Iti Wash Digital v2

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Sophie TrmoletTrmolet Consulting

APRIL 2015

CAN INNOVATION PRIZESHELP ADDRESS WATER ANDSANITATION CHALLENGES?

ideasto impact.


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This document is part of a suite of four papers (a guide and three thematic papers) thatcaptue te leaig fm te st yea f te Ideas t Impact pgamme. Me specically:

Innovation prizes:a guide for use in adeveloping countrycontextidetiesthe stages requiredt dee ete ainnovation prize is asuitable instrument tohelp address a given

development problem;

Can innovation prizeshelp address water andsanitation challenges?Introduces the conceptof innovation prizes andpresents a number ofaeas ee tey mayhave application;

Addressing problemsin energy accessthrough the use ofInnovation prizesss te guideas applied i a speciccontext and sets outthe challenges faced inusing innovation prizes

to support improvedeegy access; ad

A role for innovationprizes to supportadaptation to climatechange? An analysisof challenges,opportunities andconditionstakes atheoretical approachto understanding the

effects innovation prizesmight have in the climatecage adaptati eld.

Where text in this paper makes reference to one of the other papers in thissuite, te elevat tet ill be igligted ad te ic epesetig te css-efeeced pape ill appea i te magi.

At the time of publishing, Ideas to Impact is undertaking the detailed designf ve divese ivati pies. Te team epects t dcumet futedigs fm tis pcess tug fll-up publicatis tat ill:

Extend the Guide to include detailed design;

Share further learning from experiences across the three themes (thematicpapes cuetly g ly as fa as Stage 2 f te Guide i tei aalysis); ad

Pvide guidace t establis mitig ad evaluatifameks f ivati pies.

Visit te Ideas t Impact ebsite www.ideastoimpact.netand signup t te eslette t eceive updates.

ACKNOWLEDGEMENTS

Tis pape as itte by Spie Tmlet, based additial eseacfm Gufae Masu, Tamaa L ad Maie-Ali Pat fm TmletCsultig Limited. Taks g t Byy Eveett (IMC), EduadPee (idepedet csultat) ad Micael Levis (Istitute fDevelpmet Studies) f evieig te pape.

SEE OUR

GUIDE

SEE OUR

WASH

REPORT

SEE OUR

ENERGY ACCESS

REPORT

SEE OUR

CLIMATE CHANGE

ADAPTATIONREPORT


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Abstract 2

1 INTRODUCTION 4

1.1 Paper objectives 5

1.2 Identifying where innovation is needed in the WASH sector 5

1.3 Who should read this paper? 7

1.4 Paper structure 7

2 UnDErSTAnDInG ThE roLE ThAT InnoVATIonPRIZES CAN PLAY 8

2.1 What are innovation prizes? 9

2.2 Where and how innovation prizes have been used in recent years? 11

2.3 How can innovation prizes be used to address development challenges? 12

3 how CoULD InnoVATIon PrIzES BE USED InTHE WASH SECTOR? 15

3.1 Stage 1 Problem Identification 16

3.2 Stage 2 Prize Options 16

3.2.1 Improving urban water supply in a context of increasingly scarcewater resources 20

3.2.2 Delivering sustainable sanitation servicess 22

3.2.3 Financing WASH 24

3.2.4 Providing safe water supplies 25

3.2.5 Water Resource Management: improving accessibility ofgroundwater resources 27

3.2.6 Improving availability and maintenance of school WASH facilities 28

4 InnoVATIon PrIzES In wASh BEInG DEVELoPED UnDErIDEAS To IMPACT 30

4.1 Dream Pipe: a proposed innovation prize to help reduce Non-RevenueWater (NRW) 31

4.2 Clean City: fostering integrated urban sanitation systems 32

5 INTEGRATING INNOVATION PRIZES INTOBroADEr ProGrAMMES 34

References 37 Annex A Examples of existing prizes in the water and sanitation sectors 38 Annex B Identifying areas where innovation is needed in urban sanitation 39

CONTENTS


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Tis pape elps idetify ete ivati pies ca beused to address intractable issues in the Water, Sanitationad hygiee (wASh) sect ad makes ecmmedatisfor potential innovation prizes across a number of problemaeas. Te pape elates t Stage 1 f Innovation prizes: aguide for use in a developing country context(henceforthreferred to as the Guide), published alongside this paper,idetifyig wASh calleges f l-icme useldsad csideig ee ivati pies culd best pvideeffective itevetis. Ivati pies ca be used as aalternative to traditional grant programmes, to stimulateivative slutis, attact e pblem slves adgeeate media atteti aud a paticula set f issues.Fm a ds pit f vie, tey may pvide bette value

f mey ta taditial gats, as paymets ae diectlyliked t slutis beig fud ad applied. Ivatipies ae a elatively e ad utested fudig mecaismin the development sector but could hold considerableptetial. Tis pape teefe pesets a umbe f aeasee ivati pies culd be csideed t eitetrigger genuine innovation or promote scaling up of existingivatis i te wASh sect.

ABSTrACT

2 CAN INNOVATION PRIZES HELP ADDRESS WATER AND SANITATION CHALLENGES?


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1INTRODUCTION


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1.1 PAPER OBJECTIVES

This paper helps identify whether innovation prizes can be used toaddress intractable issues in the Water, Sanitation and Hygiene (WASH)sector and makes recommendations for potential innovation prizesacross a number of problem areas. The paper relates to Stage 1 of theGuide, published alongside this paper. It identies WASH challenges forlow-income households and considers where innovation prizes couldbest provide effective interventions. Innovation prizes can be used asan alternative to traditional grant programmes, to stimulate innovativesolutions, attract new problem solvers and generate media attentionaround a particular set of issues. From a donors point of view, they mayprovide better value for money than traditional grants as payments aredirectly linked to solutions being found and applied.

Innovation prizes have been used widely in the context of research and technology in developedcountries. However, using them in developing country contexts to address development challengesrepresents a novel approach. Te UK Depatmet f Iteatial Develpmet (DFID) is kee t epletis aspect f tei use ad as lauced Ideas t Impact, a acti-eseac pgamme, i de t evaluatete ptetial f usig ivati pies t tackle calleges i climate cage adaptati, eegy access, adate ad saitati f l-icme uselds. I eac tematic aea, eseaces ave aimed t idetifyissues ee te use f ivati pies culd be beecial. A lg list as te aed d t establisa divese pgamme f ivati pies tat ill be desiged ad lauced ve te et fu yeas.

Ideas to Impact operates as an action-research programme tracking both the costs and benets ofprizesto provide a basis for evaluating the effectiveness of such instruments and their applicability todevelopment issues. Innovation prizes are by no means a panacea: they cannot address all challenges on

their own, and in most cases, would need to be combined with other types of funding or support in orderto stimulate lasting change. The geographical location, development partners and surrounding innovationecosystem of a prize can support or impede its development impact. Any innovation needs an enablingenvironment to scale up successfully in a sustainable manner, so a crucial element in the design of innovationprizes is to understand the environment needed for their success. It is therefore critical to clearly identify whatinnovation prizes are, what they can and cannot do and how such prizes can be used most strategically todeliver change for the most deprived populations: the Guide aims to support this process.

This paper explores how innovation prizes could be used to support universal and sustainable accessto WASH services, it a paticula fcus l-icme uselds. T tat ed, eistig ad futuecalleges i te wASh sect tat limit sustaiable access t wASh sevices ad ic culd be vecmetug busiess-led ivati ae idetied, fllig Stage 1f te Guide.

GUIDE

GUIDEStage 1

ENERGY ACCESSSection 3

For more on innovationecosystems.

1.2 IDENTIFYING WHERE INNOVATION IS NEEDED INTHE WASH SECTOR

Despite signicant progressachieved over the last few decades,many challenges persist in termsof providing WASH services to all.Access to improved WASH servicesis only increasing slowly and is notkeeping up with population increases.Lagely as a esult f iadequate wAShservices, diarrhoeal diseases continue

to be one of the top 10 causes ofdeath, according to the World Healthogaiati (who), killig 1.5 millipeple i 2012 (who 2014).

Te Milleium Develpmet Gals(MDGs) aimed t alve te amut fpeple itut access t safe atead saitati by 2015. Te mstrecent assessment from the UNICEF/who Jit Mitig Pgamme,ic tacks MDG pgess, sstat dikig ate cveage adiceased fm 77% i 1990 t 89% by

te ed f 2011, it 55% ejyigthe convenience and associatedealt beets f piped ate supply pemises (who, UnICEF & JMP

2013). wile te glbal taget basedon the indicator use of an improveddikig ate suce as beemet, tis uld still leave 547 millipeple itut access t impveddikig ate suces i 2015 (ifcurrent trends continue) and hundredsf millis me itut sustainableaccess to safedikig ate.

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The MDG targets for sanitation will not be met (Battle2014). At peset, a estimated 2.4 billi peple, almst40% f te ld's ppulati, d t ave access timpved saitati. If tigs ctiue as tey ae, tecuet MDG gal saitati ill t be acieved befe2026 (wateAid 2015). Te cuties tat ae mst ff tackiclude Idia ad lage tacts f sub-Saaa Afica. Usafefaecal sludge maagemet, paticulaly i uba aeas, is asigicat issue paticulaly f te uba p tat ill eed

t be addessed gig fad, paticulaly i te ctet fthe Sustainable Development Goals (SDGs), the successorst te MDGs. I ecet yeas, atteti as sifted tivestig dsteam, i asteate teatmet ad safedisposal of sludge, to protect the environment but also toptect ate esuces ad miimise ate teatmet csts.Sice te Iteatial Yea f Saitati i 2008, e aveitessed a step-cage i te level f atteti give tte dsteam segmet f te ate sevice cycle, icis slly taslatig it iceased fudig f te sect. Asilligess t pay (ad cage) f saitati is eve leta f ate sevices, suc effts ae still lagely supptedit public fudig, mstly fm iteatial ds.

According to the current literature, such modest resultscan be linked to a number of factors, such as:

Entrenched behaviour and habits that affect demand andlimit te adpti f e facilities;

Limited ate esuce availability ad iceased levelsof pollution;

Isufciet tecical ad maagemet skills, ic esulti iefciet sevice pvides;

Lack f secue lad teue, ic limit te ability t ivestin infrastructure;

Ude piitisati f wASh sevices by pliticias adinstitutional blockages;

hig ivestmet equiemets ad affdabilityconstraints, both at the level of governments and atuseld level, it a pesistet uilligess t cage(ad t pay) f impved sevices.

Climate change and increasing competition over available water resources will mean that providing access to WASHservices in a sustainable manner is only going to become more difcult.Te MDGs ee successful i ceatig geateaaeess f te fact tat impved wASh facilities ad sevices ae vital f develpmet. As a esult, te develpmetf wASh gals ad tagets i te Sustaiable Develpmet Gals (t be implemeted pst 2015) is paticulaly imptatbut ill t be sufciet. Un-wate, te umbella gaisati tat icludes all Uited natis agecies active i te atesect, as ecmmeded tat a bade ate gal be adpted as pat f te SDGs, ic ae t be appved by teUited natis Geeal Assembly i Septembe 2015.

A pe kig gup as bee kig pvidig specic gals ad tagets f te Sustaiable DevelpmetGals. I July 2014, tis gup auced tat Gal 6 uld be dedicated t ate ad saitati it te aim fesuig availability ad suitable maagemet f ate ad saitati t all, gig muc beyd te pvisi faccess t ate ad saitati sevices t iclude tis f ate secuity, itegated ate esuces maagemet

ad te safe maagemet f all asteate s. Te specics f tis gal ave t yet bee alised ad details sucas te idicats f success still eed t be eslved. Tus fa, it is epected tat taget 6.1 ill aim t acieve uivesalad equitable access t safe ad affdable dikig ate f all by 2030; ad tat taget 6.2 ill aim t acieve accesst adequate ad equitable saitati ad ygiee f all, ad ed pe defecati; payig specic atteti t teeeds f me ad gils, ad tse i vuleable situatis.

One of the difcultiesfaced by the WASH sectorin developing countries is the inability to scale upor pilot innovative initiatives. Te wASh sect asitessed substatial tecical ivati i te last feyeas, i aeas spaig leak-detecti systems, smatate systems, pit-f-use ate teatmet teclgies

and sanitation facilities that support reuse of treatedby-pducts. I develpig cuties, eve, mst ftese ivatis ave bee deplyed a pilt basisby iteatial nGos scial etepeeus ad aveyet t be scaled up. reass f te iability t scaleup tese tecical ivatis iclude l demad, telack of a supportive institutional environment and theabsece f busiess mdels tat suppt deplyig tseteclgies at scale. Tis as led may sect acts tconclude that technical innovation is not what is neededin the sector, what we need is the more mundane businessof rolling out technologies so as to deliver sustainableimprovements.

Rolling out technologies requires, among other things,generating demand for these approaches, securingplitical ill f tei adpti, buildig te capacities flocal people to adopt and maintain such technologies anddevelpig acially sustaiable busiess mdels tatca educe depedecy eteal aduts. I fact, te

ate sect as bee cmpaatively me successful iscalig up scial ivatis suc as te Cmmuity-LedTotal Sanitation (CLTS) approach over the last 10 to 15yeas, ic as bugt i adical e ays t cagebeavius ad da atteti t te eed t ed pedefecatis.

Progress has been relatively slow, however, and thepopulation to be served is rapidly growing.Thismeas tat it is becmig iceasigly difcult t aitf small, pilt pjects t bea fuit. Scalable ivativeapproaches are needed to address rising challenges ofdidlig available ate esuce pe capita ad teatigiceasigly plluted ate esuces.

GUIDEStage 1

For more on focusing on theproblem the F in FACE.



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In the WASH sector, Ideas to Impact researchers initially identied 14 areas whereeither genuine innovation or scale-up of existing innovation is urgently needed.Tis asbased pe-eistig sect kledge cmbied it etesive csultati it sectstakeldes ad additial eb-based eseac ee ecessay.

Out of these 14 areas, two innovation prizes have been conceptualised further and arenow undergoing detailed design in preparation for launch:

Dream Pipe:a pie t icetivise te develpmet f ivative acial adctactual mdels t educe -eveue ate (nrw) ad epad access t

ate sevices t l-icme uselds. nrw is ate lst tug tecical adcmmecial pcesses by mst ate utilities peatig i te develpig ld ad is asigicat issue f ate utilities, ic taslates it lst eveue, itemittet atesupply ad te eed t seek additial ate suces i a ctet f isig cmpetitive ate esuces.

Clean City:a prize to incentivise municipalities to develop and implement innovativeslutis f city-ide itegated saitati, ic uld iclude plaig adimplemetig saitati slutis cmbiig seeage ad -site saitati slutisthat cover the entire value chain of sanitation services, as opposed to the currentpiecemeal appac.

1.3 WHO SHOULD READ THIS PAPER?

1.4 PAPER STRUCTURE

This paper targets primarily WASH sector practitioners.The objective is to provide agencies that are alreadyactive in the sector to consider innovation prizes asa possible tool to drive improvements in the watersector.It is pimaily aimed at ptetial pie spss,such as government agencies (for example DFID) privatead busiess fudatis, ad nGos. Te pape ca elptem idetify aeas f iteveti ee a ivatipie migt make a diffeece ad suc pies culdbe used algside te acig istumets as pat f alage pgamme. As suc, it ca be ead i cjucti

it te Ideas t Impact Guide, ic sets ut i medetail te aalytical steps tat eed t be flled ide t assess ete a pie istumet is suitable f aspecic develpmet pblem t.

Non-WASH sector audiences may also nd this paperuseful, particularly potential innovation prize solverswith limited or no prior experience in the WASHsector.A key bjective f ivati pies is t attacte etities it diffeet pespectives skills stat tey ca cme it fes ideas t slve pblemst addessed by taditial sect acts. Te papepvides bief vevies f at idetied callegesin the WASH sector are, before delving into more detail ivati pies culd be applied t addesstse calleges. F ptetial slves applicats, te

paper can help them better understand the implicationsf applyig f a ivati pie, ate ta a gat ecgiti aad.

Tis pape is stuctued as flls:

Section 2 sets out the role that innovation prizes can play in general terms. It stats it a vevief at ivati pies ae, tey ave cme abut, tei advatages ad disadvatages ad eetey t i amg te acial istumets tat te public sect ca use t stimulate a maket espse

tads scial ad develpmet calleges.

Section 3 discusses how innovation prizes can be used in the WASH sector and presents a briefpesetati f te 14 aeas tat ee idetied i te iitial scpig eecise.

Section 4 introduces the two WASH prizes being taken forward by Ideas to Impact. It sets ut te pies ae likely t k ad discusses key paametes ad discussis tat ave fed it te desig ftese pies s fa. Tis is iteded t pvide additial fd f tugt t pie desiges, ecgisigtat suc desigs ae still k i pgess ad ae teefe likely t evlve up t te pie lauc.

Section 5 extracts emerging lessons on how innovation prizes can be combined with otherapproaches as part of an overall programme to achieve maximum effect. It pvides a isigt tStage 3 f te Guide.

In addition, Annex Apvides a list f key efeeces ad Annex Bmaps other prizes that have been

used peviusly i te wASh sect.

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2UNDERSTANDING

THE ROLE THATINNOVATION

PRIZES CAN PLAY


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This section introduces innovation prizes as a specic type of public sectorintervention, which aims to inuence a market response to trigger innovation in anarea of specic importance to the public at large. It complements the introduction toinnovation prizes given in the Guide, which provides a working approach to identifyingwhether and how an instrument that has predominantly focussed on technological

innovation might be applied to such developmental challenges.

Tis secti stats by deig ivati pies ad biey itduces tey ave beeused i a age f sects, it a paticula fcus stimulatig eseac ad ivatii scietic ad tecical aeas. T date, ivati pies ave played a smeat lesserole in addressing social and developmental challenges but interest in using them in thisaea is gig apidly. Fially, key diffeeces betee ivati pies ad te fudigistumets ae als igligted.

2.1 WHAT ARE INNOVATION PRIZES?

An innovation prize can be broadly dened as a nancial incentive that induces changethrough competition. T i te pie, slves eed t cmpete agaist e ate t meeta set f specied citeia, ic etitles tem t sme fm f acial ead. Te pssibleage f cmpetiti desigs ad paymet stuctues is lage. Tee ca be a sigle a smallumbe f ies. Te pie may be a lump-sum aad be pptial t esults acieved.Te cmpetiti may take place i e seveal stages. weeas te acial ead isusually a sigicat icetive f applicats, tey ae als likely t ete te cmpetiti iseac f te beets, suc as ecgiti ad iceasig tei public ple. Ivatipies equie tat applicats ae able t bea te isks ivlved i cmpetig f a pie it apbability tat tey ill t win. Cvesely tis pesets a beet t spss i tat tey dt icu csts f tiallig ivatis tat migt ultimately fail.

Innovation prizes aim to stimulate or induce innovation rather than reward goodperformance ex-post, as a more standard recognition prize (also referred to as award)

would do. E-pst aads ted t be me cmm ta ivati pies: tey igligtlead performers in a certain sector and give an incentive to outperform over peers, but notecessaily t big fad e slutis t a paticula pblem. Ivati is teefe atte eat f ivati pies ad sets tem apat fm te types f aads.

GUIDEStage 3Table 1

GUIDEStage 4

Table 2

Innovation in this context can be understood in abroad sense, as renewing, advancing or changingthe way things are done (Eveett, 2011). Ivatidoes not have to be technical but it can involve, forexample, a change in behaviour or practice or thedesig f e busiess mdels tat ca successfullyscale up teclgies. Ivati ca iclude te

adpti f impved e pducts, pcesses,teclgies sevices tat ae eite e t teld (i.e. cmpletely vel), e t a egi busiess (imitative) tat da ispiati fm adiffeet aea ad ae epupsed (adaptive).

Table 1 below lays out the potential advantagesand disadvantages of innovation prizes, fromthe point of view of prize sponsors (who areorganising the prize) and for applicants, alsoreferred to as solvers.The table complements andepads te summay give i Stage 4 of theGuide(see Table 2 i paticula), ic appaises

te veall csts ad beets t all stakeldes iivati pies.

Tis table ss tat eve tug ivati pies ave may advatages, suc advatages migt lie dispptiatelyit te spss ate ta it te slves. Fm te slves pit f vie, tey migt t be able t mbilise teecessay acig t idetify slutis, paticulaly if tey see it as a iskie pcess ta simply applyig f a gat. Feample, a cmpetiti ee tee is a sigle ie (te ie takes all) may appea vey isky fm te pit f vief slves, as tey uld eed t ivest tei esuces i de t develp te sluti tat tey put fad f teucetai pssibility f iig te pie. A key diffeece it a gat applicati is tat, typically, slves uld eedt ivest substatially me efft ad esuces i applyig f a ivati pie ta i llig i a gat applicati.heve, tey may be puttig fad a ivati tat tey ave bee develpig f sme time tei , as teyuld be less cstaied by te paametes f te gat applicati. ote icetives f slves iclude te ptetial fide-agig ecgiti ad epsue f tei ppsed slutis, beyd te scpe f te pie ad its spss.

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The analysis contained in Table 1 shows that innovation prizes cannotbe seen as a panacea to stimulate a market response to address alldifcult issues. Key t te success f suc ivati pies is tei abilityt geeate a media bu ad t aise aaeess ve ad beyd teacial ead ffe, ic pvides fute icetive f ptetialapplicats t ete te pie cmpetiti. F eac aea tat is idetiedas ptetially pieable, it is teefe citical t idetify ete a pieinstrument can achieve more or better than an alternative public sectoristumet t stimulate a maket espse, suc as a taditial iput-

based gat me spisticated fms f esults-based acigistumets, as discussed i Secti 2.3.

TABLE 1: POTENTIAL ADVANTAGES AND DISADVANTAGES OF INNOVATION PRIZES

Source: authors adapted from (Everett, 2011)

Potential advantages Potential disadvantages

For prize sponsors

No need to have all the answers:can dene an overall policyobjective without having to predene an approach so as to maximizeinnovation.

Administration costs:screening a large number of applications thatare not necessarily comparable can increase transaction costs. This canpartly be addressed through dening clear selection criteria so as tominimize arbitrary decisions, which also reduces risks for applicants.

Pay on results: no payment is made if pre-dened objective notachieved.

Embarrassment if no award is made or quality of applications is poor

Stimulate investment:prize applicants will invest resources insolving the problem that can be much higher than the cash reward(and the associated costs of running the prize).

Raise awareness:through media buzz, can generate attention foran area of special importance for society. This can increase the pool of

potential solvers that will invest in solving the problem, because theyhave been made aware of the problem and/or because the benetsof solving the problem in terms of recognition increase. This can helphighlight alternative ways to solve a problem.

Duplication of effort may result in costs to beneciaries and widersupport networks.

For applicants / solvers

Increased fexibility: gives more exibility to solvers with goodoutside-the-box ideas that do not necessarily conform to pre-denedterms of reference.

Pre-nancing needs:as with any results-based nancing (RBF)mechanism, a key challenge for applicants is the need to pre-nancetheir participation. Some potential applicants may be unable toinvest or commit working capital to take part in such competitions,particularly if the probability of winning is low.

Monetary Benets:prize funds can have transformative nancing

effect. Also smaller prize funds (i.e. from business modelcompetitions) can quickly channel small amounts of money relativelysimply and quickly, acting as a life line to young companies or NGOs,which are less familiar with long-winded grant application processes.

Open a new market for solvers:solvers that are new to an areacan apply their skills in a new market. If the solution is successfullyscaled-up, this can open up new market opportunities that can morethan compensate the initial costs of applying.

Displacement of economic activity. The prize may draw attention

away from core business functions. The costs of entering the prize mayhave high opportunity costs, particularly for small organisations thatare often extremely stretched.

Signicant risk.The probability of winning the prize can be lowerthan that of being successful in applying for a grant. However, thiscan be compensated by the visibility conferred by the media buzz,including for runner-ups

Non-Monetary Benets:Media effects, recognition and brandingcan enhance visibility and credibility of solvers and potential increaseinvestment potential



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2.2 WHERE AND HOW INNOVATION PRIZES HAVE BEENUSED IN RECENT YEARS?

wile ecgiti aads ae cmm, innovation prizes tat aim t iduce cage ae less ell k,altug t a e ccept etiely. Te st famus iducemet pie as te Lgitude Pie lauced aftea Act f Paliamet as passed i Eglad i 1714 (efeed t as te Lgitude Act), as set ut i te B 1.

Since then, there have been other famous examples of these prizes, suc as naple Bapates fd

pesevati pie i te 1800s tat esulted i te evetual ceati f cas as a pesevati mecaism.Me ecet eamples iclude te Asde Aad, ic as bee uig sice 2001 it te aim fdig e sustaiable eegy slutis. Als natial healt Sevice (nhS) Eglad lauced a seiesf ivati pies i 2010 aimed at tacklig sme f te mst callegig aeas i ealtcae. I tiscase, te fcus as t t stimulate e teclgies but ate t idetify te pblems ad d bettepactices t big abut cage.

ENERGY ACCESSSection 1

For more on the recent useof innovation prizes.

Box 1: ThE LonGITUDE PrIzE (1714), FIrST EVEr InnoVATIon PrIzE

What was the challenge? Despite centuries of experimentation, it was still not possible to measure longitude while at sea in areliable manner. The English government had been wrestling with this problem, which had severe human and nancial consequences.Shipwrecks were frequent and commercial and military ships were regularly lost at sea, as they were unable to keep track of theirposition. This in turn signicantly reduced the commercial prospects for inter-continental trade. Several potential methods had beenproposed to solve the problem but none was deemed sufciently fool proof.

What was done?In 1714, the English Parliament issued an Act of Parliament that promised a series of rewards for whoever solvedthis problem, with increasing rewards depending on the level of accuracy of the proposed approach. The top prize (20,000 at thetime, which is equivalent to roughly 2.52 million in 2015) was to be awarded for a method that could determine longitude within 30minutes. The Act also established the Board of Longitude, a panel of eminent personalities from the elds of science, technology andmaritime affairs who would be responsible for awarding the prizes. The Board could also choose to give smaller awards to persons whowere making signicant contributions to the effort or to provide nancial support to those who were working towards a solution. Onbehalf of the Board, Isaac Newton, lead scientist of the time, was tasked to write a brief on competing approaches that had been putforward, ranging from the design of reliable clocks that would keep the time at sea to measuring the angle between the ship and themoon (the so-called lunar distance method).

What was the outcome of the prize?The prize prompted a urry of activity all over Europe to try to identify a solution and win theprize. The most reliable solution was developed by a London-based watchmaker, John Harrison, who designed a clock that couldreliably keep time at sea and thereby allow calculating longitude. The notable point of the prize is that it resulted in an unexpectedsolution from an unexpected source. It took over 50 years and numerous grants supporting the development of an effectivechronometer, although the prize itself was never ofcially awarded.

Box 2: nATIonAL hEALTh SErVICE (nhS) EnGLAnD InnoVATIonCHALLENGE PRIZES

Launched in 2010, these prizes aimed at nding solutions to some of the most difcult challenges in healthcare. The prizes havevaried in what they tackle, with a new set of challenge areas provided each year, including early cancer diagnosis; better managementof pregnancy; and reducing avoidable medicine waste. The maximum grant per prize is 100,000. These prizes are oriented towardsindividuals or groups of people working within the NHS system. The portfolio of prizes won by candidates include among many others:

The creation of a novel diagnostic pathway to detect signicant liver disease in the community 100,000

Early intervention dementia service 35,000

Web-based screening in the investigation of carpal tunnel syndrome 50,000

Creating a cycle response unit 100,000

These challenge prizes are ongoing with 650,000 available for prizes in 2014. Diabetes, using technology to speed up services anddiagnosis, and reducing infection are among the many challenge areas targeted in the 2014 NHS England challenge prizes.

Source: Adapted from (NHS England, n.d.)

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Interest in innovation prizes has grown rapidly in the last15 years. McKisey (2009) states tat ve te last decade teamount of funds available for prizes have more than tripledt a estimated 1-2 billi dllas ad me ta 60 epies f me ta $100,000 ave debuted sice 2000. Sucprizes have been used to address a broad range of issues,icludig ivetig e vaccies ad e teclgies, addevelpig cmmecial space tavel. F eample, te Asaix pie, lauced i 1995, as iteded t stimulate te

iveti f a eusable space caft, by eadig te ivetif te st caft t successfully sed tee peple 100 kmit space tice iti t eeks. Te aim as t develpcmmecial space tavel.

At the start of the 21st century, there was a shift awayfrom recognition prizes towards inducement prizes.McKisey & Cmpay (2008) states tat befe 1991, 97%f te pie fuds et tads pies tat ecgised piacievemet (suc as te Pulite Pie). heve, by 2008,78% f fuds f pies ee fcussed iducemet pies.

Prizes can and have been used in a wide range ofareas. Increasingly, prizes have been used to addresssocial challenges, see te eamples peseted i B3. Tis cage ccued aud te stat f te 21stcetuy. Peviusly, ats- ad umaities-ieted piesdmiated, eeas i 2008 tey made up less ta 10%and issues such as climate and environment, science andegieeig, ad aviati ad space iceased seve-fld as set ut bel. Tis sift as liked t a cage

i te atue f spss f suc pies, ic statedto include corporations, but also NGOs and privatefudatis (McKisey&Cmpay, 2008).

heve, eve tug tee as bee steady gt i teuse f pies f pilatpic pupses, tey ave aelybee applied t te develpmet sect.

2.3 HOW CAN INNOVATIONPRIZES BE USED TO ADDRESSDEVELOPMENT CHALLENGES?

Box 3: ExAMPLES oF rECEnT USES oF InnoVATIon PrIzES

NHS Innovation challenge Prizes. In 2010, the NHS launched seven different challenges with the aim of nding new ideas to solvesome of healthcares most challenging issues. The aim was to encourage new practice and change the culture within the NHS rather thanstimulate new technology. It is too early to see how cost effective this process was, however winners for the rst round of challenges havebeen identied and new ideas and solutions were found. One example was the challenge to increase independence for those with kidneyfailure: a process (used by a dialysis team in Manchester) was found that reduced the cost of home dialysis delivery by 12,000 a year.

Euclid Network, UniCredit Foundation and Project Ahead, Naples 2.0. In 2011, this prize was launched to nd innovative solutionsto persistent social challenges in six areas of Naples. Examples of the challenges were: developing an inclusion plan for Roma youthand developing sustainable business models for non-prot and volunteer organisations.

European Commission social innovation competition. In 2012, this prize was launched to nd new solutions for creating more and better

work. Around 600 proposals were received and three prizes of EUR 20,000 were given out for social care, job sharing and market access.

Box 4: ExAMPLES oFRECENT PRIZES TO ADDRESSDEVELoPMEnT ChALLEnGES

The Gates Vaccine Innovation Award:The aim is to nd newvaccines that will help immunize children in the poorest partsof the world. These prizes, targeting developing countries,aim for innovation and creativity whether that be simple

or complex, big or small, but which ultimately could beimplemented in specic countries in the developing world.Two prizes were awarded in 2012 and in 2013.

Africa Prize for Engineering Innovation:This prizeis supported by The Shell Centenary Scholarship Fund,Consolidated Contractors Company, ConocoPhillips and theMo Ibrahim Foundation. It aims to stimulate innovation, newideas and entrepreneurship in sub-Saharan Africa. Engineersfrom any sector are being asked to come up with scalablesolutions to local challenges focussing on engineering anda method of improving situations. The main winner will win25,000 and the two runner ups 10,000. At the moment,there is a shortlist of 12 entrants. They will receive 6 monthsof training after which three nalists will be chosen.

Until recently, innovation prizes have been usedcomparatively little to address burning developmentchallenges in the developing world. Tis is gaduallycagig it a gt f iteest i tese mecaismsi te develpmet aea. B 4 pesets a fe eceteamples f pies beig used i te develpmet sect.

Examples in the water and sanitation sector are set outin more detail in Annex B. They include the Reinvent theToilet Challenge (RTTC), launched by the Bill and MelindaGates Foundation in 2011 (Box 5) and the Stone FamilyFoundation for innovation and entrepreneurship in thewater sector.

Potential reasons for such limited use in the developmentsector include the fact that, prizes have largely focussed onthe idea and invention end of the innovation chain, withfew examples of prizes focussed on the results end(Everett,

2011). Introducing a prize for a technological innovation maynot be sufcient when donors are looking to achieve resultsat scale and are not prepared to wait for an invention to movefrom prototype stage to full scale-up stage.



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BOX 5: THE REINVENT THE TOILETCHALLENGE, LAUNCHED BYTHE BILL AND MELINDA GATESFOUNDATION

The RTTC was a genuine innovation prize, as it set a very clear

brief for engineers and scientists around the world to invent anew toilet that would meet the following criteria:

Removes germs from human waste and recovers valuableresources such as energy, clean water, and nutrients;

Operates off the grid without connections to water, sewer,or electrical lines;

Costs less than US$.05 cents per user per day;

Promotes sustainable and nancially protable sanitationservices and businesses that operate in poor, urban settings;

Is a truly aspirational next-generation product that everyone

will want to use in developed as well as developing nations.(http://www.gatesfoundation.org/What-We-Do/Global-Development/Reinvent-the-Toilet-Challenge)

Although the prize was awarded and there are somepromising prototypes, so far this prize has not led to thewidespread adoption of these prototypes and has thereforenot produced results that matter to donors minded toachieve global goals, such as increasing the number ofpeople with access to improved sanitation.

BOX 6: NIRMAL GRAM PURASKAREX-POST AWARD IN INDIA

There is prior experience and interest in using prizemechanisms to incentivise actors to change their behaviourin the sanitation sector in India, including for public sectoractors. The Nirmal Gran Puraskar (NGP), rst initiated in2003, is a scheme to incentivise Gram Panchayats (GP,i.e. local governments for villages and small towns inrural India) to become fully sanitized and free from opendefecation. The NGP is an ex-post award rather than aninnovation inducement prize. These incentives have beenintroduced as part of the Total Sanitation Campaign (whichdates back to 1999). The NGP provides one-off monetaryrewards (which vary in size depending on the populationin each community) from the central government to thequalifying GPs based on a set of criteria that includebeing 100% open defecation free and achieving 100%sanitation coverage of individual households. Although the

NGP has been affected by a number of issues (includingover-reporting or the problem of short-lived incentives,with villages failing to maintain open defecation free[ODF] status overtime), it has proved very popular withcommunities in India.

Innovation prizes can be used with a view to identify scalable solutions and therefore could have a role to play as part of thebroader range of results-based nancing instruments for development. The interest in innovation prizes to address developmentchallenges is part of a broader change in the way that development interventions are funded. It is part of a shift towards a resultsagenda, which refers to an international effort to make aid more effective, and to link funding more closely to results.

Such a shift builds upon an analysis of the weaknesses (and in some cases failures) of the traditional input-basedgrant models, in which the implementer of development programmes would typically receive funding up front to carryout a development intervention. Examples of results-based nancing instruments include output based aid (OBA),conditional cash transfers (CCTs) and cash-on delivery aid (COD aid), as briey outlined in Table 2 overleaf. These results-based nancing instruments can seek to shift incentives for different types of implementers including governmentagencies, NGOs, community-based organisations (CBOs), private enterprises or individual households.

TABLE 2: EXAMPLES OF RESULTS-BASED FINANCING (RBF) INSTRUMENTSSource: adapted by authors from (GPOBA, 2014) with inputs from (Klingebiel, 2012).

Potential advantages Potential disadvantages

Cash-on deliveryaid (COD)

A nancing arrangement through which donors offer to pay recipient governments a xed amount for each additional unit of progress towards acommonly agreed goal. (Birdsall, Savedoff, & Mahgoub, 2010). The payments that are provided once the agreed results have been achieved takethe form of general budget support that is paid to the treasury of the partner country (e.g. ministry of nance). Key features include payment foroutcomes; a hands-off approach; independent verication; transparency; and a complementary approach to other aid instruments (Klingebiel, 2012).

Programme-for-results lending (P4R)

A specic lending instrument introduced by the World Bank, characterised by providing funding for specic sectoral or sub-sectoral expenditure programmesand disbursing the loan upon the achievement of results and performance indicators, not inputs (Klingebiel, 2012), World Bank;(Gelb & Hashmi, 2014).

Output based aid(OBA)

A mechanism to support the delivery of basic services where policy concerns justify the use of explicit, performance based subsidies. Ex-post targeted subsidiesare paid to service providers based on reaching pre-agreed objectives to better serve the poor.

Conditional cash

transfers (CCTs)

Programs that transfer cash to poor households that make specied investments in the human capital of their children or change their behaviour to

promote the childrens welfare.

Vouchers Scheme that allows end-users to select accredited service providers that are then reimbursed on the basis of services delivered.

Results-basedlending

An approach being piloted by the Asian Development Bank over the 6 years from 2013. The distinctive feature of this approach is that disbursement ofloan proceeds are directly linked to achievements of programme results (ADB, 2013).

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In many ways, innovation prizes can be conceived as an extreme form of results-based nancing (RBF), in which the remuneration is fully linked to results, with ahigh probability for applicants of not being paid if results are not achieved.rBFmecaisms usually leave eibility t te implemetes i de t idetify slutis tmeet te taget utputs. A ivati pie leaves maimum eibility t te slvesi de t detemie te sluti ad fuds ae paid slely esults, i.e. based te taget utcme tat is sugt. Tis meas tat te isks ae ig f te slves buteads ae ptetially vey ig, bt i tems f acial eads ad recognition.

An agent that seeks to inuence society and markets but does not necessarily haveready solutions can use innovation prizes to leave maximum exibility to the solversin order to identify the most effective way of solving a development challenge . Sucistumets ae als paticulaly useful i ctets tat ae eceivig iceasig attetifrom both the general media and from a range of specialised media outlets .

The way in which innovation prizes compare with othertypes of development nancing instruments is representedin Figure 1, based te t distictive featues fivati pies, i.e. te degee f eibility left t slvesad te ptetial t geeate visibility f te issue tugceatig a media bu. Te latte ca patially be eceated

tug te aucemet ad publicity pcess audcmpetitive gats (as as de by te Eupea Uiwate Facility te Afica wate Facility), paticulaly esuc gats ae aaded tug a seies f fudig udstat geeate cmpetiti betee applicats. heve,suc bu i te case f gat applicatis uld likely beced t tse paties tat ae diectly iteested, i.e.te ptetial gat applicats, eeas te bu geeatedtug ivati pies uld usually eac a badepublic, pvided te cmmuicati campaig is elldesiged ad tat messages ae ell cmmuicated. wede ell, slves ca gai bade publicity fm takig patad paticulaly fm iig te pie.

When this aspect is neglected, the comparativeadvantage of a prize over a more conventional grantmecaism migt be miimal. F eample, te SteFamily Fudati gaised a pie f ivati adetepeeusip i ate back i 2012. Altug te piepcess as vey ell u ad eceived a lage umbe

f applicatis, te publicity tat flled te pieaad as miimal. Tis meat tat te et beet fmte pie f te wASh cmmuity as a le as l,ad pbably le ta te veall csts f uig tepie (ic icluded te pie value but als assciateduig csts, f sceeig ad selectig applicatis).

GUIDEStage 4

For more on the risks to solvers.

GUIDEStage 4

For more on media attention.

FIGURE 1: INNOVATION PRIZES VS. OTHER FUNDING INSTRUMENTS

Source: www.emdat.be

Less Flexibility for solvers to identify solutions MoreLess

More

Mediabu

zz&visability

Input-basedgrants

Output-based

aid

Competitivegrants

Innovationprizes

Innovation prizes aretherefore applicable onlyin specific circumstances:they can be usedtypically as part ofbroader programmesthat use other types ofinstruments to tackleother market failures.1Tobette udestad eead tey ca k ia development context,

the Ideas to Impactprogramme investigatedtei applicability i arange of sectors, includingWASH, as discussed in theet secti.



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3HOW COULD

INNOVATIONPrIzES BE USED

IN THE WASHSECTOR?


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This section discusses how innovation prizes can be used in the WASH sector. Itpresents the 14 areas that had been identied in the initial scoping exercise for thepreparation of the Ideas to Impact programme. One objective of this section is toprovide food for thought to other sponsors for the design and implementation ofinnovation prizes in the WASH sector.

3.1 STAGE 1 PROBLEM IDENTIFICATION

To assess where and how innovation prizes could be used in the WASH sector, Ideas to Impactresearchers undertook a broad review of the sector to identify unresolved challengeswhich couldpotentially be overcome through innovation, and specically through innovation prizes. Tis as based Stage 1 f te Guide. Give tat Ideas t Impacts scpe als ecmpasses eegy efciecy ad climatecage, tis evie eamied i paticula te wASh sect ca affect be affected by tese tother areas, as the ability to provide water and sanitation services is likely to be constrained by climatechange and rising energy costs. Tis lies at te eat f te s-called ateeegyfd eus, icas bee attactig iceasig atteti i ecet yeas. Slutis develped i tese aeas ca acievemultiple bjectives, icludig adaptig t climate cage (by elpig cseve ate esuces ad impvig

esiliece t ds ad dugts) ad elpig it mitigatig climate cage (by educig eegy use adplacig esuce ecvey at te eat f sevice delivey).

GUIDEStage 1

For more on problemidentication

GUIDE

The analysis was based on prior knowledge of the water sector, an evaluation of current government and donorpriorities, consultation with thought leaders in the sector and targeted literature reviews. Many of the sector leadersconsulted during the process agreed that the WASH sector is a one in which technical xes or shiny new toys arenot required to achieve lasting change at scale, particularly in the developing world. Tey tugt tat te sect suffesfm a abudace f pilt pjects tat ave sugt t develp e tecical es, eeas fe f tese ave maagedt be successfully scaled-up. I may cases, tecical slutis ae k, but at is eeded is t vecme cetai factstat limit tei idespead adpti, suc as limited demad, affdability cstaits plitical esistace. As a esult,sect epets agued tat te wASh sect ugetly eeds ivati i tems f busiess ad ctactual mdels as ellas acig mecaisms. As a esult f tis csultati, fcus as teefe placed idetifyig aeas ee ivati items f busiess ad acial mdels is eeded, pvided te igt type f eablig evimet is i place.

3.2 STAGE 2 PRIZE OPTIONS

This rapid scoping exercise allowed us to identify14 specic problems that limit the ability of low-income households to access sustainable services.This moves the process on to Stage 2 of the Guide:idetifyig ete pies culd be tageted taddess ay f te pblems idetied i te Stage 1aalysis.

This list of challenges is by no means exhaustiveand does not encompass all challenges that

currently affect the WASH sector.These challengesee idetied based te fllig citeia:

Pblems tat, if slved, uld ave a sigicatepected impact l-icme uselds;

Problems that, if solved, could generatemultiple gais, paticulaly t educe eegycsumpti geeate eeable eegyesuces, as a ay t mitigate climate cage;2

Aeas ee te market alone has not produceda satisfactory solutionfm te pit f vie f

sciety as a le, ad is t likely t pducee i te ea futue, judgig by ecet maketdevelpmets. I suc situatis, a publiciteveti culd make a sigicat diffeece timpve utcmes ad culd ptetially take teform of an innovation prize;

Aeas ee te media bu suudig a pieuld be beecial, i.e. ee aisig aaeessto this particular problem could have an impactbeyd te metay pie itself.

GUIDEStage 2

GUIDE

Stage 1For more onmarket failure.

2. Energy costs represent a substantial share of operating costs for water service operators (large or small) and for household self-supply, i.e. for abstracting and distributing

water (pumping costs to extract water from groundwater resources or to distribute water over the networks, particularly where gravity schemes are not feasible) or for treating

wastewater. Going forward, it is essential to identify less energy-hungry solutions for the WASH sector so as to ensure sustainable provision of those services. The growing

realisation of this as an issue is increasingly referred to as the WASH-Energy nexus, which is attracting growing interest.



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The WASH areas for which potential prizes have been identied following this process can broadlybe grouped into six main areas,as s i Figue 2 ad i Table 3 bel. Sme f tese aeas aeclsely elated ca be see as subsets f e ate (as i te aea f ate supply i te aeaf saitati). Secti 3 eamies eac f te si wASh aeas i tu s as t pvide fute detail f ivati pies ca be desiged i te wASh sect. I eac aea, e pvide a bief vevief te calleges tat ee idetied, detemie at activities ae cuetly gig t addess succalleges ad at uld eed t cage t acieve maimum impact. Tis pvides a basis fidetifyig ivati pies culd make a diffeece ad at type f acts suld csidelaucig suc pies. Acss all pies, a clea stategy f gettig ivati t scale, as discussed i

Stage 3 of the Guide, ill eed t be i place it elated acig.

GUIDE

Stage 3

Based te pblem aeas peseted i Secti 3, t ideas ee futedevelped as pat f te Ideas t Impact pgamme. Tey ee:

Deam Pipe, a pie t stimulate acial ad ctactual ivati teduce nrw ad impve ate sevices f te p.

Clea City, a pie t stimulate small cities i Idia t develp adimplemet city-ide itegated uba saitati systems.

Tese ae peseted i Secti 4.

FIGURE 2: POTENTIAL PRIZEABLE AREAS IN THE WASH SECTOR

PRIZEABLE AREAS IN THE WASH SECTOR PRIZES TO BE LAUNCHED BY IDEAS TO IMPACT

SANITATION Designing integrated urban sanitation systems

Improving faecal sludge management (FSM)

Improving affordable on-site sanitation solutions

Providing low-cost sewerage solutions

WATER

RESOURCES

MANAGEMENT

Groundwater management for sustainability

Extracting groundwater with renewable energy

SCHOOL

WASH

Maintaining school WASH services

DREAMPIPE

Financial andcontractual innovationto reduce Non Revenue

Water (NRW) and improvewater services for

the poor

CLEANCITY

Integrated urbansanitation systems

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TABLE 3: OVERVIEW OF THE 14 PRIZEABLE PROBLEMS IN 6 AREAS IN THE WASH SECTOR

Rapid description Identied problem What could the prize incentivise? Who? Targetedsolver community

Water supply

Reduce water

losses

Technologies to detect and x leaks are well-known

but reducing losses, referred to as Non Revenue Water(NRW), is costly, time-consuming and requires fullcommitment from utilities. New types of nancialand contractual arrangements are needed to do thiseffectively at scale and to share the benets of theseimprovements with poor customers.

Design and roll-out contractual forms to

mobilise nancing and technical expertiseto reduce NRW and share benets ofreducing water losses between utilities,companies that can offer leak reductionservices and customers, with a particularfocus on poor customers.

Utilities; nance,

economic andmanagementconsulting rms,engineering rmsthat provide servicesto utilities, otherunexpected solvers

Help low incomehouseholdsdeal withintermittentwater supplies

Intermittent water supplies generate a lot ofinconvenience for all customers, particularly low incomehouseholds. They need to store water in roof tanks andmanage those tanks, be at home when water comes inand sometimes pump water from the network.

Identify solutions to improve livingconditionsof low income householdscustomers affected by intermittentsupplies. An additional benet would bethat it could incentivise utilities to dealwith all aspects of water access by those

customers so as to improve quality ofoverall service.

Utilities (North/Southpartnerships), socialentrepreneurs, NGOs

Design smartmeters suitablefor low incomecountry contexts

Existing water meters on the market cannot cope withintermittent water supplies. This is often cited as areason for not investing in metering, whereas universalmetering would be a key way to encourage waterconservation and reduce losses, thereby saving preciousresources for all customers.

Design and roll-out low-cost smart watermeters that could: (a) function despiteintermittent water supplies; (b) allowthe adoption of smart water tariffs (toincentivise water conservation); (c)could be used at household level or at acommunal water point.

Utilities (North/South partnerships),equipmentmanufacturers

Sanitation

Design and

roll-outaffordable on-site sanitationsolutions inrural areas

Locally available on-site sanitation solutions are not

aspirational goods for low income customers; improvedtoilets are too expensive particularly for rural population.

Design and distribute a low-cost, locally

acceptable improved toilet solution withassociated distribution channels. In areasthat are prone to ooding, such solutionswould need to be ood-resistant.

Local universities,

local entrepreneurs(with assistance fromdesign rms)

Design androll-out low-cost seweragesolutions

Traditional sewerage networks are over-specied formany developed countries and therefore unaffordable.Even though simplied sewerage systems (alsoreferred to as condominial sewers) were developedand have successfully scaled-up in Latin America, theyhave failed to do so in Sub-Saharan Africa (SSA) orSouth Asia (SA).

Design and implement a business modelto roll-out simplied sewerage systems inSSA countries or in India.

Utilities, engineeringrms, socialentrepreneurs,unexpected solvers(innovators, techstudents, privatesector and other)

Improvefaecal sludgemanagement

Treatment of faecal sludge collected from on-sitesolutions is quasi-inexistent in most developingcountries. A key trade-off in the choice of treatmentsolution is between standard energy-hungry solutionsand low-cost low-energy solutions that use a lot of space(often not available in dense, rapidly growing cities).

Design and roll-out low-cost faecal sludgetreatment and reuse solutions for space-constrained slum environments (withassociated business model for organisingthe collection of faecal sludge, such asfranchising, leasing, etc.).

Utilities, researchlabs, socialentrepreneurs

Unexpected solvers

Implementcity-wide urbansanitationsystems

Sanitation services are currently developed in apiecemeal manner, with no foresight and coordination.This results in limited access to sustainable sanitation,with a large percentage of shit ows being dischargedindiscriminately into the surrounding environment,resulting in disease and environmental degradation.

Encourage cities to develop integratedvisions for the development of theirsanitation services, including backboneinfrastructure (sewers) and service modelsto collect, transport, treat and safelydispose of or reuse faecal sludge.

Municipalgovernments,national

governments,utilities,engineering firms



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TABLE 3: CONTINUED

Rapid description Identied problem What could the prize incentivise? Who? Targetedsolver community

Financing WASH

Develop

micronanceproducts tofacilitate accessto services bylow incomehouseholds

Micronance institutions (MFIs) are not commonly

offering products for access to basic services (e.g.building a latrine, getting a solar home system, gettingan electricity connection). This might be due to lack ofunderstanding and appreciation of these areas. NGOstrying to offer nance are frequently failing for lack ofsuitable systems to market nancial products.

Design and roll-out micronance products

for WASH with a clear strategy forimplementing those at scale. Such modelscould also be applicable to climate changeadaptation or energy efciency.

Financial institutions,

MFIsUnexpected solvers

Channelnationalpension fundssavings intolong-terminvestments

Insufcient funding available for investment inenvironmental infrastructure (such as for WASH orenergy services), both for large-scale (networks) andsmall-scale investments. Investment needs to benanced over the long-term, preferably in local currency.

National pension funds need to nd opportunities intheir country to invest in long-term assets and such

opportunities are currently limited a winwin solutioncould be identied

Design and issue environmentalbonds that would provide an attractiveinvestment vehicle for local pensionfunds. The proceeds of those bonds couldgo to utilities, municipalities or smallprojects via micronance/APEX bank these investments would need to be

low-risk and generate adequate returns.

Financial institutions,investment funds,national pensionfunds, nancialadvisers

Design long-term vehiclesfor social impactinvestments

Insufcient funding is available for investment inenvironmental infrastructure (such as for WASH orenergy services), both for large (networks) and small-scale investments.

Social investors may be interested and would be able tobehave as patient investors (bearing higher risks) thannational pension funds.

Issue Social Impact Bonds that can be soldtosocial impact investors(as social impactbonds), including international investors,wealthy people in the country and expatcommunities. These could be high riskinvestments with high social impact,suitable for patient investors.

Financial institutions,investment funds,social impactinvestors, nancialadvisers

Safe water

Deliver safe

water suppliesfor low incomehouseholds

Bottled water and sachet water are rapidly growing as

key methods for all in developing countries (includingfor low income households) to access drinking waterHowever, there are key issues involved: it is usually a veryexpensive solution, the hygiene quality of such watermay be uncertain, and there are signicant negativeenvironmental impacts.

Identify safe, low-cost and

environmentally friendly alternatives tobottled water/sachet water that providesimilar levels of convenience (e.g.cold water available on the spot) forlow income households, which wouldavoid the pitfalls of existing water ltersolutions. This could be a reinvent theliquid container solution.

Soft drink industry,

water ltermanufacturers,social entrepreneurs,unexpected solvers

Water resource management

Managegroundwatersustainably in

rural areas

20% of the population of sub-Saharan Africa relies onsurface waters, which are often unreliable and unsafe.Groundwater use should be encouraged to improve

resilience but groundwater management needs to beimproved.

Specic technical innovations (such aslow-cost sensors on groundwater pumpswith mobile communications to report

groundwater availability and serviceability)could be identied through a prizemechanism and subsequently rolled out.

Pump and sensormanufacturers,socio-entrepreneurs,

unexpected solvers

Extractgroundwaterwith renewableenergy

Climate change and rising energy costs will increasepumping costs where diesel pumps are used. Existingattempts to disseminate pumps with renewable energieshave not been scaled-up.

Business model to roll-out renewableenergy pumps (solar, wind, manual).This could include technical innovations(limited), but also innovations in terms ofnancial and business models for scaling-up such technologies.

Engineering rms,social entrepreneurs,NGOs

School WASH

Maintain schoolWASH services

High percentage of schools (and health centres) indeveloping countries do not have operating WASHfacilities, due to substantial maintenance and fundingissues.

Develop business models to build and/or maintain school latrines in workingconditions the same could be done forhealth centres.

Utilities, socialentrepreneurs, NGOs

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3.2.1 IMPROVING URBAN WATER SUPPLY IN A CONTEXT OF INCREASINGLY SCARCEWATER RESOURCES

oVErVIEw oF ExISTInG ChALLEnGES

wate supply sevices, i.e. te pvisi f ptable ate by gvemets, idividuals, pivate sects nGos is actiuig battle, it may facts ideig te pcess by ic peple gai access t ate. Iadequate access is aissue tat as igligted by te MDGs. Despite te fact tat te ate MDG as bee eaced, appimately 547 milli

peple still lack access t impved ate sevices i 2015 accdig t latest who Jit Mitig Pgamme f wateSupply ad Saitati (JMP) gues ad may me get iadequate sevices despite beig allegedly cected t tesevice. I tis secti, e fcus paticulaly calleges i uba aeas; calleges affectig ual aeas ae discussed ime detail i Secti 3.6 bel.

At present, continuity of supply is only a distant dream for substantial parts of the sub-Indian continent and sub-Saharan Africa.Te p ae usually at te ed f te lie ad ae te es tat suffe mst fm iceased ate scacity,especially i uba evimets. Tis ca be due t atiig ad itemittet supplies if tey ae aleady cectedt a etk. we tey ae t cected but use ells beles, difculties i accessig ate ca be due t tedeteiati f gudate esuces, i tu due t sall gudate suces ctamiated by iadequate saitatifacilities i te viciity iceased saliisati f te aquifes. I a ctet f iceasigly scace ate esuces, tesituati is likely t deteiate fute: it is estimated tat almst e ft f te lds ppulati (abut 1.2 millipeple) live i aeas ee ate is pysically scace.

One main cause of intermittent water supply (IWS) is the lack of water, which is often the result of losses from the

system (sometimes very severe).ratiig is used t limit tecical lsses fm te etk. I additi, a sigicatamut f ate may be lst due t teft, via illegal cectis due t iadequate meteig ad billig. we te supplyf ate is atied, due t lack f ate i te distibuti system, te st custmes t be cut ff ae usually tse livig ipe aeas. As (Mai, 2009) states: Rationing is possibly the number one quality challenge for many water utilities in thedeveloping world. Without service continuity, meeting drinking water standards cannot be guaranteed because of the riskf itti i i. T , ft i t t - d f ditibti t d ct ffd ciqit (c it , f t, d t), ditit ffctd.

IWS poses signicant health risks tothe networks customers, particularlyin networks where there areprolonged periods of interruptionof supply due to negligible or zero

pressures.The sudden increase inpessue tat ccus e supply ise-establised ca icease atelosses and cause high levels ofctamiati fm te leaked ate, eve seeage, tat may be suckedit te system. Tis sceai is likelyt ccu ee te ate pipes avebee istalled ea seeage pipes(ic culd als be leakig). Te iskf ctamiati is eacebated by teiapppiate stage f ate ete system is uig.

IWS also negatively impacts labourproductivity. Poorer customers,paticulaly me ad gils, avelittle meas t ste te ate (itate taks f eample), ave t sit

at me aitig f te ate t cme ave t lk f ate fm tesuces duig plged iteupti.Tey may t ave eug esucest ivest i ate stage pit-f-use ate teatmet slutis, icmeas tat l-icme uselds aepimaily affected by itemitted atesupplies. Te same ges f custmessupplied tug cmmual atepits, suc as kisks.

Managing water supply and reducinglosses through conventional methods(such as metering) is more difcultwhen service is intermittent, asexisting meters do not function

adequately:e ate is t igtug te pipe, ai s may affectte accuacy f ate eadigs gitmay cde ate metes.

whAT worK IS CUrrEnTLY GoInG on In ThIS ArEA?

wk as bee gig t addess suc issues, paticulaly i tems i nrw educti. Tese uld typically take te fm fivestmets i etk eabilitati (e.g. pipe eplacemet), istallati f bulk metes, leakage detecti ad epais adclampig d ate teft. Te teclgy f suc activities as impved csideably i ecet yeas ad is ell-k ad utiely used i develped ad middle-icme cuties. Fudes usually isist publicpivate patesipsaagemets t cay ut tese activities, s as t esue tat ige degees f pfessialism ad fcus ae bugt i teduce lsses ad impve ctiuity f supply. But all f tese effts eed t be lled ut a massive scale t addesste issue a glbal scale. S fa, ivestmets i suc activities ave bee faily limited, f te eass utlied bel.

Develpmet baks atial gvemets usually fud tese iitiatives as pjects: as suc, tey take a lg time t beaaged, tey ae epesive t mit ad public fudig is t sufciet t addess pblems a glbal scale. I additi,lss educti activities usually epeset a small cmpet f a bade ivestmet pgamme ad fail t be piitised as

suc. It is ly i ig middle-icme cuties (suc as pats f Sut-East Asia ad Sut Afica) tat ctacts ae sigedbetee te paties (i.e. utilities i eed f educig lsses ad cmpaies tat specialise i educig lsses) itut te eedf eteal fudig. Suc ctacts uld typically etail pt saig aagemets betee tse t types f acts. I licme cuties, ate lss educti activities ae muc less cmm, f a vaiety f eass tat may iclude te fllig:



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ate utilities may be plitically captued ad t fcussed impvig pefmace, tey smetimes lacktecical capacity fudig t udetake lss educti activities. I additi, e key issue is tat ivestmetsi lss educti activities ae fte teated as peati ad maiteace (o&M) ad as suc, ae t vieedas beig asset-ceatig. As a esult, it is typically difcult f utilities t aage fudig f tse activitiesad taditial baks (icludig develpmet baks) ae uillig t led because tey tik tat cas-sassciated it tse ivestmets ae upedictable ad tey cat claim ay cllateal. Eve pivate sectnrw epets ave tuble aisig ace tug cmmecial baks.

HOW COULD INNOVATION PRIZES HELP IN THIS AREA?

Fidig slutis t eistig ate supply pblems i uba aeas uld ave tasfmative esults, bt items f augmetig te quatity ad quality f ate available f te csumes ad i educig te veallcst f deliveig ate sevices. This part of the study follows Stage 2 of the Guide. As pat f te iitialscpig study (Stage 1 f te Guide), e idetied tee ptetial aeas ee a ivati pie culdmake a diffeece. Tese ivati aeas ae clsely elated t eac te: s, it seemed me apppiatet fcus te mst sigicat e as pat f te Ideas t Impact pgamme. neveteless, all tee aeasae elevat ad culd be te bject f futue ivati pies tug sepaate pgammes, as discussedbel. Tis is pvided tat suc pies ae udetake i te igt kid f eablig evimet, i.e. i tectet f bade ate sect efms it a fcus impvig pefmace.

1. Innovative contractual and nancialarrangements to reduce NRW.A prize

could incentivise utilities to enter intoinnovative contractual arrangements soas t educe te amut f ate tat islst ad k tads a 24 7 supply.The research undertaken as part of thispgamme sed tat, ate tatechnical innovation, there is a greaterneed to scale up NRW reductionactivities is e fms f ctactualad acial aagemets tat culdmbilise fudig fm a ide ageof actors, including from funders thatuld be pepaed t pe-ace nrweducti activities i a patiet mae.

Tis uld eable utilities t adicallyeduce nrw, eted ate cectisto poor customers and overall, improveutilities maagemet ad peatis.From the side of utilities, this could bede tug pateig (i.e. eteigit a public-public a public-pivatectact) it a epeieced ateloss reduction expert and privatepeats nrw epets, icculd k cllabatively it a utilityt educe lsses ad tasfe k- t esue sustaiability f teseappaces. Te ivati pieappac appeaed t be paticulalypmisig ad as teefe develpedas part of the Ideas to Impactprogramme under the name of DreamPipe, as discussed in more detail inSecti 4.

2. Solutions to improve livingconditions of low-income households

affected by intermittent watersupplies.Itemittet ate suppliesgenerate a lot of inconvenience forall custmes, icludig tse suppsedly ave access t te etk.Tey eed t ste ate i f taksand manage those tanks, be homee ate cmes i, smetimes pumpate fm te etk. Slutis timpve te livig cditis f licme uselds, ae mstaffected by tese cditis, culdbe stimulated via an innovation prizeaimed at utilities, social entrepreneurs

ad nGos. A additial beet uldbe that it could incentivise utilities todeal it all aspects f ate accessby tse custmes s as t impveveall quality sevice. Suc slutiscould include smart informationsystems t sed eal-time updates atiig scedule ad ateavailability, impved f tak desigso as to provide cheap smart solutions(f eample, it emte sess tdetect levels iti te f tak). Piesin this area could be organised at aglbal level by develpmet agecies teclgy pvides. Altugthere is a strong need for such copingmecaisms, tis as deemed less apiity eve e cmpaed tmeasures that aim to address the rootcauses f itemittet supplies.

3. Solutions that enable waterdemand management while water

networks functions in conditionsof intermittent water supply. Asdiscussed above, technical issueslinked to meter design affect theability t maage ate etksi cditis f itemittet atesupply. Addessig tse issuesuld equie te develpmetf smat ate systems tat cacpe it ate scacity. Slutistat culd eable ate demadmaagemet i itemittet atesupply cditis may iclude:

Metes tat ca cpe ititemittet sevice cditis, i.e.tat d t get affected by git ca adequately diffeetiatebetee ais ad ate s;

Smat metes (ic ca sedeal-time ifmati atecsumpti t te utility tecustmes temselves): teseare useful in order to introducedifferentiated tariffs, in particularto introduce disincentives forconsumption in times of high

ate demad.

Ivative ate meteig slutis eed t be cmbied it smat taiffs t icetivise ate csevati. Eve tugsme f te utilities peatig i etemely ate-scace evimets (suc as i Lima, Peu, Amma, Jda) ae acutelyaae f te eed t pmte demad maagemet ad icetivise ate csevati, mst taiff stuctues emai veycvetial i tei desig. At peset, utilities ave a ieet icetive t sell me ate as tey cage based te vlumes f ate sld. Tis is a aea ee ivati is eeded, altug adptig e ate taiffs fte emaisa plitical decisi (i te absece f adequate egulaty famek). Te desig ad applicati f ivative taiffs fate csevati uld teefe eed t be de a pilt basis ee stg ate egulats ae i place. Ivatipies i tis aea uld seek t icetivise utilities ad equipmet maufactues t desig metes tat ca cpe ititemittet supply cditis ad eable smate taiff desig.

GUIDEStage 3

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3.2.2 DELIVERING SUSTAINABLE SANITATION SERVICES

oVErVIEw oF ChALLEnGES AnD onGoInG worK

Calleges it espect t saitati vay quite substatially depedig ctet, paticulaly depedig teatue f ppulati settlemets: ual aeas (ee ppulati desity is faily l) uba ad pei-uba aeas (eeppulati desity is ig).

In urban areas, te situati is cmplicated by te eed t deal it te aspects f saitati beyd pvidig accesst impved saitati facilities. Give ige ppulati desities ad lack f space, it is t ealistic t epect tata latie ca simply be mved e it lls up. If a latie is emptied i a uygieic mae, te ealt beets fmavig ctaied te aste i te st place is lge ealised. F tese eass, seeage systems ee develped idevelped cuties i de t deal it te aste i a me cst-efciet ad ygieic mae.

F may develpig cuties, eve, seeage systems ae t a ealistic pti, as ivestmets uld be uaffdablead callegig t implemet i pactice. At peset, apidly epadig cities i te develpig ld ae dig itme ad me difcult ae just uable t epad saitati sevices t keep up it uba gt especially i pei-uba aeas. Because f te apid gt ad te eed t espd quickly t tese pblems, saitati systems i e

settlemets ae beig develped i a piecemeal mae it p fesigt ad cdiati. Te majity f pei-ubaaeas f lage ad smalle cities ae seved it uimpved -site saitati facilities, ic ae t emptied as fequetlyas eeded ad i sme cities pe defecati is t ucmm ad public tilets ae i disepai. F asteate ad faecalsludge tat is cllected fm -site slutis, teatmet is quasi-ieistet i mst develpig cuties.

As a result all of the above has led to unsustainable sanitation services, with negative consequences for public healthand the environment, resulting in substantial economic losses.Therefore affordable solutions must be found to developitegated saitati systems t deal it cllecti, taspt, teatmet ad euse f faecal mattes ad te typesf aste, icludig idustial aste. wat is eeded is a mi f etk ad ff-etk slutis t esue adequatecllecti, taspt, teatmet, euse safe dispsal f te aste. Altug sme Asia cities ae makig pgess tadsidetifyig suc itegated saitati slutis (f eample i Idesia, iitially it suppt fm wSP (wSP 2011)) sucitegated slutis still emai at te level f plas i mst SSA cities ee eeds ae acute ad apidly gig i lieit te apid spead f uplaed pei-uba aeas. Cackig te uba saitati pblem, paticulaly i cities it lseeage cveage ates, is igly elevat f l-icme uselds, ae te mst likely t suffe fm usaitayevimets ceated by iadequate saitati.

In rural areas, interventions to increaseaccess to sanitation in rural areasusually fcus gettig peple up tesaitati ladde, i.e. elimiatig pedefecati ad mvig t ed-pitdefecation, either using traditionallaties pefeably impved es.Approaches to increasing access toual saitati at scale ave gaduallydevelped. ove te last 10 yeas t 15yeas, tee as bee a sift aay fmeavily subsidised appaces t amix of approaches including behaviourcage campaigs (it CLTS cuetlybeig eavily pmted by mstdonors including DFID), sanitationmaketig, supply side stegteig(it taiig f latie buildes addevelopment of business skills), and insome rarer cases facilitated access toace ad te pvisi f icetivesto local stakeholders (as in the TotalSaitati Campaig i Idia, icicluded te nimal Gam Puaska, i.e.acial icetives t cmmuities tatmaage t elimiate pe defecati).

Suc mied appaces ae beiglled ut it sme degee f successby Gvemets (icludig i Idia) international agencies such as UNICEF,the Water and Sanitation Programme(wSP) f te wld Bak, te GlbalSaitati Fud (GSF) it suppt fmfudes suc as DFID te Bill adMelida Gates Fudati. Altugpgess as bee sle ta iitiallyexpected, increasing evidence is beinggateed at ks ad at dest k, i paticula egadig teoptimal combination and sequencingf tese appaces. Epeimetatiis still gig i tis aea, paticulalyit espect t appaces t beaviucage. Despite beig abudatlypromoted, the average success ratefor CLTS campaigns is around 30%,ic meas tat appimately 30%of communities triggered eliminatepe defecati iti a fe mts.heve, suc success ates cavay csideably betee cuties(UnICEF East Asia ad Pacic regialofce, 2013). I additi, data te

sustaiability f oDF status as beeeliably gateed t date.

The need for technical innovationappeas t be elatively limited ithis area, although improvements areneeded in terms of latrine design, toproduce and distribute at large scale,l-cst, duable latie pductsthat appeal to the rural population(suc as te Easy Latie develped iCambdia by IDE it suppt fmwSP). Specic featues may icludeeclgical laties, d-esiliet disabled-fiedly desigs. Givecultual ad gegapical specicities,innovation prizes could be designedat a national level (or at a maximum,at a sub-egial level) t icetivisete desig f lcally suitable pducts.I additi, acial ivati iseeded t mbilise useld-level investment, as sanitation issee eveyee as a useld-espsibility, eeas tei illigessad ability t pay f duable impvedlaties emais l. Micace flatie acquisiti by uselds asbee lled ut it sme eal successin rural areas in India but to a more

limited extent in SSA (including inKeya Malai).



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A umbe f acts ae cuetly kigactively t impve saitati systems iSSA cities elseee. Develpmetbanks, such as the European InvestmentBak, Kfw fm Gemay te AficaDevelpmet Bak (via its Aficawate Facility) ae mvig aay fma eclusive fcus fudig seeageetks ad asteate teatmet

plats t pject desigs tat embacete cmpleity f uba saitatimarkets in developing countries, asdescribed in the SHARE Sanitationmakets Patde (Tmlet 2012).

Developing methods for appropriatefaecal sludge maagemet (FSM)is receiving particular attentionfrom international donors anddevelpmet baks at peset. TeBill ad Melida Gates Fudati isleadig te ay i tems f ivatiit its Uba Saitati MaketsIitiative, it substatial effts

gig i Idia as ell as i its fcuscountries in SSA (Senegal, Ghana andKeya).

Tis is teefe a aea eecsideable k is gig algeac step f te s-called saitativalue cai, ic us fm cllecti(captue f liquid aste), taspt,teatmet ad dispsal f liquid astebut s fa it a lt f uaseedissues, as s i te table i Ae C


Saitati is laggig beid te acievemets i tems f ate supply. Te eed t impve saitatisystems is vital, as l saitati levels effects peples ealt, tei safety (especially i te case f me),ad educatial pefmace. Ivati pies culd elp aise te ple f saitati t a ide audiecead eable idetifyig slutis tat ae suitable t specic cicumstaces. Ptetial pblem aeas ee aivati pie culd be used iclude te fllig:

1. Design and distribute a low-cost, locally acceptable improved toilet solution with associateddistribution channels. As metied abve, lcally suitable ad affdable impved tilet slutis aestill missig i a lage umbe f cuties. Depedig lcal facts, te sluti may eed t be d-esiliet suitable t lcal sil types gudate cditis. This type of prize would therefore bebest organised at national level and target local universities or local entrepreneurs, possibly with theassistance of external design rms.

2. Low-cost sewerage solutions. Altug l-cst seeage slutis appea t be a sesible alteative tcvetial sees, tse ave s fa failed t scale-up. A ivati pie culd suppt te desig adimplemetati f a busiess mdel t ll-ut simplied seeage systems i SSA cuties i Idia.Suc a pie culd be gaised at a atial iteatial level ad taget utilities, egieeig ms scial etepeeus. Lg-tem pst pie fudig is likely t be eeded t get ivati t scale.

3. Improving faecal sludge management: space availability is a maj cstait f buildig faecal sludge

(FS) teatmet ad euse slutis i slum evimets. A ivati pie culd be gaised at atial iteatial level t stimulate te develpmet f ivative tecical slutis it assciatedbusiess mdels f gaisig te cllecti f FS. Tageted slves uld iclude utilities, eseac labs scial etepeeus. As it abve fute acial suppt pst pie is likely t be ecessay.

4. Fostering the development of integrated urban sanitation systems: in most countries, municipalgvemets ae espsible f esuig tat saitati sevices ae adequately pvided. heve,muicipal gvemets fequetly lack te tecical kledge, visi plitical ill t pla ad develptei saitati sevices i a ay tat takes accut f tecical feasibility, maket fces ad affdability fte p. Fequetly, a ecessive fcus seeage etks meas tat pptuities t pvide safe adygieic saitati slutis ae lst due t te lack f apppiate systems f faecal sludge maagemet.Innovation prizes in this area could foster municipal governments (and their partners)to develop andimplemet saitati plas tat cmbie bt seeage ad -site saitati i a sustaiable mae.

Te st tee types f pies ae fcussed idetifyigtecical slutis it assciated busiess mdels, eeaste latte type is me fcussed fsteig a cage iapproach to sanitation at the level of local governments, ae pimaily espsible f deliveig impvemetsi saitati cditis. A vast majity f cuties i tedevelpig ld culd beet fm suc a pie, evesolutions to the problem of sanitation services in cities aremst likely effected by ad specic t te ctet tey aesituated i. As a esult, it makes me sese t gaise suca pie at te level f a sigle cuty.

As detailed in Section 4 a prize designed to tackle theseissues as bee fute scped ut by Ideas t Impact.A umbe f cuties ee uba saitati issues aepaticulaly acute ad ee te lcal eablig evimetcould be suitable for the introduction of this kind of prizeee epled, icludig Idia, Keya, Gaa Taaia.This consultation process generated substantial interest forpie mecaisms at cuty level. Based tis evie,Gaa as selected t pilt te uba saitati pieccept as detailed fute i Secti 4.

GUIDEStage 2

For more on local,grassroots innovation.

GUIDEStage 2

For more on changingthe policy environment.

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3.2.3 FINANCING WASH

OVERVIEW OF CHALLENGES

Tee is cuetly a citical lack f fiacig f te wASh sect e cmpaed t te magitude f eeds. Badestimates by te oECD ave idetified tat develpig cuties suld sped abut 2-5% f tei aual GDP wASh sect ivestmets ad keepig eistig ifastuctue peatial. Yet, mst develpig cuties sped1% f tei GDP less te wASh sect.

Suc a fiacig gap is due t a vaiety f facts: te sect is usually egaded as isky by ivests, due t a lack ftaspaecy, isufficiet ifmati, difficulties it pepaig bakable pjects ad te fact tat lts f te aeastat eed ivestmet d t esult i asset ceati. I additi, gvemets ae still eluctat t assig sigificatamuts f public fudig t te wASh sect, at least amuts tat uld be cmmesuate it eeds. It istherefore critical to attract other forms of funding to the sector, ranging from private sector investors, philanthropists, lg-tem ivests, ic ae statig t lk at te wASh sect. Tis equies sme degee f fiacialivati, eve, t limit te pecepti f isk by ivests, acieve ecmies f scale f wASh sect acts(ic ted t be small-scale) ad limit te cst f fiace f ecipiets. Despite calls f fiacial ivati i tesect f ell ve a decade , suc as tug te s-called Camdessus rept peseted at te wld wateFum i Kyt i 2003, suc ivati as emaied limited s fa (Tmlet & Scatasta, 2010).


nt evey type f acial ivatieed uld led itself t ivatipies. heve, e ave idetiedtee mai aeas ee a ivatipie culd specically elp idetifye ideas ad mbilise slves fmdifferent communities, such as socialace ivats.

Potential innovation prizes in thisarea could include prizes aimed atstimulating, for example, the designad ll-ut micace pductsf wASh it a clea stategy fat-scale implemetati. At peset,micace istitutis (MFIs) aet cmmly ffeig pducts faccess t basic sevices (e.g. buildiga latie, gettig a Sla hme System gettig a electicity cecti).This might be due to a lack ofudestadig te pat f MFIsf tese aeas, ile nGos tyig

t ffe ace ae fequetly failigf lack f suitable systems t maketacial pducts. Suc develpmetactivities ave bee aced tugtechnical assistance grants but anivati pie culd ptetially aisete ple f tis maket segmet.Target institutions for such a prize,ic culd be lauced eite at teatial iteatial level, uldiclude acial istitutis, icludigcmmecial baks, MFIs ad nGos.

Alteatively, ivati pies culdseek t mbilise fuds f lage-scaleivestmets, ic is ee fudigis geuiely eeded i te sect. Tebjective f suc ivati uldbe t mbilise fuds fm lg-temivests i seac f l but steadyreturns (such as national pensionfunds, for example) or from socialinvestors in developing countries,ic migt be illig t act aspatiet ivests. A eample fa acial ivati tat as tepotential to attract such investors

to the sector are the DevelopmentImpact Bds (DIBs), ic aveecetly attacted a lt f iteesti te develpmet cmmuity (asdescibed i B bel) but ave sfar not been considered for the WASHsect.

I te wASh sect, DIBs culd be used t fud eductis i ate lsses, elimiatig oDF t iceasete pecetage f asteate ad faecal sludge geeated (altug tis is vey difcult t measue itpecisi). An innovation prize could focus on incentivising nancial intermediaries and consultants todevelop DIBs for those sectors. F eample, CGD/Scial Fiace (2013) ecmmeded te establismetf a DIB utcme fud statig: T Fd cd b t c fd, f ic DIBintermediaries and other potential project implementers compete for funds, leading to innovation in designd t ci f fd t t bt-did DIB . A pie uld mbilise te cmmuityf ivestmet bakes ad scial ivestmet advises t k ad cside tese sects tat tey may tpeviusly ave csideed, it uld leveage scial ace f tese sects, mbilise fudig fm dsiteested i suc ivative acig mecaisms (e.g. DFID) ad develp a pipelie f e pjects tace (eite tug DIBs i diffeet ays).

Leaig fm te Deam Pipe pie peseted i Secti 4 ill usefully ifm futue develpmet fivati pies f acial mecaisms.

CLIMATE CHANGEADAPTATIONSection 4.1

For more on how prizescan leverage funds.



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Box 7: DEVELoPMEnT IMPACT BonDS (DIBS) An ExAMPLE oF FInAnCIALInnoVATIon APPLICABLE To ThE wASh SECTor?

DIBs aim to leverage social investments by raising social investment to fully or partly pay for services that improve social outcomes andreduce long-term costs for society. Governments sets priorities and pay for results that benet society, while the social enterprise and/or investors get returns after achieving the results. This allows implementing partners and service providers to innovate and deliverexible, high quality services that meet social needs.

DIBs build on the example of Social Impact Bonds (SIBs), with the primary difference between the two being that the outcomefunder is an external agency (i.e. development partner) for the DIBs as opposed to a domestic government agency for SIBs. The SIBswas launched in the UK in 2010 to fund One Service working with short-sentence prisoners discharged from Her Majestys PrisonPeterborough in England and it raised 5m to reduce reoffending rates among short-sentence prisoners in the UK. Since then variousmodels of SIB/DIBs have been instigated in the UK, US and other countries. As of July 2013, there were 14 SIBs up and running in theUK to tackle various social issues such as rough sleeping, children care, employment, criminal justice and substance misuse.

The model of DIBs has recently generated some attention from developing circles. The Centre for Global Development (CGD) publisheda paper in October 2013 setting out DIBs as a concept with six possible applications, mostly in health and education with one examplefocussing on energy efciency. DFID has also initiated the rst ever DIB in April 2014, focussed on ghting sleeping sickness in Uganda.However, the baseline for this project is still ongoing and many questions remain unanswered such as who will be the social investorsand how interested will they be in DIBs. So far, none of the proposed DIBs have been launched so it is still early days to conclude that

this is an innovation that could bring substantial new funding for development.

Sources: (Social Finance; Centre for Global Development, 2012)

3.2.4. PROVIDING SAFE WATER SUPPLIES

OVERVIEW OF CHALLENGES

wate safety is a aea tat as eceived csideable atteti i ecet yeas. who as deed ate safety stadads tatave petty muc bee adpted eveyee, altug implemetati emais patcy.

Although access to safe drinking water is an integral part of the MDG denition, global monitoring of drinking water

quality is not carried out at present. wate quality is paticulaly pblematic e ate is cllected fm gudatesuces (paticulaly i aeas ee te ctet i ius atual substaces, suc as aseic uide is ig if tesesuces ae iadequately ptected) fm ctamiated suface suces.

Health experts have been debating whether it is waterquantity or quality that matters most in terms ofdriving health benets. o te e ad, Caicss ad

Valdmais (2006) estimate tat mst f te beets fmate supply ae attibutable t impved cveiecef access t ate i tems f quatity. Tis supptstei agumet tat te impact f ate pvisi isigly depedet te distace betee te usead te ate pit, as tis detemies te ttal amut

f ate tat ca be used: tey estimate tat acquiiga useld cecti (i te use

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