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(http://www.developments.org.uk/data/issue21/for-sale.htm). High potential to reach also poorer sections of the community, if properly targeted
== Cross subsidies /Differential tariff systems ==
Differentiating tariffs based on volume or living area; Also used for connection fees
A good way to reach poorer sections, but ADB concludes that whereas it helps to sustain existing systems , current approaches do not reach the poorest (http://www.adb.org/Water/Policy/consultations/IND-2005-Consultation-Report.pdf#page== Differential tariff 3). Tariffs based on volume are interesting, but metering is a problem and costly. Customer involvement in the process is very important. China’s Rural Water Supply program has over 90 % payment compliance in households with metered systems ==whereby the salaries of the operations staff are tied to monthly bill collection and raising tariffs if they do not cover operating costs (http://www.wsp.org/publications/global_wtp_china.pdf). Cross subsidies has high potential particularly for poor slum dwellers
== Micro credit for private sector ==
Helping small enterprises without sufficient collateral to obtain credit
Improving local access to micro-credit is essential to enhance private sector involvement. Requires good regulatory framework because there is a large difference in the performance of micro-credit organizations. (http://www.microcreditsummit.org/papers/fundspaperfinal.htm#4.7). High potential as opportunities for private sector involvement in sector are growing
== Fighting Corruption ==
Increased transparency will allow more efficient use of available funding
Corruption is a widespread phenomenon and drains part of the funding that could be used for on better salaries etc. It requires better procedures and access to information (http://www.irc.nl/content/download/21439/253860/file/How%20to%20hold%20a%20meeting%20tool%20(Stockholm).pdf ). A study comparing productivity among 21 water utilities in Africa found that nearly two-thirds of their operating costs were due to corruption
(http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2002/10/25/000094946_
02101104032679/Rendered/PDF/multi0page.pdf ). High potential because the part of the sector funds that are currently lost can be used for service improvement and expansion
== Full capital investments by donor funds or government ==
People receive facilities as a gift; historically linked to large externally-funded projects
Significant in the past and applied by various funding agencies including national governments, foreign donors and even NGOs. Now discouraged, with a paradigm shift towards cost sharing because of overall costs involved and to enhance ownership. Leveraging public resources is seen as a key component towards increased financial sustainability
(http://planningcommission.nic.in/plans/mta/mta-9702/mta-ch20.pdf).
== Improving financial efficiency ==
Reducing unaccounted for water by leakage control and improved billing
A considerable source of funding is in fact available within existing systems by reducing leakage, optimizing consumption (through water metering, making it possible to extend systems to more users) and by reducing back-logs in payment by users. This approach is successfully followed in large systems, but much less in smaller ones. It includes both savings in the systems by repairs and adjustments and in households by repairing leakages, and introducing water saving devices and meters. Good facilitation and promotion is needed
(http://www.irc.nl/content/download/11496/168599/file/Uso_Efficiente_2004.pdf ). High potential as it can lead to expanded coverage and better use of water resources at low cost
== Loans/credits/guarantees ==
Different models are available for people, water providers and private sector to obtain funding from banks or others, including guarantees from enterprises with too little collateral.
Funding of water sector loans is not very attractive because of relatively high risk, unfair competition from grant money. Procedures are often very complex, particularly for smaller settlements. Requires support to simplify procedures, guarantees and better local credits. In Cambodia, GRET, an international NGO has a Rural Infrastructure Fund, with a public development bank. This provides medium-term loans to local commercial banks, to finance investors of piped water systems, providing a 30% guarantee in case of default. The private sector has installed 10 water systems, representing coverage of up to 85%.
(http://www.lboro.ac.uk/well/resources/Publications/Briefing%20Notes/BN16%20Local%20financing.htm) High potential because people and WPs may have to take expensive loans from local money lenders
== Innovative financing mechanisms ==
Issuing bonds, equity mechanisms, pooling resources, etc.
Experiments with innovative financing are ongoing in different locations. These often involve considerable transaction costs that may not be attractive for donors. Further testing is needed and interesting (http://www.euwi.net/download_monitoring.php?id=209).
== Revenue financed expansion ==
Expansion of piped system based on revenues
Common practice in utility water supply, but much less in developing countries, where often no or negative profit margins exist. It is applied in some places benefiting from increased efficiency, but insufficient to quickly speed up coverage.
== Revolving funds ==
Funds established often by NGOs and managed by a community group; Repayments become loans for others
Interesting approach in the absence of financial institutions, sometimes even in kind (chickens etc.). Current funds often do not include interest, so capital diminishes. Revolving funds have been widely used in Kenya for example, usually by church based NGOs providing financial resources to women's groups. As a result thousands of rainwater tanks have been built.
(http://www.dams.org/docs/kbase/contrib/opt163.pdf).
Provision of small-scale loans for investment in water supply systems has also been successfully implemented in peri-urban areas of Cochabamba in Bolivia, where the micro-credit agency CIDRE has joined forces with a private sector company, the municipal government, the utility and community organizations to expand infrastructure (http://www.aguatuya.com/html/our_partners.html ). High potential for rural areas without banking facilities and areas with good social cohesion
== Self-financing ==
people investing individually or jointly in water supply
Widely used, but often substandard performance. Could benefit enormously from proper support (advice, materials, innovation). Legalisation of property rights is key. Poorest need support. In Baroda (India) a 1999 study showed that households invested, on average, at least 70 USD in their own facilities such as rainwater tanks, underground tanks, lift pumps etc.
(http://www.wsp.org/publications/sa_indiapoor.pdf).
The World Bank estimated that half of the investments (totalling 1.8 billion USD) made in rural China between 1990 and 1995, were made by the users themselves.
(http://www.chinadevelopmentbrief.com/node/248). High potential because of growing access also of poorer groups to credits and remittances of overseas workers
== Social development funds ==
Donor funding to mitigate effect of structural adjustment; Often linked to income generation and employment targets
These funds have improved over the years, but the problem remains that they are typically project based with arrangement that are in parallel with existing structures and having their own rules. In Tanzania, regional development funds are now financing community identified projects
(http://www.iadb.org/sds/doc/sgc-GN1930-2-E.pdf and http://www.wsp.org/publications/af_socialfunds.pdf). A recent report carried out by the World Bank's evaluations department found that social funds do not always reach the poorest sections of society and can be subject to political influence. Impact in the WS&H sector has varied and sustainability issues have not been well addressed
(http://www1.worldbank.org/publications/pdfs/15141overview.pdf).
