Editor’s Note: This guest post is authored by Christina Riechers, Director of Business Development and Strategy at Evidence Action. In her post, Christina outlines the lessons learned from efforts to ensure sustainability as the organization rapidly scales up its Dispensers for Safe Water program. Drawing from Evidence Action’s experience, she highlights the importance of diversified business models and describes the process of establishing strategic partnerships to expand the reach of the project. For more background on Dispensers for Safe Water program, read Evidence Action’s previous post, published last month on the WASHfunders Blog.
Evidence Action’s Dispensers for Safe Water program, an innovative and cost-effective system for water purification, is rapidly scaling up. Dispensers for Safe Water is currently providing safe drinking water to two million people in Eastern and Southern Africa, to grow to 25 million people by 2018.
Evidence Action was created a year ago to scale up proven development interventions to benefit tens of millions of people. As a result, we are well familiar with one of the main challenges of implementing large-scale development projects: ensuring that there is financial and operational sustainability over the long term. All too often, water access and water quality projects are implemented without a clear strategy for long-term sustainability, and infrastructure and technology end up in disrepair or disuse.
Evidence Action takes a different approach. For us, a key criteria for going to scale with an intervention is not only a strong evidence base for its effectiveness and impact, but also a sound business model and innovative financing. So what are we learning?
We Need Diversified Business Models for Scale
Dispensers for Safe Water’s business model calls for covering the costs for operating dispensers with carbon financing. Chlorine dispensers generate carbon credits by reducing the demand for boiling water with firewood, and by replacing wood burning with a low-carbon alternative. These carbon credits are verified by an independent auditor, and then sold to buyers looking to offset their carbon footprint or to meet mandated emissions targets. Because the on-going cost of filling and maintaining dispensers is so low - $0.50 per person per year when we’re rolled out at scale - even a low price of carbon could finance the program.
However, carbon credit prices have sunk to rock bottom levels. Even though we have been able to sell credits at high prices that --should these sales continue-- would enable us to meet our long-term financial sustainability plans, we wanted to have a Plan B. Moreover, the initial capital expenditure for growing the program requires other funding (carbon financing is a lagging source of funds, coming in only after people have been using the dispensers). As a result, we have been diversifying our funding sources. For up-front financing, for example, we have taken on loans from Kiva and grants from an innovation fund at USAID. For on-going servicing costs, we are branching out beyond carbon. We are exploring bundling charges for dispenser services with existing community payment mechanisms, and contracting with local governments to fund the chlorine for their constituents to make Dispensers for Safe Water like a low-cost utility service. In all of this we are committed to keeping chlorine free to end users to ensure maximum adoption.
Strategic Partners Are Essential For Going to Scale
We are also challenging ourselves to look at new ways of partnering with other organizations.
Our partnership with One Acre Fund is a case in point. One Acre Fund is a social enterprise that helps more than 180,000 farmers in East Africa double their maize yield. One Acre Fund staff work closely with rural farmers to extend loans, provides training on maximizing crop yield, and provides seeds and other products. The organization cares about the overall well-being of the farmer families, and as such, wanted to expand their efforts and offer low cost health interventions like chlorine for safe water.
When we first partnered in 2011, we thought we could simply piggyback on their last-mile distribution for local chlorine deliveries. But we quickly realized that there are key differences between their distribution and local engagement model and ours. For example,One Acre Fund field staff have a wide range of responsibilities that made the extra task of carrying chlorine with them to village visits burdensome. So we evolved our partnership so that it more closely aligns with our respective core competencies: One Acre Fund, committed to providing safe drinking water for its farmer families, now pays a certain price per farmer household per year to Dispensers for Safe Water for providing their families with access to clean drinking water. This is the same price they would pay to give farmers bottles for household use but without taxing their supply chain. We utilize our existing robust system of village health promoters who ensure the upkeep of dispensers at the water points, and circuit riders who deliver chlorine to the same districts where One Acre Fund operates.
The subsidy from One Acre Fund means further diversification of our funding portfolio, more rural households served, and a win-win partnership for all -- most of all for the community residents who have reliable access to safe drinking water.
Editor’s Note: This guest blog post is authored by Alix Zwane, Executive Director of Evidence Action. In her post, Alix lauds the increased attention given to evidence-based innovations in development and describes the Dispensers for Safe Water initiative as an example of a WASH intervention grounded in this data-driven approach.
Evidence-based development innovations are finally all the rage. The UK's Department for International Development and USAID announced the Global Development Innovation Ventures (GDIV) Fund almost exactly a year ago to focus development investments on “innovative approaches with proven, radically successful results.” Just a few weeks ago, USAID launched its Global Development Lab that aims to “test and scale breakthrough development innovations.” And even more recently, a senior policy advisor to the president of the European Commission argued that evidence should trump politics and diplomacy for deciding on aid investments.
One example of how aspirations for data-driven development translate into actual, real projects that improve millions of peoples’ lives is the Dispensers for Safe Water initiative. Chlorine dispensers currently serve over two million people in East Africa and are on track to grow to four million people by the end of this year, and 25 million by 2018.
Chlorine dispensers installed directly at the water source represent an important innovation in the rural water sector. They solve a number of challenges that have hindered sustainable, quality services for cleaner water to date -- despite the billions that have been spent on water and sanitation projects. And because the approach has been vigorously tested, we can say definitively that chlorine dispensers work at a fraction of the cost of typical water projects, and at high adoption rates by people most in need of clean water.
What Are Chlorine Dispensers?
Dispensers are installed directly at the water source and contain enough chlorine for a community using the water source for about a month. A person collecting water turns a knob that releases enough chlorine to clean 20 liters of water -- the typical amount that people collect from the source and carry home. The dispensers are rugged and durable, and maintained and marketed by local health promoters who educate the community about the utility of adding small amounts of chlorine to the drinking water, and check and refill the dispensers as needed.
Chlorine is very cheap and effective at killing most bacterial and viral pathogens. Safety concerns with dilute chlorine are minimal, and it is widely used as a disinfectant in water treatment plants around the world. Chlorine can also provide residual protection for up to three days (depending on storage conditions), which means that it not only disinfects water, but can also prevent re-contamination.
Are People Healthier Because of Chlorine in their Water?
So what do we know about improving water quality for people? There have been a number of review articles recently that have assessed the evidence for drinking water quality interventions in developing countries. One meta study that analyzed 65 separate evaluations concluded that point-of-use (or, in the case of dispensers, point-of-source) water quality interventions appear to be highly effective -- and indeed, more effective than water supply or source treatment in reducing diarrhea -- but that this is very sensitive to the ability of the program to sustain high rates of product adoption. Obviously, a product cannot provide health benefits if people don’t use it. Another systematic review of the evidence showed that there are reductions of up to 40% of childhood diarrhea among people using the product.
Are People Actually Using Chlorine Dispensers?
The case for cost-effective impacts for dispensers rests not only on the potential for health impact. People actually have to use water treatment products if they are to be effective. The sustained use of dispensers has been documented via a rigorous randomized controlled trial (PDF) in which adoption held at about 50% for three years in the treatment group assigned to dispensers. We continue to see average adoption rates over 40% in areas where baseline water treatment with chlorine is less than 10%. For anyone in the WASH field, these are impressive rates. Adoption of chlorine at the point of service is high because it is cheap, convenient, salient, and public.
Dispensers are Sustainable and Cost-Effective
Chlorine dispensers are inexpensive, costing less than $0.50 per person per year at scale. This is considerably lower than the large infrastructure programs that may not be sufficiently invested in over time, and then fall into disuse. The low cost per person has also allowed us explore new financing models, such as using carbon credits. Chlorine reduces the need for boiling water, so dispensers can be financed that way. And because chlorine dispensers are inexpensive to maintain, carbon revenue covers the costs even as the initiative expands to serve 25 million people in 2018.
We believe that evidence and rigorous testing of new development approaches is critical in order to scale what works to reach millions, and are pleased that the global development field is moving in the direction of being more rigorously data-driven and evidence-based.
Editor’s Note: This guest blog was authored by Trupthi Basavaraj and Rachel Findlay of the charity think tank and consultancy NPC, which provides strategic support to the Stone Family Foundation and has coordinated the Stone Prize for Innovation and Entrepreneurship in Water. Here they share some of the key lessons that NPC has learnt from running the Prize. A version of this story also appeared in Alliance magazine.
Prizes have long been successful at inspiring technological innovation, from determining a ship’s longitude to creating a toilet that costs less than five cents per user per day to operate. What is less common is using a prize as a tool to stimulate innovation in service delivery. So when the Stone Family Foundation set up the Prize for Innovation and Entrepreneurship in Water, it was all about doing just that.
As a part of our wider strategy to support entrepreneurial initiatives in the water, sanitation, and hygiene (WASH) sector, we launched the £100,000 Stone Prize earlier this year. After an extensive eight-month process of identifying and short-listing candidates, we finally found our Prize winner — Dispensers for Safe Water (DSW) in Kenya — and four other organisations that we hope to support outside of the Prize.
The Prize came about as a way to identify early stage water initiatives that the Foundation could support, and eventually help scale up. The search was for innovative approaches to delivering safe water in a sustainable and cost-effective manner to those without access in sub-Saharan Africa, and South and Southeast Asia. For the Foundation, running the Prize has been an exciting process, and one that has taught us several key lessons, three of which we have highlighted here.
Firstly, to attract the right type of initiatives and ultimately short-list candidates, it was important to set clear criteria — without being overly prescriptive. We identified six criteria for the Prize, but with a particular emphasis on two areas: a) innovation in technology or service delivery, typically in response to a specific need, and b) innovation in financial model, looking to harness the power of the private sector.
DSW meets both of these requirements. It addresses a clear need in rural Kenya: its water purification technology, a simple dispenser, is filled with chlorine and placed near a communal water source, allowing individuals to treat their water free of cost with the correct dose of chlorine. (To learn more about DSW's work, read this post.) But what makes this initiative truly exciting are two innovative financial models. First, the dispensers generate carbon credits by reducing the demand for boiling water using firewood, which DSW will eventually be able to sell. Second, DSW is able to bundle the dispenser as part of a wider package of agricultural goods sold by its partner, One Acre Fund. If successful, both models offer new ways of making water purification accessible and sustainable for low-income communities. It will also allow DSW to expand the Kenya Chlorine Dispenser System program into other countries.
Secondly, running a prize scheme is not just about funding. It’s also about generating publicity in a way that reactive grants programmes cannot. Getting publicity right is important not only for attracting applicants, but also for promoting the winning candidate and its approach. Our strategy was to identify the right partners and to leverage their extensive networks, reaching out to organisations both within the WASH sector and outside it. At the end of the first round, the Foundation received 179 applications from 39 different countries. We hope the Prize will not only help DSW gain recognition and attract further support from other funders, but also stimulate wider discussion on what innovation means for the water sector.
Finally, we also learnt that it was important to have the right reward in place. The promise of £100,000 for scaling up the winning initiative attracted a pool of strong applications, but as we narrowed down the candidates, it became clear that the level and type of funding offered through the Prize was not necessarily appropriate for all. As a result, the Foundation is now looking at the best way to support four highly commended candidates outside the Prize framework — this could be through providing investment or smaller grants to further test an aspect of the approach, or simply by helping to identify partners to move an initiative from pilot to scale.
For the Stone Family Foundation, the Prize has been a successful endeavour. It has enabled us to find some exceptionally strong grantees for the Foundation that we might not otherwise have discovered. It has also given us a sense of the wide range of innovations within the WASH sector, especially in countries such as Kenya, India, and Cambodia where the local environment has led to a growth in entrepreneurial initiatives. Much depends on what a funder is looking for and how a prize is structured, but we feel prizes can be an incredibly powerful tool for identifying and driving innovation.