Cost Sharing

Cost sharing is about distributing expenses of water and sanitation projects among the main stakeholders. The purpose of cost sharing of water supply and sanitation facilities is to contribute to the building of a sense of ownership in the community. The main objective of the method is to ensure that the costs which are shared by communities will be ‘ploughed’ back into increasing coverage for scaling up and also major repair or the replacement of the installed hardware (WATERAID 2006).

Partnerships between donor agencies, local NGOs, communities, local authorities, and local private sector providers have shown to improve the effectiveness of projects in many developing countries (see public private partnerships). The development of effective partnerships, as opposed to parallel and government-isolated processes, tends to be time consuming. But as a result of active communication, shared work and harmonisation of approaches, these initiatives also tend to be better prepared to face financing challenges as they arise, without threatening sustainability of services (WPP 2010).

(Adapted from WPP 2010)

There are different types of expenses that can be allocated among different stakeholders according to the proposed project. These are:

• Labour costs
• Costs for training and capacity building
• Material costs
• Pre-operational costs
• Costs for research
• Costs for using equipment, etc.

Partnerships can help to build capacity through training and skills development (see also training courses on sustainable sanitation and water management. And with the involvement of local NGOs and community organisations they can help to transfer knowledge about a communities structures and needs. Partnerships can help in replicating successful initiatives from districts to entire regions and effectively contributing to increased coverage for the poorest (CARDONE & FONSECA 2003).

Furthermore, if community members are not capable of investing money for their water and sanitation system, they can contribute offering their labour for construction of water and sanitation facilities.

(Adapted from OPP-RTI 2010)

The low cost sanitation programme of the Orangi Pilot Project (OPP) began in 1981 in Orangi, Pakistan. Poor sanitation is undoubtedly the most distressing problem of the low-income settlements. The new immigrants succeed somehow in building houses but they fail to make proper arrangements for disposal of excreta and waste water i.e. sanitation. The cost of flush latrines and underground sewerage (see PPT) built officially by contractors is too high for poor people.

Through research OPP discovered low cost methods and taught lane residents through technical and social guidance to construct sanitary latrines in homes, underground sewerage lines in the lanes and secondary sewers. All this was done with their own money and under their own management, while the trunk mains and treatment plants remained the responsibility of the government. The example from Orangi shows that cost sharing is an important component of any development initiative and it attracted the attention of other NGOs, CBOs, governmental departments and local municipalities.

It is important to clearly define the financial and operational responsibilities of all stakeholders including the community, national and local governments, NGOs, donor supported projects and programmes, and possibly others such as religious organisations, individuals or the private sector. This entails determining who is financially responsible for which costs, and over what period of time (WPP 2010).