How can economic regulation help to make water accessible to the poor ?

Richard Franceys Institute of Water & Environment, Cranfield And Member of WaterVoice Central Ofwat Customer Service Committee, UK
The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors or the governments they represent. ADB makes no representation concerning and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented.

The Target
One Manila woman spent up to P40 pesos per day for water from a vendor and now pays only P25 to P50 per month, a 96% reduction. as a result of receiving a direct water connection through the regulated PPP A focus group of her women neighbours also found more time available no more waking up at 3:00 a.m. to queue no more stress waiting for water to become available more money for other household needs and can now take a shower

Basic Proposition
Monopoly providers captured by vested interests, usually producer interest, not by the demands and needs of customers The unregulated small scale vendor market serves the poorest more effectively than monopoly providers Monopoly providers often have access to economies of scale and cheaper finance which should be accessible to the poor

How can regulation help to make water accessible to the poor ?

Regulation can develop the framework for effectively combining monopoly providers and best alternative providers Regulation can deliver credible transparency into monitoring of prices and levels of service but: Regulation can fail to deliver under existing weak governance systems and become a bureaucratic irrelevance

How can regulation help to make water accessible to the poor ?

Citizen Customer
voice customer power

Politician Policymaker

Formal Provider
contract / performance agreement

How can regulation help to make water accessible to the poor ?

Citizen Customer
voice customer power

Politician Policymaker

Regulators
Economic, Public Health, Environmental contract / performance agreement

Formal Provider

How can regulation help to make water accessible to the poor ?

Citizen Customer
voice Customer Representation Consumer Forum customer power

Politician Policymaker

Regulators
contract / performance agreement

Formal Provider

How can regulation help to make water accessible to the poor ?

Citizen Customer
voice Customer Representation Consumer Forum Informal Customers customer power Informal Providers

Politician Policymaker

Regulators
contract / performance agreement

Formal Provider

How can regulation help to make water accessible to the poor ?

Citizen Customer
voice Customer Representation Consumer Forum Informal Customers customer power Informal Providers

Politician Policymaker

Regulators
contract / performance agreement

Formal Provider

How can regulation help to make water accessible to the poor ?

By requiring a Universal Service Obligation as a primary duty By empowering the regulator to demand differentiated service standards By empowering the regulator to require utility coverage to informal housing areas

F. Carlos households have individual meters and the residents association ensures that there are no illegal connections

How can regulation help to make water accessible to the poor ?

By empowering the regulator to demand appropriate connection charges By empowering the regulator to demand utility provision of appropriate low-income customer payment facilities

How can regulation help to make water accessible to the poor ?

By empowering the regulator to accept and enable alternative water suppliers (neighbours, vendors, SSIPs) to access quality water supplies all with an appropriate (minimal?) level of oversight Acceptable prices for on-selling (bulk) water Monitoring water quality Customer grievance procedures

SSIPS too important to ignore: 5% to 45% coverage of surveyed Asian Cities

How can regulation help to make water accessible to the poor ?

By demanding that utility Asset Management Plans prioritise service coverage to the poor By demanding utility efficiency improvements to ensure that cost-reflective tariffs are least cost Promoting affordability for the poor By requiring Asset Management and Operational Plans to deliver 24/7 water

Storage space is a valuable resource in a densely populated slum

How can regulation help to make water accessible to the poor ?

By ensuring the regulator is empowered/ resourced to involve low-income customers (present and presently unserved) in the process of regulation Customer/water committees/forums Surveys and focus groups as pseudo customer involvement in lowest-income areas Local governance systems as partners

Customer Involvement In Regulation

Consumer Forum Jakarta, Indonesia

How can regulation help to make water accessible to the poor ?

By recognising that any public private community partnership is a partnership requiring give and take on both sides By understanding that private operators require a fair return capital relative to risk- public operators also have to cover their capital expenditure and cost of capital It is always the poor who are most disadvantaged by poor capital maintenance