The Asian Trends Monitoring Bulletin is a project sponsored by the Rockefeller Foundation, New York, the Centre for Strategic Futures, Singapore and the Lee Kuan Yew School of Public Policy, National University of Singapore. The Lee Kuan Yew School of Public Policy gratefully acknowledges the financial assistance of the Rockefeller Foundation and the Centre for Strategic Futures, Singapore.
The Asian Trends Monitoring Bulletin focuses on three areas of strategic concern to Asia’s well-being and future development: trade and investment facilitation; health systems; and energy security.
The Asian Trends Monitoring Bulletin are designed to encourage dialogue and debate about critical issues that affect Asia’s ability to reduce poverty and increase awareness of the implications for pro-poor policy and policy development.
Disclaimer The opinions expressed in the Asian Trends Monitoring Bulletin are those of the analysts and do not necessarily reflect those of the sponsor organisations.
Frequency The Asian Trends Monitoring Bulletin will be produced eight times a year and all issues are available for download for free at http://www. asiantrendsmonitoring.com/downloads
Production Manager, Production & Research Dissemination Chris Koh
Editorial Team Principal Investigators Darryl S.L Jarvis Phua Kai Hong T S Gopi Rethinaraj
Research associates Johannes Loh Nicola Pocock Taufik Indrakesuma Image credits, with thanks Image on page 3: Stefan Munder* Image on page 4: Sustainable sanitation* Image on page 7: Sergio & Gabriella* Images on page 7: The Floating Toilet Project* Image on page 8: Keith Bacongco* Image on page 10: Christophe.Thillier* Image on page 12: World Bank Photo Collection* Image on page 13: obron* Images on page 14: goya* Images on page 16: sherrattsam* Image on pages18–19: bbcworldservice* *These images were obtained from www.flickr.com
Permission is granted to use portions of this work copyrighted by the Lee Kuan Yew School of Public Policy. Please acknowledge the source and email a copy of the book, periodical or electronic document in which the material appears to chris.k@nus.edu.sg or send to
Chris Koh Lee Kuan Yew School of Public Policy 469C Bukit Timah Toad Singapore 259772
Contents Water: the forgotten challenge?
3
The growth of megacities: exacerbating future water problems
4
TonlĂŠ Sap: floating toilets and waste management system
7
Getting prices right: a constant struggle in ASEAN
8
Integrating rural sanitation marketing into a national programme in Vietnam
11
Privatisation: boon or bane for water provision?
12
Preventing water pollution: the carrot or the stick?
14
Closing remarks
16
References
17
Editorial team
20
3
Water: the forgotten challenge? Global megatrends such as climate change, rapid urbanisation and surging water demand will force Asia to change the way it addresses water governance over the next 20 years.5 To make matters worse, Asian countries have actually witnessed their water quality drop in recent years, perhaps signifying a lack of concern by governments and society as a whole. Clearly, a change of course is required. There are several aspects of water governance that currently demand attention. This bulletin has selected four important aspects that are especially relevant to the plight of the poor: • What are the best ways to cope with the rapid urbanisation of the poor in water utilisation? • How does pricing water for affordability affect investment and Children playing in the dirty water in Manila Bay.
water conservation? • Is privatisation of water treatment and supply a bane or a boon for
While Asia is home to some of the most vibrant economies in the world, it is also the global epicentre for some of the worst human development indicators. Around 700 million people live without access to safe drinking
the poor? • What is the best way to deal with water pollution by the poor: a carrot or stick approach?
water in Asia, and a staggering two billion people do not have access to
To enhance our analysis and provide a policymaker perspective, the
basic sanitation, exposing them to disease and often deadly infections.1
team interviewed several water policy experts and government officials
Poor water and sanitation governance continues to plague Asia, casting a
who attended the Temasek Foundation Water Leadership Program at the
dark shadow over the future with the United Nations expecting 3.5 billion
Lee Kuan Yew School of Public Policy from 10–21 October, 2011. The team
people to be living in water-scarce and water-stress areas in the coming
received insights from within ASEAN (Indonesia and the Philippines) and
decade.
other parts of Asia (Sri Lanka, Kazakhstan and China). We express our sin-
2
Access to water has important implications for health, education,
cerest gratitude to the interviewees as well as the Temasek Foundation and
poverty and the environment. Children around the world are missing
PUB, Singapore’s national water agency, for their cooperation. Excerpts from
an incredible 440 million school-days per year due to diseases related to
the interviews can be found within this issue.
water, sanitation and hygiene. In adults, these diseases lead to produc-
We invite you to share the Asian Trends Monitoring (ATM) Bulletin with col-
tivity and income losses equivalent to millions of dollars per year, mostly
leagues interested in pro-poor issues in Southeast Asia. The ATM Bulletin is
among the poor. Moreover, contaminated water is one of the leading
also available online, www.asiantrendsmonitoring.com/download, where
causes of diarrhoea, responsible for one-fifth of child mortality under the
you can subscribe to future issues. We encourage you to regularly visit our
age of five.4 Lack of clean water and sanitation could result in losses of bil-
website for more updates and recent video uploads in our blog. Thank you
lions of dollars and stunted economic progress, leaving Asia’s poorest fur-
again for supporting the ATM Bulletin, and as always, we gladly welcome
ther behind.
your feedback.
3
Nicola Pocock Johannes Loh Taufik Indrakesuma
4
The growth of megacities: exacerbating future water problems What are the consequences of lowincome urbanisation in terms of pollution? “People who move to the city and then build their homes on the river banks are usually poor and uneducated. They do not understand that disposing of waste inside the river is wrong, and that the rivers need to be protected and maintained. It is important to realise that their “choice” of living by the riverbank is With no water and drainage system, this slum in Manila has holes full of polluted water, rubbish and human excreta.
due to a lack of other options. They cannot afford to live anywhere else, forcing them to build these illegal
Megacities in Asia continue to grow at a rapid and
smaller infrastructure investments. As people
perhaps, dangerous pace. Indonesia’s urban pop-
leave their remote villages and start to live in
ulation has more than tripled from 32.4 million to
apartment buildings or densely packed urban
gal, the dwellings do not follow envi-
102.9 million since 1980.6 The Philippines is also
settlements, it becomes easier for governments
ronmental standards, and do not have
expected see a tripling of its urban population
to provide piped water connections. The cost of
proper waste management systems.
well before 2020.
extending the water grid to remote rural areas
The only real way for them to dispose
settlements. Because these settlements are ille-
ASEAN’s capital cities are growing very quickly.
is very significant, and remains one of the main
of their household waste is to throw it
For example, Jakarta’s population will soon
barriers to providing piped access to water in
into the river. Continuous disposal of
exceed ten million inhabitants and is still growing
these regions. Here, water authorities could
household waste into the river then
by more than 120,000 per year. Metro Manila has
embrace the trend of urbanisation as a way to
pollutes the river and causes the qual-
already reached 11.5 million, but still grows rap-
exploit the economies of scale in water infra-
ity of water to drop significantly.”
idly at about 2% per year. The same trend can be
structure investments.
7
found across ASEAN.
However, these benefits may not apply
— Enny Sudarmonowati, Head of
This trend is attributable not only to natural
to Southeast Asian cities, where the internal
Jakarta Green Monster, a Jakarta-based
population growth but also to rapid urbanisation.
migrants are mostly poor. As the poor move
environmental NGO
Thousands of rural poor relocate to urban areas
closer to urban centres, they face several chal-
each year with the hope of finding better work
lenges such as increased cost of living and scar-
opportunities.
city of housing. Thus, they often settle in slums
settlements in Jakarta are mostly clustered on
This trend in urban growth has several con-
or temporary settlements in the urban periphery,
land where it is illegal to build homes, such as
sequences for water provision. The main posi-
areas where the piped connections are unlikely to
rainwater catchment areas and river banks. In
tive consequence of urbanisation and densely
be constructed.
these circumstances, the illegal settlements
populated urban areas is that governments are
The consequences of slum creation for
cause direct harm to the city’s water supply, both
able to provide water for more people using
water provision are dire. For example, informal
by hampering groundwater replenishment,
5
Figure 1: Population growth 1990–2025 (estimated)
Source: United Nations, Department of Economic and Social Affairs, Population Division (2010). World Urbanisation Prospects : The 2009 Revision. CD-ROM Edition - Data in digital form (POP/ DB/WUP/Rev.2009).
because they damage the water catchment
with informal settlements popping up on unused
issues. The concession of full rights over this land
areas, and by polluting rivers with their house-
plots of land.
essentially rewards people for squatting. This
hold wastes.
Facing this rapid flow of urban poor, govern-
will induce more people to settle illegally, invit-
Even when slums do not form in areas that
ments have difficult decisions to make. There is
ing larger waves of migrants who come with the
jeopardise the water supply, slum-dwellers still
the option to concede full legal rights to illegal
intention of settling illegally. This, in turn, exacer-
face legal barriers such as lack of legal tenure over
settlers, enabling water companies to legally pro-
bates the pressures on all of the city’s essential
their housing. This causes a problem in providing
vide the settlements with piped water connec-
services, not just water.
piped connections to these houses. In Jakarta, a
tions. The main strength of this solution is that it
There is also the option of clearing the illegal
law prohibits the extension of utilities services
is quick and conflict-free. Slum-dwellers will likely
settlements and providing alternative housing
to households without property titles for fear
favour the solution because they are not forced
at a low cost. This gives the poor a legal means
that the services would “legalise” the settlement.
to relocate and will receive the services that they
of accommodation and a legal means to access
Other cities struggle with the same problems,
require. However, this solution comes with several
piped water and other utilities. However, this also
6
Figure 2: Percentage of population connected to a sewerage system (selected cities)
Intervention opportunity Small scale private water provision has been a major feature in many slums around the world. In 2003, small scale private water providers served 19% of the population in Ho Chi Minh City and 44% of the population in Jakarta*. The main advantage of these small scale providers is that they do not require expensive infrastructural developments and are able to reach Source: BAPPENAS (2007). Urban Sanitation: Portraits, Expectations and Opportunities—It’s not a private matter anymore. Indonesia Sanitation Sector Development Program (ISSDP).
remote areas that water grids cannot reach.
caused by the absolute number of migrants.
Despite the operational advan-
is expensive for governments due to the cost of
Rapidly growing urban populations will cause a
tages of small scale providers in slums,
new public housing projects. Additionally, the
strain in the available water resources. Although
the service comes with its own set of
magnitude of urbanisation makes it virtually
pipelines can be built and households can be
problems. First, there is the high price
impossible to provide enough of these housing
connected to formal water services, the available
of vended water, which has been thor-
units. The inevitable limits of supply will force
amount of water is a different story. Several cities
oughly discussed in a previous section.
many poor people to be stuck in their make-shift
are barely able to keep up with the rapidly rising
Secondly, the quality of vended water
settlements without proper access to water.
demand for water. In these kinds of situations,
is difficult to regulate, given that most
Finally, aside from the specific problems
the slightest blip in supply could leave thou-
vendors operate informally.
from illegal settlements, there are also problems
sands of people without enough water. To take
comes with its own set of problems. This option
Thus, innovations that can improve the quality of services by small scale water providers, either by
What are the consequences of unimpeded urban growth for water provision?
the projected increase in demand in not only Jakarta but also in our source provinces due to their economic and population growth. This increase in their internal
“I think the biggest problem in Jakarta is
demand may cause scarcity problems in the
long-run water security. Jakarta only sup-
respective provinces, which will likely lead
plies 3% of its own drinking water, with 97%
to prioritising their water supplies to meet
of the base water supplied from West Java
internal demands rather than to be sold to
and Banten. This is because it is currently
Jakarta. Prices will rise, which will make life
much cheaper to source the water from
worse for the people of Jakarta in general,
other provinces than to process the ground-
but especially for the poor.”
water and river water in the province. We believe that continuing down this road is unsustainable, especially considering
— Sriwidayanto Kaderi, Technical Director, Jakarta Water Supply Enterprise
helping to push vendor costs down or helping to improve the quality of vended water, will greatly benefit slum dwellers . *Conan, H. and M. Paniagua (2003). “The Role of Small-Scale Private Water Providers in Serving the Poor”. ADB.
another example from Jakarta, a burst pipeline in September 2011 left nearly half of the city without water for almost 48 hours.8 Thus, it is clear that governments need to act quickly to address the issue of adequate supply in face of high volumes of city-bound internal migrants in the future.
Case study 7
Tonlé Sap: floating toilets and waste management system
All the waste go straight into the water.
Tonlé Sap is the largest freshwater lake in Southeast Asia which drains into
Few homes though, can—or want to—store six months worth of human
the Mekong river during the dry season. During the monsoon season how-
waste, and given that most of the land areas in the lake are deluged for a
ever, the lake reverses the direction of its flow and floods to form a lake up
good part of the year, another solution was needed to store the waste.
to five times its usual size. When this happens, sanitation becomes a prob-
Developed by Flinders University in Australia and constructed by teach-
lem for the floating villages in Tonlé Sap. According to Engineers Without
ers, villagers and rangers, a floating waste management barge will house
Borders from Australia, floating villages can float up to ten kilometres
the community's waste, where it will be converted into rich compost over a
within the expanding and receding waters. This exacerbates the problem
period of six months. By then, the monsoon waters will have subsided and
caused by a lack of toilets and an eco-friendly sanitation system within the
the compost can serve as fertilisers for the villagers.
9
community. To help, they came up with a novel idea—floating toilets. Designed by local partners from the Engineering Institute of Cambodia, the Ministry for Rural Development, Resource Development International, Cambodia and the University of Phnom Penh, and in close consultation with community members, eco-friendly floating latrines were built and deployed, within the priced range of US$35. One such example is the 3-hole urine diversion dehydration toilet, which is capable of storing faeces for up to six months by adding ash to it. By design, the toilet can separate urine and wash water from menstrual waste and oral cleansing fluids. It is constructed from locally-sourced materials like cement, PVC pipe, used buckets with a wood or metal frame and all that is needed to maintain the hygiene of the toilet is soap, ash and water.
A well-maintained and fully utiliSed latrine.
8
Getting prices right: a constant struggle in ASEAN suggests that the effectiveness of block pricing is still an open question. Internationally, there has been much debate over what constitutes an ideal set of pricing policies, leading to very different price structures both between countries and between cities within a country. Tortajada (2010) notes, “… sustainable cost recovery or marginal cost pricing is part of an on-going debate, and no consensus is likely to be reached in the near future. There are differences of opinion on government interventions, subsidies, marginal pricing, water conservation taxes, flat water tariffs, and the ability of
Villagers have to queue to buy water in Baranagay Tinoto, Philippines.
Intervention opportunity
Water pricing policy is one of the most impact-
lead to over-consumption, as the scarcity of
“The first problem that arises from
ful and politically sensitive aspects of water gov-
water is not reflected in the price.
heavily polluted water sources is a sig-
ernance for the poor. When regulators set the
Conversely, if prices are set at a level that is
nificant increase in costs. The number
price of water, there are far-reaching implications
enough to cover long-term maintenance, it may
of additional filtration and sterilisa-
for household consumption levels, cost recovery
be prohibitively expensive for some subsets of
tion processes needed to make this
for the water companies, potential private sector
the population. To further complicate things, the
water potable comes with a hefty
investment, as well as water conservation efforts.
price then might not even be able to prevent
price tag. This, unfortunately, leads to
Three of the most common goals for pol-
consumption from exceeding sustainable lev-
increasing prices faced by consumers,
icy makers are affordability for the poor, cost
els. Thus, water authorities whose primary goal
whether poor or otherwise. However,
recovery and operational sustainability, as well
is water conservation need to set prices even
we believe that advances in technol-
as water conservation. The problem, then, is
higher.
ogy may lead to new innovations
that these goals are at odds with each other
Some water authorities, such as in Manila,
that can help keep the cost increases
and are difficult to achieve through a single
Phnom Penh, Vientiane, and Singapore, have
reasonable. Although we should con-
set of prices. For example, if water prices are
tried implementing block pricing to overcome
tinue campaigning for cleaner rivers
set at a level that is affordable to the poor, it
these difficulties. Price discrimination can help to
in order to clean up the water supply,
often means that water companies are unable
solve pricing dilemmas through differential rates
cheaper and higher quality filtration
to recover their costs or maintain an accept-
based on consumption levels. That way, people
technology can become a temporary
able profit margin without government sub-
can be discouraged from overconsumption, and
solution.”
sidies. Inability to recover costs can lead to
those who consume more can “cross-subsidise”
negative consequences further down the line,
those who consume less. However, not all water
— Sriwidayanto Kaderi, Technical
when infrastructure needs to be maintained or
providers have opted for block pricing, and pric-
Director, Jakarta Water Supply Enterprise
replaced. Additionally, setting low prices can
ing schemes still vary greatly from city to city. This
9
Figure 3: Water tariffs of different cities across the region, in US$ per litre
the poorest population to pay� 10. Nevertheless,
All of Southeast Asia’s major cities have dif-
metre (m3). The flat pricing scheme has also been
conflicting views on the right policies cannot be
ferent pricing schemes for household consump-
adopted by Sabah state in Malaysia. Block pric-
used as an excuse for failing to provide reliable
tion of water. Bangkok, for example, has a flat
ing schemes have been adopted by cities such
water services to the poor.
pricing scheme of 10 baht (US$0.33) per cubic
as Manila, Phnom Penh, Vientiane, Singapore,
10 to around US$172. Assuming a consumption rate of 50 litres per day, this connection fee is equivalent to three years’ worth of vended water. For someone whose priority is day-to-day subsistence, making an investment that only breaks even after three years is unthinkable.
Intervention opportunity A possible solution to the problem of burdensome household connection fees is the use of a community-based connection. One such example is the “Master Metre System”, tested and used successfully in Metro Manila, Jakarta and Phnom Penh. The metre is installed at the “gateway” to a certain neighborhood or community which measures the collective consumption of all customers A water pipe runs through a shantytown in Jakarta.
behind this metre. The water authority charges the community, which
as well as the Penang region in Malaysia. They
that pricing blocks are more effective than just
are based on the amount of water consumed.
setting a higher base price.
However, the division of pricing blocks varies
Of course, the unit cost of water is not the
greatly between cities. Singapore only divides
only thing that the poor may struggle with. In
consumption into two blocks, 0–40m3 and over
many cases, the poor do not have access to for-
40m3. Interestingly, even private households with
mal piped water connections because they can-
five or more members rarely exceed 30m3 per
not afford the installation fees. If the fixed costs
month. A five-member household with an aver-
are prohibitively high, it does not matter how low
age daily consumption of 154 litres per day per
the variable costs are.
person would consume “only” 23m3 and thus,
The inability to afford a piped water connec-
would still fall into the cheapest pricing block.
tion often results in a situation where the poor
Penang and Vientiane have three consumption
end up paying more for water than the rest of
blocks, while Phnom Penh has four. Jakarta is par-
society. The poor are often forced to rely on pri-
ticularly interesting because of price discrimina-
vate water vendors who charge up to 12 times
tion across household income levels. The water
the price of piped water. For example, in Manila,
authority uses a block pricing scheme based on
the price of five drums (1m3) of water is approxi-
consumption and also household income.
mately US$3, whereas the same amount of water
It is unclear whether any of these pricing
would only cost US$0.20 from a piped connec-
schemes are superior to others. There is no clear
tion.11 Although the price per litre of water is
correlation between the number of pricing blocks
much cheaper through a piped connection, the
and the level of consumption, and no evidence
connection fee for a piped connection amounts
in turn has to take care of bill collection from the individual households. This method enables water managers to roll out water supply to poorer neighborhoods without the need for individual metres in every house, which is usually the main cost barrier for potential customers. Feedback from communities has shown that bill collection can be tedious, but the collection rate is generally above 90%. Another advantage of this approach is that leakages or illegal taps, which resulted in high percentages of non-revenue water for the water company, are then the responsibility of the community. This adds an extra incentive for the community to maintain the network and police illegal tapping.
Case study 11
Integrating rural sanitation marketing into a national programme in Vietnam
What is sanitation marketing? Sanitation marketing is an emerging innovation that employs a demand-driven approach, building on the benefits perceived by users to ensure that communities have access to sustainable sanitation services. It rests on four principles: • Product—this may be an item (toilet) but also be a service (pit emptying) or a practice (hand wash-
When supply side subsidies for toilets have done little to improve sanitation
ing) which people want and are willing to pay for.
in rural Vietnam, are demand driven strategies the answer? International
Therefore, a range of diverse products should be pro-
Development Enterprises (IDE), a non-profit organisation that helps the poor
vided to suit a variety of conditions and pockets;
to invest their way out of poverty, thinks so. They have implemented several
• Price—this is the hardest part of marketing sanitation
rural sanitation marketing pilot projects in various parts of Vietnam, along-
resulting in attempts to keep costs down and offer a
side the government’s National Rural Water Supply and Sanitation Strategy
range of products with various prices. Hence smart
which has declared the adoption of demand-responsive approaches and
subsidies might be chosen to reach the poor, who
decentralised governance via the implementation of the second National
also have to overcome social and other costs;
Target Program (NTP) for poverty reduction (2006–2010). IDE's most recent
• Place—the products must be accessible and avail-
rural sanitation marketing pilot project was initiated in Quang Tri province,
able to the customers, which means that the sup-
an area with 33% sanitation coverage, in early 2010. IDE’s demand driven
ply chain and information about the product needs
approach does not utilise subsidies to households, with subsidies instead
to reach the target groups. The critical role of imple-
targeted toward market development, training and monitoring via:
menters is in facilitating and catalysing the sanitation
12
• Offering households a range of toilet options at low prices. Based
market to bring suppliers close to customers; and
on the health ministry's hygienic toilet standards and local condi-
• Promotion—creating demand for the product is the
tions, IDE modified toilet designs with different material choices to
most challenging part of selling sanitation. This can
reduce the construction cost of toilets;
be obtained by promotion, which includes commu-
• Training local sanitation masons to build toilets, after which they
nication with customers by many channels including
were given endorsement by local health institutions and IDE; and
demonstrations, advertising, mass media, word of
• Training local promoters to mobilise households to build hygienic
mouth, etc. Promotion campaign should be designed
toilets via town meetings, home visits, loudspeaker announce-
based on understanding the drivers of customer
ments and leaflet distribution.
demand and their trusted channels.
Nguyen’s* recent assessment of the programme reveals high demand for sanitation in study communes in Quang Tri and that access to sanitation has been improved by offering appropriate toilets at an affordable cost.
The four expected outcomes include: • Ensuring that people choose to receive the products they want and are willing to pay for;
However, she highlights that the strategies of both government agencies
• Financial sustainability—the private sector earns
and IDE currently lack an environmental focus. There is also evidence that
profits by selling sanitation products that are paid
the government’s strategy is contradicted by the financing mechanism for
for customers, while public funds can be spent more
the implementation of the NTP program, which still relies on supply driven
efficiently on product development, market research,
approaches. To overcome this, donor attention would strengthen account-
and promotion and facilitation activities;
ability of the NTP program and support oversight by civil society and local
• Cost-effectiveness and replicability—in addition,
recipients of finance and sanitation service delivery. Finally, she notes that
effectiveness can be measured by sale figures; and
Vietnamese national targets for rural sanitation can only be achieved by
• Behavioural change alongside hardware improve-
integration of good local planning and sound policies, effective institutions
ments—with the marketing approach, purchasers
at all levels, up-to-date legislation and regulations, and fora and mecha-
may come to value, use and maintain sanitation facili-
nisms for active participation of the private sector and civil society.
ties correctly.
12
Privatisation: boon or bane for water provision? (West Zone), continues to struggle with high losses to non-revenue water, partly due to the old and deteriorated infrastructure it inherited. This case study shows that although Manila enjoyed relative success in its privatisation efforts, there is still much room for debate. The ongoing debate about the privatisation of water services revolves around the issues of coverage, pricing and quality of service. The main argument in favour of privatisation is that the service quality is often better than what stateowned enterprises can provide. Being unconstrained by government budgets and government bureaucracy gives private companies the impression of efficiency and high quality of service. The ability to seek greater amounts of funding for projects also gives private water companies more resources to work with and more options for provision than local governments. The main argument against privatisation is More waste water treatment facilities like this are needed in Manila.
As discussed previously, providing water services
Manila tendered two concessions for water and
can be very costly for governments. Several cit-
sanitation services in 1997. At the time, only two-
ies around the world have explored the option
thirds of people had piped connections for 16
of privatising water services in order to ease the
hours a day, with non-revenue water reaching
burden on governments in providing water.
63%.
Currently, there are only a handful of cities in
The controversial privatisation move intro-
Southeast Asia that have privatised water pro-
duced the principle of cost recovery, leading to
vision, such as Jakarta and Manila. Water provi-
an increase in water tariffs.13 While the price hikes
sion in most other Southeast Asian cities is han-
were criticised by many, other impacts of the pri-
dled by municipal or provincial governments,
vatisation were more positive. One of the two
and sometimes even the national government.
private operators, Manila Water Company Inc.
Looking outside of Southeast Asia, we can find
(East Zone), was able to achieve 24 hour cover-
countries such as England, Wales and France that
age for 99% of residents and bring down non-
are almost completely reliant on private compa-
revenue water to 20% by 2008. However, this was
nies for their tap water.
only possible with the assistance of the Global
After deciding that it could neither maintain
Partnership for Output-Based Aid (GPOBA), an
the quality of water infrastructure nor expand it
organisation that helped to subsidise installation
to meet the rising demand of the growing urban
fees and water charges for poor communities.
population, the municipal government of Metro
The other company, Maynilad Water Services
also due to the nature of private companies.
Explained: non-revenue water? Non-revenue water includes unbilled authorised consumption (e.g. for fire fighting), apparent losses (unauthorised consumption from illegal connections and metring inaccuracies) and real losses from leakages and overflow from utility storage. In short it is the difference between water supplied and water sold (i.e. volume of water “lost�) expressed as a percentage of net water supplied. It is estimated that 50–65% of non-revenue water in Asian cities results from apparent losses.
13
Some reports even indicate that the costs of private water provision outweigh the benefits. Anand and Kallidaikurichi remark that “in the absence of effective regulation, transforming public monopolies into private monopolies poses serious risks of market failure, including exploitative pricing and poor service delivery.”16 With regard to the impact on the lives of the
Are governments too slow to act on crucial water issues? Governments (in Sri Lanka) have been slow to respond to the challenges faced by the water sector and are responsible for its state of affairs today. Water professionals have been unable to articulate their arguments A boy washing his hands with water coming from a pipe in Aceh.
well enough to convince politicians to act decisively; the professionals themselves have been slow to respond to
As profit-oriented entities, private companies
access and coverage was neutral compared to
may choose to provide water only selectively,
before the PPPs were launched, while service
to the segments of consumers that can gener-
quality and operational efficiency usually went
ate the largest amount of profit. Private com-
up.14 The effects on tariff levels were inconclusive.
panies would not have an incentive to build
Yet, other research has shown that there is
pipelines in order to connect neighbourhoods
no significant difference between the quality of
that would not be able to afford their prices,
service in private-run water companies and pub-
although these segments of consumers may
lic water companies. A 2004 report by the Asian
be most in need of a clean piped connection.
Development Bank about the privatisation of
Companies may be similarly dissuaded from
water services in Manila concluded that “involv-
providing piped connections to sparsely popu-
ing the private sector may not in itself necessarily
lated remote areas due to the high investment
lead to better access and quality of services, but
cost of building pipelines and the low expected
it allows for the formation of innovative arrange-
poor, Martin concludes that evidence of “sizable
returns.
the unfolding dilemma of development vis-à-vis resource sustainability. A national water policy document has been in circulation between agencies since the 1990’s, but we still have no water policy. Without political resolve backed by a set of committed professionals, we cannot move forward on these issues.
ments that can facilitate access and improve the
improvements” is indeed sparse, while admitting
Evidence from other countries provides a
quality of services available to the poor.”15 This
that the explosive development of urban centres
mixed picture. Some reports claim that priva-
conclusion can be interpreted to imply that the
in developing countries continues to challenge
tisation of water provision has lived up to its
improvements witnessed in the case of Metro
public and private utilities alike. He criticises that
potential and brought about improvements in
Manila’s privatisation were not due to any inher-
policy makers assumed an “automatic trickle-
water provision, even for poor neighbourhoods.
ent characteristics of private water companies,
down effect” to occur with the implementation
A study on privatisation efforts and public-pri-
but rather due to the overall process of reform
of water PPPs, but points out that major benefits
vate partnerships (PPP) in developing countries
and innovation that surrounded the privatisa-
for the poor have only materialised in few iso-
found that the average impact of PPPs on water
tion move.
lated examples.17
14
Preventing water pollution: the carrot or the stick?
Litter and trash lie along this river in the North Port District of the Philippines.
Water pollution is one of the most difficult hurdles
incentive (the carrot) or offering a negative incen-
fine of up to RM100,000 or imprisonment up to
to overcome in ensuring water security. For years,
tive (the stick). Offering positive incentives would
five years for anyone caught polluting any inland
industries and households alike have polluted
mean rewarding companies or households that
body of water.
their surrounding rivers and lakes due to lack of
dispose of their waste properly, while offering
Negative incentives are usually effective to
incentives, exposing the poor, who dependent on
negative incentives would mean punishing those
influence behaviour. Individuals now have to
natural water sources, to extreme health risks from
that do not.
calculate the risk of getting caught and paying a
waterborne diseases Properly disposing and pro-
Globally, the most often used approach to
fine, thus dissuading them from the act of litter-
cessing waste entails very high costs compared to
deal with pollution is through negative incen-
ing. Fines are especially effective against indus-
disposing that same waste into nearby waterways
tives, by making water pollution illegal, mandat-
tries because the imposed cost of pollution fac-
for free. There is no incentive for proper waste
ing proper waste treatment and disposal for both
tors into the company’s production costs. One
treatment because companies and households
households and industries, and enforcing signifi-
added benefit of imposing fines is that should
do not bear the cost of polluted water themselves
cant penalties for non-compliance. For example,
non-compliance still occur, the fines collected
(economists call this a negative externality).
the Jakarta provincial government imposes a
can be used to finance clean-up projects. It is
Thus, governments must alter the polluters’
penalty of 10–60 days imprisonment and a fine of
important to note, however, that effective imple-
incentive structures to make proper waste treat-
up to US$2,000 for people caught throwing gar-
mentation of negative incentives requires proper
ment and disposal a more attractive option. There
bage into one of the city’s 13 rivers. The Malaysian
governance structures and the ability to enforce
are two main ways to do so: offering a positive
Environmental Quality Act of 1974 imposes a
environmental regulation.
15
The effectiveness of negative incentives, however, diminishes somewhat when the culprits are poor. The problem with chronically poor households is that not only are they unable to afford proper waste treatment and disposal, but they also cannot afford to pay the fines if they are caught polluting. To further complicate matters, monitoring pollution and enforcing penalties is especially difficult in informal and temporary settlements such as slums and shanty towns. Some organisations have tried using a different set of incentives, by attempting to persuade slum dwellers and other poor urbanites to stop polluting through positive rewards. Often, these positive incentives are in the form of awareness campaigns that give people a “feel good effect” whenever they refrain from polluting. However, there are also more straightforward cases of rewarding people financially. Many non-governmental organisations are trying to raise awareness by teaching slum dwellers to earn extra income by selling products made from recycled waste. The main advantage of using positive incentives is that the poor are better able to participate. They are no longer forced into paying large sums of money, and are instead rewarded with money
How severe is the water pollution?
What methods are most effective to deter pollution by the poor?
“The quality of water in the Laguna Lake Basin is a major concern for us.
”Dealing with pollution by the poor is
Here, the biggest challenges are pri-
difficult. As long as poverty remains
mary sewage treatment and expan-
severe, people will not have any inter-
sion of the sewer network. We are
est in caring for their environment.
faced with the problem of ever-rising
Thus, raising awareness to prevent
levels of water pollution coming from
pollution needs to have an economic
household waste. The current condi-
angle as well.
tion of our sanitation system is not
What the Jakarta Green Monster
sufficient to prevent all of these pol-
has done is to approach poor neigh-
lutants from contaminating the water
borhoods and not only teach them
supply, thus water pollution currently
how to clean up the river, but also
threatens the livelihood of people liv-
show them the economic value in
ing around Laguna Lake.
doing so. We have introduced ways to
People have been forced to look
process the waste into things of eco-
for alternative water sources such as
nomic value. For example, we teach
commercial water vendors, which
them how to recycle plastic and glass
are costly and inefficient as a primary
and how to process organic waste into
source of water. However, the poor
fertiliser.
have no other choice than to drink the
Our organisation shows people the
untreated water; and are consequently
economic potential of being environ-
more prone to catch water-borne
mentally responsible, while at the same
diseases.”
time teaching them that environmental stewardship itself is important. We
for cleaning up the waterways or simply refrain-
— Adelina C. Santos-Borja,
do run the risk of things not working
ing from further pollution.
Environmental Regulation Department,
out – for example, I’ve seen a compos-
Laguna Lake Development Authority,
ter being used as a shoe rack – but we
Philippines
believe that our approach so far has
However, the use of positive incentives generates other problems. Some argue that positive rewards are less able to guarantee action,
largely been effective.”
because the prospect of gain is not as compelling —Enny Sudarmonowati, Head of
as the prospect of loss. This argument is based on the phenomenon of loss aversion in behav-
US$30–40 per household, while setting up
Jakarta Green Monster, a Jakarta-based
ioural economics, popularised by Kahneman and
proper recycling depots requires an investment
environmental NGO
Tversky.18
of tens of thousands of dollars. If the poor are
Moreover, the use of positive incentives to
taught to produce goods using recycled raw
prevent pollution can be costly. Providing the
material, then there also needs to be adequate
on investment” even lower. When compared to
poor with tools, equipment and support sys-
support to ensure that the goods are able to
revenue-generating penalty systems, the use
tems for recycling or composting involves size-
penetrate the market. Finally, the uncertain-
of positive reinforcement becomes even less
able amounts of money. Even the cheapest
ties in the uptake of the projects and the proper
desirable to governments trying to halt the pol-
home composting systems can cost around
use of equipment make the expected “return
lution of water.
16
Closing remarks Given ASEAN’s rapid population growth, it is safe to say that problems of water security will only get worse before they get better. With projected urban populations of 58.3% by 2030 in the Philippines and 53.7% in Indonesia, solutions for urban water provision and access are desperately required, especially for the poor. According to the Asia Water Governance Index, water policy in Cambodia and Indonesia is more pro-poor than in richer countries like Thailand and Singapore.19 This indicates that access and affordability for low-income groups cannot be taken for granted, even in richer countries with already well-developed water infrastructure. Given the importance of water and the far-reaching impacts of compromised water security, addressing the currently existing water provision problems can have a great impact on the well-being and economic development of the poor. Key issues for policymakers and private players in the sector to address in the near term include pro-poor pricing, demand surges from lowincome urbanisation, the impact of privatisation on pro-poor provision, and water pollution by poor households. Based on current trends and emerging innovations, we anticipate seeing more demand-driven approaches to water access problems—these have the advantage of gaining buy-in from low-income consumers themselves, in contrast to “top-down” supply-side approaches. This issue is meant to provide policymakers and organisations working in the field of water security with full information about the issues that are most crucial for the poor. We hope that the discussion within this bulletin can help policy makers optimise their pro-poor policies and guide organisations to support, emulate or improve upon the highlighted micro-level solutions for poor communities around Southeast Asia.
17
References 1. Asian Development Bank (2006). Water Financing Program 2006-
12. Excerpts from: Nguyen HH (2011). Integrating sanitation marketing
2010. Retrieved December 3, 2011 from http://www.adb.org/water/
into a national program: a case study in Vietnam. Brisbane, Queensland,
Knowledge-Center/brochures/WFP-2006-2010.asp
Australia, International Water Centre. Available at: http://docs.watsan. net/Downloaded_Files/PDF/Nguyen-2011-Integrating.pdf (accessed
2. International Development Association (2009). Water Resources:
20-12-2011)
Managing a Scarce, Shared Resource. The World Bank’s Fund for the Poorest. Retrieved November 18, 2011 from http://siteresources. worldbank.org/IDA/Resources/IDA-Water_Resources.pdf
13. Padawangi, R. (unpublished). Building Markets through Quenching Thirst: Clean Water Supply for the Urban Poor in Jakarta and Manila. Working Paper No.8. New Approaches to Building Markets in Asia.
3. International Finance Corportation (2011). Safe Water for all.
Working Paper Series. Centre for Asia and Globalisation, Lee Kuan Yew
Washington, DC, USA. P.5
School of Public Policy: Singapore
4. Guenther, I. & Fink, G. (2011). Water and Sanitation to Reduce Child
14. Marin, P. (2009). Public-Private Partnerships for Urban Water Utilities
Mortality. Policy Research Working Paper 5618. World Bank
– A review of experiences in developing countries. Trends and Policy
5. Biswas, A. & Tortajada, C. (2010). Future Water Governance: Problems and Perspectives. Water Resources Development. 26(2). Pp.129-139 6. United Nations (2010). World Urbanisation Prospects: The 2009
Options, No.8. The World Bank. p.42 15. ADB (2004). Water for Slums: Private Sector Participation in Manila. Published in “Bringing Water to the Poor: Selected ADB Case Studies”
Revision Population Database. Retrieved December 7, 2011 from http://
16. Anand, P. & Kallidaikurichi S. (2010). “New” Thinking on Water
esa.un.org/wup2009/unup/index.asp?panel=1
Governance – Clearing the Clouds, p.49
7. Jakarta Post (March, 26, 2011). Population Growth of Greater
17. Marin, P. (2009). Public-Private Partnerships for Urban Water Utilities
Jakarta and its impact. Retrieved November 28, 2011 from http://www.
– A review of experiences in developing countries. Trends and Policy
thejakartapost.com/news/2011/03/26/population-growth-greater-
Options, No.8. The World Bank. p.134
jakarta-and-its-impact.html 18. Tversky, A. & Kahneman, D. (1991). Loss Aversion in Riskless Choice: 8. http://www.thejakartaglobe.com/home/
A Reference Dependent Model. Quarterly Journal of Economics 106,
broken-dike-stops-water-supply-in-jakarta/462899
1039-1061
9. Engineers Without Borders presentation: http://www.slideshare.net/
19. Asia Water Governance Index , Araral, E and Yu, D (2011), Institute of
WaterCentre/designing-for-sustainable-sanitation-floating-toilet-case-
Water Policy. Available at: http://www.spp.nus.edu.sg/docs/AWGI%20
study and Engineers Without Borders: http://www.ewb.org.au/explore/
brochure-IWP-LKYSPP%289-10%29.pdf (accessed 1 February 2012)
initiatives/tonlesapfloatinglatrinesproject 10. Tortajada, C. (2010). Water Governance: Some Critical Issues. Water Resources Development. 26(2). Pp.129-139 11. Padawangi, R. (unpublished). Building Markets through Quenching Thirst: Clean Water Supply for the Urban Poor in Jakarta and Manila. Working Paper No.8. New Approaches to Building Markets in Asia. Working Paper Series. Centre for Asia and Globalisation, Lee Kuan Yew School of Public Policy: Singapore
18
19
Children in Manila sifting through the rubbish in the water for items that can be recycled.
20
Principal Investigators
Research Associates
Darryl Jarvis is an Associate Professor at the LKY School of Public Policy. He specialises in risk analysis and the study of political and economic risk in Asia, including investment, regulatory and institutional risk analysis. He is an author and editor of several books and has contributed articles to leading international journals. He has been a consultant to various government bodies and business organisations and for two years was a member of the investigating team and then chief researcher on the Building Institutional Capacity in Asia project commissioned by the Ministry of Finance, Japan.
Johannes Loh is working as a Research Associate at the Lee Kuan Yew School of Public Policy. He holds a Master’s degree in Public Policy from the Hertie School of Governance in Berlin. His previous research experience includes international student mobility, visual political communication, aid governance and public sector reform in developing countries. Recently, he completed a research project on Success Factors for Police Reform in Post-conflict Situations with the German Technical Cooperation.
His current research is a large cross-national study of risk causality in four of Asia’s most dynamic industry sectors. He teaches courses on risk analysis, markets and international governance and international political economy. His email is darryl.jarvis@nus.edu.sg
Phua Kai Hong is a tenured professor at the LKY School of Public Policy and formerly held a joint appointment as Associate Professor and Head, Health Services Research Unit in the Faculty of Medicine. He is frequently consulted by governments within the region and international organisations, including the Red Cross, UNESCAP, WHO and World Bank. He has lectured and published widely on policy issues of population aging, healthcare management and comparative health systems in the emerging economies of Asia. He is the current Chair of the Asia-Pacific Health Economics Network (APHEN), founder member of the Asian Health Systems Reform Network (DRAGONET), Editorial Advisory Board Member of Research in Healthcare Financial Management and an Associate Editor of the Singapore Economic Review. His email address is spppkh@nus.edu.sg
T S Gopi Rethinaraj joined the Lee Kuan Yew School of Public Policy as Assistant Professor in July 2005. He received his PhD in nuclear engineering from the University of Illinois at Urbana-Champaign. Before coming to Singapore, he was involved in research and teaching activities at the Programme in Arms Control, Disarmament and International Security, a multi-disciplinary teaching and research programme at Illinois devoted to military and non-military security policy issues. His doctoral dissertation, “Modeling Global and Regional Energy Futures,” explored the intersection between energy econometrics, climate policy and nuclear energy futures. He also worked as a science reporter for the Mumbai edition of The Indian Express from 1995 to 1999, and has written on science, technology, and security issues for various Indian and British publications. In 1999, he received a visiting fellowship from the Bulletin of the Atomic Scientists, Chicago, for the investigative reporting on South Asian nuclear security. His current teaching and research interests include energy security, climate policy, energy technology assessment, nuclear fuel cycle policies and international security. He is completing a major research monograph "Historical Energy Statistics: Global, Regional, and National Trends since Industrialisation" to be published in Summer 2012. His email address is spptsgr@nus.edu.sg
Prior to joining the Lee Kuan Yew School of Public Policy he has also worked for the United Nations Environment Programme in Geneva, Transparency International Nepal and the Centre on Asia and Globalisation in Singapore. His email is johannes.loh@nus.edu.sg and you can follow his updates on trends in pro-poor policies in the region on Twitter @AsianTrendsMon
Nicola Pocock is a research associate at the LKY School of Public Policy. She is also the research manager at aidha, a non profit financial education and entrepreneurship training school for migrant women, especially domestic workers, in Singapore. She holds a BA from Warwick University and an MSc from Kings College London. Prior to joining the LKY School of Public Policy, she interned as a Fast stream trainee in the UK civil service at the Home Office and as a research volunteer at Amnesty International. Nicola has also carried out social work in Marseille, France as a European Union sponsored youth volunteer. Her research interests span health and social policy, health systems financing, social impact assessment, gender, migration and financial behaviours. Her email is sppnp@nus.edu.sg and you can follow his updates on trends in propoor policies in the region on Twitter @AsianTrendsMon #health
Taufik Indrakesuma is a research associate at the Lee Kuan Yew School of Public Policy. He is a recent graduate of the Master in Public Policy programme at the Lee Kuan Yew School of Public Policy. He also holds a Bachelor in Economics degree from the University of Indonesia, specialising in environmental economics. Taufik has previously worked as a Programme Manager at the Association for Critical Thinking, an NGO dedicated to proliferating critical thinking and human rights awareness in the Indonesian education system. His research interests include behavioural economics, energy policy, climate change mitigation and adaptation as well as urban development policy. His email is taufik.i@nus.edu.sg
The Lee Kuan Yew School of Public Policy is an autonomous, professional graduate school of the National University of Singapore. Its mission is to help educate and train the next generation of Asian policymakers and leaders, with the objective of raising the standards of governance throughout the region, improving the lives of its people and, in so doing, contribute to the transformation of Asia. For more details on the LKY School, please visit www.lkyspp.nus.edu.sg