May 2000 - An alternative to traditional subsidies for water and sanitation services is direct subsidies - funds governments provide to cover part of the water bill for households that meet certain criteria. Issues associated with such a subsidy are analyzed through a case study of Panama. As an alternative to traditional subsidy schemes in utility sectors, direct subsidy programs have several advantages: they are transparent, they are explicit, and they minimize distortions of the behavior of both the utility and the customers. At the same time, defining practical eligibility criteria for direct subsidy schemes is difficult and identifying eligible households may entail substantial administrative costs. Foster, Gomez-Lobo, and Halpern, using a case study from Panama, discuss some of the issues associated with the design of direct subsidy systems for water services. They conclude that: · There is a need to assess - rather than assume - the need for a subsidy. A key test of affordability, and thus of the need for a subsidy, is to compare the cost of the service with some measure of household willingness to pay. · The initial assessment must consider the affordability of connection costs as well as the affordability of the service itself. Connection costs may be prohibitive for poor households with no credit, suggesting a need to focus subsidies on providing access rather than ongoing water consumption. · A key issue in designing a direct subsidy scheme is its targeting properties. Poverty is a complex phenomenon and difficult to measure. Eligibility must therefore be based on easily measurable proxy variables, and good proxies are hard to find. In choosing eligibility criteria for a subsidy, it is essential to verify what proportion of the target group fails to meet the criteria (errors of exclusion) and what proportion of nontarget groups is inadvertently eligible for the benefits (errors of inclusion). · Administrative costs are roughly the same no matter what the level of individual subsidies, so a scheme that pays beneficiaries very little will tend not to be cost-effective. It is important to determine what proportion of total program costs will be absorbed by administrative expenses. · Subsidies should not cover the full cost of the service and should be contingent on beneficiaries paying their share of the bill. Subsidies for consumption above a minimum subsistence level should be avoided. Subsidies should be provided long enough before eligibility is reassessed to avoid poverty trap problems. · The utility or concessionaire can be helpful in identifying eligible candidates because of its superior information on the payment histories of customers. It will also have an incentive to do so, since it has an interest in improving poor payment records. Thought should therefore be given at the design stage to the role of the service provider in the implementation of the subsidy scheme. · The administrative agency's responsibilities, the sources of funding, and the general principles guiding the subsidy system should have a clear legal basis, backed by regulations governing administrative procedures. · To reduce administrative costs and avoid duplication of effort, it would be desirable for a single set of institutional arrangements to be used to determine eligibility for all welfare and subsidy programs in a given jurisdiction, whether subnational or national. This paper - a product of the Finance, Private Sector, and Infrastructure Sector Unit, Latin America and the Caribbean Region - is part of a larger effort in the region to evaluate and disseminate lessons of experience in designing policies to improve the quality and sustainability of infrastructure services and to enhance access of the poor to these basic services. The authors may be contacted at [email protected] or [email protected].

An alternative to traditional subsidies for water and sanitation services is direct subsidies - funds governments provide to cover part of the water bill for households that meet certain criteria. Issues associated with such a subsidy are analyzed through a case study of Panama.

Evaluating design alternatives is a first step in introducing optimal water subsidy schemes. The definition of appropriate targeting criteria and subsidy levels needs to be supported by empirical analysis, generally an informationally demanding exercise. An assessment carried out in Panama revealed that targeting individual households would be preferable to geographically based targeting. Empirical analysis also showed that only a small group of very poor households needed a subsidy to pay their water bill.

The new 2030 Agenda for Sustainable Development includes water, sanitation, and hygiene (WASH) at its core. A dedicated Sustainable Development Goal (SDG 6) declares a commitment to "ensure availability and sustainable management of water and sanitation for all." Monitoring progress toward this goal will be challenging: direct measures of water and sanitation service quality and use are either expensive or elusive. However, reliance on household surveys poses limitations and likely overstated progress during the Millennium Development Goal period. In Innovations in WASH Impact Measures: Water and Sanitation Measurement Technologies and Practices to Inform the Sustainable Development Goals, we review the landscape of proven and emerging technologies, methods, and approaches that can support and improve on the WASH indicators proposed for SDG target 6.1, "by 2030, achieve universal and equitable access to safe and affordable drinking water for all," and target 6.2, "by 2030, achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of women and girls and those in vulnerable situations." Although some of these technologies and methods are readily available, other promising approaches require further field evaluation and cost reductions. Emergent technologies, methods, and data-sharing platforms are increasingly aligned with program impact monitoring. Improved monitoring of water and sanitation interventions may allow more cost-effective and measurable results. In many cases, technologies and methods allow more complete and impartial data in time to allow program improvements. Of the myriad monitoring and evaluation methods, each has its own advantages and limitations. Surveys, ethnographies, and direct observation give context to more continuous and objective electronic sensor data. Overall, combined methodologies can provide a more comprehensive and instructive depiction of WASH usage and help the international development community measure our progress toward reaching the SDG WASH goals.

Annotation This specific objective of this book is to explore potential avenues for generating more resources for the public sector to invest in sustainable development.

A higher share of income for the middle class and lower ethnic polarization are empirically associated with higher income, higher growth, more education, better health, better infrastructure, better economic policies, less political instability, less civil war (putting ethnic minorities at risk), more social "modernization," and more democracy.

Good management of water resources - universally identified as a key aspect of poverty reduction, agriculture and food security - has proven, in practice, as difficult to achieve as it is eagerly sought. This book, edited and authored by leading authorities on water resource management, examines the recent changes in governance, institutions, economics and policies of water, covering developing, transitional and developed countries, with special emphasis on southern African case studies. The book examines how water policies, institutions and governance have shifted in recent years from supply-driven, quantitative, centrally controlled management to more demand-sensitive, decentralized, participatory approaches. Such a move often also implies cost recovery principles, resource allocation among competing sectors, and privatization. The case studies demonstrate that the new policies and legal frameworks have been difficult to implement and often fall short of initial expectations. Using an accessible multidisciplinary approach that integrates economics, sociology, geography and policy analysis, the book untangles the issues and presents best practices for policy- and decision-makers, governments and regulators, NGOs and user groups, service providers, and researchers. The overall aim is to show how good water governance structures can be developed and implemented for the benefit of all.