Poor functionality of rural water supplies is a known and critical crisis. It is estimated that almost 15 percent of rural waterpoints fail after just one year and 25 percent are non-functional by their fourth year in operation. Although there are many root causes of this, they cumulatively manifest themselves in the form of inadequate financing for ongoing operation and maintenance.
One method, which takes a social business approach to water service delivery, is becoming known as the “safe water enterprise” model. Under this approach, private water service providers deliver water to end users for a fee and utilize revenues to maintain equipment and expand service. In theory, safe water enterprises are designed for economic viability at the outset while also being held accountable by investors to ensure the highest levels of affordability (low water price) and water quality (safe water). In practice, however, it is unclear if the model actually works on a wide scale.
In 2016, a study was commissioned to evaluate the potential of safe water enterprises to provide reliable access to the poorest people in the world. The insightful results indicate there is wide variation in performance in terms of full cost recovery and affordability, with little hard evidence of success without ongoing philanthropic support.
The study found water is often being sold at prices as high as $0.30/20 L container, about 10 times higher than what is typically considered affordable to poor people. Poor water quality was also found to be a frequent issue. The viability of safe water enterprises in rural areas remains questionable due to low population density, low affordable water price threshold, and low willingness-to-pay.
In truth, the safe water enterprise model has a lot in common with Water Mission’s approach to sustainable management and finance. Although we typically encourage community-based ownership and management instead of privatized service, we still aim for the same success standards of reliability, water quality, affordability, and financial viability.
However, unlike many safe water enterprises, our approach is yielding encouraging results. At any point in time this year, less than 20% of the safe water supply systems we actively support around the world experience functionality issues. When there are issues, they are resolved in less than four days on average.
Working with community-based safe water committees, we strictly monitor the quality of water provided to users at each and every distribution point to ensure it has adequate chlorine residual, and we evaluate water prices against average household incomes to ensure it is affordable. In terms of financial viability, over 95% of the community-managed safe water projects we support are consistently recovering day-to-day expenses with revenues from water sales, and they are consistently saving money for major repairs and replacement. In fact, the average monthly savings in our top 20% best-performing projects is more than $150/month.
Why does Water Mission’s approach seem to yield more consistent positive performance than many of the safe water enterprises? The secret is that we focus on the basics and do it with love, excellence, and integrity. We aim to establish a firm foundation for viable safe water service by ensuring a number of key elements are in place:
- Demand for safe water: End users’ desire for safe water service is the foundational building block for financial sustainability. Even in rural settings, people are usually willing to pay for and sustain service that provides a high level of quantity, quality, accessibility, and reliability.
- Stable and reliable management systems: Well-trained, values-oriented people are the gatekeepers to and protectors of financial sustainability. In rural settings, community-based water committees are often in the best position for collecting and handling revenues, tracking expenses, and remaining accountable to all stakeholders, provided they receive adequate and ongoing oversight and external support.
- Viable financial sustainability plans: Community-based water committees need to understand all long-term costs and have realistic, flexible plans for recovering those costs. Costs include: salaries and commissions, consumables, money handling costs, ongoing contracts with maintenance service providers, and major equipment repairs and replacements. Furthermore, water fees charged to recover these costs should not prevent users from meeting other basic human needs and should represent no more than 2-5% of household income.
- Best-in-class technologies: High quality, well-designed technology enables financial sustainability. Our safe water supply systems are typically comprised of the following technical components:
- Motorized pump(s)
- Solar or grid power supply
- Chlorination and other appropriate treatment steps
- Storage in excess of daily demand
- Metered distribution points ≤100m from residences.
Of course, ensuring these elements are in place is easier said than done. Water Mission often runs into challenges and there are many areas where we are actively working to improve. We are gaining a better understanding of how to help water committees set realistic targets for operational and replacement costs based on evaluation of our existing safe water projects. We are also actively engaged in dialogue with a number of agencies who are operating successful safe water enterprises in order to better understand success elements and encourage each other in best practices. We are already learning a great deal from these engagements and hope to continue influencing the positive development of safe water enterprises in the coming years.
Learn more about financial sustainability in our projects around the world.
 Banks, B. et al., (2016). What’s Working, Where, and for How Long: A 2016 Water Point Update. Abidjan, Côte d’Ivoire: 7th RWSN Forum. Available at https://rwsnforum7.files.wordpress.com/2016/12/full_paper_0150_submitter_0239_banks_brian.pdf.