the safe water biz

What do PepsiCo, GE, Rotary Club, Harvard, Johns Hopkins, ARD, and Tata Trust all have in common?

An interesting group of academics, private sector representatives, and people from Governmental/International Organizations came together last week to discuss the Small Water Enterprises (SWEs). What is an SWE? SWE refers to the management of water as a business, for or non-profit, by non-state entities. SWEs provide opportunities for supplying safe water to many underserved populations throughout the world but also raise ethical challenges.

A small water entrepreneur at work

From a company in Ghana packaging and distributing drinking water sachets to a community owned high-tech membrane treatment plant kiosks in India, SWEs come in many forms. Small water enterprises illustrate one solution where governments fail in providing safe water to communities. Where do governments fail? We find examples everywhere, from far away hard to reach rural areas to urban slums…Who will supply water to an “illegal” squatter settlement? Will a government fulfill their duty of providing water while in the same action recognizing and investing in an illegal settlement ?

By definition, SWEs do not require economic viability on their own. Some models rely on subsidies while others are run for profit. The users of SWEs often pay more for their water than those served by public utilities (think economies of scale). While paying more for their water, these users may also receive an inferior product. Recent reviews of existing SWEs (see links below) cite the lack of regular water quality monitoring as a serious barrier to successful growth.

In thinking about what would happen if SWEs take off (some would argue they already have), my continually reverts back to two realities:

Reality #1: SWEs gain traction throughout the world through financing schemes and recognition by governments. They end up serving the majority of people in previously underserved in communities but the most vulnerable are left out (or they are taken care of in some communities with stronger cohesion and social mechanisms).

The people with any political capital in places served by SWEs are probably able to afford the water. Is it likely that they would continue to lobby for water if their needs are met? Will politicians really see the needs in these communities or will it be masked by the coverage of SWEs? Will the government have any real incentives to invest in water utilities in these areas after most of the people are covered by an SWE?

Reality #2: SWEs gain traction throughout the world and communities are slowly lifted out of poverty. This leads to a wealthier community with few people who cannot afford the water and stronger communities that will take care of their poor. (a bit too simplistic and reductive but it will work for this blog)

What concerns me the most is SWEs leaving the most vulnerable behind. Pro-poor policies within certain governments who choose to recognize the legitimacy of SWEs could help with this – but do you really think it could happen?

SWEs can provide some amazing opportunities to get safe (not just “improved”) water to people who need it, but in the long run will this come at a cost to these very same people? As SWE popularity increases with entrepreneurs, international organizations, and private companies , we will just have to wait and see (hopefully set up some useful studies too).

If you want to learn more about SWEs check out these resources:

• “Safe Water for All,” International Finance Corporation, 2009
• “Data gaps in evidence-based research on small water enterprises in developing countries,” Journal of Water and Health Vol 7, Number 4 , pg 609-622, 2009.

Also, check out some of the work of EcoTact Ltd. in Kenya who applies this model to sanitation…Pretty interesting and promising stuff!