rural water – Rural Water Supply Network

Financing Maintenance in Last-Mile Contexts: Endowment Funds for Rural Water Sustainability

Featured photo: Ghana, Lucy Parker

Article by Cincotta K. & Nhlema M.

Abstract

Rural water supply systems in low-income settings, particularly in last-mile communities, face chronic sustainability challenges. Financing predictable operation and maintenance (OPEX) remains a persistent gap, with one in four water points in sub-Saharan Africa being non-functional at any given time. While community-based management has been the dominant model for post-construction maintenance, it is increasingly recognized as insufficient, relying on underfunded household tariffs, volunteer committees, and limited technical support. Emerging solutions like results-based financing and professionalized maintenance contracts have shown promise with some securing government financing. This paper proposes district-level maintenance endowment funds, a mechanism where invested capital generates predictable income, as another option for financing rural water maintenance. These funds would support targeted subsidies, results-based contracting, and accountable, locally governed service delivery aligned with decentralization frameworks. This proposed model is agnostic to the specific management model, whether community-based, professionalized, or hybrid. The focus is on creating a predictable, long-term financing mechanism, particularly for so‑called ‘last-mile’ rural communities: small, dispersed villages, often with fewer than 1,000 people, that are typically excluded from piped water systems due to high per-capita service costs.

Two key arguments frame this proposal: (1) while endowment funds may be initially capitalized by international donors or organizations, over time they reduce dependency on short-term donor cycles by creating a predictable, locally managed revenue stream, and (2) Piloting endowments at the district government level strikes the right balance between being close enough to last-mile communities, accountable to them, and large enough to achieve economies of scale that will ensure financial viability for service provider payments.

THE PROBLEM: Persistent Non-Functionality and Unrealistic Expectations

Across sub-Saharan Africa, one in four rural water systems are non-functional at any given time. These failures are not anomalies, but they reflect a systemic global challenge: the absence of a reliable model for rural water service delivery beyond construction. For decades, community-based management (CBM) has been the dominant approach. It assumes that because communities value water, they will voluntarily manage infrastructure. But the viability of CBM is increasingly being questioned. Tariffs based on affordability rarely cover full maintenance costs, especially in small, dispersed communities, with variable incomes, that are often not prioritized for piped systems. Trained committee members often leave, and access to spare parts or technical support is limited. Volunteer fatigue, lack of retraining, and systemic underinvestment compound the problem.

The expectation that people living in the poorest rural villages must fully fund and manage the long-term maintenance of their own water systems does not align with how water systems are managed anywhere else in the world. In high-income countries, water infrastructure is maintained by trained professionals and supported by stable funding streams, often not limited to water user fees, but supplemented by public financing mechanisms such as property taxes and municipal budgets. The same should hold true, if not more so, in low-resource rural settings. A more realistic, equitable approach is therefore urgently needed.

TRIED AND TESTED SOLUTIONS: Results-Based Financing (RBF) – When Performance Meets Poverty

New RBF models are emerging. Uptime, as an example, is a partnership supporting professionalized rural water service providers that pays providers based on verified uptime. This shifts incentives from reactive repairs to preventive maintenance. Between 2020 and 2022, Uptime supported services for 1.5 million people in seven countries. Governments in countries such as Kenya, Bangladesh, and Zambia are now beginning to adopt performance-based financing approaches like this into their own public financing systems. This has been inspired in part by the evidence generated through philanthropic pilots. Yet, a central limitation remains: these models have demonstrated viability primarily in communities large enough or more “well-off” to generate economies of scale. This makes them financially attractive to service providers, but systematically excludes smaller, remote last-mile communities that are seen as less “bankable”. This is not a critique of performance-based models like Uptime, they are delivering results and proving their value. But it does highlight the need to pilot complementary result-based financing mechanisms that can address the unique realities of last-mile communities. Expecting the world’s poorest to fully finance their own essential services is neither equitable nor realistic. What’s needed is smart, targeted financing, including well-placed subsidies, that reflects the diversity of community capacity and directs public investment where it’s needed most. This is especially critical for last‑mile communities, i.e. remote, low‑density villages where user fees alone can never sustainably cover operating expenses.

This frame of thought, of differential and context-specific financing solutions, borrows from Dorward et al.: “Hanging In, Stepping Up, and Stepping Out.” Most rural households are “Hanging In,” unable to pay without full subsidy. Others can co-finance with support (“Stepping Up”), or engage with market models (“Stepping Out”). This model enables differentiated financing that aligns with real-world capacity. Targeted subsidies are not about dependence; they free up cash for productive use while ensuring reliable services. Importantly, we differentiate between water as a service that must be reliably provided for health and dignity, and water as a productive resource used to generate income. The proposed endowment-backed financing model speaks to the former, guaranteeing essential domestic supply. Other financing tools may be more appropriate for supporting productive uses of water in agriculture or enterprise.

RBF models have proven we know how to make maintenance work. The challenge now is to pilot solutions, such as endowment funds, that can sustainably support these communities where market-based approaches do not reach, thereby ensuring universal access to all.

THE PROPOSAL: District-Level Maintenance Endowment Funds

To close the financing gap, we propose district-managed endowment funds dedicated to rural water maintenance. These funds would invest capital to generate steady income for maintenance costs, insulating service delivery from budget shocks and donor cycles. They would:

Provide predictable financing by requiring implementing agencies to allocate a fixed amount, e.g. 10-20% of infrastructure costs, into the fund.
Enable targeted subsidies using the Hanging In/Stepping Out framework.
Support results-based contracting for professional maintenance providers.
Align with decentralization by placing fund management at the district level, while national governments serve as regulators.

This model borrows from urban utility principles where professional service delivery is underpinned by predictable financing and adapts them to rural realities. It does not assume full cost-recovery from users, nor does it treat water as a commodity for profit. Instead, it creates a stable platform for targeted subsidies and professional maintenance services in communities where user fees alone are structurally insufficient.

Is community management sustainable? Evidence from Northern Pakistan

Blog by Jeff Tan, Aga Khan University – Institute for the Study of Muslim Civilisations (AKU-ISMC). Featured photo: Hunza Valley, Gilgit-Baltistan, Pakistan, Jeff Tan

The limitations of community-based management (CBM), and the conditions for its success, were identified as early as 1990 in a World Bank discussion paper. From very early on, it was recognised that communities needed ongoing external support from donors, NGOs and governments. However, management training, capacity building, technical input, financial assistance, and supportive policy and legislation necessary to create an “enabling environment” for successful community management rarely materialised. This raises a number of questions: Why has this external support not been forthcoming? Why has community management continued to be promoted despite the absence of support and lack of sustainability? Why has there been ‘a reluctance amongst academics and practitioners to challenge the CBM model’?

To answer these questions requires some appreciation of the wider discourse on development and in particular the anti-state rhetoric of neoliberalism that has sought to downsize, decentralise and ultimately bypass government. This has had the effect of fragmenting and hollowing out the state while at the same time prioritising markets and the private sector. Given that there is no profit to be made from delivering water services to low-income households that cannot afford to pay cost-covering tariffs, it is not surprising that previous state failure was replaced by market failure, with the private sector failing to step in to deliver water services.

One obvious solution would have been to address the sources of state failure, specifically underfunding, fragmentation and the loss of technical capacity. Instead of rebuilding state capacities, the distrust of, and ideological aversion to, the state has shifted the responsibility of water services from governments to local communities, built around the narrative of community participation, empowerment and self-help, with communities expected to take responsibility of their circumstances. It is hardly surprising then that community management is seen to enable ‘government officials and donors alike to abdicate responsibility for ensuring long-term sustainable water services’.

The recent turn against community management, not least by the World Bank, shows the persistence of CBM problems. But the Bank’s promotion of “professionalization” of water services as an alternative reflects a failure to examine the underlying tensions and problems in the CBM model and the wider delivery of rural water services, and reinforces an anti-state bias and blind faith in private sector participation. There are three structural tensions in the CBM model that have been noted in the literature and that need to be more cogently articulated.

The first tension is between access to water and cost recovery (a cornerstone to the sustainability of CBM), with low tariffs (to ensure access to water) unable to cover operating costs, let alone major repairs and capital refurbishment. Compounding this is the inability of households to pay already very low tariffs, with irregular, if any, tariff payments or collections.

The second tension is the long-term needs of water services and the short-term horizons of donors and NGOs. Only the state has a sufficiently long-term horizon to provide the indefinite support needed to sustain community management and ensure ongoing water services. But this added burden on the state for this comes at a time when the state in lower middle income countries (LMICs) is severely constrained financially and technically, having had fiscal discipline imposed on it and broken up and hollowed out in the name of decentralisation and localisation. If governments do not have the capacity to provide the so-called “enabling environment” to support community management, as has been the case since 1990, then a model that requires continued external support that is not forthcoming cannot be sustainable, “islands of success” notwithstanding.

Finally, and perhaps most significantly, the funding model for CBM is short-term, project driven (rather than programmatic or cross-sectoral) and fragmented, where the needs of water services are indefinite, with the choice being between reaching a greater number of underserved communities in the short term or serving fewer communities but with longer term support and greater sustainability. Longer-term support is especially needed because communities cannot even finance major repairs let alone capital refurbishment needed at the end of the lifespan of water infrastructure (typically 15-20 years) and to expand services to cater for population growth.

These structural features of CBM can be illustrated in the constraints faced by an otherwise successful delivery of clean drinking water through piped water networks to 459 settlements serving around 48,000 households and over 400,000 people under the Water and Sanitation Extension Programme (WASEP) in Gilgit-Baltistan, northern Pakistan. The challenges of sustaining and scaling up this textbook implementation of community management are reported in the results of a two-and-a-half-year British Academy-funded research involving a large-scale household survey of over 3,000 households, interviews with water management committees and a review of financial records, focus group discussions, an engineering audit and water quality tests.

Unlike qualitative and selective case studies, the combination of quantitative and qualitative analysis here presents important insights into the resilience but also limits of communities in sustaining water services, particularly given weak state capacities and the lack of external support. It also highlights the importance of “hardware” (engineering and water infrastructure) in sustaining water delivery, and best practices in the implementation and delivery of water services that can transcend some of the limitations of the CBM model.

The views and opinions expressed in this blog post are those of the author. They do not necessarily reflect the views of the Rural Water Supply Network (RWSN) or its Executive Committee.

Jeff Tan is a Professor of Political Economy at AKU-ISMC and was Principal Investigator on a British Academy grant on the sustainability and scalability of community water management in Northern Pakistan.

Addressing Asia’s Safe Water Crisis: Innovative Solutions from 1001fontaines

Image: Pond dried up in Banteay Meanchey province.

by Amandine Muret, Chief Partnerships Officer, 1001fontaines, RWSN Member Organisation
Am.muret@1001fontaines.com

As Asia grapples with an intense heatwave, exacerbating the already acute lack of access to safe drinking water for vulnerable communities, the call for innovative and resilient water supply solutions becomes increasingly urgent. The World Water Forum, held in Bali from May 18 to 24, brought together governments and experts from around the world, including 1001fontaines, a global NGO distinguished by its two decades of on-the-ground experience in providing safe water to communities in challenging contexts.

A Water Crisis Exacerbated by Climate Change

South and Southeast Asia are currently experiencing record temperatures. In Cambodia, where the mercury has soared to over 40°C several times, levels unprecedented in 170 years, the situation is alarming. This extreme heat wave increases the vital need for drinking water while compromising access to uncontaminated water sources, crucial to meeting this need. In rural areas, the majority of inhabitants still rely on self-supply water solutions, such as wells or ponds – with increasingly intense droughts and floods due to climate change, vulnerable populations see their water sources affected, with impacts on their
resilience and health.

The World Bank recently estimated that $36.1 billion would be needed to develop missing water access infrastructure in Asia (source: “Funding a Water-Secure Future: An Assessment of Global Public Spending” report, published in May 2024). Climate change, impacting the accessibility and quality of water resources, requires even larger investments to establish sustainable and efficient supply systems in the face of new constraints, particularly in maintenance and treatment.

In development contexts, where financial and technical resources are limited, and existing service providers already struggle to cover maintenance costs due to low household purchasing power, the idea of having a tap of safe drinking water in every home seems increasingly out of reach. Innovative approaches like those proposed by 1001fontaines appear essential to avoid regression in achieving Sustainable Development Goal 6: ensuring universal access to safe water.

Social Innovation to Address the Vital Need for Safe Drinking Water

For over 20 years, 1001fontaines has been designing and deploying sustainable solutions for access to safe drinking water for vulnerable populations in Asia and Africa. By focusing on the needs of vulnerable communities, the organization emphasizes the quality of the water produced and the strengthening of local capacities through social entrepreneurship.

In concrete terms, 1001fontaines installs decentralized water treatment stations (“Water Kiosks”) and trains local entrepreneurs to deliver the produced drinking water directly to households and schools, all in reusable
20-liter bottles.

This service, offered at an affordable price, now reaches a million consumers daily across rural Cambodian communes, where the model was initiated, while covering its operating costs. After 20 years, 90% of the deployed Water Kiosks are still operational, and consumer satisfaction reflects sustainable behavior
change benefiting public health improvement.

Sharing Experiences at the World Water Forum

At the World Water Forum in Bali, 1001fontaines will share the lessons learned from its innovative approach. With operations now expanded to four countries (Cambodia, Madagascar, Vietnam, Bangladesh), the organization has demonstrated the resilience of its model in the face of development and climate change challenges.

Unlike traditional water supply systems, which aim to provide between 50 and 100 liters of water per person, often costly to implement in sparsely populated areas, 1001fontaines focuses on a more targeted consumption, between 1 and 3 liters of safe water per person per day. This cost-effective approach ($15 subsidized per beneficiary) reduces pressure on water resources while offering better quality control. By using reusable bottles delivered directly to homes, the distribution model is less susceptible to infrastructure aging or climate-related damage, with maintenance focused on water treatment facilities.

Another key advantage is adaptability. In Cambodia, 4 regional laboratories monthly monitor water quality at the 330 active sites, allowing the identification of quality changes, often localized and related to the effects of climate change, and enabling the local technical team to implement targeted and low-cost mitigation measures.

Amandine Chaussinand, General Manager of 1001fontaines’ local entity in Cambodia, Teuk Saat 1001, testifies: “We have achieved remarkable results over two decades of operations. We are proud to share them with academic institutions, development financing institutions, and governments at the Forum in Bali because we believe that better consideration of alternative water supply systems, such as bottled water, could accelerate access to safe water for the benefit of populations facing the impacts of climate change.”

Amandine Muret, Chief Partnerships Officer, emphasizes that “Collaboration with local authorities is a key factor in the success of 1001fontaines’ programs, as is the mobilization of development aid to finance infrastructure construction and capacity building, at the heart of the sustainability of the services implemented.”

As the G7 recently announced the creation of a global coalition to address the global water crisis, high-level political dynamics could promote exchanges of successful experiences and stimulate, in the coming years, social innovations in the field of access to safe drinking water. 1001fontaines intends to contribute at its level by continuing to grow its impact.

Choum Sophorn poses with her husband and twin four-year-old daughters in her home next to the 20 litre drinking water bottle that is delivered to her home every three days.

Teuk Saat 1001’s entrepreneur stands next to the UV filtration system and holds up some freshly filled bottles, ready to be sealed before delivering directly to customers in Kouk Pou commune.

About: For two decades 1001fontaines have worked to meet the needs of underserved communities through resilient water purification infrastructure and affordable and convenient services. We aim to encourage long-term behavior change and are proud that a million consumers across four countries in Asia and Africa have adopted our safe drinking water solutions.

Our 2030 ambition is to extend our impact by proving the relevance of our safe drinking water solutions in five countries and ensuring all our local partners are on track to reach financial viability at scale.

For more information: www.1001fontaines.com/en/