Outcomes of Designing our Water-Energy Future discussion, Stockholm Water Week
The session was jointly organised by International WaterCentre, International Energy Centre and several Dutch-based organisations, including Aqua for All and the Netherland Water Partnership.
Participants came from diverse regions (including Africa, Asia, Europe, South America) and included representation from government bodies, private corporations, and academic sectors.
The dialogue was structured around three key themes –
- The challenges and barriers inhibiting effective integration of Water-Energy services
- Financing and service delivery models – looking at how governance choices effect the availability of different financing options
- The capacity and skill sets for future leaders.
Increasingly described as the largest growth market, the BOP market represents a large number of countries where communities have started the climb out of abject poverty, but where opportunities for improvement are severely constricted from lack of reliable services and institutions. These markets are often deemed to be too risky to attract market-based financing, but not poor enough to warrant direct grant aid.
Integration of Water-Energy services
Paul Gunstensen of Water and Sanitation for the Urban Poor (WSUP) noted that development banks are the main investors in water and sanitation in developing countries.
Their main effort is building large urban water distribution networks. This excludes less densely populated areas where such networks are not financially viable. Direct infrastructural investments do not necessarily address the issue of water quality and unreliable services.
According to Gunstensen, utilities must find ways to improve their services, while maintaining a cost of service delivery that the poor can afford. But more systemic improvement needs to start with integrated planning for services. Gunstensen saw opportunities for improved integration at the planning stage between water and energy utilities.
Cost efficiency could be achieved by joint planning for expansion of water and energy services for unserved areas. Such integration at planning and development stages could also open more opportunities for leveraging finances.
One of the barriers to such integration was the lack of capacity within governments to design contracts that allow the linking of water and energy contractors. This was highlighted as one area in which donor investment should be used.
Consumer preferences for electricity and water
Social entrepreneur Harish Hande, co-founder of Selco India, spoke about financing electric light and battery hire businesses for BOP servicing in India. He emphasised that finance, not technology, was the biggest obstacle to expansion of services. “It is very hard for poor people to get credit loans,” he said.
When the poor do have the option of connecting to electricity and water, electricity was consistently the first choice of householders because the direct benefit of light is more tangible than the indirect health benefits from investing in clean water.
"If we deliver solar energy, we enable a poor household to buy a sewing machine and earn back their investment. Or they can buy a lamp, enabling their child to study in the evening." We need to also show the direct value of water, he said.
Gerhard van den Top, CEO of Vitens Evides, noted that one of the barriers to social entrepreneurs developing simple and attractive products for water services is the public health risk.
The need to be able to monitor water quality and ensure it is consistently of a drinking water standard, free from contamination, is a challenge unique to the water sector and is the primary reason why Holland has kept water service delivery in public hands. There are however technologies (e.g. Coke-Cola Water koes) and countries (e.g. England) which run counter to this claim.
Financing and service delivery models
The Rebel group provided perspectives from a social finance view, highlighting the lack of water entrepreneurs who can provide financial investment to address gaps in government services.
A gap in financial models was identified in the middle of BOP markets where neither grant aid nor output-based aid models seem to reaching. For the poorest of the poor, direct grant aid remains necessary to build institutional to support service delivery, and at the other end where strong institutions are established (e.g. water concession in Manila) donors can subsidise better services through output-based aid. However, there remains a gap between these points.
Capacity and skill sets for future leaders
While the discussion initially focused on trying to explore connections between water and energy services, it quickly emerged that there are often language, technical and cultural differences between the two sectors. While energy is consistency recognised as a commodity that needs to be paid for, water is seen both as public good and an economic good.
We need to build a deeper understanding of the verifying circumstances that influence how water versus energy services can be provided. In the final discussion, the subject of building capacity and skill sets for future leaders was considered.
Professor Stefan Uhlenbrook of Unesco-IHE emphasised the need to "incorporate the concept of T-shaped water professionals, where the horizontal bar of the T refers to the knowledge outside their own discipline and the vertical bar refers to in-depth knowledge within their discipline (See: Uhlenbrook, S, De Jong, E, 2012: T-shaped competency profile for water professionals of the future. Hydrology and Earth System Sciences, 16 (10), 3475-3483).
Not only do we need to teach our students about other water-related disciplines, but also about leadership and organisational management.” The IWC believes that effective water leadership will involve the development of T-shaped water professionals and has integrated this concept into ongoing education Masters and Leadership programs.
Brian McIntosh, Senior Lecturer and Education Program Manager at IWC, considered the need to look both outside and inside the water sector. Looking outwards there is the need to develop water, energy and development-literate investment professionals, while building financial and entrepreneurial skills within the water sector.
Harish concluded with the need to focus on and connect private sector investors in small-scale water and energy services with local entrepreneurs who "most likely don't speak English or use PowerPoint or even leave their local areas”. The current connection between investors and entrepreneurs incurs high transaction costs, which prohibit effective reforms in how services are delivered.
In conclusion, there was clear recognition that in order to drive BOP solutions for increasing access to water and energy, other sectors need to recognised and brought to the table – entrepreneurs and financiers were insufficiently represented at the current session.
While opportunities to integrate service delivery of water energy were explored, it was noted that there remain situations where such integration is neither logical nor practical. Understanding local context and the state of existing infrastructure and service institutions is critical for determining whether integration is a valuable proposition to effectively increase access and sustainability of services.