Models of Aggregation for Water Supply and Sanitation Provision Capacity building module.

Models of Aggregation for Water Supply and Sanitation Provision

Capacity building module

Outline of the presentation

What is aggregation? Aggregation models The process of aggregation Summary Case studies

What is aggregation?

Grouping of several municipalities into a single administrative structure for the provision of a service

town A town B

town Ctown D

Aggregated service provider

aggregation

Aggregation: one of many management models

Aggregation of small towns

Professional support to medium operators

Scaling up demand response approach

Strengthening community management models

public private partnership

Small scale independent providers

Engaging the public sector

Drivers for aggregation

Increased efficiency

Access to professional services

Access to water resources

Access to PSPAccess to

finance

Cost sharing



Scale: the optimum size of utility

SCALE

Two Towns Several Towns Regional Provider National TerritoryHungary, The Philippines,

FranceBrazil Italy, England and Wales,

The Netherlands

Scope of Aggregation

SCOPE

A single servicee.g. bulk supply

All municipal services

All water and sanitation services

A single function e.g. procurement

All functionsSeveral functions

What services?

What functions?

Nimes (France), The Netherlandsonly water

Dunavarsany (Hungary), water first, waste water later

Italy,England and Wales

Governance arrangements

Loose association

Permanent structure owned by municipalities

Supralevel of local governments

temporary

permanent

Governance arrangements –voting rights in Board

Method ++ and -- Power tilted to…

Specific powers for the dominating entity

++ Confidence for larger entity-- Small entities have limited influence

larger entities

smaller entities

% of population in each entity

++ Democratic-- Small entities have limited influence

# of connections or value of the assets

++ A sound economic basis -- Varies from year to year

One entity = one seat ++ simple and transparent -- can be unacceptable to larger entities

….Or a mixture of the various methods



Is aggregation a suitable option? Adding up the pros and cons

++ --Facilitates access to water resourcesEconomies of scale in works, procurement & support servicesAccess to finance (private & donors)Attract private operatorCost sharing between townsIWRM

– lower control over water resources– lower tailoring services to the needs of the end users – Loss of competition –Lower accountability to customers & citizens–Resistance to cost sharing– Potentially high transaction costs

Process of aggregation

PROCESS

Voluntary Voluntary with incentives Mandated

The Philippines, France, Brazil

Hungary Italy, The Netherlands, England and Wales

Stages in the Aggregation Process

Preparatory Phase

Analytical Phase

Implementation Phase

•Initiate the aggregation process•Identify key drivers for aggregation•Identify aggregation candidates and stakeholders•Choose an appropriate consultation process•Establish group to lead the process•Choose an appropriate aggregation process

•Assess drivers, constraints, and potential issues•Assess benefits and costs for each entity•Assess benefits and costs for alternative groupings

•Choose the most appropriate aggregation model•Define an aggregation plan•Define procedure to resolve disputes•Monitor Progress against that plan



Aggregation: define scale, scope and process

SCALE

Two Towns National Territory

SCOPE

A single service or function

All services and functions

PROCESS

Voluntary Mandated

More information

Available from:

www.worldbank.org/watsan



Case studies

France Philippines Hungary Brazil Italy The Netherlands England and Wales

Syndicates in France

Drivers Economies of Scale, regional cooperation and PSP in highly decentralized environment (36,000 (often rural) municipalities)

Constraints Political legitimacy (direct taxation but indirect citizen representation)

Scale Normally 2- 5 municipalities of similar size (< 5,000 pop)

Scope Variable (pick and choose operating functions / often on WS and not sewerage)

Process Usually voluntary –central govt representative at local level (prefect) has right to mandate membership

Model Assets: asset ownership remains with municipalities, syndicate has usage rights Exit: allowed with permission of assembly if joining elsewhereVoting: mixed (max 50% seats for larger municipalities; min one seat per municipality)Harmonization: working towards harmonized tariffs and services

Local Government Units, Philippines

Drivers Economies of scale and to lesser degree access to PSP, Access to government loans, access to water

Constraints Conflicting legal interpretations and political disunity

Scale Varies widely (from Manilla with 10m pop to rural LGUs with 30,000 pop in 3 towns)

Scope Varies (several or all functions; sometimes also other services than WSS)

Process mainly voluntary – pace and route varies widely

Model Assets: in most cases transferred to aggregated entityExit: municipalities can exit / cannot be dispelledVoting: by # of connections or assets (problematic at times)Harmonization: uniform tariffs

Dunavarsany, Hungary

Drivers Political ( compliance with EU standards)

Constraints Legislative unclarity

Scale 8 municipalities, total 20,000 pop; one municipality much larger than other seven

Scope Water and wastewater; solid waste being considered

Process Voluntary with financial incentives from national governmentOriginally 4 member municipalities, 4 more joined later

Model Assets: no, not allowed by law Exit: allowed - but on reimbursing loss of additional grant Voting: based on contribution to budgetHarmonization: working towards uniform tariff

Dos Lagos, Brazil

Drivers Economies of scale and access to government finance and to lesser degree access to PSP

Constraints Political disputes between local and state level

Scale 5 municipalities; total 310,000 pop

Scope Water supply and sanitation in some municipalities

Process Strong financial incentives from state government

Model Assets: remain with state (bulk water infra) and municipalities (distribution network)Exit: limited Voting: loose association; no board in placeHarmonization: uniform tariffs

Consortium & Convenzione, Italy

Drivers Efficiency, political ( compliance with EU standards)

Constraints Local political resistance, vested private sector interests

Scale No standard size, 1- 377 municipalities, avg total population is 640,000

Scope All functions integrated

Process Mandatory

Model Two models: Consortium (new public entity) and Convenzione (agreement between existing entities)Assets: municipalities keep existing assets; aggregated entity owns new assets Voting: vary but mainly based on population Harmonization: uniform tariffs (some exceptions)

Public water PLCs, The Netherlands

Drivers Economies of scale

Constraints Resistance to aggregation among existing utilities

Scale 1-40 municipalities; 200,000 – 1.600,000 connections

Scope Water supply

Process Initially voluntary, later mandatory threshold size of 100,000 pop

Model Assets: either owned by public water PLC of by member municipalities Exit: no Voting: based on population harmonization: uniform tariffs

Regional Water Authorities, England and Wales

Drivers Water resources, access to financing (for WW treatment)

Constraints Institutional design flaw (regulator and regulatee); lack of accountability

Scale More than 100,000 population

Scope water supply, wastewater and water resource management

Process Mandatory

Model Assets: owned by RWA Exit: no Voting: fixed key, including local and central government appointees (not all municipalities represented)Harmonization: uniform tariffs

Note: RWAs were divested to the private sector in 1989

Models of Aggregation for Water Supply and Sanitation Provision Capacity building module.

Documents

models of aggregation

aggregation candidates

scope of aggregation

wales slide

netherlands slide

cost sharing slide

water resources access

public sector slide