Presentation - 9th Roundtable on financing water, Guy Hutton, Senior Economist and Financing Specialist Working in WASH

1. WASH AFFORDABILITY
Guy Hutton, PhD
Independent Consultant
Measurement and
Response Strategies

2. Why Measure and Monitor WASH
Affordability?
• Economic access is one of the
major constraints to poor,
vulnerable and remote
populations having access to
adequate WASH
• Subsequently, affordability is
one of the normative criteria
of the human rights to safe
drinking-water and sanitation
• As service providers seek to
recover more costs, important
to understand the impact on
vulnerable groups
Recognized in the SDGs:
• 'By 2030, achieve universal and
equitable access to safe and
affordable drinking water for all.’
• ‘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’

3. Despite this…
•There is no
global
monitoring of
the affordability
of household
WASH
There is limited, if
any, national
monitoring of
affordability in
low- and middle-
income countries

4. Therefore…
We need to re-
examine what is
affordability and
how WASH
affordability can
be meaningfully
measured

5. What is
WASH
affordability?
2 angles
“Access to water and sanitation
must not compromise the ability to
pay for other essential needs
guaranteed by human rights such as
food, housing and health care.”
Independent Expert on the Human Rights to
Safe Drinking Water and Sanitation, 2010.
“…payment for water services has
to be based on the principle of
equity… that poorer households
should not be disproportionately
burdened with water expenses…”
General comment

6. How can
WASH
affordability
be
practically
measured?
Until now many countries, international
agencies and service providers define as
follows:
“Household’s expenditure on water and
wastewater as a proportion of annual
income”
JMP 2017 report: proportion of total household
expenditure on WASH services (52 countries)

7. How can
WASH
affordability
be
practically
measured?
Until now many countries, international
agencies and service providers define as
follows:
“Household’s expenditure on water and
wastewater as a proportion of annual
income”
JMP 2017 report: proportion of total household
expenditure on WASH services (52 countries)
However, this measure has several flaws
or questions to resolve, such as:
What about households that do not consume
the minimum level of service?
What about WASH costs that are not captured
by utility billing regimes? (+ not everyone is
connected to a utility)
What about non-financial costs such as time
spent accessing (any) service?
What is the threshold for an affordable versus
unaffordable service?

8. To resolve
these
questions,
let’s go back
to what might
be the key
dimensions of
affordability
The price or cost related to WASH services at the
household level
The spending power of the household
The price or cost of meeting other household needs
Matrix Households have to cover all
health, education, housing,
pension costs
Households receive low cost or
free health, education, housing,
pension support
WASH prices
low
WASH prices
high
WASH prices low WASH prices
high
Low income Vulnerable Most vulnerable Not vulnerable Vulnerable
Median income Not vulnerable Vulnerable Not vulnerable Not vulnerable

9. So how can we
determine WASH
affordability in a
way that is:
- Objective &
measurable
- Allows clear decision
rules that are fair
- Monitorable
(nationally-
representative data can
be collected, regularly)
Options considered:
1. What people say about
affordability and willingness to
pay
2. How people behave with respect
to price levels and price changes
3. Poverty classification
4. Policy response

10. GLAAS: what are countries doing
about WASH affordability?
• Policies
• Targets
• Financial schemes
• Targeting specific
population groups

11. Policy responses
• Existing tariff structure
• What are other ways of
delivering subsidies – e.g.
subsidised loans, general
welfare payments, vouchers
• Populations relying on
informal services?
=> Recommendation: Conduct
benefit incidence analysis –
understand who is and who is
not receiving subsidies
How are tariffs set & applied?
What proportion of costs do they
recover?
Are tariffs inflation-adjusted?
Do tariff levels distinguish population
groups with different ability to pay?
Do tariff levels guarantee basic needs
are met?
Do tariffs incentivize conservation
(need for metering)?
Are payment plans available?
What are the consequences of non-
payment?

12. So how can we
determine WASH
affordability in a
way that is:
- Objective &
measurable
- Allows clear decision
rules that are fair
- Monitorable
(nationally-
representative data can
be collected, regularly)
Options considered:
1. What people say about affordability
and willingness to pay
2. How people behave with respect to
price levels and price changes
3. Poverty classification
4. Policy response
5. Spending as a proportion of income

13. Data source for spending: Ghana GLSS 2014/15
Other data: estimates by authors
The costs to poorer income deciles increases substantially
when the service gap and time costs are included

14. Conclusions and recommendations
• Develop country cost norms for different service levels to assess
costs of meeting SDG targets 6.1 and 6.2 (part of finance strategy)
• Incorporate sustainability and climate resilience
• Compare with household income levels and government budgets
• Analyse WASH expenditure from existing survey and utility data
• Compile in regional and global reports
• Adjust for the value of time spent accessing WatSan
• Tabulate by service level, and add in costs of filling ‘service gap’
• Undertake national affordability assessments, triangulating
different data sources, and make policy recommendations
• Promote small scale surveys in vulnerable communities
• Initiate cross-sectoral conversations on interpreting affordability

15. Conclusions and recommendations
• Develop country cost norms for different service levels to assess
costs of meeting SDG targets 6.1 and 6.2 (part of finance strategy)
• Incorporate sustainability and climate resilience
• Compare with household income levels and government budgets
• Analyse WASH expenditure from existing survey and utility data
• Compile in regional and global reports
• Adjust for the value of time spent accessing WatSan
• Tabulate by service level, and add in costs of filling ‘service gap’
• Undertake national affordability assessments, triangulating
different data sources, and make policy recommendations
• Promote small scale surveys in vulnerable communities
• Initiate cross-sectoral conversations on interpreting affordability
Affordability mentioned in SDG targets
SDG 3.8: Financial risk protection (health coverage).
SDG 3.b: Affordable essential medicines & vaccines.
SDG 4.3: Affordable education.
SDG 6.1: Affordable drinking water.
SDG 7.1: Affordable energy services.
SDG 9.1: Affordable infrastructure.
SDG 9.3: Affordable credit
SDG 9.c: Affordable internet access.
SDG 11.1: Affordable housing.
SDG 11.2: Affordable transport systems.

16. THANK YOU
guy.hutton@protonmail.com