Water - Rural WSS Financing

Financing

Efforts to scale up sustainable rural water supply and sanitation (WSS) services require predictable financing and robust delivery mechanisms. Several key principles underpin financing for sustainable rural WSS:

	Promote increased capital cost recovery from users
	Require an upfront cash contribution based on willingness to pay
	Recover 100 percent of operation and maintenance costs. Usually this calls for improving community level financial management and resource mobilization, especially for major repairs/replacements and service expansion
	Have financing mechanisms (public and private sector) and financial intermediation options (such as household credit for on-site sanitation) in place, to help increase internal resource mobilization
	Provide detailed information on costs to allow for informed choice, and seek to reduce investment costs through lower-cost technology options and more efficient delivery mechanisms

Key Challenges
Countries face big challenges in financing the capital investments and maintenance costs needed to achieve the Millennium Development Goals (MDGs). Besides a general shortfall in funding, user financing is usually inadequate among poor rural populations; attracting small-scale private sector investment is often difficult; and sanitation and hygiene promotion are grossly underfunded.

World Bank Response
Governments are increasingly putting the necessary frameworks in place to increase funding and improve the efficiency of resource flows while experimenting with different models of user financing.

Rural WSS is now often part of national planning and a feature of Poverty Reduction Strategies and Medium Term Expenditure Frameworks . As a result, the external support provided by the World Bank and its partners can be better aligned within national goals and policies, become more predictable, reduce government transaction costs, and where appropriate, be delivered as direct budgetary support. The Bank is able to provide budget support through Poverty Reduction Support Credits and can help governments increase efficiency of financing through Public Expenditure Reviews .

To maximize the health benefits from public WSS investments, the World Bank is promoting corresponding household investment in sanitation facilities and national-level financing of hygiene promotion through combined government, donor, and industry programs such as Public-Private Partnerships for Handwashing with Soap.