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Scaling Dispensers For Safe Water to Millions: What’s the Business Model?

Scaling Dispensers For Safe Water to Millions: What’s the Business Model?

Christina Riechers, Director of Business Development and Strategy at Evidence Action

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.

Dispensers are maintained and re-filled by local health promoters who ensure that they are in good working order. Credit: Evidence Action

Dispensers are maintained and re-filled by local health promoters who ensure that they are in good working order. Credit: Evidence Action

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.

Circuit riders deliver the quarterly chlorine supply to the local health promoters who are maintaining Dispensers for Safe Water. Credit: Evidence Action

Circuit riders deliver the quarterly chlorine supply to the local health promoters who are maintaining Dispensers for Safe Water. Credit: Evidence Action

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.

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