue for a specified period of time (e.g., 18 years in Bangladesh) [4][5].
In lease-affermage contracts, operators lose money if costs and fees exceed the revenue from water rates. As a result, the operator has an incentive to increase efficiency, lower operation costs, expand the number of water connections, and maintain the quality of the water. As the water quality and accessibility increase, the consumers will be more willing to pay water rates, and revenue security will increase. As a result, lease-affermage contracts tend to be more popular and more successful [4][5].
Lease-affermage contracts in Cote d’Ivoire (Sub-Saharan Africa) encouraged efficient operation, which in turn allowed most of the investment to be funded from revenue for over 10 years [4]. Customers were more willing to finance expansion because of the efficient service. Greater revenue encouraged the operator to continue to expand high quality drinking water. This lead to great increases in water access as a result of PPPs. As seen in Figure 1, improved access to local piped water increased from 68 to 90 percent and twice as many people were served from 1990 to 2006. Household connections also increased from 41 to 60 percent. More than twice as many people had access. 340,000 new water connections were installed. A water development fund, composed of the tariff surcharges, paid for the operation and management of the water system. The fund was so successful that government and donor funding was not needed for the first 15 years [4].
Water access can be increased in rural and urban communities when local governments partner up with private operators to build and/or rehabilitate water distribution systems. Lease-affermage contracts tend to be more successful because of the incentives that operators have to increase efficiency and improve the quality of the water systems. Regulation however, is essential for any PPP to work successfully [4][5][12][11].
Figure 1: Increase in water access through lease-affermage contracts in Sub-Saharan Africa [4]
Regulations and Incentives for PPPs
Government regulation of the PPP, to prevent operators from becoming corrupt, can be done through a system of fines based on the PPP contract and incentives based on water rates. In the PPP contract or through a separate contract with the operator, the local government could hold the operator responsible for running within the budget and for expanding/rehabilitating water systems on schedule, as outlined in the original PPP contract. Any violation of the contract in water quality/accessibility would result in a fine. If the costs of running the water system are lower than those outlined in the budget, the operator would be able to keep that profit. The cap and trade system, especially when combined with lease-affermage contracts, encourages the operator to increase efficiency and lower overall operation costs [4][5].
From the view of operator revenue, operators can be encouraged to expand their pipe systems, work quickly on renovations, and improve water quality through a gradually increasing tariff and multiple stages of pipe extensions. When the operators build or rehabilitate their first stage of pipes/pumps/wells in the center of the rural community, the local government can set low tariff rates to the people that are connected to water supply. As the construction of the water system expands to the edges of the town or city, the consumers would see a significant improvement in the water supply and quality, and the government would slowly increase tariff rates. As previously stated, consumers provided with easily accessible clean water of good quality are willing to pay higher water rates [4][15]. This increases revenue security for the operator, and encourages the operator to continue maintaining, expanding, and improving the water distribution system, which in turn increases revenue security. Increased water access improves the financial security of a community and more efficient operators have easier access to more funding to further to increase water access. Sometimes, a combination of the final increased tariff and the revitalized economic base of the community is enough to pay for the operating costs of the finished water system [4][5][15].
To summarize, local governments can use a cap and trade system based on the PPP contract to encourage operators to increase efficiency and follow the terms of the contract. Local governments can also use a gradually increasing water tariff as an incentive for operators to continue building and improving the water distribution systems. As consumers see improvements in their water access and quality, they are more willing to pay their water rates, encouraging operators to increase efficiency and follow the contract [4][5][15].
Case Studies of Regulations in PPPs
The lease-affermage PPP in Senegal in 1996 reduced water loss and increased water distribution through the use of incentives and governmental regulations [4]. The contract included specific goals for water waste reduction and efficient water bill collection, backed by financial penalties. The private operator was also responsible for rehabilitating water systems, financed by its operating fee. This gave the operator more flexibility to find issues in the pipe system, quickly resolve them, and reduce water losses so that the company would not have to depend even more on the asset holders that paid for most of its initial cost. 17 kilometers of pipe, 14,000 water meters, and 6,000 connections were replaced each year of the contract, leading to improvements in water quality and pressure, and distributing the water to more people in Senegal [4]. The presence of an efficient operator was a comfort to donors, allowing donors to see that their money was being used to increase water access and their assets were well maintained. Senegal’s model was so successful that Niger and Cameroon both used Senegal’s efforts as a model for their own affermages in 2001 and 2007 respectively [4].
Cartagena and Eastern Manila in the Philippines both achieved almost universal access to piped water in 2007 despite high poverty rates [4]. In Cartagena, piped water was offered in bulk at the entrance to each community in the first stage of construction while the standard or community pipe connections were gradually added to each settlement in the city as each settlement became legalized. Individual or household pipe connection was not achieved, but access to safe drinking water improved dramatically [4]. Cartagena, along with Amman, was also able to increase its financial sustainability by increasing productivity through PPPs. By keeping track of their rate collections and controlling their operating costs, both operators gained surpluses that they put towards investments, reducing the pressure on the community funds and governmental funds to help finance the water system. Efficiency increased to the point that tariffs were actually lowered over time. This increase in efficiency is depicted in Figure 2A and 2B. In Figure 2A, the private operators in Cartagena and Amman decreased water loss by at least 5 percent and in Figure 2B, the private operators in both cities have been seen to decrease their working ratios (the ratio operating costs to cash collections) by at least 50 percent. Similar decreases have been seen in other cities. Overall, communities were able to achieve secure funding and increase their water access when operators were encouraged by the local government to pay close attention to the collection of water tariffs and the goal of lowering operating costs [15].
Figure 2A: Decrease in water wastage through the use of PPPs [15]
Figure 2B: Decrease in the working ratio (ratio cash operating costs to cash collections) [15]
Addressing Social Concerns
In order to alleviate any communal concerns about the introduction of a private operator, the local government or the communal ruling body can form joint meetings between representatives from the private operator, representatives from other funding sources (e.g., local banks, charitable organizations, world banks), local authorities that are invested in the PPP, and consumers before a final contract is signed. Meeting times and locations should be made to accommodate the consumers first. The first few meetings should introduce the community to the PPP idea, focusing on explaining the basic structure of the PPP contract under consideration and the changes that a PPP will make in the community. Later in these joint meetings, consumers’ fears and conflicting interests will be discussed and addressed by the private operators, local authorities, and funding representatives. The consumer’s ability to support the cost will then be assessed by the local authorities, funding source representatives, and private operators and presented to the community members. The consumers’ rights and responsibilities will also be discussed, along with the anticipated costs and benefits to the consumers. If most of the consumers object to the introduction of a private operator under the terms of the current contract, the contract should not be continued in its current form. If the tension between consumers and representatives and local authorities prevents constructive discussion and agreements, a charitable organization such as Smart Development Works can be selected to mediate the discussion. Local businesses and community members should be given as much opportunity to contribute as possible. Local governments can encourage private operators to purchase materials from local businesses through the PPP contract. Local governments can also encourage private operators to train and employ community members in maintenance and construction through the PPP contract. Once the contract has been signed, the local government or community council should collaborate with the private operator to make an education campaign about the changes that the new water systems will bring to the community. As a result, the community will feel ownership in the water distribution project and receive a new system that is better adapted to the culture and lifestyles of its members [16].
Local governments would have an incentive to partner up with operators successfully because once the PPP contract expires, the local government would own an efficient water distribution system that it can operate without paying the whole capital cost. Operators would also want to collaborate successfully so that they can earn profit from the construction and operation of the water system. In order for the whole PPP to be cost effective and pay for itself in the long run through water tariffs, the consumers must be partners in the entire process. As a result, local governments, operators, and consumers have incentives to work together successfully in the plan to increase water access in a community (see Water Management systems).
In 2004, the Rwandan government tried to implement PPPs in more districts. However, a lack of community ownership, technical skill, and accountability prevented the PPPs from becoming successful. In 2008, Smart Development Works (SNV) Rwanda succeeded by building good relations between consumers in the districts of Rubavu, Nyabihu, Musanze and Burera and the private operator Aquavirunga through joint meetings. SNV’s educational campaign on the importance of paying water rates increased the community’s understanding and acceptance of water payments and improved the relationship between consumers and the community leaders that enforced the water rates. From 2009 to 2011, water loss reduced from 69% to 49% and the operational cost coverage ratio increased to 91%. 75% of water access points were managed by water users committees and 600 water user committee members were trained in basic maintenance, conflict resolution, and financial management [16] (see Water Management systems for solutions to more management issues).
Technical Solutions for Pipe Systems
With funding from their contracts with the local governments and grants, loans, or funds from international organizations, local banks, businesses, and/or social funds, private operators of the PPPs will be expected to actively maintain, rehabilitate, and expand the water distribution systems under their contracts [4][5]. Safe disinfectants (e.g., chlorine) should be added at multiple points along the pipeline [3]. Operators should regulate the water pressure and enforce a minimum water pressure of 9m, the hydrostatic pressure due to water column, or 13PSIG throughout the pipe system [3]. Operators should replace pipes made out of concrete or iron, both of which corrode easily, with pipes made out of PVC, galvanized iron, and/or mild steel. Operators should also prevent and/or remove the construction of dead-end connections and cross-connections to reduce or eliminate the possibility of contamination from surrounding non-potable water sources [2].
The goal should be construct a continuous flow water distribution system. If an intermittent distribution system is part of the contract, then the operator’s engineer should test the pressure throughout the current pipe system and test the pressure in the initial stages of the new pipe system for a half week to a week in order to evaluate the changes in pressure due to intermittent water flow. The resulting data would then inform the engineers of any valve, connection, and pipe adjustments or leaks that need to be corrected in order to make the water pressure more stable across the pipe system, and thus increase the water access to those who live on the fringes of the water system [10][3].
Any deviations from the recommended construction requirements outlined in the PPP contract will result in a fine to the private operator. Decreasing water quality from the construction or low maintenance of pipe systems also discourages consumers from paying their water tariffs. As a result, operators have economic incentives to keep their pipes well maintained at the very least [4][5][15].
Implementation
Planning a contract with a private operator can take local authorities or governments up until 2015 or longer if started today [4][17]. The duration of preparation depends on the time local governments take to choose a private operator, communicate and receive an assenting response from the consumers, consult charitable organizations or other advising organizations on the feasibility of the water systems project, secure a funding plan, and develop design specifications [12]. PPPs will be contracted from 2015-2020 or 2015-2040, depending on the degree of construction (e.g., repairing and replacing sections of pipe systems versus building an entirely new water distribution system) [4][11]. The cost of building the water system alone usually ranges from $75, 000 to $170, 000, once again depending on the degree of construction required [17].
Conclusion
Many communities do not have the capital, expertise, or water infrastructure to increase their water access [4][5]. However, several steps can be taken to increase water infrastructure in developing nations. In rural communities where large centralized water distribution systems would not be cost effective, the use of cooperatives and community funding can be used to construct decentralized water systems [9][7][10][11]. In rural and urban communities that can afford to partner up with private operators, local governments can make public-private partnerships. Operators would then be held by a contract to build and/or improve the water distribution system with funding from the community, the operator, the local government, and grants from international organizations [4][5][12][11]. A system of fines based on the PPP contract and local water tariffs enforced by the local government would provide economic incentives for the private operator to increase efficiency and follow the original contract [4][5][15]. Local authorities, community members, and operator representatives can form joint meetings to better address any concerns about the formation of PPPs [16]. Through PPPs, local governments would gain a new working water distribution system, operators would make a profit, and consumers would receive increased water access. Each participant – the local government, community member, or private operator – depends on the other two participants to gain a benefit from the PPP. As a result, the local government, private operator, and community have an incentive to collaborate successfully for the construction of a water distribution system.
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