There is growing awareness that effective WASH service provision can be driven by market forces, whether these services are provided by government, civil society or private sector participants. People realise that free services do not exist; costs have to be covered one way or another if the service is to be durable. Providing grants as a single tool for poverty alleviation has not worked, as they fail to create incentives for people, businesses and governments to use their own resources and creativity.
Furthermore people, companies and governments are starting to appreciate that investment costs are covered as much as possible through local funding sources e.g. household contributions, recurrent tax revenue, fee systems and loans from local banks and micro-finance institutes. Proven successes in using instruments such as micro finance, guarantees, or cross-cutting subsidies provide examples and inspiration to rely more on local finance and the ability of people to become customers instead of recipients of support. There is a growing recognition of the crucial role of the informal sector and small enterprises in the provision of WASH services. [[3R (water) – Recharge, Retention and Reuse|Water and nutrient resource recycling ]] is slowly but steadily gaining economic momentum, the next stage will be to convert the recycled resource into a source of income.
The ongoing decentralisation through which the process of dispersing decision-making governance closer to the people (from national to more local level) provides opportunities for local communities and consumer groups to be more engaged in decision making by the local authorities, including influencing budget allocations.
===Challenges===
===Financing documents & links===
* [http://www.ircircwash.nlorg/pageresources/47707 smart-finance-solutions-examples-innovative-financial-mechanisms-water-and-sanitation Smart Finance Solutions] This booklet on Smart Finance Solutions, like its equivalents on water and sanitation, gives examples of how different financial mechanisms are being used to finance water, sanitation projects and small local businesses that contribute to reaching MDG-7.
* Akvopedia – [[Finance Portal|Finance Portal]]
* Dutch WASH Alliance – [http://www.washalliance.nl/fiets-strategy/f/ Financial Sustainability]
* Aublet, A.S. and Schmid, R., 2012. [http://www.skat.ch/publications/prarticle.2005-09-29.5069774463/prarticle.2005-09-29.1875579521/skatpublication.2012-12-19.5550148854 Financial sustainability of WASH services]. (28th AGUSAN Workshop (2012). Briefing note). SDC, Eawag/Sandec, Helvetas, Skat.
===Acknowledgements===
