Digital Finance and Sustainable Water Service for All
Thirsty? If you are lucky enough to have safe drinking water piped directly into your home, you can run the tap, fill up a glass, and take a drink. If you live in a city like New York, the cost of 12 ounces of water is about one-twentieth of one cent, or $0.0005. Without several glasses of life-saving water every day, you would not be able to survive. It is not a stretch to say that water is the single most important aid to your or anyone’s survival. And yet it is among the cheapest goods that we consume, by volume.
That any of us are able to access safe, affordable, reliable, and convenient water is a miracle, given its cost, weight, and our low willingness to pay for it. This is a miracle we desperately need to replicate. Over 3 billion people do not have access to water piped into their homes, and hundreds of thousands die every year as a result. More than a $100 billion is needed annually through 2030 to finance the United Nations’ water and sanitation Sustainable Development Goal, but the median water utility in 2014 could barely cover its operating costs, let alone repair broken equipment or pay back investors. In rural areas of developing countries, a quarter of all water points are broken at any given time. Without fixing the business, tripling the sector’s funding will be difficult, if not impossible.
We need a model for providing water service that works in the long term, and digital finance will play an important role in creating that model. This Brief on digital finance in the water sector looks at how people currently access water service, and finds that it varies from urban to peri-urban to rural areas. What is generally consistent: providers do not charge enough to cover repairs and replacement, far too much water is lost to leaks and/or theft, and onsite connections plus meters are too expensive for people who need them the most. Digital finance is not the only answer to each of those problems, but there are several ways it can help organizations that supply water to become more profitable. This is essential if they are to expand access to everyone over the next dozen years.
In this Brief, we look at how digital finance can help to:
- Reduce the time and expense of paying water bills by using digital payments.
- Link digital payments with prepaid “smart” meters to create an improved, pro-poor service.
- Expand access to credit for onsite water connections.
- Enable governments or other providers to subsidize low-income water access more effectively.
We use examples ranging from Safe Water Networks’ micro-utilities in Ghana to Water.org’s WaterCredit program in India to illustrate how digital finance is beginning to drive financially sustainable ways of delivering what we cannot live without: water.