To meet the Millennium Development Goals (MDGs) for water supply and sanitation, project planners and service providers and the poor themselves in developing countries will have to overcome a number of barriers that impede the improvement of services for the poor. These Guidance Notes identify a number of institutional, legal, financial, and technical barriers to providing adequate services to the urban poor and propose practical solutions based on the experience of a number of relevant cases. These Notes are aimed primarily at project planners, service providers, and community leaders but provide some suggestions for policymakers. A summary of policy issues is included in the last section.

The Current Situation

In 2006, nearly 1 billion people were still using water from unimproved sources such as shallow wells, rivers, streams, ponds and drainage ditches—with their attendant health and safety risks. Even those who have access to improved water supply infrastructure do not necessarily get adequate services. Large numbers of those who lack access to improved water supply infrastructure live in urban slums. The situation for sanitation is even worse than for water supply as sanitation has historically received substantially less attention, funding, and priority than water supply in virtually every country. In 2002, 2.5 billion people—47 percent of the population of the developing world—lacked toilets and other forms of improved sanitation. They defecate in plastic bags, buckets, open pits, agricultural fields or public areas in their communities. In 2005, slightly more than one-third of city dwellers - almost 1 billion people - lived in slums, in conditions characterized by overcrowding, high levels of unemployment or underemployment, lack of land tenure, poor water, sanitation and health services, and widespread insecurity, including violence against women. Improving services in the slums around large cities is essential. It is also now widely recognized that, to slow the growth of slums in large cities, more attention must be focused on improving services for the poor in towns and small cities.

Give the Poor a Voice; Build Support for Improvements; Eliminate Administrative and Legal Barriers

• The voice of the poor is often not heard, and misperceptions about the poor persist.

Getting the poor engaged is essential. Project designers and service providers often assume they know what type of services the poor want and are willing to pay for. Their assumptions are not always correct and often result in costly and unsustainable supply-driven public programs to provide services. Giving the poor the opportunity to participate in planning and design can make the difference between success and failure. This can happen only if adequate time and resources are allowed for meaningful consultation during the preparatory phases of projects. The poor are often unaware of official policies and their attitudes and behavior may impede their access to services. Educational programs that provide information develop skills as well as promote constructive attitudes and behaviors are an essential component of any effort to improve services and give the poor a voice. A number of welldocumented cases demonstrate the willingness and ability of the poor to create and/or manage their own services. Community-based organizations (CBOs) and federations of CBOs can help the poor take action on their own behalf.

• Water vendors, organized crime, public officials, and utility staff may have a vested interest in preventing better services for the poor.

Vested interests will naturally oppose any changes to the status quo that threaten their sources of revenue or political support. Sometimes confrontations can be avoided by giving informal service providers and other vested interests new roles or incentives that bring them into the formal system. Public awareness campaigns may help to build political support.

• Land ownership and tenure issues often create barriers to the provision of services to the poor.

Legal reform is needed to enable the poor to gain secure tenure, adequate housing, and services but in the meantime, innovative strategies to get around land tenure requirements can sometimes be found at the local level. One such approach is to allow

alternative documentation. For example, as part of its program to promote connections in slums, the Bangalore Water Supply and Sewerage Board agreed to permit residents to present lease documents and other ‘proof of occupancy’ documents such as ration cards, identity cards, election cards or electricity bills instead of land titles and tax receipts.

• The poor may be unaware of administrative and legal requirements, or find it difficult to understand them and comply.

Simplified, client-friendly procedures for connection, billing, and collection help the poor to gain and retain access to services. Creating a dedicated unit within the utility and/or engaging nongovernmental organizations (NGOs) to communicate with poor communities and facilitate access to services has also been effective.

Strengthen and Regulate Service Providers

• Public service providers sometimes lack the autonomy, financial and human resources, and incentives to provide services to the urban poor.
• Municipalities and utilities are not held accountable for the provision of satisfactory water supply and sanitation services.
• The services provided by small private service providers (SPSPs) are not recognized, encouraged or regulated.

The poor performance of water supply and sanitation (WSS) services is often due to an inappropriate institutional framework, lack of regulatory mechanisms, an absence of appropriate attitudes and skills, and a lack of explicit directives and incentives to serve the poor. Many governments have taken steps to restructure the sector by separating and clarifying the roles of policymakers, regulators, and service providers and adopting accountability mechanisms. In a number of countries, the largest service providers have been converted into autonomous public or private companies. In a few, more attention is being devoted to improving the performance and sustainability of services in the smaller towns. Such restructuring entails far more than a change in legal status—substantial internal restructuring, including management reforms and performance incentives for staff, is required to create a sustainable service provider. Training must focus on improving service quality, access and sustainability—rather than on engineering solutions.

Effective accountability and performance monitoring systems need to be put in place and propoor regulatory approaches should be adopted to ensure the availability, affordability, and sustainability of services for the poor. In most places, formal utilities will be unable to satisfy the demand of 100 percent of urban households for the foreseeable future, especially in poor neighborhoods. Taking advantage of the services of SPSPs can be an essential component of strategies to expand and improve services to the urban poor.

Working with SPSPs may require finding innovative ways of linking them with formal utilities, providing small amounts of investment finance, introducing appropriate regulatory mechanisms, and adopting strategies for eliminating illegal and abusive SPSP activities (if they exist) without driving SPSPs out of business.

Adopt Appropriate Investment Finance, Cost-Recovery, and Subsidy Policies

• Tariffs do not cover the full cost of efficient services.
• Poor households find it difficult to pay upfront connection fees.
• Poor households find it difficult to pay monthly bills.
• Increasing block tariffs penalizes households that share a single connection.
• Small-scale service providers lack adequate finance to extend networks into peri-urban informal settlements and small towns.

Targets for cost recovery that are realistic and charging methods that take the constraints faced by the poor into account can lead to financial viability as well as improved access for the poor. Cost recovery can be improved by reducing costs through increased efficiency, improving commercial performance, and charging an average tariff that reflects all costs. If a large tariff increase (in real terms) is required, even after taking into account the effects of efficiency improvements and increased connections, the increase should be phased over a period of time and accompanied by perceivable improvements in service.

Prices affect consumption behavior, so tariff structure and cross subsidies must be designed carefully to minimize economic distortions or changes in consumption patterns that would undermine the financial performance of the utility. Expanding services to the poor may result in a higher average cost because of physical conditions, higher collection costs, and lower average, consumption from connections in poor households. This creates a dilemma that needs to be acknowledged and dealt with realistically. Practices that reduce the cost of serving poor neighborhoods, such as community management of billing and collection, may be needed. While individual household connections for water and sewerage are often the preferred options, when many households are served through a single water connection, water consumption per connection may be higher than the utility’s average and make up for some of the higher costs in poor communities. Likewise, block toilets increase economies of scale. In general, subsidies should be targeted at the poor and should be limited and temporary. Subsidizing investments and/or connections in poor neighborhoods is preferable to subsidizing monthly consumption because the former is both targeted and limited in scope, and is generally sufficient to ensure that the poor will be connected and stay connected. If the very poor have difficulty accumulating cash to pay monthly fees, it may be possible to increase the frequency of collection by organizing daily or weekly collection by community representatives. Rising block tariffs are generally intended to provide a low lifeline tariff for basic essential household consumption and to discourage excessive use by those who consume more than a basic volume of water. However, such tariffs may penalize the poor when several households use one connection. Administrative or regulatory actions may be required to eliminate these distortions.

Legitimizing and providing finance to SPSPs can be an effective way to promote the expansion of acceptable services to unserved neighborhoods.

Overcome Physical and Technical Barriers

• The overexploitation and degradation of water resources affect the poor disproportionately.
• Physical and technical challenges and the high investment cost of conventional technologies make extending formal piped water supply and sewerage networks into informal and unplanned settlements more difficult.

Inadequate attention to managing water resources is leading to the overexploitation and degradation of water resources and exacerbates the already difficult service and environmental conditions in poor urban neighborhoods. As water becomes scarcer and its quality degrades, the poor must go farther and pay more to satisfy their basic needs. Most countries have adopted the Dublin Principles regarding the need for integrated water resources management to protect the environment, and the economic pricing of water to ensure efficient use of water resources, but further action is needed to implement these principles. Most governments are still operating in the reactive mode—responding to neardisasters. Public authorities and utilities should adopt comprehensive forwardlooking strategies for reducing water losses and encouraging the adoption of water saving technologies and low-cost sanitation at the household and community level.

A number of low-cost and physically adaptive alternative technologies have been developed for poor and marginal communities. A few examples are pourflush latrines, condominial sewerage systems, low-cost sewage treatment technology adapted to local conditions, rainwater collection systems, bulk water and sewerage connections at the boundary of poor communities, street or block metering arrangements whereby individual households are billed for water on the basis of average consumption. These have already been successfully used in many places. Modular planning, by which system components are initially designed with only limited excess capacity, has been advocated as a method to reduce initial investment costs in water supply and sanitation infrastructure. The underlying principle is to construct only when the investment leads to increased revenues in an acceptable timeframe. Subject to certain considerations, such as economies of scale, components are designed so that they can be expanded or upgraded as needed.

Policy Issues

The guidelines recommend practical strategies for overcoming obstacles to improving water supply and sanitation services for the urban poor. But in many cases, overcoming the obstacles will require more than the strategies. It will require changes in policies or legislation—for example, to increase transparency, promote better services for the poor, reform land tenure rules, require better cost-recovery, and allow adaptive standards and technologies. Even when policy reform is not essential, the proposed strategies could benefit from a more supportive policy or legal environment. In many cases, while current policies themselves may be adequate, their implementation is weak, or they may not be understood and appreciated by the key actors. In those cases, strategies to improve the implementation of policies may be needed.