| Access to basic services such as drinkable water, safe sanitation, modern energy, primary education and healthcare is critical if the poor in developing countries are to escape poverty. The challenge—particularly in the poorest countries—is to ensure that aid- and tax-funded spending reaches the poor, that the services efficiently respond to their needs and preferences, and that public funds are used in a way that leverages private financing of service delivery. The World Bank Groups' Private Sector Advisory Services has published a new book outlining an innovative approach to delivering development assistance for basic services. Called output-based aid, the approach delegates service delivery to the non-profit or for profit private sector under contracts that tie payments to the outputs or results actually delivered to target beneficiaries. Results could be defined in such terms as the number of children immunized, the number of girls reaching a desired standard of reading, or the number of operational electricity or water connections. This approach to development assistance (and government spending) contrasts with traditional approaches to projects which have often focused on financing inputs—for example building a water pipeline, a health clinic or a school—with at best an indirect relationship with the services actually delivered. It builds on now extensive experience with public sector performance contracting and private participation in the delivery of infrastructure services. The new book, Contracting for public services: output-based aid and its applications, gathers cases of innovative, output-based approaches from across the infrastructure and social sectors, including: - providing poor communities with public telephones in Peru,
- delivering water services in Chile and Guinea,
- maintaining better roads in rural areas of Argentina,
- providing rural energy services in Argentina, Chile, Panama, and Cape Verde
- teaching mothers in Bangladesh how to provide oral rehydration treatment to prevent children dying from diarrheal diseases,
- developing better primary health services in Haiti and Romania,
- building better schools with effective computer learning resources in the U.K.
"These cases illustrate some of the key challenges in channeling tax and donor funds to target services and beneficiaries, and creating incentives for the efficient delivery of these services," said the book's co-editors, Penelope Brook and Suzanne Smith. The book concludes with a checklist for project implementation: including how to choose beneficiaries, how to choose service suppliers, how to define performance, how to link payments to performance and how to administer the schemes. Output-based aid is a key element of ongoing work to develop a new Private Sector Development Strategy for the World Bank Group. Additional resources and features on output-based aid are available on the Bank's Rapid Response Web site. Partial funding for the book has been provided by the Public-Private Infrastructure Advisory Facility. | 
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