Identifying the Potential for Results-Based Financing for Sanitation
Results-Based Financing (RBF) is an approach that allocates public funds based on the achievement of specified results. Wheras it has had some practical successes in health and education, its use in the sanitation sector has remained very limited. The report identifies potential applications of RBF to sanitation:
- At government level, some municipalities already receive performance-linked rewards for improving sanitation services (as in the India's NGP for example). These schemes could be strenghtened with better monitoring or extended to govern the relationship between international donors and national governments (what is referred to as Cash-on-Delivery Aid).
- On the supply-side of the market, output-based subsidies have already been offered to service providers that deliver services to the poor in a number of geographies (ranging from Mozambique to Morrocco). Other RBF innovations, such as advanced-market commitments (AMC), could also be tested;
- On the demand-side, Conditional Cash Transfers could be provided to households with young children as long as they invest in building a toilet and maintain it overtime in usable condition.
This report was initially written as a background note for a workshop on applying Results-Based Financing (RBF) to Sanitation, which took place at the Department for International Development’s headquarters in April 2011, with support from the UK Department for International Development funded SHARE research program consortium and the Gates Foundation.