Barriers:

• Policies distort pricing, lower profits, and misuse water and waste: Distortions in the water sector hide in many guises: international development assistance for disaster relief, politicians providing water as patronage, the promise of "free services" from nonprofit organizations, and subsidized agricultural and industrial water use, which are ultimately unsustainable. Subsidies hurt both consumers and the environment because they discourage water conservation, which can lead to water scarcity. Those that offer water services must compete with free, or underpriced water, which many people think of as their only option, despite poor quality and low reliability. The low cost of water, and apathy toward better services, also means that many more innovations exist for water treatment than for waste disposal, which could limit the contamination of the water. Artificially depressed water prices hurt entrepreneurs as well by limiting their profitability. Tiny profit margins can mean entrepreneurs don't commit to healthy or environmentally sound solutions unless they're guaranteed a large volume of customers. In addition, water providers that fill in the gaps in water-scarce areas are rarely accountable for water-quality standards. Small-scale water providers in water-scarce urban areas charge too much for poor quality water. Meanwhile, rural residents don't have water service or access at any price. Although all residents-rich and poor, rural and urban-are willing to pay for the convenience of a nearby tap connection, most think of water itself as a free good because of current pricing schemes. As a result, consumers tend to use water in ways that are irresponsible.

• Public information alone doesn't change behavior: The health benefits of clean water and safe sanitation practices, however clearly documented, have not persuaded many households in developing countries to change their day-to-day sanitation practices. Public health campaigns may improve knowledge, but not necessarily change behavior (consider the challenge of getting households to use bednets to prevent malaria, or other seemingly simple practices). Framing a behavior as the 'right thing to do' implicitly chastises people for the way they live. People respond far more to messages of personal economic benefit or social status.

• Limited focus on long-term impact: In vibrant business markets, companies that are first to innovate quickly contend with imitators. This early competition generates consumer demand. And to capture that demand, companies scale up the availability of their product and generate new product uses and features. But when water and sanitation projects are created or managed by non-governmental organizations, they tend to focus on opportunities for poverty reduction rather than strategies for long-term business development. As a result, NGOs may not know enough about consumer preference or focus sufficiently on profitability for their ideas to be scaled-up without reliance on subsidies. Support for pilot projects rarely leads to a permanent service. In addition, the simple act of framing water treatment technologies or sanitation products as pilot projects limits thinking and planning for long-term results and commitment.

• Lack of access to equity/credit in the sector: Lack of access to equity or credit inhibits individual entrepreneurs who want to create a service, and communities that may want to purchase new services. Financiers have not considered the income-generating opportunities in the sector for individuals. Banks may not want to lend because they consider the water and sanitation sector to be a high-cost, low-return investment, or simply because they don't have the resources to assess the risks and returns for small deals. Local entrepreneurs need services that would help them quantify these risks and document their returns. They also need services to cut through bureaucratic red tape so they can earn quicker, higher returns on their water or waste management solutions. And for communities needing funds to buy new services, finance institutions cannot assume that microcredit is the answer in all cases. For instance, urban residents may not want to be in the typical joint liability group that microfinance institutions require, because they cannot afford time away from their jobs. Thus, different financing options may need to expand to increase access but cover risks in this sector.

• Participation can limit accountability and effectiveness, rather than improve service provision: Collective ownership and management do not work in all situations. Although local governance may seem more responsive to local needs, treating communities as entrepreneurs may actually increase transaction costs and therefore decrease service levels. For instance, participants in local water cooperatives may not invest sufficient time in training and organization to deliver multiple-use water appropriately. Also, local boards may lose so much time in water access requests to regional water managers that they are slower to deliver water. Similarly, deciding that everyone will clean and maintain toilets may mean that no one takes responsibility. To this end, some development experts caution against romanticizing collective action for service provision and maintenance. Community involvement and ownership are crucial to success, but it is naive to assume that the poor have unlimited time to plan and participate, or unlimited desire to learn to manage something unwieldy. Competitive markets that provide choice, which fuels more attentive customer service, can provide better services at lower costs.

Principles of Innovation: Efficient services delivered to the consumer, and earned income for the entrepreneur

• Value-added services mean additional business income (Individual and business level*): Entrepreneurs can create profitable businesses based on water and sanitation provision services as long as they are seen by customers to directly improve wellbeing by raising earned incomes, improving health, or dramatically saving time. Entrepreneurs can add value by delivering services, such as providing water that is safe for drinking so that households do not need to buy point-of-use filters or other household-based treatments, or use valuable firewood for boiling water. When those services increase income significantly for entrepreneurs, they can scale-up their businesses and demonstrate new models for water and sanitation provision. In this way, both the consumer and entrepreneur graduate to more convenient, cost-effective, and sustainable solutions.

• Move people up the water & sanitation ladder (Individual level*): Although constructing a pit latrine is not a long-term solution, it can be an important first step in a coordinated effort to introduce new sanitation practices, especially if the latrines are built ecologically and are regularly emptied and maintained. Consider how a businessperson could earn income by delivering new sanitation options to communities, just as salespeople graduate users of consumer products to more sophisticated, sometimes healthier options. In this case, it may be easier to shift a neighborhood, rather than just an individual household, from pit latrines to urine-diverting toilets to septic systems. And it doesn't end with household solutions. Entrepreneurs need to generate demand for investment in a networked sewage system. This means coordinating small-scale sanitation or water providers with the government to move neighborhoods up the ladder. In addition, sanitation solutions should fit with the local setting. For instance, a small, enclosed toilet may make sense in a dense urban area, but seem unsanitary to a rural farmer in a village with ample space. Total Sanitation programs, whereby communities mount active monitoring campaigns against open defecation, tend to work in more hierarchical societies, where everyone knows each other's roles and responsibilities.

• Increase accountability through design for the long-term (Sector level*): The current public sector approach that disconnects water delivery from sanitation has actually undermined public sector investments in water. Many more people have access to a tap than do to a toilet, as sewerage investments lag far behind water pipes. Broken water pipes that run next to pit latrines and overflowing septic tanks carry contaminated water into homes. But a solution may be emerging out of necessity. Communities with limited resources have a strong incentive to make their water system design as good as possible, so that they have to devote only minimal resources to operating and maintaining the system. Designs that divert sanitation disposal to points outside residential areas, and that provide easy access to water at multiple points within the community are more likely to remain in use over the next 5-10 years. Investors who help develop a complete system - from design to construction to system management - can claim the full value of the system. They can claim not just the financial return on investment, but also the economic benefit of bringing long-term savings and efficiency to a community.

• Connect solutions to the finance and housing sectors (Sector level*): People who don't have enough space in their home to install a latrine won't do so. And people who have insecure ownership rights over their home will invest in it even less (and neither will the government for sewerage or water connections). Housing and sanitation entrepreneurs could work together to find low-cost ways for the urban poor to own or rent land, or to build low-cost housing with a small-scale sanitation option as part of the design. Coordination is already emerging in select communities, by connecting vulnerable residential areas with water and sanitation products. Financial entrepreneurs should consider how opportunities in rural areas differ from urban ones. In dense urban dwellings, microfinance institutions may be willing to lend for housing stock improvements that add a toilet and a sustainable water connection, which could also earn the dweller income. In rural areas, other financiers may offer loans to create multiple-use water systems that provide both agricultural and household water access.

• Financing for the new consumer (Individual, business and sector level*): Expanding the range of investment options in water and sanitation could shift the water market away from a quasi-monopoly, and in turn cultivate new customers. Consider how the financing itself can help develop customers, by making them stakeholders in the service. Water co-operatives could dedicate a portion of user fees to upgrading services; or small monthly payments could ensure continued usage of toilets in a way that fee-for-service payments may not. Financiers can also think beyond microcredit toward savings products and other options that tap consumers' willingness to pay.

  *: Individual level indicates changes that target individual consumers and their behavior. Business level involves the creation of a robust market of products and services, either with a new kind of market-based financing. Sector level involves solutions that will systematically change the way water and sanitation services are delivered globally.

  
  

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  Short Descriptions of Mosaic Cases

  1.   KickStart

     
     Country: Kenya
     Website: www.kickstart.org/tech/technologies/micro-irrigation.html
     Mosaic Principle: Value-added services mean additional business income
     Mosaic Barrier: Policies distort pricing, lower profits and lead to misuse of water and waste

     By enabling farmers to pump out water directly at source and push water uphill-thereby eliminating the need to pay for pumping and transporting water-KickStart's Super MoneyMaker Pressure Pump is transforming Kenya's subsistence farms into highly profitable enterprises. Exploiting the pump's ability to draw water up from 23 feet (7 m) and irrigate up to 2 acres of land, thousands of farmers are using the gadget not only to irrigate their own crops, but are selling the water to others at a profit. Incomes have increased as much as ten-fold for many of these "farmerpreneurs."

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  2.   Hindustan Lever's Pureit

     
     Country: India
     Website: www.hulpureit.com/htmls/about.html
     Mosaic Principle: Value-added services mean additional business income
     Mosaic Barrier: Public information alone doesn't change behaviors

     Hindustan Unilever's Pureit water purifier offers in-home all-in-one water purifying services that remove bacteria, parasites, pesticides and odor without dependence on electricity, gas, running water or chlorination. The unit is pitched as a time and money saving device that's tailored for working families. It guarantees safety, boasts of being easy enough for a child to use, and emphasizes convenience of use by being portable. Moreover, the practice of door-to-door demonstrations functions as an effective marketing strategy.

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  3.   Barefoot College Solar Engineers

     
     Country: India
     Website: www.barefootcollege.org/prog_rwh.htm
     Mosaic Principle: Value-added services mean additional business income
     Mosaic Barrier: Limited focus on long-term impact

     The Barefoot College, located in Tilonia in Rajasthan, India, works with local communities to engage them in setting up and maintaining systems for providing easy access to drinking water. Several villages now benefit from community piped water supply systems, designed, planned and implemented entirely by the village people. These communities pay a small monthly fee for this connection. The College has trained over 1,000 hand pump mechanics to carry out all repairs for the 45,000-plus hand pumps in Rajasthan. There are almost 50 women mechanics in this team. A number of women have been trained as barefoot engineers, to fabricate and construct overhead water tanks, having a capacity of holding 100,000 liters of water. Several women are now equipped to plan, supervise and implement a drought proofing initiative of desiltation of village ponds. These activities provide much-needed steady income for women and helps strengthen their positions in these deeply patriarchal communities.

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  4.   WaterHealth International

     
     Country: U.S.
     Website: www.waterhealth.com/water-solutions/project-financing.php
     Mosaic Principle: Value-added services mean additional business income
     Mosaic Barrier: Lack of access to equity/credit in the sector

     WaterHealth International is ensuring that underserved populations avail of its UV-based water purification technology by using a unique business approach that includes credit facilities for financing for the purchase and installation of the systems. This makes it possible to deliver products for safe, clean water, even to communities traditionally considered "unreachable." User fees for treated water are used to repay loans and to cover the expenses of operating and maintaining the equipment and facility. WaterHealth hires members of the communities to conduct the day-to-day maintenance of these "micro-utilities," thus creating employment and building capacity, as well as generating entrepreneurial opportunities for local residents to provide related services, such as sales and distribution of the purified water to outlying areas. Moreover, because the facilities are owned by the communities in which they are installed, the user fees become attractive sources of revenue for the community after repayment of loans.

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  5.   Association of Private Water Operators

     
     Country: Uganda and S. Africa
     Website: siteresources.worldbank.org/EXTWSS/Resources/337301-1147283795581/APWOHarrisonMutikanga.pdf
     Mosaic Principle: Value-added services mean additional business income
     Mosaic Barrier: Participation can limit accountability, rather than solve service provision

     In Uganda, a move by private water supply operators to form an umbrella association is benefiting the urban communities they serve by enhancing the efficiency of urban water supply services. The formation of the Association Private Water Operators (APWO) is improving the continuity and success of private sector participation in urban water supply by facilitating efficient operations, sharing of experiences and giving a single voice to operators. APWO-Uganda has several goals geared toward uniting its members in the delivery of high quality, reliable, environmentally sustainable, economically efficient, and satisfactory water and sanitation services to users. Others countries like South Africa are also following this model.

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  6.   Trevor Mulaudzi

     
     Country: South Africa
     Mosaic Principle: Move people up the sanitation ladder
     Mosaic Barrier: Public information alone doesn't change behaviors

     In South Africa, Ashoka Fellow Trevor Mulaudzi uses a school toilet clean-up project to raise standards of hygeine and sanitation both in schools and in the community. Mulaudzi convinces parents by involving them in the initial clean-up project and then encouraging the school to hire some of these parents as cleaners, thereby generating much-needed employment. He hooks schools to the project by making it an income-generator: he supplies the schools with toilet paper and cleaning materials at a low cost which the schools sell to parents and the rest of the community for a higher price. In this way, the schools generate income while also building community awareness and contributing to the improvement of sanitation in the home.

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  7.   Sulabh Sanitation

     
     Country: India
     Website: www.sulabhinternational.org
     Mosaic Principle: Move people up the sanitation ladder
     Mosaic Barrier: Participation can limit accountability, rather than solve service provision

     Sulabh International is operating and maintaining more than 6,000 community toilet complexes in some 1,100 towns and cities across India, and one in Bhutan. These low-cost toilets require just 2 liters flush water, and the toilet blocks are equipped with electricity and a 24-hour water supply. Soap is provided free for hand washing. Users pay a small fee that goes toward the wages of an on-site caretaker who is charged with cleaning and maintaining the facilities. Sulabh is also operating and maintaining about 100 such complexes at important railway stations. Impressed with Sulabh's efficiency and cost-effective methodology, the Indian Railways is considering handing over the management of its entire sanitation services to this civil sector organization.

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  8.   Laxman Singh

     
     Country: India
     Website: www.sulabhinternational.org
     Mosaic Principle: Increase accountability through design for the long-term
     Mosaic Barrier: Policies distort pricing, lower profits and lead to misuse of water and waste

     In drought prone Rajasthan, India, Ashoka Fellow Laxman Singh is helping communities to ensure water security by encouraging them to remember and implement traditional water conservation and natural resource management systems. He trains youth groups to design locale-specific blueprints for water conservation, founded on traditional knowledge systems of the area. Singh is successfully transferring control of water resources to rural youth and citizens, replacing dysfunctional centralized government planning with the self-reliance of local people. Several other citizen sector organizations have adopted his model, and the idea is spreading across the region.

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  9.   Ravindranath

     
     Country: India
     Mosaic Principle: Increase accountability through design for the long-term
     Mosaic Barrier: Participation can limit accountability, rather than solve service provision

     In India, Ashoka Fellow Ravindranath organizes villages and communities in Assam's flood-prone areas to predict, prepare for, and cope with, the deluges that regluarly destroy homes and livelihoods. His Disaster Preparedness Committee has developed an Early Warning Network System to predict possible flash floods. Trained volunteers, working in a coordinated manner, regluarly measure water levels and relay the information to downstream areas, thereby alerting local evacuation and rescue team in those villages and giving communities adequate time to save lives and reduce loss. His model is being replicated across north-east India.

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  10.   Ministry of Health

      
      Country: El Salvador
      Website: www.mspas.gob.sv/p_salud_ambiental6.asp
      Mosaic Principle: Increase accountability through design for the long-term
      Mosaic Barrier: Policies distort pricing, lower profits and lead to misuse of water and waste

      The Salvador Government is providing poor homeowners with an individual home-based sanitation solution by installing rooftop solar-run urine diverting toilets. The Ministry of Health (MOH) runs the program in partnership with several civil sector organizations. Different models of financing are used depending on what best suits the client community. In some communities the NGO has provided both the materials and labor, whereas in others, it has only provided materials and information on how to build the toilet, while labor is offered by the future users of the toilets. The MOH has established the regulations for the construction and maintenance of units and these regulations are regularly updated to reflect improvement and developments in the technology. Plans are on the anvil to collaborate with the Agriculture department to utilize the run-off urine as fertilizer

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  11.   Water Partners International / Gramalaya

      
      Country: India
      Website: water.org/waterpartners.aspx?pgID=1015
      Mosaic Principle: Connect solutions to the housing & finance sectors
      Mosaic Barrier: Public information alone doesn't change behaviors

      Through its Water Credit Initiative, WaterPartners International is providing microfinance for installing water and sanitation systems to poor communities who do not have access to traditional credit markets. By providing these groups with the credit tools they need, WaterPartners is enabling them to take charge of and design solutions to their water and sanitation needs. In India, WaterPartners provided loans for safe drinking water and household toilet facilities for urban slum residents. Loans were disbursed by WaterPartners' local implementing partner, Gramalaya. The latter teamed up a local micro-finance institution, BASIX, in order to develop the infrastructure they needed to make the loan distributions. BASIX educated Gramalaya on the qualifications for loan eligibility and helped them to develop financial systems to process the loans. The approach has been very successful so far, with a 90 percent repayment rate.

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  12.   Public-Private Partnerships

      
      Organization: Centre Régional pour l'Eau Potable et l'Assainissement à faible coût (CREPA)
      Country: Ivory Coast
      Website: www.reseaucrepa.org
      Mosaic Principle: Connect solutions to the housing & finance sectors
      Mosaic Barrier: Limited focus on long-term impact

      CREPA Côte d'Ivoire (a civil sector organization) works with the local public water utility service to pre-finance water connection fees as a loan to all households in a neighborhood, then trains the community to mobilize household savings to repay the loan and pay ongoing water bills. CREPA first arranges micro-loans for households to get water connections. A fund is created to continue the support to the connection fees and a household committee is set up. To reimburse the funds, a box is installed in each user household into which 100 CFA must be deposited everyday. The household committee carries out weekly checks to monitor this. At the end of the month, the household pays the water bill and the leftover money is used toward repaying the loan for the connection. The project is all set to be replicated in other areas as well.

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  13.   Community Lead Infrastructure Financing Facility (CLIFF)

      
      Country: UK
      Website: www.homeless-international.org
      Mosaic Principle: Connect solutions to the housing & finance sectors
      Mosaic Barrier: Lack of access to equity/credit in the sector

      CLIFF helps slum communities to execute slum development solutions - including installing and/or upgrading water sanitation facilities-by first providing loans and then leveraging additional loan finances for the communities from large financial institutions. The original CLIFF loans enable communities to demonstrate their capacity to implement financially viable projects, which can potentially be used to change the policy and practice of financial institutions. When financial institutions can visit and assess projects that are underway it helps them to develop confidence in the quality that can be produced through a community-driven process. CLIFF can also be used to share financial risks with other financial institutions, with all parties contributing loan financing. Sometimes, when financial institutions require additional security, CLIFF offers the needed guarantees. As more financial institutions become involved in the schemes, their confidence in lending to community driven projects increases.

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  14.   Juan Carlos Luna

      
      Country: Peru
      Website: www.chez.com/cenca/ingles.html
      Mosaic Principle: Financing for the new consumer
      Mosaic Barrier: Policies distort pricing, lower profits and lead to misuse of water and waste

      Ashoka Fellow Juan Carlos Luna offers simple water management technologies to slum neighborhoods and rural areas in Peru. These inexpensive technologies - that homeowners contribute upto 40 percent of -promote community water conservation and waste management, help prevent human waste dumping, and have the added benefit of turning gray water into usable water for public parks. Luna works with government water and sanitation engineers to introduce them to these technologies. Simultaneously, he has designed new policy approaches for the government which involve greater community participation which ensures that local policy is generated largely by community members themselves instead of being imposed by government officials. This allows communities to build their own water management infrastructure through small investment increments and therefore feel some ownership and responsibility.

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  15.   UN Habitat

      
      Country: Lao PDR
      Website: www.unhabitat.org/pmss/
      Mosaic Principle: Financing for the new consumer
      Mosaic Barrier: Lack of access to equity/credit in the sector

      In Lao PDR, UN Habitat has invested in a revolving fund for neighborhoods to connect piped water directly to individual households. The water is used for drinking and for low-flush toilets. Each home pays a fee for the connection and for usage. These fees feed back into the revolving fund, which is then used by another neighborhood. Before the intervention is rolled out, an aggressive awareness raising campaign is set in motion, followed by a rigorous neighborhood survey to determine the community's willingness and ability to pay for the service.

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