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How can economic regulationHow can economic regulation

help to make water accessiblehelp to make water accessible

to the poor ?to the poor ?

Richard FranceysInstitute of Water & Environment, Cranfield

And Member of WaterVoice CentralOfwat Customer Service Committee, UK

The views expressed in this paper are the views of the authors and do not necessarily reflectthe views or policies of the Asian Development Bank (ADB), or its Board of Directors or thegovernments they represent. ADB makes no representation concerning and does notguarantee the source, originality, accuracy, completeness or reliability of any statement,information, data, finding, interpretation, advice, opinion, or view presented.

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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 connectionthrough 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

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Basic PropositionBasic Proposition

Monopoly providers captured by vested interests,

usually producer interest, not by the demands andneeds of customers

The unregulated small scale vendor market servesthe poorest more effectively than monopoly providers

Monopoly providers often have access to economies

of scale and cheaper finance which should beaccessible to the poor

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How can regulation help to makeHow can regulation help to makewater accessible to the poor ?water accessible to the poor ?

Regulation can develop the framework for effectivelycombining monopoly providers and best alternativeproviders

Regulation can deliver credible transparency intomonitoring of prices and levels of service

but:

Regulation can fail to deliver under existing weakgovernance systems and become a bureaucraticirrelevance

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contract /performance agreement

customerpower

voice

Citizen

Customer

Politician

Policy-maker

FormalProvider

How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

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How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

contract /performance agreement

customerpower

voice

Citizen

Customer

Politician

Policy-maker

FormalProvider

RegulatorsEconomic, Public Health, Environmental

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How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

contract /performance agreement

customerpower

voice

CitizenCustomer

Politician

Policy-maker

FormalProvider

Customer

RepresentationConsumer

Forum

Regulators

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How can regulation help to make waterHow can regulation help to make wateraccessible to the poor ?accessible to the poor ?

contract /performance agreement

customer

power

voice

InformalCustomers

InformalProviders

CitizenCustomer

PoliticianPolicy-maker

FormalProvider

Customer

RepresentationConsumer

Forum

Regulators

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How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

Citizen

Customer

contract /performance agreement

customerpower

voice

Informal

Customers

InformalProviders

Politician

Policy-maker

Formal

Provider

CustomerRepresentation

ConsumerForum

Re ulators

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How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

By requiring a Universal Service Obligation as aprimary duty

By empowering the regulator to demanddifferentiated service standards

By empowering the regulator to require utilitycoverage to informal housing areas

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F. Carlos householdsF. Carlos households

have individual m et ershave individual m et ers

and t he resident sand t he resident sassociat ion ensuresassociat ion ensures

t hat t here are nothat t here are no

il legal connect ionsil legal connect ions

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How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

By empowering the regulator todemand appropriate connection

charges By empowering the regulator to

demand utility provision ofappropriate low-income customerpayment facilities

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By empowering the regulator to accept and enablealternative water suppliers (neighbours, vendors,

SSIPs) to access quality water supplies all with anappropriate (minimal?) level of oversight

Acceptable prices for on-selling (bulk) water

Monitoring water quality

Customer grievance procedures

How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

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SSIPS too important

to ignore: 5% to 45%coverage of surveyedAsian Cities

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By demanding that utility Asset Management Plansprioritise service coverage to the poor

By demanding utility efficiency improvements toensure that cost-reflective tariffs are least cost

Promoting affordability for the poor

By requiring Asset Management and OperationalPlans to deliver 24/7 water

How can regulation help to make waterHow can regulation help to make water

accessible to the poor ?accessible to the poor ?

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Storage space is a valuableresource in a denselypopulated slum

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By ensuring the regulator is empowered/ resourcedto 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

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Consumer ForumJakarta,Indonesia

CustomerInvolvementIn Regulation

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How can regulation help to make wateraccessible to the poor ?

By recognising that any public private community partnershipis a partnershiprequiring give and take on both sides

By understanding that private operators require a fair returncapital relative to risk- public operators also have to covertheir capital expenditure and cost of capital

It is always the poor who are most disadvantaged by poor

capital maintenance