COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

COMMUNITY LEVEL MODELS FORFINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

WaterAid in NepalKupondole, Lalitpur, NepalGPO Box: 20214, Kathmandu, NepalTelephone: 00 977 1 5552764/ 5552764/ 5011625Fax: 00 977 1 5547420Email: [email protected]/nepal

Nepal Resident MissionSrikunj, Kamaladi, Ward No. 31Post Box 5017, Kathmandu, NepalTel: +977 1 422 7779Fax: +977 1 422 5063Email: [email protected]/nrm

MoneyDownthe Pan?

MoneyDownthe Pan?

www.iys2008.org.npwww.endwaterpoverty.org.np

Laia Domenech Pretus, Oliver Jones, Laxmi Sharma and Rajani K.C. Shrestha

JUNE 2008



JUNE 2008

MoneyDownthe Pan?

Publication Stock No. 050108

ISBN 978-971-561-694-2

Cataloging-In-Publication Data

Pretus, Laia Domenech, et al.Money down the pan? Community-level models for financing sanitation in rural Nepal: a sector reviewMandaluyong City, Phil.: Asian Development Bank, 2008.

1. Sanitation. 2. Nepal. I. Asian Development Bank. II. WaterAid.

The views expressed in this book are those of the authors and do not necessarily reflect the views andpolicies of the Asian Development Bank, or its Board of Governors, or the governments they represent, andWaterAid.

ADB and WaterAid do not guarantee the accuracy of the data included in this publication and accept noresponsibility for any consequence of their use.

Use of the term "country" does not imply any judgment by the authors or ADB or WaterAid as to the legal orother status of any territorial entity.

6 ADB Avenue, Mandaluyong City1550 Metro Manila, PhilippinesTel: +63 2 632 4444Fax: + 63 2 636 4444www.adb.org

For orders, please contact:Department of External RelationsFax: +63 2 636 2648E-mail: [email protected]

WaterAid in NepalKupondole, Lalitpur, NepalTel: +977 1 555 2764/65Fax: +977 1 554 7420Email: [email protected]/nepal

© 2008 Asian Development Bank and WaterAid in NepalAll rights reserved. Published 2008.Printed in Nepal.

iiiMONEY DOWN THE PAN?COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

Contents

Preface vAbbreviations vii

1. Introduction 11.1. Background 11.2. Aims and Objectives 21.3. Methodology and Limitations 2

2. Key Players in the Sanitation Sector 52.1. Sector Stakeholders 52.2. Geographic Distribution of Agencies and Sanitation Programs in Rural Nepal 6

3. Overview of Main Approaches to Financing Sanitation in Rural Nepal 93.1. Learning From the Past 93.2. Financing Models 11

3.2.1. Hardware Subsidies 113.2.2. Loans 163.2.3. Community Awareness 173.2.4. Rewards 223.2.5 Mixed Approaches 24

4. Multi-Criteria Analysis of Financing Models 274.1. Economic Dimension 28

4.1.1. Duration of Sanitation project 294.1.2. Significant Variation in Program Cost 294.1.3. Large Disparity in Hardware Cost But Minor One in Software Cost 304.1.4. Varying Levels of Community Contribution 314.1.5. Material Procurement 324.1.6. Financial Burden of Latrine Construction 334.1.7. Income-Generating Opportunities of Sanitation 33

4.2. Social Dimension 344.2.1. Support for Disadvantaged Households 344.2.2. Inclusion and Active Participation of Disadvantaged Households 35

4.3. Sustainable Total Sanitation Dimension 364.3.1. Unhygienic Latrines are Widespread 364.3.2. Achieving a Common Sanitation Goal 374.3.3. Procurement and Availability of Materials Promotes Sustainable Sanitation Outcomes 37

4.4. Integrated Ranking of Financing Models 38

5. Recommendations 395.1. Financing Modalities Should Focus on Achieving Community Outcomes 395.2. Accessing Financial Support 39

5.2.1. Poor and Marginalised Groups Need Additional Support 395.2.2 Improved Access to Institutional Microfinance Facilities 40

5.3. Increased Sector Coordination 405.3.1. Reduced Overlap of Programs Promoting Different Financing Models 405.3.2. Increased Local Planning and Coordination Among Stakeholders 415.3.3. A National Sanitation Program should be Developed 42

6. Conclusion 43

iv MONEY DOWN THE PAN?COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

References 46

List of TablesTable 1. List of project sites visited 3Table 2. Sector programs: main learning and best practice 9Table 3. Main features of program adopting hardware subsidy modality 12Table 4. Evaluation criteria 27Table 5. Impact matrix with economic dimension 28Table 6. Average household contribution to latrine construction in different programmes 32Table 7. Impact matrix for the Social dimensions 34Table 8. Impact matrix for the Sustainable Total Sanitation Dimension 36Table 9. Brief Description of Main Sanitation Modalities 43

List of FiguresFigure 1. Water and Sanitation Sector Agencies and Sanitation Coverage in Nepal (2005–2007) 7Figure 2. Water supply management needs improvement 14Figure 3. Latrine constructed with costly materials 14Figure 4. Latrine built with both subsidy and loan 15Figure 5. Women's group 15Figure 6. Latrine with superstructure made out of sticks and leaves 19Figure 7. Female toilets in Bhimnagar School 21Figure 8. Flooded temporary latrine 21Figure 9. Sanitation table displayed in the school 23Figure 10. Newly completed latrine 25Figure 11. Ongoing latrines construction 25Figure 12. The comparative cost of sanitation financing modalities in an example

Nepali community of 99 households (33 ultra poor, 33 poor and 33 medium) 30Figure 13. Balance between software and hardware cost of main sanitation modalities

as a percentage 31Figure 14. Balance between software and hardware cost of main sanitation modalities

as a absolute cost 31Figure 15. First-class latrine up to pan level 37Figure 16. Damage superstructure 37Figure 17. Multi criteria Analysis Results with Simple Product 38Figure 18. Total Donor Cost per Capita vs. Sustainable Sanitation Outcomes 44

vMONEY DOWN THE PAN?COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

Preface

Sanitation is often given low priority at the international, state, and local levels. In addition tofinancial neglect, sanitation receives little institutional or legislative focus, and is often not given itsown government department or national policy or program. Nepalese sanitation coverage targetsare ambitious, particularly the national goal to achieve 100% sanitation coverage by 2017. Inaddition, Nepal needs to reach 53% coverage by 2015 to meet the Millennium Development Goalon sanitation. Numerous sanitation programs are launched in Nepal every year with commonaspirations, but also different implementation modalities. This sometimes results in overlap andinefficient distribution of available resources. The most recent policy regulating sanitation activitiesis the 2004 Rural Water Supply and Sanitation National Policy. Sector figures show significantdisparities in sanitation service delivery, particularly between rich and poor and rural and urbanareas. Access to improved sanitation among the richest quintile is about 79%, while access amongthe poorest quintile is 10% (UNICEF 2006).

Approaches to sanitation are diverse and multidimensional; however one of the critical areas wherethe widest range of approaches is being adopted and little is currently known in Nepal is financingsanitation at the community level. Allocation of available and scarce resources is crucial to movingtoward national and international sanitation targets most efficiently. However, financing also hasimpacts on equity and sustainability issues, which are also essential in achieving sanitationtargets, and ultimately achieving 100% coverage across Nepal. Thus, this study aims to bring someclarity to the main features, achievements, and challenges of the most popular approaches inNepal.

This publication, jointly undertaken by the Asian Development Bank (ADB) and WaterAid, is timelyin view of 2008 being declared the International Year of Sanitation. Available documents werereviewed, relevant information updated, and consultations with relevant stakeholders conductedwhile undertaking the study and preparing this publication.

On behalf of ADB and WaterAid, we express our thanks to the individuals and institutions who havecontributed to this research, as well as provided access to project sites and support with logistics:Suman Sharma of the Ministry of Physical Planning and Works, Nawal Kishor Mishra and KhomSubedi of Department for Water Supply and Sewerage, Larry Robertson and Nameste Lal Shresthaof United Nations Children's Fund (UNICEF), Han Heijnen of World Health Organization, BhupendraAryal and Maheshwar Prasad Yadav of the Rural Water Supply and Sanitation Fund DevelopmentBoard Program (RWSSFDBP), Kishore Shakya and Bikesh Shrestha of the Community Based WaterSupply and Sanitation Project, Kari Leminen and Kalawati Pokharel of the Rural Village WaterResources Management Project, Muriel Mac-Seing and Pawan Bahadur Karki of Centre forInternational Studies and Cooperation (CECI), Laxmi Paudyal and Kumar Silwal of Nepal Water forHealth (NEWAH), Ram Risal and Ramesh Bohara of Helvetas, Nabin Pradhan of Plan International,Captain Bakta Rai of the Gurkha Welfare Scheme, Nirmala Sharma of Care Nepal, Rishi Adhikari ofRural Reconstruction Nepal, and Mukti Pokharel of the Nepal Red Cross Society. We are alsoindebted to all those people who kindly supported us during fieldwork, and to local governmentbodies and local communities who provided very valuable information. The research aimed tocapture the views of as many stakeholders in the sanitation sector as possible and in doing so

vi MONEY DOWN THE PAN?COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

create a sense of joint ownership on the findings and future direction in this important area, soyour contributions are hugely appreciated and valued.

The study would not have been possible without its anchor persons. We thank Laia DomènechPretus for leading the research team, developing the methodology, coordinating with the numeroussector bodies, and for the considerable work she put into producing the final report. In addition, werecognize the efforts of the research team-Noki Tamang, Nirmal Kumar Raut, and Rajani K.C.Shrestha-for their time in collecting and analyzing the data used in this study. We also very muchacknowledge the technical support and guidance of the research advisory team: Oliver Cummings,Rabin Lal Shrestha, Guna Raj Shrestha, and James Wicken. Finally, we thank the managers of thisresearch project, Oliver Jones and Laxmi Sharma, who coordinated and provided inputs at everystage of the research process.

This publication serves to demonstrate the strong commitment of ADB and WaterAid to improvingoverall sanitation coverage in Nepal. We hope that this publication will be used widely within andbeyond Nepal.

Paul J. Heytens Sanjaya AdhikaryCountry Director Country RepresentativeNepal Resident Mission WaterAid NepalAsian Development Bank

viiMONEY DOWN THE PAN?COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

Abbreviations

ADB Asian Development BankASHA Accessing Services for Households - Care supported programCBWSSSP Community Based Water Supply and Sanitation Sector ProjectCECI Canadian Centre for International Studies and CooperationCHV community health volunteerCLBSA Community Led Basic Sanitation for AllCLTS Community Led Total SanitationDACAW Decentralised Action for Children and WomenDDC district development committeeDFID Department for International DevelopmentDWSS Department of Water Supply and SewerageDWSSCC district water supply and sanitation coordination committeeFCN Friendship Clinic NepalFINNIDA Finnish International Development Agency (now Embassy of Finland)GWS Gurkha Welfare SchemeIDS International Development SocietyIEC information, education, and communicationIPRA Ignition Participatory Rural AppraisalJRCS Japanese Red Cross SocietyLGB local government bodyMCA multi-criteria analysisNDHS Nepal Demographic and Health SurveyNEWAH Nepal Water for HealthNGO nongovernment organizationMDG Millennium Development GoalNRCS Nepal Red Cross SocietyODF open defecation freePAF Poverty Alleviation FundPRA Participatory Rural appraisalRRN Rural Reconstruction NepalRWSSSP Finnish Government supported Rural Water Supply and Sanitation Support ProgramRWSSFDBP Rural Water Supply and Sanitation Fund Development Board ProgramSACOSAN South Asian Conference on SanitationSLTS School Led Total SanitationSRLF sanitation revolving loan fundSSHE School Sanitation Health EducationUNICEF United Nations Children's FundVDC village development committeeWATSAN Water and Sanitation ProgramWAN WaterAid NepalWESP Water and Environmental Sanitation ProgramWHO World Health OrganizationWHS Water, Health and SanitationWB World Bank

Research Managers Laxmi Sharma and Oliver Jones

Research Team Leader Laia Domenech Pretus

Researchers Nirmal Kumar Raut, Noki Tamang, Sunila Baniya and Rajani K.C. Shrestha

Research Advisory Team Oliver Cummings, Rabin Lal Shrestha, Guna Raj Shrestha and James Wicken

Note: In this publication, “$” refers to US dollars.

1Introduction

1. Introduction

1.1. Background

Sanitation is often given low priority at theinternational, state, and local levels. From 1990 to2000, the total investment in water supply in Africa,Asia, Latin America, and the Caribbean was estimatedat $12.6 billion per year, whereas the estimate forsanitation was only $3.1 billion per year (WHO andUNICEF 2004). In addition to financial neglect,sanitation receives little institutional or legislativefocus, with it often not being given its owngovernment department or national policy orprogram. The perceived benefits of sanitation arethought to provide a low return on investmentcompared to water projects, even though sectorfigures indicate otherwise (Paterson et al 2007).Countries with low sanitation coverage have highhealth expenses because of lack of proper hygieneand sanitation practices; there are also other socialand economic impacts. Diarrheal diseases cause 1.8million deaths every year, 90% of them being inchildren under 5 years. In most cases, the diarrhealepisodes are attributed to unsafe water andinadequate sanitation and hygiene practices (WHO2004).

In South Asia, more than half of the population hasno access to improved sanitation, and coverage isleast in rural areas. Estimates from 2002 indicate thatSouth Asia is not on track to meet the Millennium

Development Goal (MDG) for sanitation (WHO andUNICEF 2004). The present challenge for the regioninvolves increasing sanitation coverage to 60% by2015 to meet the MDG. In an attempt to address thelow sanitation coverage in the region, the first SouthAsian Conference on Sanitation (SACOSAN) was heldin Dhaka in 2003. The regional event concluded withthe Dhaka Declaration on Sanitation, in whichgovernments committed to exert additional efforts toadvance sanitation and hygiene practices in theirrespective countries through people-centered,community-led, gender-sensitive, demand-drivenapproaches. In 2006, SACOSAN II was held inPakistan, where all participating governmentsreaffirmed their commitment and political will toaccelerate sanitation progress in their respectivecountries.

Nepalese sanitation coverage targets are ambitious,particularly the national goal of aiming to achieve100% sanitation coverage by 2017. In addition, Nepalneeds to reach 53% sanitation coverage by 2015 tomeet the MDG on sanitation. Every year in Nepalnumerous sanitation programs are launched withcommon aspirations but with differentimplementation models, which sometimes results inoverlap and inefficient distribution of the limitedresources available. The most recent policyregulating sanitation activities is the 2004 RuralWater Supply and Sanitation National Policy. After the

2 MONEY DOWN THE PAN?COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

first SACOSAN conference, attempts were made toupdate the Nepalese National Sanitation Policy from1994. However, the draft of the new national hygieneand sanitation policy failed to be approved in 2004.Through the endorsement of the Dhaka Declaration,the Government of Nepal also committed to thedevelopment of a sanitation master plan aimed atguiding a national sanitation program andestablishing the main principles to be followed by theorganizations delivering sanitation services in theNepalese context; however this is yet to materialize.

Sector figures show significant disparities insanitation service delivery, particularly between thepoor and the rich and in the rural and urban context.Access to improved sanitation among the richestquintile is about 79%, while access among thepoorest quintile is nearly eight times lower, with only10% of the poorest households having access toimproved sanitation (UNICEF 2006). The gap betweenthe rural and the urban areas is also noteworthy, withaccess to improved sanitation in urban areas (36.9%)almost double that of rural areas (19.8%) NepalDemographic and Health Survey (NDHS 2006). Inview of both the low sanitation figures in rural Nepaland the fact that 88% of Nepalese people reside inrural areas, achieving total sanitation in rural Nepal inthe near future will be a very challenging task.

1.2. Aims and Objectives

Approaches to sanitation are diverse andmultidimensional. One of the critical areas where it isperceived that the widest range of approaches isbeing adopted and where little is currently knownacross the sector in Nepal is financing sanitation atthe community level. For example, some programsgive high hardware subsidies while others relyexclusively on strong community mobilization andawareness building of the importance of sanitation.Financial models obviously have an impact on thecost of delivering sanitation, although theeffectiveness of the approach is not necessarilylinked to the level of investment. Allocation ofavailable and scarce resources is crucial to movingtoward national and international sanitation targetsmost efficiently. However, financing also has animpact on equity and sustainability issues, which arealso essential in achieving sanitation targets, andultimately achieving 100% coverage across Nepal.

This study aims to bring some clarity to the mainfeatures, achievements, and challenges of the mostpopular approaches in Nepal. In addition, the study

aspires to become a reference for future sectorcoordinating efforts by evaluating the strengths andweakness of the individual and collective approachesof the sector. This research is basically centered onthe sources and means of financing sanitation at thecommunity level, and, therefore, the followingaspects are given special consideration.

How much funding is being provided and bywhom.Mechanisms by which the available funds areallocated and distributed in communities andultimately are turned into sanitation outcomes.

Other specific objectives of this research are todeepen the understanding of various approachesto the financing of sanitation in rural communitiesof Nepal;compare the effectiveness of the main communityfinancing models, especially in terms of ensuringsustainable services to the very poor andmarginalized groups;identify the main challenges and barriers createdby the high diversity of models; andmake recommendations on national sanitationpolicy based on the research findings.

1.3. Methodology and Limitations

The main approaches to financing sanitation wereevaluated through the review of policies andguidelines elaborated by main sector agencies, andassessment of various case studies, includingprojects in both the tarai and hills. Evaluation ofevery case study consisted of (i) key informantinterviews with funding agencies, national and localnongovernment organizations (NGOs), governmentbodies, and members of the users' committees; (ii)group discussion with community people; (iii)household interviews; (iv) interviews with children;and (iv) community observations. Most key sectorstakeholders-including national and local governmentbodies; international development agencies;international, national, and local NGOs; andcommunity people-were consulted during this study.Seven districts of Nepal were visited between Marchand November 2007 to collect data from the field.The projects were selected with regard to therepresentation of the main models and mainagencies of the sector. Further details of the revisedcase studies can be found in Table 1.

Three dimensions were considered in evaluatingevery financial model; every project was evaluatedfrom the economic, social, and sustainable total

3Introduction

1 Only seven of the mentioned modalities are analysed in the MCA

2 These seven modalities broadly represent all the financial modalities for financing sanitation beingimplemented in Nepal at present

District Date Main Donor MainImplementing Program Modality1 Location

Agency

Pyuthan March 2007 ADB DWSS/DDC CBWSSSP Subsidy + R.Loan Khalanga

ADB DWSS/DDC CBWSSSP Subsidy + R.Loan Khaira - 7

WB RWSSFDBP RWSSFDBP Revolving Loan Khaira - 1

WB RWSSFDBP RWSSFDBP Revolving Loan Vijay Nagar, Kuwapani

DFID NEWAH WHS Rural Hill Graded subsidy Maranthana VDC, Saribang

DFID NEWAH WHS Rural Hill Graded subsidy Dakhaquadi VDC

Care Care ASHA Project Hardware subsidy Indriya Danda, Bijuwar

Chitwan August 2007 JRCS NRCS IFP SSHE GunjaNagar - 4, Bhimanagar

WB RWSSFDBP RWSSFDBP Revolving Loan Jutepani - 1, Nayatole

DFID GWS RWSP Stepwise approach Birendranagar - 9, Rasauli

WHO DWSS SLTS promotion SLTS Jagatpur-2

WAN NEWAH/FCN WHS Rural Terai Graded subsidy Sajhapur-4, Meghauli

Tanahun Aug / Sept 2007 Helvetas Helvetas WARM-P Graded subsidy Ghansikuwa-5

UNICEF NRCS DACAW SLTS Vyas Municipality -6, Shera

FINNIDA DDC RWSSSP Reward Vyas Municipality - 6, Shera

Kailali October 2007 Care Faya WATSAN Program Hardware subsidy Vijay Nagar, Tikapur-8

up to pan level

Surkhet October 2007 CECI UKP Sahakarya Hardware subsidy Ramghat-8

up to pan level

Oxfam RRN PHABLeS Minimum subsidy Meheli, Garpan-2

Banke October 2007 Plan IDS WESP CLTS Shumshergunj-6

Kapilbastu November 2007 ADB DWSS/DDC CBWSSSP Subsidy + R.Loan Bhaglapur, Kopawa 9

ADB DWSS/DDC CBWSSSP Subsidy + R.Loan Banskhaur - 9, Gaura

Table 1. List of project sites visited

sanitation perspective. A multi-criteria analysis (MCA)was selected as a suitable tool to integrate the databelonging to these three dimensions, and analyzethe many elements that make up the financingmodel and the impact these have on achievingsanitation outcomes1. In this study, a number ofalternatives being implemented by differentorganizations have been reviewed; however, sevenfinancing models were selected2 and have beenincluded in the multi-criteria framework, with eachmodel being evaluated against various predefinedcriteria. The criteria might be partially contradictory,which means that one alternative can be the bestunder one criterion but not necessarily the bestunder the rest of the criteria. The overallpreferences among the alternative options aredetermined by the application of an MCA model,which are numerous. In this study, the NovelApproach to Imprecise Assessment and DecisionEnvironments (JRC 1996) was selected as the

appropriate multi-criteria model to compare thedifferent financial models being studied. Theprogram enables the management of a mixture ofinformation (qualitative and quantitative), theestablishment of indifference and preferencethresholds, and establishment of the degree ofcompensation in the criteria aggregation (Gamboa2005). An explicit relative weighting of the differentalternatives is obtained at the end of the MCA.

The main limitations found during the developmentof this research are summarized below.

There were difficulties in differentiating betweenwater supply and sanitation investment in waterand sanitation integrated projects.Out of 75 districts, the study was only able to visitsanitation projects in seven districts because oftime and resource restrictions. Although thesedistricts were selected to give a representativeinsight into different geographical and cultural


contexts, we realize that not every scenario in theNepalese context was reviewed.Frequently different agencies implement multipleprojects in one location over a period of time.Although this gave some interesting insights intothe effects of multiple approaches beingimplemented in one area, it was more complicatedto identify the impact of a single model underreview. During the fieldwork the team also foundinstances where two organizations weresimultaneously working in the same project area,which could have also led to misinterpretation.It is acknowledged that the level of success of anindividual model may vary depending on thelocation, socioeconomic status, cultural traditions,and other contextual factors.This study does not try to look at the total cost ofimplementing sanitation programs; instead itfocuses on the allocation and distribution ofresources at the community level. We havetherefore not looked at the administrative costs ofdesigning and implementing sanitation programs,

which would vary depending on the scale andtype of organization implementing the program.Splitting the total hardware and software costsconsistently for each organizational approach is asignificant challenge. To increase consistency weonly included the cost of staff employed at acommunity level, not of staff of the implementingorganization. This does mean that the total costof approaches that employ more community-based staff, rather than using external people,might appear higher.Hardware costs are always site and contextspecific; therefore, although in parts of ouranalysis we have had to use average costs basedon the information gathered in projects reviewed,these need to be treated with caution.The estimation of community contribution doesnot include time and labor contributed by thebenefited households.A certain degree of uncertainty has beenconsidered for the qualitative criteria, as itsdetermination is somewhat relative under MCA.

5Key Players in the Sanitation Sector

2. Key Players in theSanitation Sector2.1. Sector stakeholders

It is important to understand the dynamics of thesanitation sector in Nepal, as a large number ofstakeholders are involved in sanitation and hygienepromotion activities. Partnerships and bilateralrelationships among funding agencies; governmentagencies; and international, national, and localNGOs are diverse, with some organizationsimplementing programs unilaterally and othersworking in a wide range of partnerships andcooperative and contractual relationships. Thismeans that financial support for sanitation flowsthrough a number of different channels, both withinand outside of official government budget lines.

The Department of Water Supply and Sewerage(DWSS) under the Ministry of Physical Planning andWorks is the main government agency responsiblefor delivering water supply and sanitation services.Other concerned ministries playing roles includeLocal Development, Health and Population,Education and Sports, and Women Children andSocial Welfare.

The two largest programs of the sector, bothinitiated in 2004, are run by autonomousgovernmental institutions with the support ofinternational development banks. The World Bank iscurrently supporting the second Rural Water Supplyand Sanitation Fund Development Board Program

(RWSSFDBP-II) and the Asian Development Bank(ADB) is supporting the Community-Based WaterSupply and Sanitation Sector Project (CBWSSSP).International development agencies (such asHelvetas, the Government of Finland [formerly asFINNIDA], the United Nations Children's Fund[UNICEF], and the World Health Organization [WHO])and international NGOs (such as Care, Plan, theCentre for International Studies and Cooperation[CECI] and WaterAid) are also supporting thesanitation sector in Nepal.

In an attempt to coordinate sector stakeholders andpromote hygiene and sanitation activities, a SteeringCommittee for National Sanitation Action, chaired bythe director general of DWSS, was formed at thecentral level in 2000. At the district level andaccording to current policy, a district water supplyand sanitation coordination committee (DWSSCC),chaired by the local development officer, should beformed to coordinate concerned stakeholders andprepare an action plan for the district. The reality isthat the DWSSCC is only functional in a few districtswhere external support and incentives have beenput in place.

As per the last sector policy, responsibility isbestowed on local government bodies and localcommunities to play a growing role in sanitationprograms. The Rural Water Supply and SanitationSector Policy 2004 states that "consumers groups


and community organizations will be maderesponsible to provide water supply and sanitationservices effectively by designating proper work tothe local bodies as per the decentralization policy"and that "GoN [the Government of Nepal] and localbodies will play the role of regulating, monitoringand facilitating the implementation of projects."However, the field reality shows that donor agenciesand international, national, and local NGOs are theprimary designers and implementers of sanitationprograms. Users' committees and communitymembers also play an active role, and communitycontribution is increasingly demanded through theapproaches being implemented. However, the rolethat local bodies play in coordinating, implementing,and monitoring activities is still very weak in manydistricts, which is partially a result of the continuedabsence of elected officials at the local level. Theconflict which has agitated the country since 1996has also made it increasingly difficult to build andretain capacity at the district level and below.

2.2. Geographic Distribution of Agenciesand Sanitation Programs in Rural Nepal

The geographic distribution of agencies andsanitation programs shows how external assistanceis not necessarily higher in the districts with theleast sanitation. While many agencies are workingin certain districts (increasing the chance of programoverlap), none or very few organizations are workingin other areas (Figure 1). Although sanitationcoverage, remoteness, and conflict are likely topartially determine the distribution of sanitationprograms, sector investments clearly do notnecessarily represent those areas most in need ofsupport. Moreover, the significant trend towardintegrated water and sanitation programs alsoraises the question of whether districts andcommunities are selected for their lack of water orlack of sanitation coverage.

Surprisingly, in the district with the lowest sanitationcoverage in Nepal, which is Rolpa with 10% sanitationcoverage as per 2001 data, only one program-theCBWSSSP-has been implemented since 2005. In thiscase, conflict is likely to have discouraged national

and international organizations from supporting thisarea. In the tarai area of the Central DevelopmentRegion and a few districts of the MidwestDevelopment Region, there are also remarkably fewagencies working. Fifteen districts in Nepal havesanitation coverage below 20%, and seven of thesedistricts are in the Midwest Development Region.Many agencies are actually working in that region,but not necessarily targeting the districts most inneed. Five or six agencies are workingsimultaneously in Surkhet and Jumla (districts withmore than 50% sanitation coverage), while only oneor two agencies are promoting sanitation in thedistricts with the lowest sanitation coverage. Similarly,out of the 15 districts with sanitation coverage below20%, five are in the tarai and the external assistancethey are receiving is also limited. Three agencies areworking in Kapilbastu, but in the remaining fourdistricts only one or two agencies are supportingsanitation activities.

It is recognized that, because of the diverse size ofdifferent sanitation programs, the number ofagencies working in a district does not alwaysrepresent the level of resources deployed, as onelarge program in one district could allocate moreresources that 10 small ones in another district.Despite this, the number of agencies working indifferent areas provides a good indication of theallocation of resources-both financial and human-focused on increasing sanitation coverage acrossNepal. The lack of systematic planning andguidance at the central and local levels was felt tobe behind the uneven spread of programs andtherefore the unequal distribution of availableresources in areas most in need.

It became clear from discussions with sectorparticipants that some agencies prefer to work inaccessible areas. In an attempt to distribute Chitwandistrict (a relatively accessible district) among theconcerned agencies working in the area, thepreference of most agencies to work in accessibleareas became obvious. Due to the lack of interest ofmost agencies to work in hilly village developmentcommittees (VDCs), the DWSSCC is consideringintroducing incentives to promote sanitation in thehilly VDCs of the district.

7Key Players in the Sanitation Sector

FIGURE

1. W

ater

and

San

itat

ion

Sec

tor

Age

ncie

s an

d San

itat

ion

Cove

rage

in

Nep

al (

2005

–200

7)

9Overview of Main Approaches to Finance Sanitation in Rural Nepal

3. Overview of the MainApproaches to FinancingSanitation in Rural Nepal3.1. Learning from the Past

Several agencies have long-term experience in thesanitation sector. Many programs are running in

their second or latest phases and, over the yearsthey have redesigned their approach according tothe lessons learned. Some of the main learning andbest practices are summarised below:

RWSSFDB-I (1996-2003)

Development Region: West, Central and East

Direct pit latrines were promoted with SRLF but they were

found unhygienic and not sustainable in the long term.

Inclusion of poor households was limited.

SRLF between NRs700 and NRs1,100 per household.

Latest Program and Improvements

ADB: Fourth Rural Water Supply and

Sanitation Sector Project

Need for community-based approach including capacity

building and empowerment.

Interventions in the sector need to be well coordinated

and complementary to each other.

Clear mechanisms for substantive but equitable

community contribution should be developed.

Sufficient time needs to be dedicated to social

mobilization activities.

Sanitation development should be an integral part of rural

water supply projects.

A prominent component for strengthening executing and

implementing agencies' monitoring systems is needed.

RWSSFDBP-II (2004-2009)

Development Region: Midwest and Far West

Promotion of ventilated improved pit latrines.

Priority is given to poor households.

Provision to subsidize the poorest households.

SRLF of NRs2,000 per household.

Introduction of post-implementation phase

ADB: Community-Based Water Supply

and Sanitation Sector Project

The rural component of the project includes a key activity-

Community Mobilization and Capacity Building for

Sustainability.

Establishment of Sector Stakeholder Group and District

Water Supply and Sanitation coordination committee

proposed.

Community contribution policy was formulated together

with other stakeholders for promoting unified approach.

The project goes through four key stages-planning,

development, implementation, and post-construction.

A dedicated component on health and sanitation is

included in the design.

A dedicated component has been included in the design

for institutional strengthening at different levels including

NGOs.

Previous Program and Key Learning

Contd...

Table 2. sector programs main learning and best practice


Latest Program and Improvements

Helvetas: Self-Reliant Water Supply

and Sanitation Program (SRWSP)

Lack of ownership feeling in first phase (1976-1994). Top-

down approach.

Helvetas was procuring some materials for community.

Decrease of community contribution because of a

reduction in the number of males in the communities.

Helvetas: Water Resources Management

Program (WARM-P) (since 2001)

Development Region: Far West, Midwest, and West

Application of bottom-up approach.

All materials are to be procured by the users' committee.

Introduction of social preparation phase.

Introduction of graded subsidy according to poverty

categories.

Previous Program and Key Learning

FINNIDA: Rural Water Supply and Sanitation Support

Program (RWSSSP) (1990-2005)

Development Region: Lumbini Zone, Tanahu, and Parbat

No contribution from DDC/VDC in first phase.

Decentralization and higher contribution from DDC/VDC

in second and third phases.

No subsidy in first phase. NRs 1,000 subsidy in second and

third phases.

Graded subsidy based on wealth ranking was piloted in

third phase to increase inclusion.

Inclusion of RWSSSP in government annual plan was made

compulsory.

Weak monitoring and follow up.

Government of Finland: Rural Village Water Resources

Management Project (RVWRMP) (2006-2010)

Development Region: Far West and Midwest

Graded subsidy following successful pilot.

Sulab twin pit pour flush latrines are prioritized.

Incorporation of CLTS components.

Introduction of post-implementation phase with focus on

livelihoods/income generation and support to operation

and maintenance and using water supply and sanitation

facilities

Promotion of ecosan latrines (pilot).

Local designs and materials to be used due to remoteness

of working VDCs (high transportation cost).

UNICEF-SSHE3 (since 1997)

Schools are the best entry points to cultivate new

sanitation and hygiene habits.

Need to develop appropriate monitoring and follow-up

mechanisms.

A joint effort of government agencies and international

and national NGOs is the best approach for creating

uniformity, standardization, systematic process

information, and policy development.

The project should be continued by the schools with a

long-term vision.

Toilets should be child and gender friendly.

UNICEF-SLTS4 (since 2005)

School and community work in partnership to achieve a

collective goal.

Mobilization of financial resources such as rewards and

revolving loans to promote hardware construction.

Total elimination of open defecation is promoted as a key

component of the program.

Contd...

Contd...

NEWAH - Graded Subsidy / CLTS

The ignition Participatory Rural Appraisal (PRA) tools are

effective in raising awareness and preventing people from

defecating openly.

A capable facilitator is greatly important.

Provision of rewards is a very effective tool to promote

affiliation toward the program.

Community collective effort is very important for

sanitation promotion.

The poor and marginalized groups require special

attention.

Pride is an important component of total sanitized

communities.

Stopping open defecation practices brings about multiple

benefits.

Sanimart favors quicker, cheaper, and more effective

construction of latrines.

Various technological latrine options should be made

available at the community level.

NEWAH - CLBSA5 (From July 2007)

Creation of a community fund to support poor and

excluded.

Sanitation promotion fund for remote community.

Continuation of sanimart concept.

Introduction of user-friendly (child, disabled, and women)

technological options.

Paid job opportunity for poor and excluded.

Focus on sanitation as a public concern.

Provision of exposure visit for community people and local

partner staff.

Introduction of basic sanitized community concept.

Mobilization of local resources is promoted.

Rewards are made available to honor the achievement of

open defecation free (ODF) status and basic sanitized

community.

3 DWSS & UNICEF, 2006-A

4 DWSS & UNICEF, 2006-B

5 NEWAH, 2007


Contd...

Latest Program and ImprovementsPrevious Program and Key Learning

CARE- WATSAN II6 (September 2005 - April 2006)

Districts: Kailali, Kanchanpur and Baitadi

Procurement of materials by the Water Users Committees

following a quotation permitted to save funds against the

estimated budget.

Due to the short period of the program, follow-up

activities were not assured.

Women's participation in decision making could be

increased.

Users' committees led by women showed better

performance in terms of transparency, quality of work,

and effectiveness.

The design of the project at the central level hinders

project sustainability.

CARE-WATSAN III (July 2006 - June 2007)7

Districts: Darchula and Baitadi

Focus on providing water and sanitation facilities to the

poor, disadvantaged, and marginalized households.

Cost of nonlocal materials, mason for a day, and material

transportation also for a day is borne by the project.

The subsidy policy varies depending on the program.

Additional support for households without male

members.

Materials should be procured by the leadership of the

users' committee.

PLAN - CSP-18

Little emphasis given to software and social preparation.

Sanitation program concentrated on hardware activities.

Little participation of users resulted in low sustainability

and cost recovery.

Beneficiaries able to have active involvement in program.

PLAN - Water and Environmental Sanitation Program (July

2005 - June 2010)

Development Region: East, Central and Mid-West

Program is demand oriented.

High importance given to social preparation.

Implementation of stand-alone sanitation programs.

Reduction in hardware subsidies and increase in

community contribution.

Introduction of CLTS concept.

6 Available: http://www.carenepal.org/WATSAN/watsan2/index.htm

7 Program Support Strategy and Procedure Formulation Workshop and Program Operational Manual. Water and Sanitation Program, 2006.

8 WES-CPO Plan, 2007

3.2. Financing Models

As mentioned above, a wide variety of approachesto financing sanitation at the community level havebeen, and are being, used across Nepal. Eachimplementing agency has its own specific policytoward and interpretation of each model. Within thisdocument effort has been made to group the widerange of approaches under a number of broadheadings to aid understanding and analysis. Themain financing models identified are hardwaresubsidies, loans, software subsidies (here referredto as community awareness), and rewards. It mustbe appreciated that many sanitation programs haveincorporated more than one of these components intheir approaches, and therefore the inclusion of theprogram in one heading or another was not alwaysobvious. Such classification has been doneaccording to the most relevant financial componentof the program.

3.2.1. Hardware SubsidiesTraditionally, most agencies utilized subsidies tosupport construction of latrines. While it is widelyaccepted that there is a need to provide softwaresubsidies to communities, debate is currentlycentered on the effectiveness and capacity ofhardware subsidies.

The size of hardware subsidies and the procedurefor distributing them to communities have beenchanging based on the lessons learned. Currently,subsidies are rarely handed in cash directly to thehouseholds as the chance of misuse is too high. Fullhardware subsidies to build latrines are also rarenowadays. The cost of the program increasesenormously if all households receive full subsidies,and subsidies have been demonstrated to killhousehold self-initiative and sense of personalownership. In all areas of rural Nepal, it is not rareto find high-quality latrines built with the support of


Tara

i/H

ill

Type

of

har

dw

are

sub

sid

y

Mat

eria

ls

Ski

lled

lab

our

sub

sid

ised

Cos

t of

har

dw

are

subs

idy

per

hou

seh

old

Wh

o pr

ocur

es

har

dw

are

sub

sid

y

Hil

l

Gra

ded

subs

idy

Type

I:

wat

er s

eal

pan,

one

sip

hon,

HD

P

bend

, 2

circ

ular

pla

in

slab

s, 2

m H

DP

pipe

,

half

bag

cem

ent

and

one

day

skill

ed

mas

on

Type

II

: w

ater

sea

l

pan,

HD

P be

nd,

one

circ

ular

pla

in s

lab,

2m H

DP

pipe

, ha

lf

bag

cem

ent

Yes

- O

ne d

ay s

kille

d

mas

on

NRs

.2,0

00

Use

rs c

omm

itte

e at

the

loca

l le

vel

NEW

AH

-non

-loc

al

mat

eria

ls

AG

ENC

IES

AS

HA

WA

TSA

NS

ahak

arya

PH

AB

LeS

WA

RM

-PW

HS

Ru

ral

Tara

iW

HS

Ru

ral

Hil

l

pr

og

ra

mP

ro

gr

am

CEC

IRR

NH

ELV

ETA

SN

EWA

HN

EWA

H

CAR

EC

ARE

Tab

le 3

. Mai

n f

eatu

res

of

pro

gra

ms

ado

ptin

g h

ard

war

e su

bsid

y m

od

alit

y Hil

l

Min

imu

m h

ard

war

e

sub

sid

y

1 pa

n, 2

m p

ipe,

2kg

rod,

hal

f ba

g of

cem

en

t

No

NR

s.1,

00

0

RR

N

Hil

l

Gra

ded

subs

idy

1 ba

g ce

men

t, 1

pan,

3-4

met

ers

drai

n pi

pe,

2.5m

gas

pipe

, 6

kg r

od

and

200

gram

s

wir

e

Bet

ter

off

do n

ot

get

har

dw

are

sub

sid

y.

Yes

(NRs

.600

)

NRs

.2,5

15

Hel

veta

s (n

on-

loca

l m

ater

ials

)

Tara

i

Gra

ded

subs

idy

Type

I: w

ater

sea

l pan

, H

igh

Den

sity

Pla

stic

(H

DP)

ben

d, 1

siph

on,

6 co

ncre

te r

ings

, 2

circ

ular

pla

in s

labs

, 2m

HD

P

pipe

, ha

lf b

ag c

emen

t

Type

II:

1 w

ater

sea

l pa

n, H

DP

bend

, 1

siph

on,

4 co

ncre

te

ring

s, 1

cir

cula

r pl

ain

slab

, 2m

HD

P pi

pe,

half

bag

cem

ent

Type

III:

1 c

ircu

lar

slab

wit

h

wat

er s

eal

cem

ent

pan

wit

h 4

conc

rete

rin

gs

Yes

(NRs

.200

) -

One

day

ski

lled

mas

on

Ult

ra P

oor

= N

Rs.2

,630

Poor

/Med

ium

Poo

r =

NRs

.1,9

25 o

r 2,

325

Use

rs c

omm

itte

e at

th

e lo

cal

leve

l

NEW

AH

-non

-loc

al m

ater

ials

Hil

l

Har

dw

are

subs

idy

up t

o pa

n

leve

l

1 pa

n sh

eet,

2

bag

s ce

men

t,

5kgs

of r

od,

100g

rs o

f w

ire,

2

m d

rain

pip

e, 2

m

gas

pipe

and

1

vent

cap

Yes

(NRs

.500

dis

trib

uted

aft

er

con

stru

ctio

n)

NR

s.3,

00

0

Loca

l N

GO

Hil

l

Har

dw

are

sub

sid

y

1 pa

n, 2

,5 m

pip

e,

2 ba

gs c

emen

t,

pcs

rod,

2-3

pcs

tin

and

som

e

loca

l m

ater

ials

Yes

NRs

.5,0

00

Use

rs C

omm

itte

e

Tara

i

Har

dw

are

sub

sid

y

up t

o pa

n le

vel

6 ri

ngs,

1 c

over

, 1

pan

, 2m

ven

tila

tion

pip

e, 1

ven

tila

tion

pipe

cov

er,

1 pi

pe

Yes

(NRs

.325

)

NR

s.3,

500

Use

rs c

omm

itte

e

thro

ugh

ext

ern

al

sup

pli

er

con

td..

.


Aft

er d

iggi

ng p

it a

nd

proc

urin

g al

l lo

cal

mat

eria

ls

NA

(Up

fron

t ca

sh T

ype

I:

NRs

.500

and

Typ

e II:

NRs

. 300

, UP:

no

con

trib

uti

on)

NA

Tab

le 3

. Mai

n f

eatu

res

of

pro

gra

ms

ado

ptin

g h

ard

war

e su

bsid

y m

oda

lity

(co

ntd

...)

Aft

er d

iggi

ng p

it

and

con

stru

ctin

g

latr

ine

hou

se

NRs

. 4,4

20

2 da

ys S

anit

atio

n

Trai

ning

to

com

mun

ity

by

sup

por

ting

NG

Os

Aft

er d

iggi

ng,

linin

g

pit

and

cons

truc

ting

latr

ine

hou

se

NRs

.1,5

25

(Inc

lude

s up

fro

nt

cash

- V

ery

poor

NRs

.

50,

aver

age

NRs

. 25

0

and

rel

ativ

ely

bet

ter

off N

Rs. 3

00)

3 da

ys s

anit

atio

n

trai

ning

to

com

mu

nit

y

Aft

er d

iggi

ng p

it a

nd p

rocu

ring

all

loca

l m

ater

ials

NR

s.2,

671

(Inc

lude

s up

fron

t ca

sh T

ype

I:

NRs

.800

, Typ

e II:

NRs

.500

, Typ

e

III: N

Rs.2

00, U

P: n

o

con

trib

uti

on)

4 da

ys C

HV

tra

inin

g, 4

day

s

Ch

ild H

ealt

h A

war

enes

s

Com

mit

tee

(CH

AC

) tr

aini

ng,

1

day

orie

ntat

ion

to A

dvis

ory

com

mit

tee

of C

HA

C,

teac

her

orie

ntat

ion,

2 d

ays

orie

ntat

ion

to m

onit

or o

f C

omm

unit

y C

hild

Hea

lth

Gro

up (

CC

HG

), C

HV

wor

ksh

op,

regu

lar

hea

lth

educ

atio

n in

eac

h cl

uste

r an

d

scho

ol,

vari

ous

heal

th a

nd

awar

enes

s re

late

d c

amp

aign

s

by s

uppo

rtin

g N

GO

.

Aft

er d

iggi

ng p

it

and

con

stru

ctin

g

latr

ine

hou

se

NRs

. 6,2

50

3 da

ys t

rain

ing

to

loca

l so

cial

mob

ilise

rs,

3

day

s d

iarr

hoe

a

pre

ven

tio

n

sess

ion

in

com

mun

ity

and

sch

ool.

Hea

lth

Lite

racy

Cla

sses

by

faci

litat

or

from

com

mun

ity

to w

omen

gro

up

NA

NRs

. 3,0

00

CH

V g

ives

trai

ning

to

scho

ol a

nd

com

mu

nit

y

Whe

n is

subs

idy

give

n

Sel

f

con

trib

uti

on

per

HH

Hea

lth

and

Hyg

ien

e

Edu

cati

on

Aft

er d

iggi

ng p

it

NRs

. 45

1

Loca

l N

GO

giv

es 3

days

tra

inin

g to

wom

en g

roup

AG

ENC

IES

AS

HA

WA

TSA

NS

ahak

arya

PH

AB

LeS

WA

RM

-PW

HS

Ru

ral

Tara

iW

HS

Ru

ral

Hil

l

pr

og

ra

mP

ro

gr

am

CEC

IRR

NH

ELV

ETA

SN

EWA

HN

EWA

H

CAR

EC

ARE


In Garpan, a remote village development committeelocated in Surkhet district, Rural Reconstruction Nepal

(RRN) piloted different financing models. This was donein communities located close to each other, which ledto complaints from some villagers.

Between May 2006 and April 2007, households in ward2 were provided only with minimum subsidy while theneighboring community received full subsidy to buildlatrines. Every household received one pan, 2 metersof pipe, 2 kilograms of rod and half a bag of cement

after digging the pit andconstructing the latrinehouse. Households hadto contribute the restof the materials as wellas all the skilled andunskilled laborthemselves. Materialssuch as cement orstone were costly asthey had to betransported from faraway. Most householdsasked for loans at 24%interest from the saving

group of the community, which RRN also supported.Some households had to take two different loans andothers even sold assets, such as livestock, to financethe construction of their latrine.

Efforts were made to support disadvantagedhouseholds through cross subsidy. In addition, villagersdug pits, carried stones, and constructed roofs for thosehouseholds in need of help, which reveals a high levelof unity between community members. However,delivery of sanitation to the most vulnerablehouseholds was not completely successful. Sixhouseholds could not build the latrine duringimplementation of the program, mainly because ofextreme poverty and absence of males in thehousehold.

FIGURE 2: Water supplymanagement needsimprovement.

Minimum Subsidyin Garpan (Surkhet)

a subsidy that are not in use and fall into disrepairor are utilized for other purposes, such asstorerooms.

Some programs are still giving high hardwaresubsidies to construct latrines. This practice wasparticularly found in programs responding tocommunity demands to reduce poverty. In thoseprograms, the community is given the opportunity toselect the intervention most needed; therefore theprogram only delivers sanitation when thecommunity demands it. The fact that the communitydecides to allocate limited resources to sanitationrather than other potential areas of investment-suchas water supply, education, or health facilities-issignificant and is actually different from atraditional, fully subsidized sanitation intervention.Some examples of such programs in Nepal includeAccessing Services for Households (ASHA) programfrom Care, the Community Support Program from theUK Department for International Development, or thePoverty Alleviation Fund (PAF) program from theWorld Bank. Subsidies given in these programsranged from NRs4,000 to NRs10,000 per household.

Even though most agencies still have a subsidypolicy for latrine construction, the current tendencyis toward increasing community contribution. It is acommon practice to subsidize latrines only up topan level, and the remaining superstructure and theunskilled labor are to be contributed by thebenefited household. Some organizations-such asRural Reconstruction Nepal (RRN), Community Forest,and some VDCs-have gone further to reduce theirsubsidy by offering only a minimum subsidy or an"encouraging subsidy," which consists of providingonly a few essential nonlocal materials like a pan orpipe to support latrine construction. The remainingmaterials and required labor are contributed by thecommunity and individual households.

Graded subsidies were found to be very effective intargeting everyone in the community. The inclusionof the poorest households and socially excludedgroups is increased through the provision ofadditional support. Households are classified intodifferent well-being categories. In some countries,such as India, the government identifies thosehouseholds which are below the poverty line, andservices and subsidies are targeted and allocatedaccordingly. Although the census in Nepal hasgathered information on those living below thepoverty line, the accuracy of this data at the microlevel has been questioned. As a result, thegovernment and other implementing agencies donot use this household-level information to directlytarget the poorest households. NGOs and other


FIGURE 3: Latrine constructedwith costly materials


service providers categorize communities usingparticipatory approaches and community consensus.This can result in categorization being relative tocommunity perceptions, with the wealthiest groupsin some communities being in an equal economicgroup as the poorest groups in other communities.Thus, community categorization is a difficult processthat needs to be well facilitated and requiresrepresentation from all groups. Dividing householdsinto different categories can be very challengingbecause of the lack of community consensus, asoften all households want to receive subsidies. It issometimes difficult to exclude the richesthouseholds from receiving subsidies.

A number of agencies across Nepal are usingcommunity consensus to categorize communitiesby wealth ranking. In the program of Nepal Waterfor Health (NEWAH) program, the communitydistributes all households into three categories:medium, poor, and ultra poor, based on a set ofcriteria developed by the community according tobasic guidelines provided by NEWAH. Householdsreceive a set of materials and skilled labor forlatrine construction after depositing a fixed amountin the bank account of the users' committee. Thehousehold's cash and/or labor contribution aregraded depending on the household's well-beingcategory, physical ability, technological choice, andgeographical location (hill or tarai). Ultra-poorhouseholds are exempt from having to contributecash for direct pit and single offset pit latrines topan level.

Helvetas' program (Water Resources ManagementProgram [WARM-P]) also makes use of gradedsubsidies to promote sanitation. However, better-offhouseholds are not supposed to receive any subsidyas the program only targets the poorest of the poor.The wealth ranking is jointly carried out by theusers' committee and the community facilitator toidentify the poorest among the poor. Helvetas'program establishes three categories-relativelybetter off, average, and very poor-which will receivesubsidy. Households also receive the materials afterdepositing a nominal amount in the bank account ofthe users' committee.

A summary of different programs following thehardware subsidy strategy is presented in Table 3.Cost, materials provided, and health and educationsessions broadly vary depending on the program. Inmost cases, the supporting organization is providingthe nonlocal materials to the users' committee. Onlyin Care's program was it found that the users'committee was responsible for procuring all therequired local and nonlocal materials.

In Ramghat (Surkhet), the Centre for International Studiesand Cooperation (CECI) implemented the Sahakarya project

with the support of a local nongovernment organization atthe end of 2006. The Sahakarya project promoted improve-ments to community health and economic developmentthrough saving and credit groups and other income-gener-ating activities.

Even though CECIwas providing ahardware subsidy ofNRs3,000 to buildthe latrine, around80% of the house-holds had to take aloan from a money-lender to completethe construction oftheir latrine. Relatively better-off villagers lent betweenNRs6,000 and NRs8,000 to the interested households at36% interest. The borrowed amount was generally investedin building the superstructure, as most materials to buildthe latrine up to pan level were already provided free ofcost by the program. After 6 months of having taking theloans, none of the interviewed households had repaid theirloan in full. Tension was increasing within those householdsbecause of the daily increase in their loan size.

A women's saving group was also established in the villageafter the implementation of the sanitation program. Thesaving group lends money to the needy members of thesame group at 24% annual interest rate, and to externalmembers at 36% interest rate. The loan is to be paid backin 3 months, but if the borrower does not pay back theloan in time, the interest rate is increased to 36% per an-num. The establishment of the saving group before the sani-tation program could have allowed many households toavoid taking high-interest loans.

Linking sanitation programs with income-generating activi-ties favors enhanced effectiveness of the sanitation pro-gram, since the reduction of poverty and higher availabilityof financial resources is likely to be translated into im-proved sanitation practices.

FIGURE 4.Latrine builtwith bothsubsidy andloan

In addition tosubsidies, highinterest loans aretaken out to buildlatrines, Ramghat(Surkhet)


FIGURE 5. Women's group


The second phase of the Rural Water Supplyand Sanitation Fund Development Program

(RWSSFDBP) was initiated in 2004. The project isone of the largest water supply and sanitationprograms in the country with a total budget allo-cation of $41.5 million for 2004-2009. The overallprogram has been implemented in seven different batches across 71 districts of Nepal and through more than200 support organizations. The Fund Board works directly with support organizations, such as nongovernmentorganizations (NGOs) and private-sector organizations, which act as facilitators in communities. Working withsuch a large number of organizations has proved challenging. Local NGOs frequently lack sufficient technicalcapacity to implement the projects, and they are only paid for a few months while the project expects them towork over a longer period.

The project cycle is fairly long. In Jutpani (Chitwan) the program started at the beginning of 2004 (batch VI), butafter more than 3 years, the project activities are not yet finalized. Sanitation outputs have almost beenachieved but water supply is still to be provided. Water scarcity in the area is severe; householders need towalk around 5 kilometers to access safe water, raising questions about the impact of sanitation services whichrequire water for their hygienic use.

The Fund Board makes available a revolving loan fund for latrine construction, which is calculated by multiplying25% of the total number of households without latrines by NRs2,000. In Nayatole community (Jutpani), therewere 119 households when the project commenced and 69 latrines to be constructed. Only 14 of the 69 house-holds had access to the revolving loan; 10 households borrowed NRs2,000 in a first round, and recently in asecond round four further households received NRs2,000 to build their latrine. All the beneficiaries from the firstphase have already repaid the borrowed amount in full. According to the regulations of the users' committee,the interest rate is 12% per annum and beneficiaries need to pay back half of the loan after 3 months and theother half during the following 3 months, i.e., the repayment period is 6 months.

However, three households in the community still do not have a latrine, and there is NRs13,000 to be revolvedin the users' committee bank account . The three households without a latrine are female-headed households,which cannot build a latrine unless they receive some additional support.

In addition to the Fund Board, Nepal Aadiwasi Janajati Sangh was also promoting latrine construction inNayatole through the Bote Society in the area. Janajati households received a hardware subsidy in cash from theBote Society to build their latrines. Duplication of programs divided the community and reduced participationof Janajati households in the Fund Board program.

3.2.2. LoansIn Nepal the practice of taking loans to cover thecost of weddings or crises, such as crop failures orserious illnesses, is not a new one. The CentralBureau of Statistics estimated in 2004 that 70% ofNepalese households have a loan that needs to bepaid back (Central Bureau of Statistics 2004, inUNICEF 2006). Taking loans to build latrines is alsobecoming a common practice in Nepal, which hintsat an increased priority being given to sanitation.Money is generally borrowed from informal sourcessuch as relatives or private moneylenders, and thisoften involves very high interest rates.

However, borrowing from institutional sources is alsobecoming increasingly popular through saving andcredit groups and revolving loans. In recent years,countless communities have established saving andcredit groups (mostly led by women) and severalsanitation programs make community revolvingloans systems available to support latrineconstruction. Institutional borrowing offers moderateinterest rates compared to loans taken frommoneylenders. Because of the growing importanceof revolving loans, this new financial model isspecifically addressed later on.

Rural Water Supply andSanitation Fund DevelopmentBoard Program in Jutpani


The RWSSFDBP-I implemented between 1996 and2003 was the first program broadly promotingrevolving loans to finance sanitation. Currently, inaddition to the Fund Board program, several otherprograms-such as School Led Total Sanitation (SLTS)and local bodies under the CBWSSSP-incorporaterevolving loans to support the construction oflatrines.

In all these programs, the users' committee receivesfunds in proportion to the size of the community,and these funds are to be revolved amongcommunity members. The fund is revolved accordingto the rules set by the external agency and theusers' committee, and the final amount recoveredgenerally remains in the community to be investedin further sanitation improvements. Use of revolvingloans significantly reduces the cost of the projectsas several households make use of the same funds,but other issues also need to be considered:

Long repayment periods slow the revolvingprocess, whereas repayment periods which aretoo short or unrealistic cause households todefault on payments.Due to the fund having to be revolved three oreven four times to cover the whole community, theimplementation period for this approach is oftenlonger than other approaches.Disadvantaged households are often excludedfrom taking revolving loans, as they feel they willnot be able to repay the loans and fear theburden it will place on their families.Generally, the amount lent is not sufficient to builda latrine and therefore some households have totake additional loans from private moneylendersor relatives to complete construction of the latrine.In cases where additional funding sources areavailable, the question of what value a revolvingfund adds arises, as promotion of the latrine andawareness of financing option would have hadthe same impact.

3.2.3. Community AwarenessExperience demonstrates that the construction oflatrines only, without software activities (so-called"latrinization"), frequently results in poor long-termsustainability of latrines and the lack of adoption ofsafe hygiene practices. This is the case in Nepal, astraditional behavior is deeply rooted in mostcommunities. The rush to meet national andinternational targets, which are usually limited tolatrine numbers, has in the past often resulted in alack of attention to, and emphasis on, awareness-raising activities.

Approaches that focus solely on or includecommunity awareness are increasingly common inNepal. In the long term, an understanding of thelinks between sanitation and health is essential,and as a result most sanitation programsincorporate hygiene and health educationpackages. Community awareness and thegeneration of demand for sanitation can becreated using a number of different approaches.Building an awareness of the convenience, shame,and prestige related to sanitation (or the lack of it)have also been identified as an effective means ofstimulating latrine construction and use within acommunity.

The focus areas and intensity of awareness-raisingactivities differs depending on the program;consequently, the impact and effectiveness alsovary. Some programs provide solely software supportwhereas others combine both software activitieswith financial assistance for latrine construction.Lately, the promotion of "total sanitation" is gainingmomentum, which includes not only safe disposal ofexcreta but also health and hygiene education andproper management of solid and liquid wastes.

The main organizations essentially relying onsoftware activities to promote sanitation includethe UNICEF, the Gurkha Welfare Scheme (GWS),Plan, National Red Cross Society (NRCS), andNEWAH. These organizations are implementingrelatively new models such as the SchoolSanitation and Health Education (SSHE) Program,SLTS, Community Led Total Sanitation (CLTS), andCommunity Led Basic Sanitation for All (CLBSA),which is reviewed in the Mixed Approaches sectionon page 24.

The above-mentioned models initially createdemand and raise awareness within the communityand later on promote hardware construction.Awareness-raising activities (such as groupdiscussion, street drama, rallies, or door-to-doorvisits) and Ignition Participatory Rural Appraisal(IPRA) tools (such as social mapping, fecescalculation, or flagging of open defecation) arefrequently used to sensitize communities to thebenefits of a healthy environment. Hardwareconstruction is addressed through detailedexplanation of available latrine designs andmaterials, training of sanitation masons,construction of demonstration latrines, and/orestablishment of local shops to make availablenonlocal materials at affordable prices.


3.2.3.1. Community Led Total SanitationCommunity Led Total Sanitation (CLTS) wasconceived in Bangladesh in 1999 to address lowsanitation coverage in the country. Outstandingresults in this particular program brought aboutinterest to replicate the same approach in Nepal.Since 2003, several agencies-including WaterAidNepal, Plan Nepal, NEWAH, and RRN-have beenpiloting CLTS in Nepal. As will be discussed later,WAN and Plan Nepal have both done externalassessment of the CLTS work they have supportedto date and CLTS has emerged as a very cost-effective tool for speeding up achievement of totalsanitation coverage.

The main focus of CLTS is stopping open defecationthrough collective community action. Sanitation inCLTS is understood as a public good and not as anindividual task; therefore all community memberswork closely together to achieve the commonobjective of total sanitation.

Effective motivational tools-such as a walk of shameand praise, social mapping, group discussions, andfeces calculation-are applied to initiate the processand stimulate behavioral changes toward hygiene.Children play a crucial role in the overall process;CLTS makes use of children's enthusiasm to monitorproper use of sanitation facilities. Formation of asanitation committee and elaboration of a plan ofaction to stop open defecation are also keycomponents of CLTS. As mentioned above, thesemotivational tools often focus on community prideand dignity in relation to sanitation rather than thedirect links between sanitation and health.

A core principle of CLTS is that hardware subsidiesare not provided but communities are encouraged toidentify their own financing mechanisms-such ascross subsidy, prizes, or saving and credit groups-tosupport latrine construction. However, implementingthis approach in areas where subsidies have beengiven in the past has proved to be difficult. Villagersare frequently aware of neighbors who havereceived subsidies earlier and therefore peopleexpect the same support to build their latrine.

The initial focus of CLTS is for the community toachieve open defecation free (ODF) status throughthe construction of inexpensive but hygienic latrinesutilizing local materials and low-cost technologies.Households receive training in a wide range oftechnological options suitable for the local context.Procurement of materials is also addressed throughpromotion of sanitation centers and local productionof certain materials.

Once a community achieves ODF status and newhabits are adequately assimilated, the community isconsidered to be on the "sanitation ladder" which isbelieved to ensure use and progressive upgradingof latrines. Monitoring and follow-up activities aregreatly important to sustain the communities in thelong run and to encourage people to upgrade theirlatrines to more durable ones.

3.2.3.2. School Sanitation and Health EducationProgramIn 1997, UNICEF started a large initiative inpartnership with the NRCS and NEWAH to implementSchool Sanitation and Health Education (SSHE)programs in several districts of Nepal. By 2005,UNICEF was working in 15 districts under theDecentralised Action for Children and Women(DACAW) (DWSS and UNICEF 2006-A). To date, WaterSupply and Sanitation Divisional Office and NRCShave been the main implementers of SSHE programsin DACAW districts. Apart from UNICEF, otheragencies-such as Save the Children, GWS, and theJapanese Red Cross Society through theInternational Friendship Program-have also beenpromoting SSHE programs.

Under this approach schools are used as a mainentry point to bring about hygiene and healthawareness to communities. The main aims of theSSHE program are to raise awareness amongchildren on the importance of following properhygiene and health practices and to ensure basicsanitation in the school through the provision ofwater supply and sanitation facilities.

Child and youth learning are believed to have anamplified effect within communities, as their habitsare likely to be passed on to other familymembers, and particularly to the next generation.Therefore, several current programs are targetingchildren and youth as the main change agents inorder to convey sanitation promotion from child tochild, from child to family, and from child tocommunity.

Schools are permanent institutions and educationalone is the central duty of the institution; buildingon this established institution helps to keep costslow. Health and hygiene education is included in thenational curriculum, but it is often squeezed out andnot prioritized due to the pressures to teach othersubjects which are perceived to be of more worth.As teachers are frequently not motivated to includehealth and sanitation education in their curriculum,special support to launch SSHE programs in schoolsis generally required.


The Gurkha Welfare Scheme (GWS)implements integrated water supply and

sanitation schemes using the so-called"stepwise approach" in which a series ofcomprehensive steps is followed to deliver both water supply and sanitation to rural communities. Sanitation isset as a precondition for water supply. Community people often give less priority to sanitation compared towater supply, and therefore water supply is used as a practical incentive to increase the involvement of communitiesin sanitation activities.

The GWS does not provide any hardware assistance for household-level sanitation promotion. The communityhas to contribute all materials, as well as both skilled and unskilled labor. Only software is provided through asocial supervisor and a community hygiene worker, who undertake hygiene and sanitation awareness activities-such as community mapping, home visits, hygiene message-tile selection, construction of demonstration latrines,and household latrine construction and progress monitoring-to stimulate behavioral change.

In Birendranagar, out of 246households only 40 had permanentlatrines prior to programimplementation in 2005, but after3 months of project activitiessanitation coverage and usagereached 100%. Despite thecomposition of the Water andSanitation Management Committeeindicating a lack of focus oninclusion, the project increasedlatrine coverage successfully amongall sectors of the community.

Although the GWS was notproviding any financial or hardwaresupport to the community, at thattime Community Forestry was alsopromoting sanitation in the samearea with the provision of four ringsand one pan to the pooresthouseholds. In fact, several households stated that the availability of a hardware subsidy from CommunityForestry was the main reason to build a latrine. Thus, it is difficult to gauge whether the poorest householdswould have built a latrine without receiving the support from Community Forestry. In addition, most householdsexpressed their dissatisfaction with their latrine, as they could only build direct pit latrines and their superstructureswere very temporary (Figure 5). The joint efforts of different organizations might be very effective in maximizingresources, but proper coordination is also required to avoid undesired interferences.

Using water as an incentive can be useful to stimulate the construction of latrines, even though households onlyreceive software support. However, such a strategy also presents certain limitations, such as the impossibility ofusing the precondition in communities already having water or the risk of promoting "latrinization" instead ofbehavioral change, as perceived need for the latrine might not be properly developed.

Community awareness as anexclusive tool to promotesanitation. Birendranagar, Chitwan

FIGURE 6. Latrine with superstructure made out of sticks and leaves


Community Led Total Sanitation (CLTS) wassuccessfully introduced in Shumshergunj-6, a

community with 59 households, mostly belonging to Dalitand Janajati castes. Coverage increased dramatically,reaching open defecation free (ODF) status in only 2months. Prior to the program the community only had 2permanent and 10 temporary latrines; however, noweverybody uses a latrine to defecate and all householdshave latrines, only nine of which are temporary.

The program was funded by Plan International, and theInternational Development Society (IDS) acted as a facilitatorwithin the community. IDS conducted health orientationsessions and several training sessions for communitymembers. Children's clubs were also effectively mobilizedand children were very active in spreading health messagesthrough the community. Children's clubs organized severalactivities-including street dramas, quiz contests, and culturalprograms-to raise hygiene awareness in the village.

The construction of permanent latrines was fostered byhonoring those households that built the best latrines.Nine households were awarded with a set of cleaningproducts including bucket, brush, towel, soap, andtoothpaste. Another innovative initiative (agreed uponamong all community members) was that of penalizingthose persons found practicing open defecation. Likewise,drunkards also received the same penalty for beingdrunk; four people have already been fined inShumshergunj. The offender is fined NRs101 and this isshared equally between the person who reports andthe users' committee. The children's club and five healthvolunteers monitor the water and sanitation conditionof the area regularly. The community has also built atoilet in the community church, because prior to theCLTS program there was only one facility for urination.

The dual approaches made the implementation of theprogram more difficult to some extent. Nepal Waterfor Health had been giving subsidies in nearbycommunities, making the task of convincing householdsto build latrines without any support even morechallenging. Nevertheless, after declaring the communityODF, the community became very proud of their ownachievements and even neighboring communitiesdemanded the same program for their own community.

Plan International has identified that shifting betweenprogram approaches may be problematic in certainareas. Consequently, it is still implementing its WaterSupply and Sanitation (WATSAN) Program with twodifferent approaches. The minimum-subsidy approachis used in those areas where a program was alreadyrunning, and CLTS is only introduced in new projectareas.


Community Led TotalSanitation inShumshergunj, Banke

In fact, capacity building of main stakeholders(teachers, parent-teacher associations, and localgovernment bodies [LGBs]) is carried out during thepreparation phase of the program.

A children's club is formed in every school toactively support the child-to-child activities of theprogram. Child-to-child activities are centered onproblem-solving methodologies to study sanitation-related problems and find suitable solutions. TheSSHE program often leverages off national events-such as the hand-washing week and the latrinepromotion week-to launch a hygiene and sanitationcampaign in schools and communities. Duringconstruction of school latrines and water supplyfacilities, students actively follow the process andare taught about the proper maintenance of thefacilities.

Hardware support is limited to the provision of watersupply and sanitation facilities to schools. The costof providing latrine facilities to schools is borne 50%by the government or donor and 50% by the schooland/or community, while 20% of the cost ofproviding water supply facilities is borne by theschool and/or community. Even though supportingagencies only provide assistance for 3 or 5 years,the school program has a long-term vision and theaim is for it to be continued by the school in thefuture. Refresher training may be necessary toguarantee continuation of activities. Adaptation ofinformation, education and communication (IEC)materials to suit the local context is alsorecommended.

The program does not include any mechanism tosupport poor households. Apart from hand-washingweek and latrine promotion week, most programactivities do not directly target the community andtherefore total latrine coverage is rarely achieved inSSHE focus areas.

3.2.3.3. School Led Total SanitationFollowing the introduction of CLTS, UNICEF adaptedthe approach to focus on the increased work theydo with children. As a result they developed theSchool Led Total Sanitation (SLTS) program in Nepalwith encouraging results. UNICEF's supportedprogram is being implemented by the DWSS andNRCS from 2005 onwards in 23 districts of thecountry, including the 15 DACAW districts. Theprogram also fosters partnerships betweenstakeholders at the central, district, villagedevelopment committee (VDC), and school levels(DWSS and UNICEF 2006-B). Other agencies such asNEWAH have also piloted the SLTS approach.


In the catchment area of Bhimnagar School,out of 600 households only 10% had latrines

before the Nepal Red Cross Society (NRCS)introduced the School Sanitation Health Education (SSHE) package in 2004 under the International FriendshipProgram. Three years later, 90% of the households have constructed latrines. In addition to the awarenesscampaigns delivering continuous awareness-raising activities among students, the project has provided onelatrine to the school at a total cost of NRs100,000, which was financed 60% by NRCS and 40% by the school andthe village development committee.

Sanitation conditions in the area have improved substantially since initiation of the program. The school andthe children's group (the so-called Junior Red Cross Circle) have been leading the behavioral change process.Students visited most households to convince community members to change sanitation habits. In addition,students distributed several metal sticks among households in the catchment area to facilitate collection ofrubbish from household compounds.

SSHE does not incorporate any mechanismto target the poor. Total latrine coveragecould not be achieved because the poorestpeople lack sufficient funds to build a per-manent latrine. Several low-income house-holds used to have very temporary latrines,not financed by any source. However, mostof the latrines were flooded during the rainyseason (Figure 7), forcing villagers to prac-tice open defecation once again. During groupdiscussions, community people expressed theview that some kind of subsidy should begiven to the poorest households to help thembuild their latrines.

A few of the households had built latrineswith the support of a revolving loan madeavailable through a women's group. However,not everybody could afford to take out aloan. One ultra-poor householder with nolatrine stated that "many organizations havebeen offering us loans to build a latrine butwe could not accept it because we wouldnot be able to give it back."

Currently, community and school members aredemanding several further improvements totheir sanitation facilities, such as improve-ment of school toilets, as they are insuffi-cient to cover female students' needs. Sur-prisingly, there is a higher female studentpopulation because most boys are sent tothe private school in the area. In the plan-ning process, the higher numbers of femalesshould translate into increased sanitation fa-

cilities for them. Currently, sanitation facilities for females consist of two toilets and one menstrual hygienefacility (Figure 6). The community is also planning to build a public latrine in the village bazaar in order toimprove the sanitation condition of the area, as currently those people working in and visiting the bazaar donot have access to any public sanitation facility and, as a result, sometimes defecate in the open.

SSHE program in BhimnagarSchool, Gunjanagar, Chitwan.

FIGURE 7. Female toilets in Bhimnagar School

FIGURE 8. Flooded temporary latrine


As in CLTS, the SLTS program aims at stopping opendefecation but uses the catchment area of theschool, rather than a single community, to define itstarget area. Defining the exact catchment area orarea of influence of the school can be difficult whenstudents come from different, and often scattered,localities. The impact of the program in differentcommunities might vary depending on thecommunity's location in relation to the school andthe proportion of households with children attendingthe school.

SLTS comprises both the basic elements of the SSHEpackage and the IPRA tools from CLTS (DWSS andUNICEF 2006). As with SSHE, schools remain theentry point of the sanitation program, and watersupply and sanitation facilities are provided with thesupport of both the VDC and the school. As is thecase with CLTS, communities are directly targetedwith participatory awareness-raising activities,although in SLTS, children's clubs and students arethe main agents of the initiating process. Other keyactivities in SLTS include the formation of asanitation committee, and the development andimplementation of a plan of action.

Schools are generally fixed institutions and this canpositively impact on the sustainability of anycommittee established and linked within them.However, the members of the school are not alwaysrepresentative of the communities around them, asmany poorer and excluded groups do not send theirchildren to school and therefore are not part of theinstitution. This could lead to a lack of realparticipation and ownership by all target groups ofthe activities promoted by the school committee.

Unlike SSHE, SLTS makes available some financialresources to motivate and support the declaration ofODF areas. Subsidies are strongly discouraged in SLTS,following the principle of CLTS that household subsidiesinhibit personal ownership of the process and causelong-term dependency on external resources. Rewardsand revolving loans are seen as the most suitable toolsfor encouraging construction of sustainable latrines. Arevolving loan ranging from NRs10,000 to NRs50,000 isprovided to each school to support poor households tobuild a latrine. Alternatively, those schools which areable to keep their catchments free from opendefecation using only community resources are grantedan award ranging from NRs10,000 to NRs35,000 by thesupport organization.

3.2.4. RewardsThe use of rewards is also gaining popularity asan effective tool to encourage achievement ofpublic outcomes and construction of qualitylatrines without providing any kind of hardwaresubsidy. Rewards are common in CLTS and SLTSprograms, and LGBs are also increasingly usingrewards to promote sanitation in their areas ofinfluence. Sometimes rewards are given upon theachievement of a community outcome such asODF status. For example, the district developmentcommittee (DDC) of Bara is giving NRs50,000 tothose VDCs achieving 100% sanitation coverage(Nepal Country Paper 2006). In other instances,LGBs honor those households which have built apermanent latrine. Examples of such initiativeswere found in Tanahu and Kapilbastu , where theDDC is rewarding those households building goodquality latrines. However, software activities arenot integrated into the program and therefore theimpact of such initiatives is somewhat limited. InKapilbastu , all VDCs can apply to participate inthe community sanitation program launched bythe DDC in 2006. The program makes availablesome funds to reward those households buildinghygienic latrines. Currently 11 VDCs areparticipating in the program. About 250households received a reward of NRs500 during2006, and around 500 received a reward ofNRs1,000 during 2007.

Although this review focuses on financing models ata community level, within South Asia are examplesof rewards being used by national and stategovernments as incentives to local governmentbodies to address sanitation. These have oftenbeen applied by rewarding sanitation outcomes. Inthe Indian state of Maharashtra, rewards forachievement of ODF status were offered at variouslevels, from community to the equivalent of VDClevel, by the state government. This motivatedpoliticians, local officials, and community groups towork together to increase sanitation coverage, andin a relatively short period coverage has increaseddramatically. The World Bank's Water andSanitation Program is currently supporting stategovernments in Pakistan to adopt similar incentiveschemes. The heart of these strategies has beenthe public-good nature of sanitation and themotivation of stakeholders engaged in sanitationactivities at various levels to work toward a commongoal.


School Led Total Sanitation (SLTS) was introduced in the Shree Sindhu Primary School

by the Nepal Red Cross Society (NRCS) withthe financial support of the United NationsChildren's Fund at the end of 2005. In the ShreeSindhu Primary School, there are 82 students, whereas in its catchment area there are 112 households, themajority of them being poor households headed by Janajatis. Prior to program implementation, 21 householdshad latrines but only half of the households were using them. The Gobar Gas Company had supported some of thehouseholds to build permanent latrines in the past.

The Junior Red Cross Circle and the sanitation committee organized numerous activities to mobilize the commu-nity and raise sanitation awareness. A sanitation table with a few basic hygiene-related articles is displayed in theschool as a reminder of the importance of following hygienic practices (Figure 8). Members of the Junior Red CrossCircle utilize whistling and flagging as an effective means of discouraging open defecation.

At the community level, four masons were trained to support latrine construction. The joint efforts of localgovernment bodies, the NRCS, and community benefited the entire community. One caretaker from the commu-nity working as a volunteer and one community health volunteer (CHV) paid by the municipality and the publichealth office are also in charge of spreading sanitation messages among community members.

After 1.5 years of project activities, all ex-cept 10 households have built latrines. Thecatchment area has already been declaredan open defecation free area as all house-holds NGO are using latrines, albeit not theirown in a few cases.

Both minimum hardware subsidies and/or re-volving loans were provided to those house-holds requesting support from the sanita-tion committee. It is worth noting that, de-spite project guidelines discouraging theprovision of subsidies, NRCS provided mini-mum hardware subsidies, consisting of onebag of cement to three households, plasticpans to 16 households, and pipes andbrushes to every household.

In addition to the hardware subsidy, NRCSgave NRs20,000 to the sanitation committee

to be used as revolving loan funds in the community and catchment area. Every household demanding therevolving loans received up to NRs500, to be repaid within 6 months with no interest. At the time of the field visit,the second round of revolving loans was taking place. Out of the 40 households who received the loan, 17households had not repaid the loan despite the repayment period being over. Incorporation of incentives and/orpenalties could favor punctual collection of revenue.

The community affirmed that there were some difficulties in accessing certain materials, as transport to reach theclosest market is not that frequent. NRCS provided pans, cement, and pipes to several households. Most mate-rials to build the superstructure were procured locally. Even though funds to support the construction of latrineswere made available, most latrines built as a result of the program are direct pit latrines with very temporarysuperstructures. During group discussions, community people stated the view that it would be better if some kindof subsidy was provided to the poorest households to build their toilets. Most households stated that theywould like to build a permanent latrine but they lacked sufficient finance. In the area, some households havereceived a reward of NRs1,250 from the Finnish International Development Agency and a municipality fund.However, only those households having permanent latrines could receive such reward (section 3.2.5.).

SLTS in Shree Sindhu PrimarySchool (NRCS-UNICEF), ByasMunicipality, Shera, Tanahu.

FIGURE 9. Sanitation table displayed in the school.

Local GovernmentInitiative: Rewards forPermanent Toilets in Shera

In Tanahu, the Finnish International DevelopmentAgency (FINNIDA) was implementing its Rural Water

Supply and Sanitation Support Program in close col-laboration with the local government body. Despiteproject activities having not been completed in someof the village development committees, the programwas phased out at the end of 2005 and thereforeFINNIDA staff could not continue with the implemen-tation of the program. In view of this, FINNIDA de-cided to hand over the uncompleted schemes to thedistrict development committee (DDC).

As per government initiative, the unused funds weregiven as a reward to those households building per-manent latrines. In 11 wards of Vyas Municipality(Tanahu), the reward was NRs1250, out of which NRs750was from FINNIDA funds and NRs500 was contributedby the municipality. The DDC worked in collaborationwith a women's cooperative to identify those house-holds building permanent latrines and therefore de-serving to receive the reward. The women's coopera-tive also lent money at 12% interest rate to the poor-est households to build latrines.

In Shera, ward number 6 of Vyas Municipality, 21 house-holds with permanent latrines were selected to re-ceive the award. In the same area, NRCS is imple-menting the SLTS program, and most households par-ticipating in that program could only build direct pitlatrines and therefore were not eligible to receive thereward. Some households with temporary latrinescomplained as they felt they deserved a similar re-ward.

Households who had received support from the BiogasSupport Program were receiving the reward. A house-holder who had received the reward for her latrinebuilt 5 years ago made the following wise comment:"the reward from FINNIDA should be given to thosehouseholds having a temporary latrine so they canbuild a permanent latrine." The government initiativeis worthy of note; however, it failed to reach the mostin need and only the relatively better-off benefitedfrom the program.

3.2.5 Mixed ApproachesAs mentioned above, at the broadest level theapproaches in Nepal can be clustered into threemain groups-subsidy, loans, and communityawareness. However, some programs, althoughcentered around one approach, have includedelements of other approaches in their models.Examples of this are CLTS (which promotes crosssubsidy) and SLTS (which includes some revolvingloan support), and most subsidy approaches havesome level of community awareness. In this section,two relatively new financing models, whichincorporate elements of the three main groups, aredescribed.

3.2.5.1 Community Based Water Supply andSanitation Sector ProjectCurrently within Nepal there is one program that hasformalized the mixing of these core groups within itsapproach. The Community Based Water Supply andSanitation Sector Project (CBWSSSP) designed itsstrategy to deliver sanitation by incorporating thekey elements of all the three main groups. Theprogram, supported by ADB with $35.7 million, is oneof the largest rural water supply and sanitationprograms in Nepal. The program aims to work in 21districts in the West, Midwest and Far Westdevelopment regions of the country between 2004and 2009.

The financial model to promote sanitation is uniqueand fairly complex as it incorporates a number ofdifferent financing models. Community awareness isused to encourage households to build latrines fromself-initiation, but financial resources are also madeavailable with hardware subsidies for the ultra-poorhouseholds, as are revolving loans for the poor andmedium-income households. In the first batch, thepoorest 10% of households were provided with aNRs3,000 hardware subsidy and the next poorest10% received a revolving loan of NRs3,000. Insubsequent batches, the revolving fund amount hasbeen provided to 32% of the households in order tofurther facilitate access to financial resources andfavor construction of good quality latrines.

In terms of investment in software, activities arebased on PHAST (Participatory Health and SanitationTransformation) and PRA tools to effectivelydisseminate the health and sanitation message tothe community and, remarkably, to users' committeemembers, women, and children. Training is providedat the beginning of the intervention to the staff ofthe concerned nongovernment organizations(NGOs), CHVs and water users' committee members.



Bashkhor is a Madhesi community with 114households located in Kapilbastu district. About

half of the households in the area have good latrinesup to pan level (provided by a previous sanitationprogram) but most latrines are not in use because oflack of ownership and hygiene awareness.

The CBWSSSP was initiated in Bashkhor in mid-2006;after more than 1 year of project activities sanitationactivities are ongoing and water supply is still to beprovided. Initial training of the users' committee,women's group, masons, and children has already beencompleted. Despite the provision in the projectguidelines to train an equal number of male and femalemasons, in Bashkhor only male masons could receivetraining as it was difficult to involve females due tocultural reasons.

Subsidies and revolving fund loans were distributedby the users' committee to the selected households,and at the time of the field visit the benefited householdswere building their latrines. Eleven households receivedhardware subsidy and seven households received arevolving loan of NRs3,000. Revolving loans andsubsidies were provided in the form of materials andskilled labor to build latrines up to pan level.

Field evidence showed that subsidies were notdistributed equitably in Bashkhor. While only thepoorest households should have received a hardwaresubsidy, relatively better-off households were found tohave also received a subsidy. Even though the entirerevolving loan fund was distributed, the demand forloans was found to be low and therefore loans weredistributed on a first-come, first-served basis.

Around 60% of the households are expected to build aself-initiation latrine. Provision of subsidies and loansseems to act as a disincentive for other households tobuild their latrine with their own resources. In Bashkhor,no one has built a self-financed latrine since initiationof the project activities as people are apparently waitingto receive either a subsidy or a revolving loan.

The Community Based Water Supply andSanitation Sector Project in Bashkhor

FIGURE 11. Ongoing latrines construction

FIGURE 10. Newly completed latrine


Sanitation masons are also extensively trained. Inaddition, the program makes provision for refreshertraining to reinforce the impact of the hygienesanitation and behavior change program.

The CBWSSSP was approved in 2004 and a pilotbatch was initiated in 2006. However, to dateprogress in all the project areas is modest for bothwater supply and sanitation. Some of the challengesfaced by the program are summarized below.

Complex financing model at the community level.Due to the different models being used for varioussections of the community, clear training andcommunications on these are essential to ensurethat a transparent approach is understood by all.Uniformity of communities in terms of povertyhindered effective application of the sanitationfinancing modality, i.e., some communities faceddifficulties in allocating the amount granted as ahardware subsidy because of the large number ofpoor households equally deserving of the grantedamount.A high number of layers of organizations involvedin the process. The CBWSSSP office through thedistrict water supply and sanitation support unitunder participating DDCs works with local NGOs inpartnership with national NGOs in each district,and at the same time works in joint venture withlocal NGOs.Lack of technical capacity of national and localNGOs.Staff are paid full time for a few months eventhough they have to work for a longer period on apart-time basis.

3.2.5.2 Community Led Basic Sanitation for AllCommunity Led Basic Sanitation for All (CLBSA) is anew approach developed by the Nepal Water forHealth (NEWAH). It incorporates the main lessonsfrom NEWAH's past experience, andimplementation began in 2007. The model is

inspired by CLTS, and similarly the entirecommunity is mobilized to achieve basic sanitationfor all. Unlike CLTS, however, CLBSA incorporates acommunity fund to support the ultra poor andexcluded to build latrines with the provision ofcertain materials and skilled labor. The householdsin need of support are identified through well-being ranking exercises and household visits.NEWAH transfers the funds at an advanced stageof the program on the basis of actual expenses.Thus, the users' committee is encouraged to findalternative ways to support the ultra-poorhouseholds, such as mobilizing their ownresources, taking loans from local providers, orseeking LGB support.

The program is delivered in two stages. In the firststage the community achieves ODF status, and in asecond stage the community moves toward a basicsanitized community. Use of hygienic latrines andother indicators involving a clean and healthycommunity are applied to declare the community abasic sanitized community.

Innovative promotional activities, such as videoshows of those communities that are alreadydeclared ODF and basic sanitized, and stool tests toshow the main dangers of open defecationpractices, are also used in CLBSA to promotesanitation practices and behavioral change. Awardsare also used to motivate people to activelyparticipate in the program. Letters of appreciationand small awards are given to those householdsplaying a leading role. The children's group alsoreceives sports materials worth NRs3,000 in twoinstallments-after public declaration of ODF statusand after basic sanitized community status. Finally, acommunity achieving ODF status receives a rewardof NRs8,000-NRs10,000 and a certificate. The basicsanitized community is awarded with NRs10,000 anda certificate.

27Multi Criteria Analysis of Financing Modalities

4. Multi-Criteria Analysisof Financing Models

The main financial models described in this reportare analyzed through a multi-criteria analysis

(MCA) framework. Key areas of the broad models forfinancing sanitation have been analyzed against anumber of criteria which have been clustered underthree dimensions. The criteria in the first twodimensions-economic and social-look at theapproaches, focus, and inputs of each model andthe effect these criteria have on increasingsanitation coverage. The third dimension includes

three criteria by which sustainable sanitationcoverage can be measured and the outcomes of themodels analyzed. It is recognized that the economicand social criteria have an impact on the successfuloutcomes of the sustainability criteria. Table 4 has aconcise description of the criteria, and indicatorsused to evaluate the different alternatives under theeconomic, social, and sustainability dimensions arepresented.

Dimension Criteria Index / Indicador

Table 4. Evaluation criteria

Economic Project duration

Hardware cost per community

Software cost per community

Community contribution

Quantitative evaluation of the time taken to complete the program

in one project area. It is considered that a project starts with the

formation of the users' committee and finishes with completion of

sanitation construction activities. Follow-up activities are not

considered as they are usually carried out on intermittently over a

long period.

Quantitative evaluation of the material and labor cost subsidized by

the donor. It does not include the cost of institutional latrines.

Quantitative evaluation of the cost of training at community level,

IEC materials, salaries for community staff, and rewards and token

money given to the committees for sanitation activities.

Qualitative evaluation of materials and labor contributed by

community to build latrines. The community's own unpaid labor and

free local materials are not included.

Contd...


4.1. Economic Dimension

Within the economic dimension, not only the financialcosts (such as hardware and software) have beenevaluated but also the costs such as time and labor.To be able to establish comparisons, costs werecalculated for an example Nepalese community made

up of 99 households, with an equal number ofmedium, poor, and ultra-poor households. Theevaluation of the economic criteria for each financialmodel is shown in Table 5. Analysis of the majorfindings and relevant issues related to the economicdimension of every financing model is broadlyexamined in the following subsections.

Dimension Criteria Index / Indicador

Table 4. Evaluation criteria (contd...)

Social

Sustainable

Total Sanitation

Additional support to the very

poor

Inclusion of disadvantaged

households

Community unity

Hygienic latrines

Use of latrines

Total coverage

Qualitative evaluation of special assistance given to ultra-poor

households to build their latrines, e.g., additional subsidies or cross

subsidies.

Qualitative evaluation of the active participation of disadvantaged

households. It includes the involvement of women and ultra poor in

the users' committee, and paid employment or training in specific

skills given to the disadvantaged groups

Qualitative evaluation of the degree of community unity promoted

to achieve the goals of the program.

Qualitative evaluation based on the type of latrines found in the

community. A latrine is considered hygienic when human excreta is

not visible, flies and other insects do not have access into the

latrine, and surrounding water sources are not polluted. Unhygienic

latrines are considered unsustainable.

Qualitative evaluation based on the level of latrine use in the

community. Some households may not have a latrine but use that of

a neighbor or relative, while others may have one but may not be

using it due to lack of awareness. Evidence of open defecation in the

community was also used as an indicator.

Qualitative evaluation of the number of households without a

latrine.

FINANCIAL ECONOMIC CRITERIAMODALITIES

Project Hardware donor cost Software donor cost Total donor cost Communityduration9 per community (NRs) per community (NRs) per community (NRs) Contribution (NRs)

Full subsidy to 5 months 339,587 14,000 353,587 Moderate

pan level

Graded subsidy 15 months 203,115 54,827 257,942 More or less good

Minimum subsidy 9 months 99,000 24,000 123,000 More or less good

Revolving loan10 24 months 62,500 28,000 90,500 Good

Subsidy + 21 months 60,000 50,000 110,000 Good

revolving loan11

CLTS 2 months 0 17,000 17,000 Very good

SLTS 18 months 17,500 23,294 40,794 Good

Table 5. Impact matrix with economic dimension

9 Duration of the project is only up to the completion of hardware construction and does not include follow up software activities

10 Modality adopted by the WB funded RWSSFDP

11 Modality only adopted by the ADB funded CBWSSP


4.1.1. Duration of Sanitation ProjectThe time taken to construct sanitation hardware(understood in this study as the project duration)varies considerably between approaches andsanitation programs in Nepal, ranging from a coupleof months in CLTS to 24 months in the Rural WaterSupply and Sanitation Fund Development BoardProgram (RWSSFDBP). Mostly as a result of fixedprogram costs (such as project staff salaries),project duration is indirectly related to the cost ofthe program.

It should be noted that those programs thatintegrated water supply and sanitation lasted nolonger than those implementing stand-alonesanitation programs. In the case of integrated waterand sanitation programs, there was a diverse mix ofprograms: those leading with water activities (asaccess to water is required for successful latrineadoption), those implementing the two componentssimultaneously, and those also using latrineconstruction as a precondition for water activities.

The main issues related to the duration of theprojects which arose during the review of the casestudies are summarized below.

Motivation of people to build latrines is highest atthe beginning of the project, followingmobilization and training. Capitalizing on thisinitial momentum was seen as an effective meansof ensuring total sanitation coverage.In different approaches, the timing of theprovision of funds acts as both an incentive anddisincentive to engagement in latrine building anduse. In some programs, particularly those involvingthe provision of revolving loans, households haveto wait for their turn to receive financial support,which causes long implementation periods andfrustration among community members, and mayresult in reduced enthusiasm to participate in theprogram.Some programs provide funds on an installmentsbasis, wherein initial support is followed up withadditional funds based on satisfactory progress.Although this practice acted as an incentive tobuild latrines, it lengthened the duration of theconstruction activities and, in some cases, heldback some households willing to constructlatrines. In other approaches where rewards aregiven to the community following the achievementof sanitation outcomes, communities have had tobuild latrines before financial support is received,and this was found to encourage communityengagement and speed up the realization ofsanitation coverage.

It was clearly seen that sustainable behaviorchange takes some time to achieve; therefore,although an initial "sanitation surge" isnecessary, continued software activities arerequired over a longer period.Those programs with financing strategies thatenabled or encouraged sanitation hardwareactivities to be completed quickly, with a"sanitation surge" in the community, were seen tobe successful in achieving sanitation outcomessuch as total coverage and stopping opendefecation practices. It was recognized that theachievement of quick hardware goals needs to besupported with simultaneous and long-termsoftware activities to ensure latrine use andupkeep.The inclusion of a post-implementation phase wasseen as crucial to ensure supplementary time tofinalize certain activities, provide the communitywith additional training and support, and provideproper monitoring and follow-up of the sanitationachievements.

4.1.2. Significant Variation in Program CostAs mentioned in the limitations, this study has not triedto analyze the total cost of implementing sanitationprograms. Instead it focuses on the allocation anddistribution of resources at the community level. Wehave therefore not looked at the administrative costs ofdesigning and implementing sanitation programs, whichvary depending on the scale and type of organizationimplementing the program. The total cost of sanitationprograms at the community level was found to varyenormously depending on the approach adopted (Figure12), as well as geographic location and latrine optionspromoted. The donor cost at the community level for anexample Nepalese community of 99 households rangesfrom NRs17,000 to NRs340,000.

The provision of hardware subsidies in sanitationapproaches is shown to greatly increase the cost ofthe program at the community level. Hardwaresubsidy up to pan level, graded subsidy, andminimum subsidy are all costly models, but the costdiffers significantly depending on the type of subsidy.Providing minimum subsidy, consisting of a fewessential materials, is three times less expensivethan giving full hardware subsidy to pan level to theentire community. The cost of graded-subsidyprograms varies depending on the makeup of thecommunity and, in terms of total cost, generally fallsbetween the other two subsidy models but was feltto provide increased equity in the allocation ofresources. The inclusion of the cost of skilled laboras part of hardware subsidy packages (common in


FIGURE 12. The comparative cost of sanitation financing modalities in an exampleNepali community of 99 households (33 ultra poor, 33 poor and 33 medium)

12 Exchange rate 1US$=NRs.65 and average family size of 5 households.

most subsidy-based approaches) increases the costof the program substantially.

Programs which focused on providing softwaresupport to achieve sanitation outcomes, such asCLTS, are more cost-effective alternatives. Analysisshows that through investing more time andresources in community mobilization, the cost ofsanitation programs is considerably reduced ascommunity resources are more effectively mobilizedand the communities themselves become the maincontributors to program outcomes.

As mentioned above, the time taken to achievesanitation outcomes in a community significantly impacton the cost. The cost of those financing models thatencourage a "sanitation surge" to achieve sanitationcoverage quickly is shown to be relatively less thanthose approaches that take a number of years toachieve the same outcome. It should be noted that allapproaches require follow up and longer-term support toensure sustainable sanitation outcomes.

In rural areas of Nepal, around 11 million people donot have access to a latrine facility (NDHS 2006); in2004 around $1 million per year was available toincrease sanitation coverage in rural areas (WAN2004). The cost of providing sanitation coverage inall of rural Nepal using the most expensive modalityis around $121 million with subsidy up to pan level;using the cheapest modality (CLTS) it would cost$5.8 million.12 Hence, at current investment levels,using the subsidy up to pan level model, it wouldtake around 121 years to achieve 100% sanitationcoverage; using CLTS it would take almost 6 years.

If subsidies are given, the level of resourcesrequired is beyond reach. Thus, it is important tokeep in mind that the proper distribution ofresources is actually crucial to achieving totalsanitation coverage in rural Nepal.

4.1.3. Large Disparity in Hardware Cost ButMinor One in Software CostThe balance between the software and hardwarecosts of the main models also varies enormously.Hardware and software costs are calculated only atthe community level, i.e., the costs borne by theinternational, national, and local agencies was notconsidered because of difficulties in ascertainingthe amount spent for a specific project. In thisanalysis hardware costs include materials and laborsubsidized by the donor, while software costsinclude the cost of training given to users'committee and community people, IEC materials,salaries of staff recruited from within the community,and cash rewards given to the committees forsanitation activities.

Most approaches spend larger amounts onhardware than software; only CLTS and SLTS investmore resources in software activities than inhardware. The CBWSSSP (subsidy plus revolvingloan model) invests approximately the same amountin software as in hardware. The rest of theapproaches allocate more than 65% of the projectresources to hardware, with the subsidy up to panlevel approach being the extreme case with morethan 95% of the total cost spent on hardware(Figure 13).


Balance between software and hardware cost of main sanitation modalities

FIGURE 13: Percentage (%) FIGURE 14: Absolute cost (NRs.)

While total hardware cost broadly varies betweenapproaches, total software costs are broadly similar,with those programs relying exclusively on softwareprovision not showing higher investments onsoftware activities compared to other models. Forexample, CLTS and SLTS show lower levels ofinvestment in software activities than other modelsproviding hardware subsidies (Figure 14).

The broadly similar total costs can be explained bythe fact that most programs have similar softwarepackages, with software costs being made up ofstaff salaries and IEC materials. However, whatvaries between programs is the emphasis thatdifferent approaches place on software andtherefore the number and type of software activitiesundertaken. Those programs with high hardwaresupport use this as the major tool for motivatingcommunities to build latrines, whereas thoseprograms which do not allocate financial resourcesfor hardware have to place increased importance oneffective community mobilization through softwareactivities. CLTS and SLTS have demonstrated that,once initial investment is made in training local staffand IEC materials, additional community activitiesare not costly but can significantly impact onreducing hardware costs in the program and onachieving sanitation outcomes.

It should be borne in mind that this research hasonly considered the software cost directly given to,or expended by, the community. As a result, if anapproach requires the implementing agency toexpend significant additional resources on software-

perhaps in the form of salaries for a non-community-based health and sanitation professional-this is notcaptured in the analysis. However, observation madeof different program approaches and during the fieldvisits showed that most implementing agencies hadallocated similar levels of their own humanresources to support the program implementation.Cost, however, may vary depending on whether the

staff employed were receiving salaries and benefitsfrom local, national, or even international NGOs.

4.1.4. Varying Levels of CommunityContributionIn all financing models evaluated in this study, somelevel of community contribution was required tocomplete latrine construction. In some models (suchas subsidy up to pan level), only construction ofsuperstructure was required, but in others (such asthe revolving loan approach, SLTS, or CLTS) theentire latrine was financed by the benefitedhouseholds. In NEWAH's graded-subsidy approach,in addition to the labor that households had tocontribute to build that latrine, they were alsorequired to pay a contribution to receive theirsanitation materials and skilled labor support.Moreover, the range of technological optionspromoted and the availability of materials alsodetermine the level of investment required.

The average cost of the latrines constructed indifferent programs was found to range betweenNRs700 and almost NRs9,000 in hill programs andbetween NRs1,500 and NRs7,000 in tarai programs.


Hardware Graded Min SLTS-Subsidy pan Subsidy Helvetas Subsidy RRN NRCS UNICEF

level CECI

Average Household NRs 6,250 1,525 4,420 713

Financial Investment13

% of total 71% 44% 81% 100%

Total average cost of the latrine NRs 8,750 3,440 5,420 713

Table 6: Average household contribution to latrine construction in different programs

6.1 Hill Programs

6.2 Tarai Programs

Hardware Graded Revolving GWSSubsidy pan Subsidy loan CBWSSSP Stepwise CLTS SLTS-level CARE NEWAH RWSSFDBP approach PLAN WHO

Average Hou.sehold NRs 451 2,671 7,385 2,805 4,471 1,500-3,000 1,850

Financial Investment14

% of total 11% 54% 100% 64% 100% 100% 100%

Total average cost

of the latrine NRs 3,951 4,898 7,385 4,380 4,471 1,500-3,000 1,850

13 Labour and time invested by the household to construct the latrine are not considered.

14 Labour and time invested by the household to construct the latrine are not considered.

It is important to bear in mind that the cost ofconstructing a latrine depends to a large extent onthe type of technology and materials promoted,geographic context (tarai or hilly), andtransportation cost, which is normally related to thelocation of the community from the markets. Theaverage amount spent by each household toconstruct latrines also shows strong variations, fromNRs700 in the SLTS implemented by UNICEF to morethan NRs7,000 in the Fund Board project (Table 6).In addition, the variation in the cost of latrines isdirectly linked to the amount of subsidy provided orfunds in the form of credit made available to ahousehold, as well as the household's ability anddesire to invest in sanitation.

Household financial investment by the ultra-poorhouseholds was found generally to be low or evennil in some cases. Many ultra-poor householdsconstruct the latrine with the hardware subsidyreceived from the support organization andcomplete the superstructure of the latrine withnonfinancial or locally sourced materials. Poverty,lack of hygiene awareness, or the hope of receivinga subsidy from other programs may be the cause ofreduced household investment. The season when asanitation program is launched is also likely todetermine the level of household contribution. Afterharvesting, many households have more financeand time available, which is likely to result inconstruction of higher quality latrines.

4.1.5. Materials ProcurementMost sanitation programs incorporate some strategy tofacilitate access to the materials required for latrineconstruction. In rural areas, those materials aresometimes far from the communities, and this mightbecome a barrier to construction, maintenance, andupgrade of latrines. In the past, materials have beenprocured by the supporting organizations; butincreasingly this responsibility has been handed over tothe users themselves. Other initiatives-such as theproduction of certain materials locally or supportingsanitation centers through loans and subsidies-havebrought material procurement closer to the point of use,resulting in the increased availability, and often reducedcost, of materials. Allocating financial resources to localsanitation centers to supply materials is evidence of ashift in the distribution of sanitation subsidies from theconsumer to the producer. This arguably demonstratesa change in the motivation for, and objective of, the useof subsidies, from a tool used to encourage individuallatrine construction to one that stimulates the supply ofsanitation materials for a whole community.

With the community themselves in charge ofmaterial procurement, some financing models haveadvocated for community procurement of essentialmaterials over individual procurement. In addition toincreasing a sense of community action andownership, this has enabled economies of scale andincreased purchasing power from local markets aswell as decreased transportation costs, and has


proved effective in many cases. However, in a fewinstances it has resulted in less flexibility in latrine

options and led to the exclusion of poorerhouseholds who were unable to afford the standardset of latrine materials and therefore could notparticipate in community procurement initiatives. Thishighlights the important issue of the promotion of awide range of latrine options which are affordableand appropriate to different socioeconomic groups.

In the tarai, having to line latrine pits to preventthem collapsing and to reduce groundwaterpollution increases the cost of material required. Incontrast, transportation costs are frequently higherin remote hill areas. The cost of superstructures alsovaries depending on the ecological area and theavailability of local building materials. In mostfinancial models superstructures are constructed byowners of the latrines using local materials. Theassumption that local materials are available andfree of cost is not always accurate. In the tarai manyhouseholds construct superstructures with grass,hay, bamboo, and/or mud. These materials might befree from financial cost, but procuring them has atime and labor cost for the household, which willvary depending on their proximity. Access to a forest,where many of these materials might be sourced,could entail a fee as it might fall under communityor local government management.

In hill areas, stone is commonly used to buildpermanent superstructures, but despite often beingreadily available the associated cost of quarryingand carrying stones is normally high. Sand cannormally be acquired without a financial cost; butagain most households need to invest their time totransport the sand. Limited access to local materialsor the inability to meet the expense of the requiredunskilled labor induces poor households to useplastics, cloth pieces, and even cardboard to buildtheir superstructure, which results in very temporarysuperstructures prone to damage in the short term.Therefore, these households will likely need toinvest additional time and labor in repair andmaintenance of their superstructure.

4.1.6. Financial Burden of LatrineConstructionFor many households unable to meet basic needs,borrowing money from outsiders is becoming acommon practice, as well as an increasing burden.Among those households interviewed which had builta latrine recently, 39.7% had taken some form of

loan to achieve this. In only 6.9% of the cases theloan was a revolving loan from the current sanitationprogram; in most cases (96.6%), householdsborrowed money from private moneylenders,relatives, or saving groups outside of any mechanismestablished by the sanitation program.

In the project visited, those households taking fundsfrom private moneylenders were paying interest ratesranging from 12% to 36%. Saving groups were alsofound in most villages where sanitation programs hadbeen implemented. Interest rates offered by savinggroups were found to be fairly high, ranging from24% to 36%, and as a result only in a very few caseswere households found to be borrowing money fromsaving groups to build latrines.

Because of the high rate of interest, return periodsare mostly relatively short and are fixed for only afew months after the loan is taken, thereforeleading to tolerable interest increments. Problemsoccur when households fail to repay the loan; as aresult, interest rates and the accumulated debtincrease exponentially, causing significant tensionamong borrowers. Partnerships between sanitationprograms and existing saving groups were not foundin any of the project sites visited, but these couldenable some control on high interest rates and morefavorable conditions, and in doing so give increasedaccess to financing.

4.1.7. Income-Generating Opportunities ofSanitationOn the reverse side, sanitation activities provide theopportunity for income generation, and somesanitation programs implemented by agencies suchas CECI, Rural Reconstruction Nepal (RRN), or FundDevelopment Board have directly linked withincome-generating programs. Poverty reduction andthe increase in access to funds will enablecommunities to invest in basic services, such assanitation. The generation of income is also crucialto enable households to take and repay loans tobuild latrines. A household which is unable to pay fora latrine now is unlikely to be able to pay in a fewmonths unless some additional income is generatedin the meantime. A healthy environment alsogenerates extensive savings in medicines and timeat the household level, and thus improved sanitationalso has a positive impact on poverty reduction.Most households affirmed that since they built theirlatrine, they suffer less from diarrhea and similarlytheir expenditure in medicines has also beenreduced.


FINANCIAL SOCIAL CRITERIAALTERNATIVES

Additional support to Promotion of Inclusion ofpoor households community unity disadvantaged

households

Full subsidy to pan level More or less bad More or less bad More or less good

Graded subsidy Good More or less good Good

Minimum subsidy Moderate Moderate More or less good

Revolving loan Bad More or less bad More or less bad

Subsidy plus revolving loan More or less good Moderate More or less good

CLTS Moderate Good Good

SLTS Moderate Good Moderate

Table 7. Impact matrix for the Social Dimension

The construction of latrines also results in new jobopportunities being created in both the short andlong term. Most sanitation programs train communitymembers as sanitation masons, communitymobilizers, or health promoters, providing them withnew skills and providing an environment where thoseskills can be used.

Although most sanitation programs just address thesafe disposal of feces and urine, where culturallyacceptable these waste products can be usedproductively. Ecosan latrines, which turn humanwaste into fertilizer, enable farmers to save moneyand increase the quality of their crops. Similarly,setting up a kitchen garden with seasonablevegetables fosters reuse of wastewater andimproves household food security.

4.2. Social Dimension

The criteria selected to evaluate the socialdimension of the financial alternatives areprincipally based on the effectiveness of theapproach to deliver sustainable sanitation servicesto the poor, and the level of inclusion andparticipation of the disadvantaged groups (women,the ultra poor, dalits, and the disabled) in thedecision-making process and other programactivities. Enhanced community unity is alsoconsidered a positive outcome of some sanitationinterventions. The results of the evaluation of thesocial criteria are shown in Table 7.

4.2.1. Support for Disadvantaged HouseholdsPoor households need to manage their limitedresources carefully to ensure that they gain accessto basic services. Despite improved sanitationhaving many positive impacts on the household andcommunity, food, water, and shelter are generallyhigher priorities. In addition, household funds areoften managed by the men in the family who give

less priority to sanitation than women. Ultra poor,disabled, and female-headed households arefrequently incapable of building latrines withoutassistance, and therefore specific mechanisms totarget these groups are required to ensure totalsanitation.

The most common reasons behind the inability ofultra-poor households to build a latrine include

lack of sufficient financial resources;lack of time (households cannot afford to stopwork to build the latrine);lack of sufficient skills;lack of land and temporality of landlesshouseholds; andlack of awareness of positive impacts of animproved sanitary environment.

Paradoxically, those households requiring anddeserving the most support are often excluded fromreceiving additional support, such as subsidybenefits, because of a lack of proper understandingof their needs. In Garpan, where RRN wasdistributing minimum subsidies to all households, afew ultra-poor households could not build theirlatrine because there were no skilled members inthe household. This situation is aggravated by themigration pattern found in many rural areas ofNepal, where (mostly) males leave their houses towork in urban centers and abroad. In Garpan,community members helped disadvantagedhouseholds to dig their pit but that support was notsufficient; ultra-poor households were unable tocontinue the construction of the latrine.

Some projects exclusively providing revolving loansor community awareness were also found to besomewhat ineffective in targeting the poorestsection of the community. Similarly, the ultra-poorhouseholds either do not have access to or cannotafford loans, as they are unable to pay the amountback. Building a superstructure can be a burden to


certain households, and therefore those householdsneed special guidance and support to build it.Providing affordable latrine options for the pooresthouseholds is essential to enabling them to adopthygienic sanitation practices. As a result of a lack oflatrine options, the poor often don't build latrines orbuild unhygienic latrines.

Currently, most programs providing hardwaresubsidies support households to build hygieniclatrines up to pan level. The remaining superstructureis the responsibility of the household, which isrequired to contribute all materials and labor.Although local material can often be used withrelatively little expense, it is commonly assumed thatthe construction of superstructure can be easilycarried out by the householders themselves. In VijayNagar (Tikapur-Kailali), one female-headed householdhad to wait 1 month until one of the woman'srelatives could help her build the superstructure, asshe lacked the appropriate capacity herself. Anotherfemale head of a household in the area claimed shewas unable to repair damaged superstructurebecause of her extreme poverty.

Financing models are becoming increasingly flexiblein order to respond effectively to the needs of thedisadvantaged households. Some sanitationfinancing models, such as graded subsidies, givespecial support to the poor by making additionalresources available to them. Proper classification ofhouseholds in poverty categories is sometimes achallenging task since most households prefer toreceive subsidies. Similarly, the CBWSSSPincorporates a subsidy provision to target ultra-poorhouseholds. However, the fact that no more than10% of households can receive subsidies presumesthat all communities are homogeneous, and doesnot recognize the fact that in some communities thepoorest 20-50% might be equally poor. The practicalimplications of this rigid approach might causeconfusion and conflict within a community.

Cross subsidy, i.e., the relatively better-offsupporting the most disadvantaged households tobuild their latrines, is also a valuable and effectiveway of targeting the ultra poor and marginalizedgroups. Cross subsidies were found in Garpan,where RRN was providing minimum hardwaresubsidies and some members of the communityhelped the marginalized groups dig pits and carryrequired materials. CLTS and SLTS models alsoencourage the use of cross subsidies. To encouragemembers of the same community to provideassistance to those in need of help, it is firstnecessary to create an awareness of the

interdependence of households in achieving healthoutcomes. When sanitation is presented as a publicgood and not as an individual issue, the sanitationprogram usually results in enhanced unity amongcommunity members. Cross-subsidy bringscommunity members together, and therefore theresulting benefits are far beyond the implementationof the program. Nevertheless, heterogeneity ofcommunities and caste systems might hinder thesuccessful performance of cross subsidies.

Even though there is flexibility, certain rigidities alsohinder some programs from responding properly tolocal needs. Rigidities are commonly related tobudgets and subsidies. Agencies are compelled toallocate a certain budget to each project. Usuallythe level of funds available for hardware is notdecided by the implementer, or it is decidedbeforehand by the international or national agencysponsoring the program. In Ramghat, not allhouseholds could receive the hardware subsidy toconstruct the latrine up to pan level because fundsallocated by CECI for that community were notsufficient to cover all households; in fact, some ofthe most disadvantaged households were left out ofthe program. However, in subsequent years CECIplans to increase the coverage to include theremaining households.

4.2.2. Inclusion and Active Participation ofDisadvantaged HouseholdsThe needs of the disadvantaged households aremore likely to be fulfilled when those householdstake an active part in decision making. For example,users' committees are usually responsible forsetting their own rules about how to distributerevolving loans among the benefited households. Inthe Fund Board and SLTS programs, the communitydecide on the amount, interest rate, and period ofrevolving loans. The active participation of thedisadvantaged households favors the equitable andinclusive distribution of funds.

In most schemes, female representation in theusers' committee is notable, and is even higher thanmales in many cases. However, the top positionssuch as president, vice president, or secretary arestill occupied by men in the great majority of cases.Inclusion of ultra-poor households in the users'committee obviously depends on the composition ofeach community, but in general their participationcan be said to be low and that medium or poorhouseholds are better represented. In particular, theusers' committee from the RWSSFDBP in Jutepanishowed a remarkably low level of empowerment ofdisadvantaged households.


FINANCIAL SUSTAINABLE TOTAL SANITATION CRITERIAMODALITIES

Hygienic latrines Total Coverage Use of latrines

Full Subsidy to pan level Good Moderate More or less bad

Graded subsidy Very good Good Good

Minimum subsidy Good More or less bad Moderate

Revolving loan Good More or less bad Moderate

Subsidy + Revolving loan Good Moderate Moderate

CLTS Good More or less good Very good

SLTS More or less good Moderate Very good

Table 8: Impact matrix for the Sustainable Total Sanitation Dimension

Sanitation programs usually offer jobs and skilldevelopment opportunities to some members of thecommunity, such as community health volunteers(CHVs), caretakers, and masons. Another way ofpromoting inclusion consists of offering the paid jobsor skills development training to those most in needso their poverty can be alleviated. Nevertheless, onlya few agencies-such as RRN, NEWAH, Plan, and CECI-were found to be giving paid jobs or skillsdevelopment training to ultra-poor households.

4.3. Sustainable Total SanitationDimension

The sustainable total sanitation in a community ismeasured in terms of the durability of theintervention outcomes and long-term benefits forthe environment. Whereas the first two dimensionslook at the inputs of the different models, thisdimension reviews the outcomes of the models. As aresult, the figures for construction of hygieniclatrines, latrine coverage, and use of latrines wereused as the main indicators to evaluate thesustainable total sanitation dimension (Table 8).

4.3.1. Unhygienic Latrines are WidespreadAccording to the NDHS from 2006, in rural Nepal33.8% of the people have a non-shared sanitationfacility whatever the quality, and as many as 12.3%people have an unhygienic facility. This data revealsthat four out of every 10 households with a latrinehave a non-improved or unhygienic facility.

Those households lacking sufficient economicresources or knowledge and skills to construct ahygienic latrine are likely to construct a non-improved sanitation facility, such as direct pitlatrines without a slab, or open pits. Unhygienic

latrines without a water seal attract flies, generatebad smells, and are likely to become full quickly andcause contamination of surrounding water sources.In Gumjanagar, where Nepal Red Cross Society(NRCS) was implementing the School SanitationHealth Education (SSHE) program, very poor peoplehad constructed unhygienic latrines which were notused because they had been flooded during therainy season.

Financing models-such as CLTS, SLTS, or minimumsubsidy-that give little or no financial support tobuild latrines generally incorporate strategies toencourage households to build hygienic latrines.Guidance and facilitation during latrine constructionare crucial components of these programs. Theprograms are based on the principle that latrinesshould last long enough to habituate communitypeople to latrine use, and thus they prioritize therebuilding of the latrine rather than defecate in theopen. Construction of relatively good superstructureswas also found to be important because verytemporary superstructures are prone to damage,and from a dignity point of view they might notensure adequate privacy for the users, thusreducing the likelihood of use. Where increasedcommunity awareness activities had beenundertaken, community members were noted tomore likely maintain and upgrade temporarylatrines.

Latrines built with hardware subsidies are generallyvery good up to pan level, as they are built bysubsidized skilled masons. However, as will beexplained in the following section, in thoseprograms hygiene awareness and a feeling ofownership are sometimes lower, and therefore it iscommon to find latrines that are not in use and/orfall into disrepair.


Figure 15. First-class latrine up to pan level , but not in use.Figure 15. First-class latrine up to pan level , but not in use.

Figure 16. Damaged superstructure

4.3.2. Achieving a Common Sanitation GoalIn rural areas of Nepal, changing traditional habits isnot an easy task as many people, especially theelderly and men, simply prefer to defecate in theopen. During focus group discussions, communitypeople from many different villages stated that ithad been hard to convince old people to changetheir habit of defecating in the open. Effectivemobilization of the community to achieve thecommon goal of total sanitation has ensured long-lasting results in terms of use compared to othermodels promoting "latrinization."

The mobilization approaches used in CLTS and SLTSfocus on collective action and stopping opendefecation practices. In the communities where CLTSand SLTS were introduced, latrine use was verysatisfactory, while latrine coverage was not alwayshigh. In Jagatpur (Chitwan), the area had beendeclared open defecation free (ODF) through SLTS,despite 24% of the households not having a latrine.Those households without a latrine were usingrelatives' and neighbors' latrines; as a result, hygieneconditions of the area had remarkably improved.

Thus, use of latrines and sanitation coverage arenot necessarily correlated. Latrines might be usedby everybody in the community while latrinecoverage is less than 100%, and latrine coveragemight be 100% and use of latrines might be below100%. In Vijaya Nagar (Tikapur-Kailali), highhardware subsidies were provided by Care to buildoffset pit latrines up to pan level. Every householdreceived the sum of NRs3,500 to cover all the costsof materials and skilled labor. Superstructures werebuilt by the householders themselves, but severalwere found to be damaged at the time of the fieldvisit, which resulted in useless latrines andhouseholders practicing open defecation once again(Figures 15 and 16). The level of ownership feeling,hygiene awareness, and habit creation willdetermine whether households upgrade and repairthe damaged superstructure.

4.3.3. Procurement and Availability ofMaterials Promotes Sustainable SanitationOutcomesIn rural villages located far from urban centers andmarkets, availability of materials may become asignificant barrier to the upgrade or repair oflatrines. Subsidized materials are sometimesprocured by the local or national nongovernmentorganization (NGO) implementing the program. Thispractice may impede further repair or upgrade of thelatrine due to restricted access to the required

materials, as most subsidized materials are notsourced locally. In recognition of this fact, in severalprograms the responsibility for procuring allmaterials is handed over to the same community.This is a core principle of community-ledinterventions such as CLTS. In addition, with theintention of favoring materials available locally, thefollowing practices are being encouraged.

Production of a series of latrine designs involvingthe use of available materials.The establishment of sanitation centers wherelatrine components can be purchased ataffordable prices.Production of certain components locally.

Only NEWAH and PLAN were found to promote theabove-mentioned practices, with rings for pit lining


FIGURE 17. Multi criteria Analysis Results with Simple Product

being produced locally during projectimplementation. Most agencies set up temporaryproject-financed production centers rather thansustainable supply chains through the local privatesector. The supply side of sanitation programs stillneeds to be further improved.

4.4. Integrated Ranking of FinancingModels

The results from the multi-criteria analysis arepresented in Figure 17. The first index shown is thestrength index (F+), which ranks the different financingalternatives from the best one to the least good; thesecond index is the weakness index (F-), which ranksthe alternatives from the least worse to the worst. Thegraph is obtained from the intersection of bothindexes. The ranking of alternatives obtained from theaggregation of the analyzed criteria shows that CLTS isthe model that scores highest against the criteria set,followed by SLTS.

CLTS and SLTS involve low cost for the donor andenhance community contribution and mobilization.Emphasis on stopping open defecation andpresenting sanitation as a public good ensuredeffective behavior change and improved communityunity in addressing sanitation. Both modelsencourage the provision of cross subsidies amongcommunity members in order to address theadditional support required by disadvantagedhouseholds. Thus, despite financial support notbeing provided, the disadvantaged households aretargeted through collective community action. Inaddition, sanitation is looked at from a communityoutcome perspective, not by the number of latrinesbuilt. It should be stressed that for CLTS and any

community-awareness approach to be successful, itis reliant on effective community mobilization, andthis requires skilled local facilitators. This may be abarrier to taking such an approach withoutsignificant investment in human resourcedevelopment and training.

Graded-subsidies models delivered sanitationservices effectively to all members of thecommunity; at the same time a feeling of ownershipwas properly developed, partially because of theobligation to contribute a certain sum to receive thehardware subsidy. However, the cost of theseprograms is significantly higher than thoseapproaches which maximize the communitycontribution.

The cost of programs offering subsidies up to pan levelis up to 30 times higher than community-ledinterventions, and even though latrine coverage isgenerally good, latrine usage is not always thatencouraging. Approaches making use of revolving loansenable increased community contributions and haveresulted in the construction of quality latrines. However,revolving loans often fail to reach the pooresthouseholds, with many low-income households unableto afford loans. As a result, ODF status is rarelyachieved. Although it is recognized that the mixedapproach adopted by the CBWSSSP (simultaneouslypromoting self-finance latrines, a hardware subsidy, andrevolving loans) is relatively new and has yet to be seenat scale, it was observed that community people had towait to receive financial support, and consequently theydid not get into action jointly and promptly. Again,achieving the public health outcome which derives fromstopping open defecation practices appears to be along-term mission when the three financing tools aresimultaneously offered to the communities.

39Recommendations

5. Recommendations

5.1. Financing Models Should Focus onAchieving Community Outcomes

Financing models designed to promote andencourage the achievement of communityoutcomes, such as ODF status, were observed to beeffective in delivering sustainable sanitationcoverage in rural communities. Field evidenceshowed that focusing on stopping open defecation,rather than constructing individual latrines, broughtabout superior use of latrines and therefore superiorhealth and sanitation benefits to the wholecommunity. From the financing perspective, thismeans that financial support should reflect thisapproach, with resources being targeted atcommunity activities such as mobilization andtraining, and community outcomes, i.e., rewardingcommunity sanitation outcomes rather thansupporting individual latrine construction.

If the whole community is strongly mobilized toachieve the public good of total sanitation, greaterinvolvement and a higher level of contribution, bothin cash and kind, from the community aregenerated. In turn these foster increased ownershipamong the members of the community, ensuringcommitment from everyone to build, use, andmaintain their latrines in the long term. Financingmodels that provide rewards and formal recognitionof achievements to the entire community, rather

than providing up-front support to households, canbe used as valuable motivational tools to achievesanitation outcomes.

5.2. Accessing Financial Support

5.2.1. Poor and Marginalized Groups NeedAdditional SupportHouseholds made up of the very poor ormarginalized groups, or those headed by a femalegenerally require additional support to build theirlatrines. Most disadvantaged households lacksufficient financial resources and many also lack theskills to undertake latrine construction. As sanitationis best addressed at a community (not household)level, identification of those households in need ofadditional help is an essential part of developing anadequate community strategy to target them andachieve a community sanitation outcome. Aparticipatory process, with mechanisms to increasetransparency, needs to be encouraged to ensuresuccessful identification of disadvantagedhouseholds and allocation of additional support,whether that is in cash or kind.

When sanitation is understood as a public good,cross subsidies become a natural part of anycommunity plan to achieve ODF status, and agraded system of support or subsidies can ensure


that everybody in the community can construct ahygienic latrine. Flexibility in the latrine optionsbeing promoted will also enable the pooresthouseholds to access sanitation facilities. Pushing asingle model, which is often financially andtechnically out of reach of the poorest households,can result in some groups being excluded from theprocess. Following some basic principles, hygieniclatrines can be built with minimal financial cost andthen improved over time once further resourcesbecome available.

5.2.2 Improved Access to InstitutionalMicrofinance FacilitiesIt was found that a large number of householdstake loans from different sources to complete latrineconstruction. Loans become a burden for manypeople, as failure to repay results in interestincreasing rapidly. In addition, many poorhouseholds refuse or are unable to take loansbecause of their inability to repay them. There is aneed to link sanitation programs with banks andother institutions, such as saving groups, to giveeverybody the opportunity to access affordablemicrofinance. In light of the public-good nature ofimproved sanitation conditions, partnerships withexisting saving groups (offering special terms andconditions to those households borrowing money tobuild a latrine and giving special consideration topoor families) could be an effective means ofsupporting the financing of sanitation.

5.3. Increased Sector Coordination

5.3.1. Reduced Overlap of ProgramsPromoting Different Financing ModelsMany agencies are working in the sanitation sectorin Nepal, but their distribution around the countrydoes not always reflect actual areas of need. It isnot rare to find two agencies workingsimultaneously in the same area, which usuallymeans implementation of two different approaches.There is often a lack of appreciation for the impactof the implementation of divergent financial modelsin one area on delivering sanitation more broadly.

At the VDC level, Khairenitar and Bandipur failed todeclare their VDCs ODF, which was partially due tomultiple approaches. There are further examplesconcerning multiple approaches at the community,VDC, and district development committee (DDC)levels. In Chitwan, a program to achieve totalsanitation by 2009 is being implemented andefforts were made to coordinate agencies working

in the district; despite this, examples of overlapwere still found. In Jagatpur (Chitwan), the DWSSand WHO, in partnership with a local NGO, wereimplementing SLTS without providing any financialsupport for latrine construction. At the same time,Jagatpur VDC was giving hardware subsidies toultra-poor households. The combination of bothstrategies facilitated the construction of latrinesamong ultra-poor households, but many otherhouseholds in the community still do not have alatrine.

Overlapping approaches was also detected inJutpani (Chitwan), where the RWSSFDBP was beingimplemented. The Fund Board made available arevolving loan of NRs2,000 per household, but in thesame area the Bote Society supported by NepalAadiwasi Janajati Sangh was providing a NRs2,900subsidy in cash to build latrines. As a result, mostJanajati households in the community wereindifferent to the committee formed by RWSSFDBPand rarely cooperated with the rest of thecommunity. These dual approaches destroyed oneof the key elements of successful sanitationsupport-community unity.

High subsidies given in some programs may disruptthose programs intending to reduce or eliminate theamount of hardware subsidy granted to everyhousehold. Community people, obviously, prefer toreceive high subsidies. In Garpan (Surkhet), RRN waspiloting several financing models (full subsidy,minimum subsidy, and CLTS) in neighboringcommunities. The proximity of the communitiescaused disappointment in some households as soonas they discovered they were given fewer subsidiesthan their neighbors. Community mobilizers had tomake a greater effort to convince community peopleto actively participate in the program which offeredreduced subsidies.

In Kapilbastu, the CBWSSSP faced difficulties inimplementing its health and sanitation programbecause of dual approaches. The Poverty AlleviationFund (PAF) was giving high subsidies (NRs10,000 incash to build latrines) while the CBWSSSP expecteda much higher contribution from the community.Community people frequently declared "we don'twant to take the NRs3,000 from the CBWSSSP. We'drather wait until the PAF comes to our area." Thesituation was aggravated by a lack of information.The engineer from the CBWSSSP unit office statedthat "PAF does not inform the DDC, and thereforewe do not know where they are working and wecannot plan accordingly."

41Recommendations

Overlapping approaches is common in rural Nepal,and this has proved to reduce effectiveness ofprograms. Although one single approach to financingsanitation might not be appropriate across Nepal,and therefore a variety of approaches might bepromoted nationally, at the district and certainly VDClevels increased consensus needs to be achievedbetween agencies as to the approach to bepromoted to achieve total coverage in one area.Available financial resources to promote sanitationare scarce; therefore sector stakeholders shouldmaximize the limited funds and avoid programoverlap.

5.3.2. Increased Local Planning andCoordination Among StakeholdersCoordination of sector stakeholders and properplanning are urgently needed to avoid duplication ofeffort and allow effective sanitation promotion inone area. The 1994 National Sanitation Policy refersto the obligation of establishing a district-levelcoordination committee chaired by the localdevelopment officer in every district. However, DCCsare only functional in a very few districts. The RuralWater Supply and Sanitation National Strategy 2004also mentions that the coordination of sectorstakeholders is to be led by the local governmentbodies (LGBs), stating that "DDC/VDC will coordinateand monitor the international NGOs, Rural WaterSupply and Sanitation Development Fund and othersectoral development programs at VDC and districtlevel."

Effective planning is also crucial to meet thenational and international sanitation targets, andLGBs should be at the forefront of this task. Thecurrent water supply and sanitation policy specifiesthat "Planning will be done in coordination withDDC/VDC to avoid duplication and optimize the useof limited resources." In the new policy,decentralization is also promoted to transfer majorresponsibilities for operation and maintenance ofwater supply and sanitation schemes to LGBs and/orWater and Sanitation Users Committees. The DWSSis to gradually hand over the responsibility ofimplementing and managing rural water supply andsanitation schemes to the DDCs.

Adequate information management is essential forplanning and identifying the areas that requiremajor assistance. In this sense, the Rural WaterSupply and Sanitation National Strategy 2004mentions the obligation of DDCs to prepare andupdate the District Water Supply and SanitationProfile with details on status, cost, operation and

maintenance, and responsibilities of every scheme.Moreover, a plan of action is to be developed toidentify priority areas and required actions. Such aplan has already been developed in some districts,such as Dhading, but often implementing agenciesignore these plans.

All organizations implementing sanitation programsat the community level should seek permission fromthe DDC and VDC to select and implement theirprograms. In fact, the current national water supplyand sanitation policy mentions that "Projects will beselected (for implementation) on the basis ofprojects prepared by the local bodies." However, toofrequently LGBs are not even informed about theimplementation of a particular sanitation program intheir area. Most agencies inform DDCs aboutprogram activities but forget to seek permissionfrom the VDC as well. Conflict has made thecommunication task impossible in certain areas, butin other areas VDCs are operative and yet are stillignored. Informing the DDCs and VDCs aboutimplementation of programs would facilitatecoordination of approaches and avoid duplication ofeffort. Actually, the inclusion of developmentprograms in the annual plan of the DDCs and VDCsshould be made mandatory for all agencies. InTanahu DDC, for example, all agencies working inthe district are compelled to appear in the annualplan from 2008.

Whereas communication with VDC needs to beconsolidated, partnerships with LGBs need to bestrongly reinforced. Although some agencies gettheir program activities incorporated into the districtplan once they have selected their working areas,very few programs seek VDC support to implementsanitation activities. In SLTS and SSHE, schoollatrines are usually built with partial support fromthe VDC. The Sectoral Strategic Action Plan of theRural Water Supply and Sanitation Policy 2004stipulates that water supply and sewerage divisionor subdivision offices should allocate 10% of thetotal annual budget for running sanitation programsto places where water supply projects have beencompleted and ownership transfer has taken place.

Similarly, the draft of the 2004 National Hygiene andSanitation Strategy states that "District levelagencies should allocate at least 10% of the annualwater and sanitation budget for implementation ofstand-alone hygiene and sanitation programs basedon Basic Sanitation Program and School Sanationand Health Education Program" and in addition "aminimum of 20% of the cost of water supply and


sanitation project will be allocated for hygiene andsanitation program." However, existing practices ofimplementing agencies and a lack of a clear plan atthe district level result in these resources not beingmobilized or capitalized upon. New sector policiesaim to stimulate greater investment in sanitationactivities by LGBs, which if properly coordinatedshould enable further resources to be effectivelyinvested in achieving sanitation outcomes.

5.3.3. A National Sanitation Program Shouldbe DevelopedField realities show that greater harmonization offinancing sanitation models and more efficientdistribution of available resources are needed.Surprisingly, discrepancies in approaches betweenthe same donor is also common. For example, theUK Department for International Development hasbeen funding NEWAH and Gurkha Welfare Scheme(GWS), and the World Bank is funding the FundBoard and PAF, and they all implement verydifferent approaches. At the national level,concerned stakeholders should work jointly to

prepare a national sanitation program, so that allefforts are concentrated in the same direction.According to the Rural Water Supply and SanitationNational Strategy 2004, a sectoral stakeholdergroup coordinated by the sanitation coordinationcommittee is to be formed to formulate sectoralpolicy and coordinate sectoral activities. Thus, thesectoral stakeholder group appears to be theappropriate institution to lead the development ofthe national program and to seek compromisefrom, and conformity of, all concernedorganizations.

A national sanitation program, although coordinatedat the national level, could then be facilitated andoverseen at the district level by the districtcoordination committee according to a clear districtplan. As proven by successful experiences in Indiaand Pakistan, the use of incentives by nationalgovernments for achieving sanitation outcomes at adistrict (or even VDC) level is an effective use ofresources as it stimulates LGBs to coordinate andfocus on sanitation activities.

43Conclusion

6. Conclusion

Numerous agencies are involved in the important taskof delivering sanitation services in rural areas of Nepal.Table 8 sets out the broad approaches that arecurrently being implemented.

Hardware subsidies are preferred by mostimplementing agencies, and indeed most beneficiaries,but the provision of heavily subsidized latrines resultsin limited sustainable sanitation outcomes at thecommunity level in too many cases. In addition,subsidies have seen costs increase dramatically and

Financing Modality Description Strenghts And Weaknesses

Table 9. Brief Description of Main Sanitation Modalities

Hardware subsidy up

to pan level

Graded subsidy

Minimum subsidy

Provision of subsidized materials and

skilled labor to all households

Classification of households in well-

being categories

Provision of materials and skilled labor

upon the payment of a predetermined

amount based on the well-being

categories

Ultra-poor households are exempt from

paying

Provision of few essential, nonlocal

materials to construct latrines

Cross-subsidies are sometimes

encouraged

Inhibits ownership feeling

Low level of latrine use

High cost for the donor

Failure to achieve Community ODF status

Effective are targeting disadvantaged

households

Ownership is somewhat ensured

High cost for the donor


Moderate cost for the donor


Contd...

local resources are not effectively mobilized. Revolvingloans reduce the cost of the intervention to theimplementing agencies substantially, but theyfrequently fail to reach the poorest households, resultin debt, and take a long time to achieve ODF status asthey are too often focused on household-notcommunity-outcomes.

Those financial models that support and promotecommunity sanitation outcomes, such as CLTS andSLTS, have proven to be very effective in speeding


Financing Modality Description Strenghts And Weaknesses

Table 9. Brief Description of Main Sanitation Modalities (contd...)

Revolving loans

Revolving loans +

hardware subsidy

CLTS

SLTS

Community receives a revolving loan

fund to be distributed among

community members to support latrine

construction. The fund is calculated in

proportion to the number of households

without latrine

Only some households can receive the

loan in the first round

The fund is revolved until all households

have built their latrine

Community receives a revolving loan

fund to be distributed among

community members to support latrine

construction. The fund is calculated in

proportion to the number of households

without latrine.

The ultra poor households receive

hardware subsidy to build latrines

The rest of the households are expected

to build latrines from self-finance

Community is mobilised to achieve the

public good of achieving "Open

Defecation Free" status

Strong facilitating and ignition process

Cross-subsidies are encouraged

School is the entry point of the

sanitation program

Community is also mobilised to achieve

the public good of achieving "Open

Defecation Free" status

Cross-subsidies are encouraged

Rewards or revolving loan fund is made

available to promote the achievement

of "ODF Status"


Ownership feeling is ensured

Fails to reach the poorest, ultra poor

households are unable to take the

revolving loan

Long implementation periods



Disadvantaged households are targeted

Disincentives self-initiation latrines


Low cost for the donor

Promotion of community union and

inclusion of disadvantaged households

Community ODF status achieved

High use of latrines


Promotion of community union and

inclusion of disadvantaged households

High use of latrines

Continuation of the program in the long

term

FIGURE 18: Total Donor Cost per Capita vs. SustainableSanitation Outcomes

up sanitation coverage as they look beyond theindividual household latrines and focus resources onencouraging collective action. Although it isrecognized that the context in Nepal is diverse anddifferent approaches may suit specific environments,these two models-which involve lower subsidies andincreased community contribution-have proved to bethe most effective against the socioeconomic andsustainable total sanitation criteria.

What Table 8 does not present is the impact of thisnumber of sanitation approaches beingimplemented in parallel to one another. Thefinancing models that each organization haveadopted are diverse and contradictory in theirapproach to achieving sanitation coverage. Despite

45Conclusion

this they are often implemented alongside eachother, resulting in conflict between communities anda hampering of community initiative and innovation.A more structured approach to the financial supportprovided to rural communities is required to ensurecommunities work together to achieve sanitationoutcomes, not compete for resources to addressindividual sanitation needs.

Financial resources available to promote sanitationare limited, and therefore their effective andefficient allocation is crucial in order to move swiftlytoward total sanitation in rural Nepal. One means ofincreasing coordination in the sector would be for

the central government to offer incentives toencourage involvement of LGBs in achievingsanitation outcomes, such as ODF status, in theirareas of influence. Better planning and coordination,as well as allocation of major resources, are neededto successfully move the country toward totalsanitation. This would be aided by the joint effortsand increased collaboration of all sectorstakeholders, both at the national and local levels.Thus, the current International Year of Sanitation isa perfect opportunity to bring together all sectorstakeholders to develop a credible sanitation masterplan and generate political will from governmentand donors to raise the required funds to support it.


References1. Central Bureau of Statistics. 2004. Nepal Living Standards Survey 2003/04, Statistics Report,

Volumes 1 and 2, Central Bureau of Statistics, Kathmandu, 2004. In Situation of Children andWomen in Nepal 2006, UNICEF 2006. Kathmandu, Nepal.

2. DWSS and UNICEF. 2006. Participatory Assessment of the School Sanitation and HygieneEducation Program in Nepal. DWSS, Kathmandu, Nepal.

3. DWSS and UNICEF. 2006a. School Sanitation and Hygiene Education Program Guideline.Fifth Edition. DWSS, Kathmandu, Nepal.

4. DWSS and UNICEF. 2006b. Guidelines on School Led Total Sanitation. DWSS, Kathmandu,Nepal.

5. Gamboa. G. 2005. Social multi-criteria evaluation of different development scenarios of theAysén region, Chile. Ecological Economics (in press).

6. Joint Research Centre. 1996. NAIADE Manual - version 1.0.ENG. Joint Research Centre of theEuropean Commission. Ispra site. Italy.

7. Nepal Demographic and Health Survey. 2006. Kathmandu, Nepal. Ministry of Health andPopulation, New ERA, and Macro International Inc. Inc. 2007. Nepal.

8. Nepal Country Paper. 2006. SACOSAN-2. Islamabad, Pakistan.

9. Nepal Water for Health (NEWAH). 2007. Policy and Working Guidelines of Community LedBasic Sanitation for All (CLBSA). NEWAH, Kathmandu, Nepal.

10. Ministry of Physical Planning and Works. 2004a. Rural Water Supply and Sanitation NationalPolicy and Strategy 2004. MPPW, Kathmandu, Nepal.

11. Ministry of Physical Planning and Works. 2004b. National Sanitation Policy and Strategy2004 (Draft).

12. Paterson, C. et al. 2007. Pro-poor sanitation technologies. Geoforum 38, 901-907.

13. Rural Water Supply and Sanitation Fund Development Board (RWSSFDB). 2006. Rural WaterSupply and Sanitation Fund Development Board Annual Report 2006. RWSSFDB, Kathmandu,Nepal.

14. United Nations Children's Fund (UNICEF). 2006. Situation of Children and Women in Nepal2006. Kathmandu, Nepal.

15. WaterAid. 2006. Total Sanitation in South Asia, the challenges ahead. WaterAid, London UK

16. WaterAid Nepal. 2006. Community Led Total Sanitation in Nepal, getting us back on track.Occasional paper. WaterAid Nepal, Kathmandu, Nepal.

17. WaterAid Nepal. 2004. The Water and Sanitation Millennium Development Targets in Nepal:What do they mean? What will they cost? Can Nepal meet them? WaterAid Nepal,Kathmandu, Nepal.

18. WHO (World Health Organization). 2004.Water, Sanitation and Hygiene Links to Health:Facts and Figures. Available: http://www.who.int/water_sanitation_health/en/factsfigures04.pdf

19. WHO and UNICEF. 2004. Joint Monitoring Program for Water Supply and Sanitation. Meetingthe MDG drinking water and sanitation target: mid-term assessment of progress.


WaterAid in NepalKupondole, Lalitpur, NepalGPO Box: 20214, Kathmandu, NepalTelephone: 00 977 1 5552764/ 5552764/ 5011625Fax: 00 977 1 5547420Email: [email protected]/nepal

Nepal Resident MissionSrikunj, Kamaladi, Ward No. 31Post Box 5017, Kathmandu, NepalTel: +977 1 422 7779Fax: +977 1 422 5063Email: [email protected]/nrm

MoneyDownthe Pan?

MoneyDownthe Pan?

www.iys2008.org.npwww.endwaterpoverty.org.np


JUNE 2008

COMMUNITY LEVEL MODELS FOR FINANCING SANITATION IN RURAL NEPAL: A SECTOR REVIEW

Documents