46765 The World Bank Group's Program for Water Supply and Sanitation Water Supply & Sanitation Sector Board THE WORLD BANK GROUP The World Bank Group's Program for Water Supply and Sanitation 2 The World Bank Group's Program for Water Supply and Sanitation CONTENTS The Problem: Limited Access and Poor Service 7 The Challenge: Reducing Poverty through Improved Water Supply and Sanitation Services 9 Key Lessons: Building on Global Experience 13 Responding to the Challenge: Business Lines and Cross-cutting Priorities 17 Supporting Country Programs 23 Deploying Resources More Efficiently 27 Conclusion 30 3 The World Bank Group's Program for Water Supply and Sanitation The Water Supply and Sanitation Sector Board supports the World Bank Group's mission of reducing poverty in developing and transition economies. Achieving these objectives requires a focus on "Efficient Sustainable Water Supply and Sanitation Services for All" WATER SUPPLY AND SANITATION SECTOR BOARD January 2004 Chair: Jamal Saghir Members: Africa Region Water and Sanitation Program Jaime Biderman and Inger Andersen Walter Stottmann East Asia and Pacific Human Resources Vice Presidency Keshav Varma Linda Duma Latin America and the Caribbean International Finance Corporation John Stein Usha Rao-Monari Middle East and North Africa World Bank Institute Francoise Clottes Vahid Alavian Eastern Europe and Central Asia Operations Evaluation Department Lee Travers Alain Barbu South Asia Water Resources Management Group Sonia Hammam John Briscoe 4 The World Bank Group's Program for Water Supply and Sanitation FOREWORD The international development community has recognized the importance of water supply and sanitation for reducing poverty in the developing world. Access to improved water supply and sanitation are explicit targets of the Millennium Declaration adopted by the United Nations in 2000, and have since been a central focus of international cooperation, including the International Conference on Financing for Development-Monterrey, the World Summit for Sustainable Development-Johannesburg, and the Third World Water Forum-Kyoto. The growing awareness among policymakers in both the developing and industrialized nations that improving water supply and sanitation services is the key to achieving broader poverty reduction goals,has been accompanied by calls for more concerted efforts and additional resources from all stakeholders, including the World Bank Group. In this context, the World Bank Group's Water Supply and Sanitation Sector Board has developed a sector program which identifies key thematic areas on which to focus, strategic regional and sub-sectoral priorities, the range and choice of instruments, and opportunities to leverage development impact through partnerships. The program draws on the World Bank Group's broad thematic and corporate policies and strategies, including those related to urban, rural, and private sector development as well as water resources management and the environment. It draws on evaluations conducted by the World Bank Group's Operations Evaluation Department andrecentWorldDevelopmentReports.Itfurthertakes into account a series of background notes that assess progress in the implementation of sector reforms, historical access coverage rates and capital flows, case studies of successful programs around the globe and recent experience within the World Bank Group. Finally,itbuildsontheWorldBankGroup'scomparativeadvantages:asalong-termpartnerthatcanassistgovernments meetchangingdevelopmentneedsandobjectives;asaknowledgeinstitutionthatdevelopsandsharesglobal,regional and country-specific information with its clients and partners; as a multilateral agency with a comprehensive geographic and multi-sectoral perspective -- placing water supply and sanitation within the broader fiscal, social andenvironmentalcontext;asadevelopmentbankwithaccesstoadiversesetof programsandfinancinginstruments that can be tailored to country specific needs -- including long-term finance for large, complex investments; and as a convener of development partners -- to address issues of common interest such as sector governance, financing, environmental and social concerns. On behalf of the members of the Sector Board and the World Bank Group's Water and Sanitation Practice, I would like to thank Jonathan Halpern, Mukami Kariuki and Michael Hamaide for leading this work, and all the World Bank Group staff who contributed to this endeavor. Jamal Saghir Director,Energy and Water Chairman,Water Supply and Sanitation Sector Board 5 The World Bank Group's Program for Water Supply and Sanitation TABLE 1 WATER SUPPLY AND SANITATION ACCESS, 2000 improved water supply (%) improved sanitation (%) Region Urban Rural Urban Rural Sub-Saharan Africa 83 44 73 43 Middle East and North Africa 95 77 93 70 South Asia 94 80 67 22 East Asia and the Pacific 93 67 73 35 Latin America and the Caribbean 94 66 86 52 Europe and Central Asia 95 82 97 81 Developing Countries 92 69 77 35 Source:WHO/UNICEF JMP,www.childinfo.org/eddb/water.htm www.childinfo.org/eddb/sani.htm 6 The World Bank Group's Program for Water Supply and Sanitation THE PROBLEM: LIMITED ACCESS AND POOR SERVICE Inadequate water supply and sanitation services underscore the lives of billions of poor people in the developing world. Of every ten people, two lack access to a safe water supply, five have inadequate sanitation, and nine do not have their wastewater treated to any degree (Table 1). This translates to an estimated 1.1 billion people without access to safe water and 2.4 billion without adequate sanitation.1 Yet even these estimates understate the extent of the access gap. In many countries where water supply systems have been installed, the quality of services is poor. For many consumers there is often no water in the pipe, and when available, it is unsafe to drink. In addition, sanitation facilities are often inadequate, overloaded, in disrepair, or unused. Inadequate water supply and sanitation affects multiple dimensions of poverty: · In 2002 about 1.7 million deaths worldwide were attributed to unsafe water, sanitation, and hygiene, mainly through diarrhea. Nine out of ten such deaths occurred among children, and virtually all of the deaths were in developing countries.2 The burden of illness weighs most heavily on the poorest members of society. · Poor sanitation and the absence of minimal facilities for safe wastewater disposal contribute to the degradation of groundwater, rivers, and coastal resources, on which the poor are heavily dependent for theirlivelihoods.Indenselypopulatedurbanandperi-urbanareas,poorsanitationtranslatesintosqualid livingconditions,highvulnerabilitytoenvironmentalhazardssuchasflooding,andincreasedprevalence of water-related infections and parasitic diseases. · Manychildren,particularlygirls,donotattendschoolbecausetheymustfetchwaterfromdistantsources. In some cultures, girls are not permitted to attend schools that do not have latrines out of concern for their privacy and modesty. Studies in Asia indicate that girls' enrollment rises with the provision of latrinesinschools.Higherenrollmentof girlscanhaveapositiveimpactonchildmorbidityandmortality -- the education level of mothers has been shown to be a strong determinant of water and excreta- related diseases in children. As these examples illustrate, improved water supply and sanitation can positively influence health, education, social and environment outcomes. Progress in expanding access and improving the quality of water supply and sanitation services requires an enabling environment and cross-sectoral interventions in such areas as water resource management, land management, fiscal decentralization, and public health, among others. Ensuring consistency in policies and approaches across sectors is vital for improved financial and operational sustainability of all water supply and sanitation services. 1WHO/UNICEF JMP,www.childinfo.org/eddb/water.htm 2Reducing Risks,Promoting Healthy Life,The World Health Report,2002 7 The World Bank Group's Program for Water Supply and Sanitation FIGURE 1 GROWTH IN ACCESS TO WATER AND SANITATION, 1990-2000 AND 2000-2015 400,000 300,000 200,000 100,000 Water Supply 0 Sanitation 1990-2000 2000-2015 Number of new people with access to WSS per day for past 10 years and projection for 2000-2015 Source:UNICEF:www.childinfo.org/eddb/water.htm FIGURE 2 COMPARISON BETWEEN HISTORICAL AND NEEDED MDG INVESTMENT LEVELS (Billions of US$ per Annum) 50 ? 25 ? Wastewater Treatment Sanitation 0 Water Present MDG Needs Source:Global Water Partnership Framework for Action,2000/World Bank 8 The World Bank Group's Program for Water Supply and Sanitation THE CHALLENGE: REDUCING POVERTY THROUGH IMPROVED WATER SUPPLY AND SANITATION SERVICES In recent years the challenge of reducing poverty by LESSONS FROM THE improving the efficiency and sustainability of water INTERNATIONAL DRINKING WATER supply and sanitation services has found focus in the SUPPLY AND SANITATION DECADE "Millennium Development Goals". The Millennium Development Goals identify targets for improving The Millennium Development Goals follow several earlier initiatives that established water water supply and sanitation. These are outlined in the supply and sanitation access targets. The most Millennium Declaration and were further elaborated notable was the International Water Supply and during the World Summit on Sustainable Sanitation Decade in the 1980s. In translating Development in 2002. The targets aim to reduce by half the Millennium Development Goals into the proportion of people without sustainable access to safe quantitative targets at country level countries drinking water and basic sanitation by the year 2015. should take into account the following lessons Success in this endeavor would mean providing an from the "Decade": additional 1.5 billion people (1 billion in urban areas, · avoid the"performance by target"syndrome and 0.5 billion in rural areas) with access to safe water, in which time-consuming and often and about 2 billion people (1.1 billion in urban areas, politically difficult processes (such as and 0.9 billion in rural areas) with basic sanitation realigning policies and institutional roles between 2000 and 2015 (see Figure 1).3 to achieve sustainable improvements in service quality and access) are bypassed in These global estimates of access mask large disparities an effort to quickly show results, and make the case for increased domestic budgetary between countries and within them. When viewed on resources and concessional aid; a country basis, no more than 20 percent of developing · establish sound policies and institutions at countries, and less than 10 percent of the lowest- national, local and community level in income countries, are increasing access at the rate order to ensure sustained progress; and needed to meet the targets.4 To achieve these · build capacity at local level for identifying Millennium Development Goals, annual investments and understanding the specific in water supply and sanitation would likely need to characteristics of poverty groups, and establish mechanisms that respond to double from the historical level of US$15 billion per demand. year to US$30 billion (see Figure 2).5 These estimates 3WHO-UNICEF JMP: www.childinfo.org/eddb/water.htm. Adjusted to reflect base year as 1990 rather than 2000."Safe"water includes household connections, public standpipes, boreholes,protected dugwell,or spring and rainwater collection."Adequate"sanitation includes connection to a public sewer or septic system, or possession of a pour-flush,simple pit, or ventilated improved pit latrine. 4Progress Report And Critical Next Steps In Scaling Up: Education For All, Health, HIV/Aids ­ Addendum 3,Water Supply And Sanitation And The Millennium Development Goals,Development Committee,March 27, 2003 5Towards Water Security:A Framework for Action, Global Water Partnership,2000. 9 The World Bank Group's Program for Water Supply and Sanitation 10 The World Bank Group's Program for Water Supply and Sanitation do not include wastewater treatment and assume good maintenance of existing assets and efficient investment, in the absence of which investment needs will be much higher. In summary, the magnitude of the access gap and the costs of closing it are considerable. But closing the gap is not simplyamatterof moremoney.Sustainableaccesstosafedrinkingwaterandadequatesanitationrequires:improving andsustainingthequalityof existingservices;tailoring newservicestorespondtodemandfromunservedhouseholds; andestablishingsoundenvironmentalmanagementpractices.Commontoeachof theseistheneedforbetterutilization of existing resources. Doing so requires action along four fronts: · Creating and disseminating knowledge on what works in local circumstances; · Adopting policies that provide incentives to invest and operate efficiently, and ensure that services reach the poor; · Building and strengthening local institutions to permit improvements in service quality and increased access; and · Securing the necessary financing to rebuild infrastructure and expand service coverage and quality. 11 The World Bank Group's Program for Water Supply and Sanitation 12 The World Bank Group's Program for Water Supply and Sanitation KEY LESSONS: BUILDING ON GLOBAL EXPERIENCE Over the past two decades much has been learned in developing countries about what it takes to improve water supply and sanitation services. The main lesson is that where developing countries have steadfastly pursued sound policies and created supportive and sustainable institutions, they have made remarkable progress in expanding the reach of water and sanitation services. In contrast, where efforts have not been consistent and sustained, funding for the sector has had very limited and only temporary benefit. Creating the conditions for reform -- drawing on the following lessons derived from international experience -- is key to making progress: Well-functioning service providers are essential to realizing sustained improvement "In the absence of sound policy and in water supply and sanitation services. Many water supply service providers institutions, increased investment will be currently operate with levels of unaccounted-for water in excess of 50 percent, ineffectual in reaching the Millennium and collection efficiencies below 70 percent. As a consequence, only about one Development Goals." third of the water produced generates revenue, leaving many service providers without the means to operate, maintain, and expand systems in response to growing consumer demand. When provided with clear incentives, service providers have reduced costs, improved service quality, and increased access. An important priority is to ensure that service providers are accountable (downward) to users rather than exclusively (upward) to government.6 Extending services to poor people in urban areas requires specific attention and targeted intervention. Traditional monopoly service providers have often been deaf to the needs of poor households, perceiving them as customers who are costly to serve and unable to pay their bills. However, the unique and differentiated service demands of poor households can not be met through standard one-size-fits all approaches. Understanding these unique needs requires the participation of users in the design, management and regulation of services.When standards are too rigid or set too high, water supply and sanitation services may become inaccessible or unaffordable to the urban poor. Experience shows that where a range of options is offered and adapted to suit these niche markets (e.g., through small scale providers), the poor have benefited. Rural communities are willing to pay for and manage water supply and sanitation services when offered a choice of service level and a voice in the design of service delivery and financing mechanisms. Significant action along several fronts is required toaddressthechallengesassociatedwithfinancinganddeliveringsafewaterandadequatesanitationservices to dispersed rural communities, comprised largely of households with low incomes. Experience with community- driven development approaches has demonstrated the importance of: establishing financing arrangements that expeditetheflowof fundsfromcentralagenciestocommunities,basedonclear(andmeasured)performancecriteria; 6"Making Services Work for the Poor,"World Development Report 2004,World Bank 13 The World Bank Group's Program for Water Supply and Sanitation strengtheningtherolethatcommunities,andwomeninparticularplayinmanagingwatersupplyandwaterresources; and enhancing the capacity of local government agencies, NGOs, and entrepreneurs to support communities in the design and management of their water supply and sanitation systems. Sanitation and hygiene are critical to improving people's health and living conditions. Realizing health benefits from improved water supply and sanitation depends on a three-pronged strategy: (i) access to sufficient quantities of water; (ii) sanitary disposal of excreta; and (iii) sound hygiene practices. Household demand for improved sanitation often lags behind the demand for improved water supply, and is driven by perceptions of other benefits (e.g., privacy, convenience, dignity). In many countries, on-site sanitation (which is the primary excreta disposal method) is a private/household responsibility. However, as improved sanitation yields important public benefits, greater public support -- financing, policy, technical, and social marketing -- is warranted. Achieving sustained improvements in sanitation is a long-term undertaking that often requires a phased approach matched to consumer demand. Partnerships are key to expanding access to water supply and sanitation services. The public sector is the principal provider and financier of water supply and sanitation services in the developing world -- at less than 10 percent of total sector financing, the private sector supports and augments public sector initiatives rather than supplanting them. While government is, and should remain, accountable for service delivery, over the past few decades other players -- the private sector, communities, NGOs -- have played an increasingly important role in delivering these services. NGOs and community-based organizations have been instrumental in expanding access to rural water supply and sanitation, and in recent years the role of the private sector has evolved from a narrow focus on the supply of goods and services to include a broader role in financing and managing water supply and sanitation services. The role of the international private sector in managing large-scale water supply and sanitation services has grown significantly over the past 10 years -- from a handful in 1990 to about 200 worldwide by 2001. Over this period, several notable trends have emerged: (i) the entry of private sector operators has challenged the idea of permanent, unregulated, public monopolies and stimulated better performance among all operators; (ii) more transparent and impartial regulation has improved access to and disclosure of information; and (iii) marked improvement in performance over extended periods has been achieved by creating incentives to meet specific targets. 7Infrastructure Action Plan,World Bank, 2003 14 The World Bank Group's Program for Water Supply and Sanitation Expanding and sustaining service requires clear and consistent financial policies. Services should be paid for if they are to be sustained, and the extent and manner of cost recovery is crucial. In particular: tariffs should be aligned with costs; subsidies more clearly targeted to the poor; and a range of less costly service levels offered and delivered in a cost-efficient manner. Financing, and by extension pricing policy should take into account wide variations in payment capacity, distinguishing among urban, peri-urban, and rural consumers. In some countries this may mean that tariff adjustments to reflect the true costs of service are implemented gradually -- during which time government subsidies may be required to bridge the gap between overall revenue and costs. While user charges are critical to sound financing, affordability concerns "Water Supply and Sanitation and public externalities associated with certain types of water supply and Services are always paid for by sanitation services require public support. However, this should be provided someone, inevitably consumers in a manner that does not dilute service providers' incentives to perform. or taxpayers." Keying public funding to the achievement of explicit improvements in service -- e.g., through "output based aid" -- is one such approach. Public support (and by extension development assistance) is also important for mobilizing private financing for water supply and sanitation systems -- e.g., through partial guarantees to mitigate risks that hinder long-term private financing. Better water resource management and environmental protection are essential for ensuring sustainable access to adequate water supply and sanitation. In arid regions and those subject to high climatic variability, the costs of obtaining adequate sources of raw water are rising rapidly. In a growing number of countries, limitations in resource availability have led to better organization and increased cooperation among users, resulting in improved resource allocation. As only 10 percent of the wastewater generated in urban neighborhoods is safely collected and disposed of, further efforts to reduce overexploitation and environmental degradation are required. Integrated approaches to resource allocation, water quality management and pollution control which involve municipal, state, and federal agencies are required in order for priority setting and pricing mechanisms to work. 15 The World Bank Group's Program for Water Supply and Sanitation WATER SUPPLY AND SANITATION BUSINESS LINES Extending Services to the Urban Poor Managing Water Improving Service Resources Effectively Provider Performance Increasing Access to Rural Water Supply 16 The World Bank Group's Program for Water Supply and Sanitation RESPONDING TO THE CHALLENGE: BUSINESS LINES AND CROSS-CUTTING PRIORITIES Over the past decade, World Bank Group assistance has incorporated these lessons, shifting from a narrow focus on physical infrastructure to fostering operationally and financially sustainable service provision.Assistance for water supply and sanitation focuses on four main business lines or thematic areas: (i) extending water supply and sanitation services to the urban poor; (ii) improving service provider performance; (iii) increasing rural access to water supply and sanitation; and (iv) better managing the water resource base. These are linked to the World Bank Group's broader strategies for Rural Development, Private Sector Development, Urban and Local Government, and Environment. Extending Services to the Urban Poor: Over the next two decades, the bulk of population growth in developing countries will be concentrated in urban areas. By 2020, 50 percent of the developing world's population will be urban, most will live in small and medium-sized towns, and many will be low income households. Reaching the poor requires targeted interventions and broader actions at the municipal level, including: offering households a menu of service options, with differentiated costs that reflect their willingness to pay; establishing appropriate tariffs and subsidies; expanding the choice of service providers; and increasing hygiene awareness through social marketing, as a means to improving health and sanitation. In addressing urban poverty, the World Bank Group's advisory and analytic assistance and lending activities are focused on strengthening the capacity of local institutions to conduct demand assessments across user groups, improve poverty mapping, establish targeted subsidy mechanisms, pilot output-based approaches, and reform regulations and standards. Among the vehicles for introducing these interventions are sector- wide programs and broad urban poverty-oriented programs such as slum upgrading initiatives (e.g., Vietnam), city development strategies (e.g., Johannesburg, South Africa), and local government supported community development programs (e.g., Nigeria) Increasing Access to Rural Water Supply and Sanitation: Rural communities are often directly responsible for the operation and maintenance of water supply and sanitation services. Increasing access to rural water supply and sanitation requires a community-driven development approach that gives communities choice of service while instilling accountability for service delivery. Key measures for improving accountability and building local capacity include: community contracting -- whereby user groups manage investment funds and contract goods and services from local suppliers directly; capacity-building of local agencies and entrepreneurs rather than centralized ministries; channeling central government/donor financing to local governments based on actual performance; and involving communities in water supply and water resource management at the local level. As the share of rural water supply and sanitation 17 The World Bank Group's Program for Water Supply and Sanitation 18 The World Bank Group's Program for Water Supply and Sanitation programs implemented through multi-sectoral initiatives such as social funds, rural development and natural resource management operations has increased, measures to ensure consistency in policy and approach are also being put in place, and attention to broader questions of fiscal decentralization (e.g., Uganda), local government capacity (e.g., China) and livelihoods (e.g., India) is a priority. Improving Service Provider Performance: In many countries poor service quality, limited access (especially for the poor) and lack of financial viability are key sector challenges. Expanding access to sanitation poses an additional challenge as the access gap is wider and responsibility for service provision is dispersed.An important priority is to transform monolithic state-owned water companies into more-responsive service delivery agencies that address the needs of all users. Central to most water supply and sanitation programs are policy, regulatory, and institutional reforms to create incentives for service providers to be more accountable, commercially oriented, creditworthy, and customer-focused. Key measures include: developing regulatory capacity, and enhancing participation with civil society; establishing incentive based programs to improve the performance of public utilities; more effective engagement of international, local and small-scale private sector operators; refining pricing policy; commercializing utility operations; and applying new financing instruments--output- based aid, credit enhancement and sub-sovereign lending.Making progress in these areas requires action beyond the sector including: the development of local capital markets (e.g., Mexico), and strengthening of municipal finance and intergovernmental fiscal systems (e.g., Indonesia). Managing Water Resources More Effectively: Competing demands for water have brought water resources management to the forefront of the water supply and sanitation agenda in a number of countries in Africa, the Middle East and South Asia. Better management of existing resources is crucial. However, in some countries, the costs of obtaining adequate raw water are rising. In these circumstances, the development of basic hydraulic infrastructure is required in order to meet broad social and economic objectives.With respect to environmental degradation, a growing number of middle-income countries, in the East Asia and Pacific, Europe and Central Asia, and Latin America and the Caribbean region have initiated actions to arrest the decline in ambient water quality and improve wastewater management, including flood control and water reuse. Recognizing the interdependence of water supply, sanitation and water resource management, the World Bank Group's water supply and sanitation practice is working jointly with the water resources management practice to prepare country water resource assessments that address allocation, water quality, pricing, wastewater management and other issues (e.g., Yemen). Collaboration across sectors, particularly environment, urban development, and rural development is being strengthened in order to scale up work on water quality management and 19 The World Bank Group's Program for Water Supply and Sanitation CROSS-CUTTING OPERATIONAL, POLICY, AND INSTITUTIONAL PRIORITIES STRENGTHEN GOVERNANCE · IntegrateWSSwithin broaderdecentralizationandlocalgovernment reforminitiativestoimprove MECHANISMS accountability, ensure financial sustainability, and increase the flow of finances to the sector. Policy and regulatory reforms enhance · Improve communication and advocacy on reforms in order to set realistic expectations, address sustainability. Creating the conditions stakeholder concerns, promote awareness of beneficial impacts, and build broader, more for reform requires political enduring support. commitment and long-term · Strengthenregulatorycapacitytooverseeservicedelivery,settariffs,monitorenvironmentalquality. engagement. · Improve contractual and regulatory frameworks for partnerships with the private sector and communities. ENSURE FINANCIAL · Advocate for pricing policies that promote sound resource management,more effective resource SUSTAINABILITY use, and long-term sustainability, while achieving social objectives. Satisfied customers pay their bills. Cost- · Improve cost recovery to ensure that, at a minimum, revenue generates sufficient cash flows to recovering tariffs enable service cover explicit costs and financing commitments. providers to operate and maintain their · Design public sector financing mechanisms to meet social objectives while retaining a focus on systems at adequate levels, and mobilize more efficient resource use. financing for service expansion. · Enhance financial risk mitigation and guarantee instruments to leverage private financing and catalyze local currency and sub-sovereign lending. · Improve household access to financing forWSS installations through more appropriate payment mechanisms and micro-credit facilities. IMPROVE SERVICE DELIVERY · Create the right conditions for accountability, and efficiency of service providers ­ whether Improve access, quality, and public or private, international or local. sustainability of service delivery. · Provide flexible service options and standards in order to meet the needs of consumers under Broaden and strengthen partnerships various economic and technical conditions. among governments, communities, · Ensure that contracts address the needs of poor consumers. the private sector, and civil society. · Design performance incentives for service providers, to improve efficiency and effectiveness, and extend services to vulnerable groups. TARGET INTERVENTIONS · Adapt regulations and standards to ensure that water supply and sanitation services can be TO THE POOR extended to the poor. Reach poor and vulnerable groups · Introduce tariff structures and subsidy instruments that are transparent, and target poor and through specific and targeted vulnerable groups. interventions. · Pilot output-based approaches that shift public funding from inputs to services actually delivered to poor households. · Improve and expand poverty mapping and household demand assessment. Determine community preferences and tailor service delivery accordingly. · Deploy measurement tools to track outcomes, support regulation, and inform policymakers and consumers. IMPROVE HEALTH OUTCOMES · Promote self-sustaining hygiene education programs (including in schools) to stimulate Improving health outcomes requires demand for sanitation and reduce illness. not only investment in water and · Employing social marketing tools/techniques to develop understanding of, and stimulate sanitation facilities but also behavioral demand for, sanitation. change. · Introduce appropriate standards for sanitation, in accordance with the economic capacity and social needs of each targeted community. 20 The World Bank Group's Program for Water Supply and Sanitation pollution control, through integrated basin management approaches; the use of new instruments such as output- based approaches for wastewater (e.g., Brazil); and phased approaches to the development of sewerage systems and introduction of effluent standards. In each of these four thematic areas, the World Bank Group is working with client countries to address a core set of cross cutting policy and institutional priorities -- strengthening governance, ensuring the financial sustainability of water supply and sanitation schemes, strengthening service delivery mechanisms, targeting interventions to the poor, and improving health outcomes -- all of which are essential for achieving sustained improvements in sectoral performance and broader poverty reduction goals. 21 The World Bank Group's Program for Water Supply and Sanitation 22 The World Bank Group's Program for Water Supply and Sanitation SUPPORTING COUNTRY PROGRAMS Sharpening Focus: Assistance for water supply and sanitation is focused on countries in which the potential for impact is highest ­ that is, where the World Bank Group's support for national programs is matched by country commitment to sound policies and institutions. In each region, an initial set of focus countries has been identified for enhanced support with a view to accelerating progress towards achievement of the Millennium Development Goals. While resources are dedicated to achieving impact in focus countries, this does not necessarily mean increased lending. In some countries, ensuring sustainable access to water supply and sanitation may require that support for policy and institutional reforms initially takes precedence over increased lending -- some low-income countries may not be able to absorb large increases in external financing. By the same token, focusing on an initial set of countries does not imply that work will cease in other countries. Activities will continue at a steady pace (where institutional capacity exists), with reduced intensity (in countries where reforms are slow or non-existent), or on a declining basis (where other partners are taking the lead, as in European Union (EU) accession countries, or where national governments no longer need external support). Working within Country Frameworks: The Millennium Development Goals are global targets which should be translated into country specific priorities, implementation capacities, and timeframes. Scaling up water supply and sanitation takes place as part of a country-wide prioritization and resource allocation process that recognizes the interdependence of water supply and sanitation, health, education, and environmental outcomes. Meeting ambitious targets set at the national level requires sound sectoral policies and strategies, supported through discrete programs and dedicated funding. Well-elaborated country programs help to reduce duplication of effort among agencies and donors and establish a common framework for sectoral assistance. National development plans such as Poverty Reduction Strategies provide a clear indication of the priority that governments and development partners accord water supply and sanitation. However, policies, priorities, and budgetary implications should be elaborated with enough clarity to guide external assistance through: multi-stakeholder assessments -- to bring diverse perspectives to bear; sector diagnostics -- to establish baseline conditions; investment programs and financing strategies; and monitoring and evaluation systems that measure implementation progress and development impact. Working with a Wide Spectrum of Service Providers: The scale of water supply and sanitation needs calls for engagement across the spectrum of public and private actors. Over the past few decades the nature of partnerships has evolved to accommodate diverse needs and country characteristics. Many governments are delegating responsibilities to community organizations, non-governmental agencies and 23 The World Bank Group's Program for Water Supply and Sanitation 24 The World Bank Group's Program for Water Supply and Sanitation the private sector; and establishing national programs to replicate success and broaden impact. In this regard, assistance for strengthening governance systems, developing financing mechanisms and building capacity for contract management may be required. In the context of providing policy advice on sector reform the World Bank Group is deepening its support for well-functioning service providers -- financing inefficient service providers without a clear reform program does not produce sustainable gains. As a means of increasing efficiency and performance of service providers, support for the engagement of private actors will continue. Drawing on lessons from several decades of experience, new relationships and business models are thus evolving in response to local needs. Strengthening Analytical and Advisory Assistance: Developing and consolidating sector knowledge at country level informs sectoral priority setting, feeds into the elaboration of programs and strategies, and guides sector reforms. Assistance may be required to address gaps in knowledge on a range of issues such as: assessing consumer demand for services; designing pricing policy and tariff structures, institutional capacity and performance; and broader sector policy and regulations. Addressing gaps in knowledge at the country level may require: joint work with other sectors -- to prioritize and sequence interventions at the national and local levels (e.g., city development strategies, poverty assessments, public expenditure reviews); and collaboration with other actors -- to ensure policy consistency, harmonize approaches and coordinate technical support and investment programs. Translating learning into country actions also requires improvements in knowledge sharing. To this end the World Bank Group hosts a variety of knowledge-dissemination, capacity-building, and learning programs such as the Water Sanitation Program and World Bank Group Netherlands Water Partnership, that generate and disseminate knowledge. 25 The World Bank Group's Program for Water Supply and Sanitation 26 The World Bank Group's Program for Water Supply and Sanitation DEPLOYING RESOURCES MORE EFFICIENTLY Broadening Impact: Water supply and sanitation strategies prepared for each region anticipate increased World Bank Group lending and non-lending assistance over the next five years. These strategies reflect regional operational priorities derived from country experience.As conditions vary within regions, the specific priorities, mix of instruments and partnerships are geared to country-specific needs, capacities and policies. Notwithstanding, countries at similar levels of development share common characteristics that inform the nature and phasing of assistance: · In low-income countries under stress (LICUS), the first priority is to advocate and establish basic policies and build institutional capacity for modest investment programs implemented in partnership with communities, the local private sector, and NGOs using community based approaches e.g., through slum upgrading and social development funds. · In low-income countries, assistance may initially focus on policy and institutional reforms at central and local government level, followed or complemented by investment financing to scale up on various fronts (e.g., sanitation, small towns) in accordance with local implementation capacity. Given the importance accorded to decentralization and local government reform in several regions, programmatic approaches to financing for water supply and sanitation operations are increasingly important. · In middle-income countries, which typically have a greater ability to mobilize resources, assistance is highly selective and catalytic, directed at leveraging private financing through International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and concessional lending by regional development banks; addressing poverty pockets through the design of pro-poor targeting policies and programs; and strengthening local government management and financial capacity (e.g., facilitating sub-sovereign lending). Leveraging Assistance through Strong Partnerships: The World Bank Group works closely with various agencies at global, regional, and country levels to share knowledge, leverage resources, build consensus on effective policies and practices, and support common programmatic approaches. These partnerships are being sustained and strengthened through joint activities to enhance advocacy, knowledge generation, financing and capacity building. At the global level, joint initiatives are underway with various United Nations agencies and most bilateral agencies ­ many of which also support one or more trust-funded programs housed within the World Bank Group. 27 The World Bank Group's Program for Water Supply and Sanitation Membership in several global networks such as the Global Water Partnership is complemented by participation in special-purpose global task forces, such as the World Panel on Financing Water Infrastructure, and active participation in key international water supply and sanitation events. In addition to traditional partnerships with governments and donor agencies, over the past decade cooperation has increased markedly with private operators, financiers, academia, consumer organizations and civil society. At the regional level, the World Bank Group often works with the regional development banks ­ many of which play a lead role in external financing of water supply and sanitation. The World Bank Group actively supports regional programs such as the New Partnerships for Africa's Development (NEPAD), and has recently launched a joint initiative with other international financing institutions aimed at mobilizing investment financing for water infrastructure. New partnerships aimed at strengthening institutional capacity have been established with regional and country networks of professionals such as the Latin American Association of Utility Regulators (ADERASA). Strong partnerships at country level often reap the largest benefits from development assistance. The World Bank Group is currently working with its clients and their partners at country level to develop and share knowledge, support sector reforms, finance common sectoral programs, and harmonize procedures e.g., by consolidating reporting and fund management procedures, budget structures, regulations surrounding procurement of goods/ services and disbursement cycles across aid agencies. These actions improve the effectiveness of development assistance and reduce demands on scarce in-country administrative capacities. Within the World Bank Group, joint initiatives are underway with other departments (e.g., environment, rural development, social protection, health) to strengthen cross sectoral linkages with water supply and sanitation services. These activities are intended to improve the quality and relevance of analytical and advisory assistance to permit better integration of water supply and sanitation within country programs and magnify the development impact of operational work.In recognition of the need for close coordination across infrastructure sub-sectors, an Infrastructure Action Plan has been prepared with the aim of increasing the contribution of infrastructure services to poverty reduction and economic growth. Measuring Results ­ Improving, Monitoring and Evaluation: Effective measurement of development is the basis for understanding and applying lessons learned from experience. Over the past year, demand for comparable information on various aspects of sector performance has grown rapidly, driven in part by the 28 The World Bank Group's Program for Water Supply and Sanitation desire to measure progress towards achievement of the Millennium Development Goals. In order to address these demands, a water supply and sanitation sector monitoring and evaluation action plan has been prepared. A coherent sector-wide approach to collecting, aggregating, and reporting on project and country-level performance is being established with the following key elements: · Monitoring Country and Global Outcomes Measurement of country outcomes is important for gauging the effectiveness of country policies and World Bank Group assistance. Immediate demands for country-level data on access can be satisfied using indicators already available from the WHO-UNICEF Joint Monitoring Program (JMP). However, effective measurement at global level is made difficult by the wide variety of performance indicators used at country level. The World Bank Group is working with partners to improve the relevance, quality, and timeliness of data collection; increase consistency between data collection instruments; strengthen effectiveness of the Joint Monitoring Program (JMP); and extend the range of country-level indicators. · Comparing Service Delivery Performance Comparative measurement of service provider performance can be used to raise awareness among policymakers, service providers, and consumers about what is possible relative to the service delivery they are currently receiving. One instrument for this is a benchmarking toolkit that enables information to be collected at the provider level with the potential for aggregation at national level. The World Bank Group is currently supporting the International Benchmarking Network (IBNET) to expand the number of participating countries and utilities as well as the range of indicators in order to broaden the scope and improve comparability of data sets. · Measuring Project Effectiveness The World Bank Group currently measures project effectiveness by monitoring inputs and outputs against indicators developed for specific projects. Measurement of the links between project outputs and country outcomes is currently a priority. In line with efforts to improve monitoring at the global level, the World Bank is streamlining project-level monitoring indicators with those used to assess country outputs and outcomes by: standardizing project-level monitoring indicators across sectoral and multi-sectoral operations, disseminating methods/tools for measuring sectoral performance at the country level, and improving portfolio monitoring. These efforts are closely linked to service provider and global efforts described above. 29 The World Bank Group's Program for Water Supply and Sanitation CONCLUSION The program outlined above identifies key lessons, themes, priorities and approaches on which the World Bank Group is focusing in order to accelerate progress towards the objective of "efficient sustainable water supply and sanitation services for all". The following principle actions are outlined: · Focusing the World Bank Group's Business Assistance is focused on: (i) extending services to the urban poor; (ii) improving operator performance; (iii) increasing rural access to WSS; and (iv) better managing the water resource base. Priority is accorded to countries which are committed to establishing sound policies and institutions where the potential for impact is highest. · Improving Development Effectiveness Across each of these themes, the World Bank Group uses a mix of lending and non lending instruments to assist client countries in addressing a core set of cross cutting policy and institutional priorities ­ strengthening governance, ensuring financing sustainability, improving service delivery, targeting interventions to the poor, and improving health outcomes. · Using Resources Efficiently The World Bank Group is strengthening cross-sectoral collaboration within and outside the institution, to maximize the impact of its modest resources. These partnerships at global, regional and country level, meet a variety of objectives: sharing and developing knowledge, building joint initiatives, harmonizing approaches, and ensuring that resources are used efficiently. Following through on these actions requires several shifts in approach and emphasis in order to (i) align support to country specific needs and local priorities; (ii) ensure linkages with broad country programs and (iii) build on comparative advantages. These shifts are already underway, but require concerted attention and follow through. 30 The World Bank Group's Program for Water Supply and Sanitation 31 CONTACTS Water Supply and Sanitation Sector Board Secretariat Sylvia Michele Diez 202.473-3893 www.worldbank.org/watsan Water Help Desk: 202.473.4761 Copyright © 2004 Energy and Water Department/The World Bank Photography Credits: Cover - Dominic Sansoni Page 10, 22 - Curt Carnemark Page 12 - Guy Stubbs/WSP-SA Page 18 - Mukami Kariuki Page 24 - SKAT-HTN Page 26 - Jamal Saghir Page 31 - WSP-AND Designed and produced by Roots Advertising Services Pvt. Ltd., India