AcknowledgementsWaterAid in Nepal would like to thank to the men and women in the various communitiesof Sankhuwa Sabha, Dhading, Baglung and Kaski districts for taking thetime and effort to share their views and experience during the field study.We also acknowledge effort of the study team; Guna Raj Shrestha,Team Leader andresearchers Madhab Bhattarai, Tara Lamichhane, Kiran Darnal of CODEF for theirwork in collecting and analysing field data and developing this report. In addition,thanks also are given to NGOs and government line agencies of the study districtsfor support during the field study.We are especially grateful to Oliver Jones, Rural Programme Manager of WaterAidin Nepal for all his support for coordinating the research and re-writing and editingthe report. Anita Pradhan, Documentation Manager of WaterAid in Nepal has playeda key role in publishing the report. Sarah Pyke from WaterAid in the UK proofreadthe report.A WaterAid in Nepal publicationJuly 2010A copy of the report can be downloaded from www.wateraid.org/nepalWaterAid transforms lives by improving access to safe water, hygiene andsanitation in the world's poorest communities. We work with partners andinfluence decision-makers to maximise our impact.Cover picture: Water supply system exists but lack of rehabilitation service delivery is not functioning,non functional water point from Kaskikot, Kaski District of
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsiContentsAbbreviation 11. Inroduction 31.1 Background of the research 31.2 Objectives of the research 41.3 Llimitation of the study 41.4. Definition of water supply systems 42. Methodology and approach 52.1 Desk study 52.2 Consultation with stakeholders 52.3 Selection of the study districts 52.4. Interview with stakeholders at the district level 62.5 Study at the VDC/Community level 63. Analysis and findings 73.1 Sector policies on investment 73.1.1 Policy statement on investment on the sector 73.1.2 Investment trend on water and sanitation sector 103.1.3 Project cost 113.1.4 Investment patterns in new, rehabilitation and 12replacement systems3.2 Scheme selection and planning procedures 133.2.1 Different sector agencies selection and prioritisation 13procedures
iiResearch into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems3.2.2 Project selection criteria 153.2.3 Criteria not currently considered 173.2.4 Consequences of poor selection criteria of projects 183.3 Functionality and sustainability of water supply systems 213.3.1 Sustainability indicators 213.3.2 Approaches to address operation and maintenance of 22the systems3.3.3 Actual O&M systems in the field 243.3.4 Status of sustainability of water supply systems 243.3.5 Major causes of dysfunctional water systems 264. Recommendations 314.1 Focusing investment effectively 314.1.1 Social Inclusion and access to services included in 31Selection Criteria4.1.2 Recognition of investment in new, rehabilitation and 31replacement schemes4.1.3 District Level Operation and Maintenance Fund 324.1.4 Establishment of Sector Wide Approach 324.2 Goverance and monitoring 334.2.1 Redefining the roles of various actors at all levels 334.2.2 Appropriate monitoring mechanism with local bodies 334.2.3 Institutionalisation of Water Users Committee 334.2.4 Strengthening the role of Fedwasun 344.3 Operational sustainability: 344.3.1 Technical capacity of WUC 344.3.2 Improved O&M approach and mechanisms 35Annex 36
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems1AbbreviationCBO : Community Based OrganizationsCBWSSP : Community Based Water Supply and SanitationCC, BPT : Collection chamber and Break Pressure TankDDC : District Development CommitteeDOLIDAR : Department of Local Infrastructural Development andAgricultural RoadsDTO : District Technical OfficeDWSS : Department of Water Supply and SewerageFEDWASUN : Federation of Water Supply and Sanitation Users NepalFINNIDA : Finnish International Development AgencyGoN : Government of NepalGWS : Gurkha Welfare SocietyHDI : Human Development IndexHH : HouseholdINGO : International Non-Governmental OrganizationLTSS : Long Term Sustainability StudyMCTG : Mother Care Taker GroupMDG : Millennium Development GoalsMLD : Ministry of Local DevelopmentMPPW : Ministry of Physical Planning and Works
2Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsMTRNEWAHNGONPCO&MRVWRMPRWSSFDBSOSWAPTORVDCVMWWASHWSSDOWSSSDOWTSSWUSC: Mid Term Review: Nepal Water for Health: Non-Governmental Organization: National Planning Commission: Operation and Maintenance: Rural Village Water Resources Management Project: Rural Water Supply and Sanitation Fund Development Board: Support Organization: Sector Wide Approach: Terms of Reference: Village Development Committee: Village Maintenance Worker: Water, Sanitation and Hygiene: Water Supply and Sanitation Divisional Office: Water Supply and Sanitation Sub-Divisional Office: Women Technical Support Services: Water Supply and Sanitation Users Committee
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems31 Introduction1.1 Background of the researchThe Government of Nepal (GoN) andother agencies invest significant fundsevery year in the establishment ofdrinking water systems in rural hillcommunities of Nepal. The basic watersupply coverage has thus increasedfrom 37% to 76% over 17 years from1990 to 2007 1 . However, many of thesesystems do not last their design periodand therefore fail to provide sustainablewater services to the communities theywere established for. The 10th five yearplan (2002-2007) states that most of thedrinking water systems built in the pasthave become either totally or partiallydefunct. Profiles of 22 hill districts showthat about 76% of schemes built in thepast need major repairs or rehabilitation.This is as a result of many factors,including poor quality construction,natural disasters and a lack of properoperation and maintenance (O&M)systems. Over the years, many ruralhill communities have been providedsupport to construct water supplysystems, as well as further support toreplace and rehabilitate systems whenthey are no longer functional. Thereare other communities that have neverbeen provided any support to accesssafe water during that time, showing anobvious lack of equity in the allocationof resources across the sector. This isevident from the fact that there are 42districts below the national coverage ofbasic water supply.From this perspective, this research isdesigned to explore the real situationand suggest ways that would significantlycontribute to reforming the largerpolicy regime of the state concerningthe institutional and sustainabilityfactors that contribute to improving thefunctionality of drinking water systemsin rural hill communities. This study also1There Years’ Interim Plan, NPC, 2007
4Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsattempts to suggest for the rationaleof allocation of available resources fordrinking water that could be used forincremental development in the sectortowards meeting the water needs of thepeople more equitably in the country.1.2 Objective of the researchThe objective of the study is to reviewthe equity of distribution of theinvestment and sustainability of rural hillwater supply systems from two interrelatedperspectives:• the level of investment focused inconstructing new and replacementsystems and the rehabilitation ofnon-functional systems, and how andwhere it is prioritised• the main causes of systems becomingdysfunctional and whether currentinstitutional arrangements at thecommunity, VDC and District levelsaddress these issues adequately.1.3. Limitation of the studyThe Department of Water Supplyand Sewerage (DWSS) has recentlyaccomplished a nationwide datacollection on water supply coverage,types of schemes, functioning status,O&M status, etc. However the report isnot yet published. This study had largelyexpected to collect and analyse the datacollected by DWSS. Due to absence ofthese data, the research is limited to itsstudy in very limited samples and othersecondary data.1.4. Definition of water supplysystemsThe following definitions have beenadopted in this research:• New system: refers to a water supplyschemes constructed in a communitythat never had a safe water supplysystem before.• Rehabilitation: refers to a watersupply system that is dysfunctional,despite being within its design life(normally 15 years) and requiredeither rehabilitating or replacing. Inaddition, the level of work required tomake it functional should be beyondthe amount that could be collectedthrough an effective community O&Mfund or beyond the technical capacityof the community and thereforerequire external assistance.• Replacement: refers to a new waterscheme that is being constructedin a community to replace (partiallyor fully) an existing dysfunctionalscheme, which has crossed its designlife.• Maintenance: refers to the workthat is conducted on a water supplyscheme, in which part of or all ofthe system is not functioning, butthe level of work needed to make itfunctional is within the financial andtechnical capacity of the community.
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems52 Methodology and approach2.1 Desk studyDocuments related to national plan,policy and strategies on the watersector in general and specifically onrehabilitation and sustainability issueswere reviewed. Studies and reports onfinancial investment on drinking waterprojects and institutional arrangementswere also consulted. The existing data,studies and research in the area ofinvestment in new, replacement andrehabilitated water systems was alsoreviewed.2.2 Consultation with stakeholdersA central level consultation wasmade especially to seek informationon overall sectoral policy, projectprioritization and selection procedures,level of investment, sustainabilityaspects, etc. Most specifically thefollowing agencies were consulted:• Department of Water Supply andSewerage (DWSS) undertakingCommunity Based Water Supply andSanitation Project (CBWSSP)• Nepal Water for Health (NEWAH)• CARE Nepal• Rural Village Water ResourceManagement Project (RVWRMP)supported by FINNIDA and NepalGovernment• Rural Water Supply and SanitationFund Development Board (the FundBoard)2.3 Selection of the study districtsThree hill districts were selected for thefield study. The districts were selected onthe following criteria:• Water coverage more than 50 %• Involvement of multiple agencies inwater sector• Strong presence of Federationof Water Supply and Sanitation
6Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems(FEDWASAN) in the district• Relatively accessible district to ensurecompleteion of the study in a shorttime• Representation of diversedevelopment regionBased on the above criteria, SankhuwaSabha, Dhading and Baglung wereproposed for the sample districts.Sankhuwa Sabha district representsEastern Development Region, whereas,Dhading district represents CentralDevelopment Region. Dhading hasstrong presence of FEDWASUN.Baglung represents the WesternDevelopment Region. While theconsultant team was in Kaski for othermission, a scheme in Kaski was alsovisited for this study.2.4. Interview with stakeholders atthe district levelInterview with stakeholders at districtlevel will be carried out for an indepthassessment of the drinking waterprojects currently being implemented byall the government and non-governmentagencies, local bodies, and other CBOslike the forest user groups in the district.The following agencies will be consultedat the district level:1. District Development Committee(DDC)2. Water Supply and SanitationDivisional Office (WSSDO) and WaterSupply and Sanitation Sub-DivisionalOffice (WSSSDO)3. District Technical Office (DTO)4. Federation of Water Supplyand Sanitation Users in Nepal(FEDAWSAN)5. Pertinent projects, NGOs and INGOsworking in the district2.5 Study at the VDC/CommunitylevelA total of 19 WASH projects were selectedfrom the four sample districts for in-depthinvestigation. Various water supply andsanitation projects – recently completed,rehabilitated, replaced and defunct wereidentified at the district level consultationand consequently the sites were visited.While visiting the projects, the water userscommittees, VDC personnel, NGO personnel,selected beneficiaries, women groups, andother active groups in the project areaswere interacted. Besides, observation of theschemes was also made. Of the total 19schemes visited, 10 were rehabilitation, 8new and 1 replaced scheme.
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems73 Analysis and findingsThis research has analysed three mainareas related to functionality andsustainability of gravity flow watersystems in hill district of Nepal. Thefirst area of analysis is focussed on theinvestment that the sector makes in thewater schemes, and trying to identifyany trend between investment in new,rehabilitation and replacement schemes.Taking this theme forward the secondarea of analysis has attempted to look atthe selection criteria for water projects,and try to understand how communitiesand VDC are prioritised. Looking at theselection criteria of different agencies isexpected to enable the impact of thesecriteria on the equity of allocation ofresources and possible impact on longterm sustainability. The final area ofanalysis has also looked at some ofthe main reasons for the poor levelsof sustainability within the sector, andlinks these with policy and institutionalmechanisms, which have been mentionedin the first two sections.3.1 Sector policies on investment3.1.1 Policy statements on roles andinvestments of sector agencies and theirimplementation and complianceThe Rural Water Supply and SanitationNational Policy, Strategy and SectoralStrategic Action Plan - 2004 allowsusers to choose from various availableRWASH technologies and clearly definesthe roles of different stakeholders inthe planning, implementation, operationand maintenance of RWASH schemes.Followings set outs the key rolespertinent to financing and sustainabilityaspect of WASH and how different actorsare interpreting them in their programmeand projects:a. Financing relatedNational Policy states that WSUCsshould contribute a minimum of 20%to the investment cost in water supplyhardware, and this should include atleast 1% cash. From a review of other
8Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemspolicies and practices in the sector onlythe government supported projectswere found to have followed this policyexactly. Other major projects havesought additional investment from thecommunities themselves. In the case ofthe Fund Board schemes, the communityare expected to contribute 30% of theinvestment in hardware costs, with27% of this being provided in kindcontribution and 3% in cash contribution.In NEWAH supported schemes communitycash contribution is not required howeverkind contribution is up to 23%. TheFinnish Government supported projectseeks funding for investment from VDCsand DDC irrespective of the nationalpolicy. The DDC should allocate aminimum of 10% of its internal revenueper annum on water supply schemes inthe district. The VDC should contribute aminimum of 5% of the hardware cost.b. Institutional relatedThe Ministry of Physical Planning andWorks (MPPW) and the Ministry ofLocal Development (MLD) are the twogovernment agencies which overseeand implement the vast majority ofgovernment supported water supply andsanitation projects. MPPW implementwater supply and sanitation projectthrough its Water Supply and SanitationDivisional/Sub-Divisional Offices (WSSDO/WSSSDO) and MLD through its DistrictTechnical Offices (DTO). It should alsobe noted that separate bodies have beenestablished to implement the World Bank(Fund Development Board) and ADB(Community Based Water Supply andSanitation Project and Small Towns WaterSupply and Sanitation Project) supportedprojects in the sector.There is a division of responsibilitybetween MPPW and MLD in terms ofwater supply and sanitation projects,which states that MPPW will implementWASH projects with a population ofover 1,000 and MLD with a populationof less than 1,000. Although MLDand MPPW act together in close coordinationto avoid duplication inthe functions of DTOs and WSSDO/WSSSDO, the definition of whatconstitute a scheme with more or lessthan 1,000 households is loose andleft to interpretation. This can meanthat the two District level agencies candemarcate areas in which they wishto work to suit their respective sizerestrictions. It should also be notedthat such restrictions on scale are notset out for other sector actors andtherefore other actors can implementprojects without any population size asa project boundary.The GoN current policy clearly statesthe local government bodies will notdirectly implement WASH projectsthemselves but instead play the role ofregulating, monitoring and facilitatingthe implementation of the projectson the ground. It goes on to statethat communities and WSUCs shouldtake the lead role in construction andimplementation of WASH project works,including the procurement of externaltechnical and managerial supportand rural water supply and sanitationfacilities made available from concernedaid agencies;.A lack of clear understanding of whata facilitating role for the DTOs and
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems9WSSDOs actually involves, as well assome apprehension over the impact ofhanding over the function of implementerwould mean, has resulted in this policynot being implemented consistently oreffectively at the District level. Havingsaid this there has been some attemptsin recent year to more actively engagethe VDC in monitoring, regulating andfacilitating WASH project. This has beenled by the Finnish Government supportprojects, and taken up by Helvetas,WaterAid and NEWAH, but still theengagement of the VDC is not inline withthe how the currently government policyenvisages it. There is no doubt that thelack of elected local officials and thedeterioration of governance at the locallevel has contributed to these agenciesnot taking on the role as envisaged ingovernment policy.c. Project selectionA detailed decentralised planning processfor local level development activities,including WASH projects, has been putin place at the District level. However theprocess is arguably too complicated witha significant number of steps and tooambitious in the current context with thelack of local level governance, mentionedabove, resulting in this process notbeing following as designed, if at all. Inrelation to WASH activities, projects aresupposed to be selected on the basis ofprojects prepared by the local bodies,which in turn is based on the VDC andcommunity need assessments anddemand.Due to a lack of a functional local levelplanning systems and some agencies’desire to select their own projectlocations, in effective opting out ofthe systems, few agencies have thecriteria of selecting the projects that areidentified by VDC and DDC assemblies.Many agencies simply inform the DDCof project that they have selected forinclusion in the District DevelopmentPlan. The absence of effective localgovernment project selection criteriaand agencies choosing to work outsideof the system, has led to duplication ofwork and the inequitable allocation ofresources.d. Sustainability relatedThe GoN policy states that consumersthemselves will own, operate andhave responsibility to maintain watersupply projects. Provision is also madefor an O&M fund to be created, withupfront contributions from communitymembers and small scale O&M costsshould be fully borne by the community.Every agency has followed the policyof shouldering the responsibilities ofO&M of WASH projects to the userswith a formation and registration ofwater and sanitation users committees.The upfront cash as envisaged in thepolicy is mandatory for all the schemesirrespective of implementing agency, butthe size of it varies from one agency toanother. The upfront cash varies fromNRs 1,000 to 1,500 per tap stands, butin case of the Fund Board supportedschemes it is 3% of the constructioncost.In addition to community based O&M,the GoN policy states that local bodyand the government will provide somefinancial assistance for repair in case ofhuge and important structures. This isto be financed through a rehabilitationfund, which should be created at DDCand VDC level to support large scalere¬habilitation financing. But none of
10Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsthe visited schemes were found to havebeen supported from DDC and VDC. Itwas also not found such rehabilitationfund existed in the visited districts. Priorto this policy, the “Rehabilitation Policy,2003” stated that rehabilitation wasthe responsibility of the implementingorganisations. The policy also envisagesthat linkages will be establishedwith income generating projects andactivities by the implementing agencyto strengthen the O&M fund at thecommunity level. The policy alsomandates the VDC to take a role insupporting WSUCs to register themselvesand their water sources under DistrictWater Resources Committees.3.1.2 Investment trend on water andsanitation sectorThe Government of Nepal is found to haveallocated budget for water supply andsanitation in periodic planning processsince its fifth five year plan. Levels andpatterns of funding of governments’development expenditure on drinkingwater and sanitation sector since the fifthplan is presented in table below. The evelof funding in this sector has increasedgradually from about Rs 268 millionduring the fifth plan period to aboutRs 6,570 million during the eighth planwhich is equivalent to an average annualgrowth of almost 200% over the periodof 12 years. While significant increasein the funding level is apparent in thesector, differences are also observed inthe funding pattern. In the fifth plan,about 45 percent of sectoral developmentexpenditure were funded through foreignaid. This proportion declined graduallyto a lowest of 43 percent in the no planperiod (1991 and 1992) owing to poorfunding capacity of the government.At the local level, a survey of 15 VDCsshowed that in FY 2005/6, 2.6% of theirown resources and 4.9% of governmentgrant was spent on drinking waterfacilities in an average. Similarly, 4.2%of VDCs’ own resources and 7.9%of government grant was spent onLevel and composition of development expenditure in the drinking waterand sanitation sectorPlan period and Total WASH sector Composition of developmentyear development expenditure (%)expenditure Government Foreign aid( NRs. million)Fifth Plan (1977-82) 268.1 54.90 45.10Sixth Plan 1980-85) 873.3 62.05 37.95Seventh Plan (1985-90 1881.7 60.30 39.70No Plan (1991-92) 1878.9 56.63 43.37Eighth Plan (1992-97) 6569.8 52.64 47.36Ninth Plan (1997-2002)Tenth Plan (2002-2007) 58101.2Three Year Interim Plan (2007-2010)
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems11improving sanitation facilities. In thecase of DDCs’ expenditure on WASHsector in FY 2005/6, a survey among 5DDCs revealed that 3.7% of both ownresources and government grant wasspent on drinking water sector. A surveyamong three municipalities shows thatnothing was spent on drinking watersector in FY 2005/6 (NPC/UNICEF 2006).However the investment by types ofWASH schemes is not available.The review of the Red Book of thegovernment during the tenth fiveyear plan (2002 to 2007) shows thatexpenditure on rural WASH is below 1%of the total annual budget of the country.The figure below shows that among thetotal rural WASH expenditure, about 931million Rupees (88%) are expended onthe construction of the WASH system,whereas, 13.8 million Rupees (2.2%)on the maintenance of the constructedsystems and 40 million rupees (8%) onwater quality improvement.3.1.3 Project costThe project cost of WASH scheme widelyvaries from 0.9 to 2.3 million rupeesamong the various agencies during theperiod of 2005 to 2008. Many factorsimpact the cost of projects from thecost and transportation of materials,communities’ location and size, theavailability of water sources and manyothers. However disaggregated data ofthe investment by different agencies intonew, rehabilitation or replacement isnot available. WASH project cost of theFund Board varies from 0.9 to 2.3 millionrupees. In terms of funding pattern,about 72 percent of the average schemecost are borne by the governmentthrough World Bank loan, about 2percent in cash and about 27 percent inkind is borne by the community.In the case of RVWRMP schemes,FINNIDA’s contribution including thegovernment averaged at about 74percent while that of VDC accountedfor about 2 percent. About 0.3 and 24percent of the average scheme cost wasborne by the community respectivelyin cash and kind. In a similar manner,around 77 percent of scheme cost wereborne by NEWAH and the remaining 23percent by the community in kind. CARENepal in its emergency water supplyand sanitation projects contributes 82%wheras community has to contributeremaining 18% in terms of kind.All these analysis shows that the in therecent years, donors’ contribution in RWS
12Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsFunding pattern of average scheme cost under different RWASH organisationsRWASH Average Share of Cost in PercentageOrganizations Scheme Donor VDC CommunityCost (NRs)CashKindRWSSFDB 3 900,000- 71.6% 0.00% 1.71% 26.71%(Batch VI) -2005/6 2,300,000FINNIDA (RVWRMP)-40 2,171,492 73.75% 2% 0.25% 24%completed schemes in2007/08CARE Nepal (2008) 550,000 82% Not required Not required 18%NEWAH (2006/7) 4 2,384,821 77.1% Not required Not required 22.9%in Nepal is around 70 to 80% whereascommunity contribution is around 20to 30% in terms of cash and kind. Thecommunity’s cash contribution is around0.3 to 2% . However CARE Nepal andNEWAH waves off the communities’cash contribution in the projects. Onlythe Fund Board seeks cash investmentfrom the local government bodies. Manyagencies lack coordination with the VDCsand DDC for co-funding although FINNIDAsupported projects have mobilized VDCand DDC fund.The above costs include onlyconstruction cost of the WASH schemes.3.1.4 Investment patterns in new,rehabilitation and replacement systemsAmong the 19 WASH schemes in thethree districts (excluding Kaski), averageinvestment for the new project isRs 13 million rupees and Rs 13.8 forrehabilitation projects. Interestinglythe project cost of the rehabilitationis slightly larger than that of the newschemes. The rehabilitation projectsselected for study were the largeprojects undertaken by the government;hence the rehabilitation project costis apparently larger. The averagecommunity contribution is around 26%in terms of cash and kind, with about74% of the total cost being contributedby the funding agencies. The communitycontribution in rehabilitation schemes isabout 32%, only marginally more thanwith new schemes. In RVRWMP schemesthe community have to invest from 25%to 50% of the total rehabilitant projectswhereas they have to pay only Rs 500per tapstand for a new project.Although it seems logical thatcommunities contribute more towardrehabilitation of schemes than they3Annual Report 2006, published by RWSSFDB4Annual Report 2006/7 published by NEWAH
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems13would for their first water scheme. Ifcommunities are able, and allowed,to continue to access “new” schemesat the same rate as their first scheme,rather than rehabilitating their exitingschemes, then the system is set up asa disincentive to rehabilitate existingscheme.3.2. Scheme selection and planningprocedures3.2.1 Different sector agencies selectionand prioritisation proceduresThe selection and prioritisationprocedures for selecting WaSHinterventions of the following fiveorganisations were critically reviewed.Many agencies claim that they areadopting a demand led approach toselect the schemes but exact definitionis not available. Demand led approachis indeed a broad term and difficultto define. However, in this study, thedemand led approach is perceived inthree aspects- involvement of localgovernment bodies, support of NGOsand commitment of the communities inthe schemes. The higher the commitmentof communities with the involvementof the local government bodies canbe considered as the most demandled approach, whereas the higher theinvolvement of NGOs with the lowcommitment of communities can beconsidered as the lowest demand ledapproach. However, if there is low levelof commitment of communities in anycase, the approach cannot be consideredas the demand led approach.In this context, the below table givesvarious procedures being practiced bydifferent agencies.The table in text page depicts thatthe Fund Board expects high level ofinvolvement of NGOs with low level oflocal government bodies’ participation andgood level of community’s participation inthe scheme cycle. In contrary, the FINNIDAsupported RVWRMP expects high levelof local government bodies’ involvementwith low level of NGO participation andgood level of community participationin the scheme cycle. The approach ofthe government is different than theprevious two agencies. The governmentexpects low level of participation fromboth the local government bodies andNGOs and even from communities. Thegovernment relies on the contractors anduses committees. NEWAH however poursits heavy input of its own staff with alow level of participation of local NGOsand local government bodies. CARE alsorelies heavily on its staff, and places lessemphasis on the participation of localgovernment bodies and local NGOs.The analysis shows that the communityled approach is still required tostrengthen by all the agencies with fairbalance of local government bodiesand local NGOs. Most specifically localgovernment bodies are relevant andimportant in the context of the supportfor major rehabilitation and operationand maintenance of the schemes afterphase out of the schemes implementedwith the support of external agencies.
14Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsAssessment of demand led approach taken by various organisationsProcedures Fund FINNIDA DWSS CARE NEWAHBoard (RVWRMP)Involvement of local government bodiesSchemes prioritized in the VDC/DDC - Yes - - -level master planSchemes endorsed by VDC /DDC Yes Yes Yes - YesassembliesCommitment required for funding - Yes - - -from VDC/DDCInvolvement of NGOsRequest letters through NGOs Yes - - - -NGOs involvement in planning,implementation and monitoring andevaluation High Medium Low Low MediumLevel of community participationRequest letter submitted by users Yes Yes Yes Yes YesUsers request with full commitmentof contribution for upfront cash for O&M Yes Yes Yes Yes YesUsers request with full commitmentof contribution for upfront cash forinvestment Yes Yes - - -Communities involvement in planningand monitoring and evaluation Medium Medium Low Low Mediuma. Government proceduresThe procedure varies from one projectto another in case of DWSS. If it isdonor supported project, it follows theguidelines developed for the specificproject. Otherwise DWSS adopts theprocedures differently for its regulargovernment funded projects based onthe divisional and sub-divisional offices.The Community Based Water Supplyand Sanitation Project supported byADB follows the procedures set in theproject guidelines. According to theguidelines, the VDCs are selected based
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems15on the HDI and communities based onthe existing water hardship, povertyranking, low sanitation status, majoritydeprived people and remoteness. Theschemes must be endorsed by VDC andDDC assemblies. However divisional andsubdivision offices seek the schemesfor its regular programme under thegovernment funding from among theschemes passed in the DDC assemblyand prioritized by the political parties.Dhikurpokhari-Kaskikot-Sarangkotscheme in Kaski, Balewa NarayansthanWASH schemes in Baglung andDhadingbesi WASH schemes in Dhadingare the examples which were selectedwith political motives.b. NGOs and bilateral projectsFINNIDA seeks the schemes to beprioritized in the VDC level masterplan and endorsed by VDC and DDCassemblies and also seek investmentsupport from VDC as a mandatory. TheFund Board employs NGOs to assistthe communities, whereas NEWAHcollect community applications and isincreasingly working with VDCs and DDCto endorse these. Involvement of NGOsis high in the Fund Board and FINNIDAsupported schemes, whereas povertyfocused criteria is strong with NEWAHsupported schemes. CARE as it worksspecially for emergencies water supply,it does not follow all the participatoryapproaches rather complete theconstruction works in a short period withtechnical and financial supports fromCARE itself although it also mobilise localNGOs for community mobilisation.3.2.2 Project selection criteriaWhen comparing the prioritisation criteriaused by different agencies, the followingmajor criteria are, in general, found beingused:• Size: As already mentioned abovegovernment bodies have dividedresponsibility for schemes based ontheir relative population size. TheDWSS undertakes schemes of over1,000 people, whereas, DOLIDARbelow 1,000 population. The FundBoard expects schemes of less than900 population and other agenciesnormally below 1,000 population.• Demand based: Following criticismof agencies implementing a supplyled approach, over the last ten yearsthere has been a shift to “demandled” or “community willingness”approaches. This has seen criteriaadded to selection criteria whichrelate to community request andengagement, which also includecommunities’ financial and in kindcontribution. Some agencies haveslightly modified the demand ledapproach, to a “demand stimulationapproach” recognising that often itis the relatively wealthy or influentialcommunities who find it easier todemand basic services. As a resultpoorer, excluded and more remotecommunities, who were un‐aware ofavailable support to improve waterservices, were not coming forward torequest support.• Technical: All the agencies includecriteria which relates to the yield ofavailable sources being sufficient to
16Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemssupport the target areas. For ruralWASH schemes, the water should besufficient to meet water demand atthe rate of 45 lpcd and for urban andsemi –urban WASH at the rate of 80to 100 lpcd. All the agencies have thecriteria of the source to be perennialfor round the year.• Existing service level: The Fund Boardincludes criteria which relates to thedistance communities currently haveto travel to fetch water. The fetchingtime should be above one hour onaverage. CARE includes criteria thattargets communities where waterquality is poor, which is measuredthrough the prevalence of waterborne diseases and epidemics.Fund board allows for private tapsprovided the user HHs pay 100% ofthe cost required for the additionalinvestment.• Social poverty and social exclusion:Social cohesion is used a criterionin many projects which is primarilymeasured through the lack ofdisputes over the water sourcesidentified for the projects. Theselection of communities based onrelative poverty or due to a highnumber of socially excluded groups,such as Dalits, is also used by someagencies.• Local government’s prioritisation:FINNIDA (RVWRMP) has given muchemphasis to the planning andcontribution by the local governmentbodies such as DDC and VDC. Theschemes are selected only if thescheme is prioritised in the WaterUsers Management Plan (WUMP) ofthe VDC and consequently passedin the VDC assembly. Recentlythe Fund Board has also mademandatory provision of the schemesto be passed by the concerned VDCassembly. NEWAH are also moving toan approach that encourages the VDCto prioritise communities within theirworking areas. The government seeksthe schemes passed by the DDCassembly.• Sustainability: As mentioned above,in the most part this relates tocommunities agreement to establishand contribute to an O&M fund. Thefund board has the criteria to raise3% of the hardware cost for O&M.FINNIDA (RVWRMP) collects Rs 500per tap whereas DWSS collects Rs1000 per tap as upfront cash forO&M. However some agencies, suchas NEWAH, have included criteriawhich stimulate agreements with thecommunity to contribute time intothe planning, implementation andlong term management of the project.All the agencies also encouragecontinuing to raise the fund after theconstruction of the schemes.• Cost per capita: Cost per capita isalso a criterion that some agenciesuse to select and prioritise projectselection; however from a reviewof the policies there is a littleconsistency between agencies andwithin the sector. Different agencieshave set criteria of different per
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems17capita investment cost for projects tobe feasible and it should be notedthat these cost are often based onjust the project implementationcost and not inclusive of widerorganisation costs.• Schemes to be funded under theFund Board programme, for example,should have per capita cost atdesign stage in between Rs 2,400and 3,000. The Fund Board seemsto have implemented this policy ina consistent manner, as the averageproject cost per capita of schemes ofBatch V was NRs 2,756 and in BatchVI was NRs 3,052.• NEWAH don’t have such a rigidpolicy as the Fund Board but haveguidelines that expect capita costto be in the region of NRs 2,500to 3,000 per capita cost of theproject, and the Finnish Governmentsupported programme has not setceiling for per capita cost.• What can be concluded is that costper capita schemes vary significantlybetween and within agenciesbased on locations and approachesadapted. Evidence supports thebelief that the more remote thelocations are the higher the cost percapita, with project per capita costin the remote VDCs almost doubleof average per capita cost acrossthe country and agencies. RVWRMPhave more schemes than otheragencies in remote VDCs of mid andfar western development region,have the highest cost per capita atNRs 5,575. As would be expectedanalysis also shows NEWAH andFund Board cost increase in remotelocations.• The impact of cost per capita restrictionon project selection could result insome remote and/or difficult to servecommunities continuously not gettingprioritized by agencies, thus leadingto their continued exclusion from theprovision of services. Although littleevidence has been able to be gatheredto prove this point, this research alsobelieves that the cost of rehabilitatingexisting partially functional schemeswould have a lower cost per capitaversus new systems. Therefore costper capita criteria was applied inthose communities where investmenthas been made in the past mightbe prioritized above those where noinvestment has been made.3.2.3 Criteria not currently consideredThe above criteria were reviewed and alsocross checked in the selected schemes inthe field. Most of the criteria were foundto have been used while selecting andprioritising the schemes. The followingcriteria, however, were not considered orused by any agencies:Eligibility criteria• There are no separate criteria forassessing the interventions, whetherthey be a new, rehabilitation orreplacement system, which had beenimplemented in previous years in theVDC or District.
18Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems• Agencies don’t have criteria orpolicy on the proportion of new,rehabilitation or replacement systemto be implemented in specified years/phase, District or VDC.Technical criteria• The design life of existing watersystems was not considered to assesswhether it was more appropriateto implement a rehabilitation orreplacement project.• The service level of the existingsystems is not thorough analysisagain to identify if an rehabilitationor replacement scheme is moreappropriate.• Quality of water at the source.• Period for construction is neverconsidered. Most of governmentprojects were found requiring morethan 10 years of construction periodbut the design period of the schemewas not considered accordingly.• Minimum coverage of the scheme isnot considered whether VDC levelor ward level. Some schemes havethe coverage of only a cluster of award or few wards of a VDC. If all theclusters are not covered in a ward orVDC, it takes another huge logisticalsupport for next time for otheragencies. Moreover, it is unlikelythat other agencies intervene in thatuncompleted ward or VDC becausethe other agencies always seek theprevious untouched ward or VDCs.Social criteria• Institutional aspects of the existingsystems, e.g. is a User Committee inexistence and what are the barrierswhich stop it functioning.• HDI is one of the criteria for selectingthe districts but it has not beenapplied to select the VDCs.• Gender and social inclusion issues arelacking in the selection criteria.Economical criteria• The investment criteria for new,rehabilitation and replacementsystems, e.g. different per capita.• No criteria for community contributionbased on previous scheme and natureof intervention (new, rehabilitation orreplacement) willingness to pay forthe services.Sustainability• Follow up mechanism of the WSUCs.• Willingness and commitment ofcommunity to contribute a regulartariff for O&M activities.• Identification of maintenance workersto support O&M work.• Linkage and coordination mechanismwith the concerned District agencies.3.2.4 Consequences of poor selectioncriteria of projectsThe absence of the above selectioncriteria has caused a number ofconsequences, which are set out below:a. Unbalanced allocation of resourcesThe lack of proper selection criteriaand guidelines has caused a seriousmisbalance in allocation of resourcesfor water intervention in the districtand VDCs. In Baglung, out of 26 VDCsstudied, 7 VDCs have only one WASHproject in each VDC during the last fiveyears, whereas 5 VDCs have over five
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems19WASH schemes in each VDC during thesame period. In Damek VDC there havebeen 11 schemes constructed duringthe last five years. Interestingly NEWAHsupported to saven schemes and theFund Board to four schemes in DamekVDC. The budget for the last five yearsin a VDC ranges from 1.5 million to 40million rupees. In an average the budgetallocation in a VDC is 7.2 million rupeesin five years and 1.4 million rupees in ayear. There are other several VDCs in thedistrict and other districts having watersupply coverage less than the nationalaverage but without the adequatebudget for WASH. This is truly theconsequence of lack of proper criteria ofscheme section.Similar to Baglung, a study of VDCs inDhading reveals that the investment ina VDC over the last years was incurredfrom 0.2 to almost 12 million rupees.However the average investment in aVDC in the last five years is about 0.7million which is almost ten times lessthan investment in Baglung. It showsthat the investment pattern is notuniform, but rather is based on existenceof donors and active NGOs irrespectiveof the water coverage required in thedistrict.b. DuplicationIn Dhading, various VDCs were found tohave duplication of schemes by differentagencies. In Murali Bhanjyang VDC, itwas observed that various agencies hadbeen involved in the provision of waterschemes between 1985 and 2007; theseincluded the VDC, UNICEF, WSSDO, andRWSSFDB. However despite a numberof communities being provided morethan one scheme during that time,interestingly in two wards (Wards No 2and 5) no scheme have been provided atall, and these communities were sufferingsignificant water shortage. These wardsare inhabited by the Kumal ethniccommunity.In Baryang Bazaar, Ward No. 3, ofHugdiseer VDC in Baglung district,WSSDO, GWS and RWSSFDB are allimplementing water schemes. InitiallyWSSDO implemented a WASH schemein this ward during the period of 2000to 2006. Later in 2007, GWS and theFund Board intervened in this Ward tocover some of the communities andhouseholds that had been left out byprevious interventions. If the WSSDOhad covered all the communities inthis Ward, the overhead and otherlogistic expenses which overheadsexpended by GWS and the Fund Boardcould have been minimised. Theproject selection criteria of WSSDOdid not delineate the size of thecommunity, if would have been moreefficient to cover a whole areas, suchas a VDC, to minimise the logistic andother administrative cost.Due to the lack of elected LocalGovernment in recent years and thefact that some agencies do not havemandatory provision to coordinate withLocal Government, many agencies havenot put their planned intervention VDCand DDC assemblies for approval. In theabsence of these criteria, the duplication,as well as poor targeting, will continue toexist in future too.
20Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsc. RepetitionMany water schemes do not remainfunctional for their full design life. Thedesign life of a WASH scheme is typically15 to 20 years. The reason of low life mightbe different from one scheme to another.Some may be due to technical design andimplementation weaknesses, some may bedue water depletion, some due to naturalcalamities and some due to poor operationand maintenance. Whatever the reasonsmight be, many schemes are found to haverevived with a new project.Balewa Narayanstan scheme inBaglung district was constructed forthe first time by the DDC in 1977.Only two years later, when it wasdysfunctional it was again rebuiltby Indian Embassy in 1979. Thisscheme lasted for five years beforeit was reconstructed by DWSS in1984. Now after 22 years, a majorrehabilitation has been initiatedby DWSS in 2006 and it is still ongoing.The rehabilitation includesthe construction of a new reservoirtank but not the other structures.It is likely that the scheme needsother rehabilitation schemes in nearfuture. The rehabilitation project wasapproved after a delegation of peoplevisited the then Finance Minister andit was given approval irrespective ofproject selection criteria for choosinga scheme for rehabilitation.d. Poorest communities excludedThe Federation of Water Supply andSanitation Users Nepal (FEDWAUN)is coordinating with various Citizens’Action Programme in Dhading district.It has studied 31 schemes in the year2006. Out of 31 schemes, users of15 schemes have been left out dueto obligatory provision of cash andlabour contribution as they could notafford.e. Prolonged project periodThe criteria do not specify how manyyears the schemes take to completethe construction. Due to this, manygovernment undertaken projects take over10-15 years to complete a project. Thedesign period is hence almost over by theend of the construction of the project. InKaski, Dhikurpokhari-Kaskikot-Sarangkota water scheme was initiated in 2001and the progress till 2009 is only about15% of the total budget and time. It isexpected that it will take the next 7 to 8years to complete the 100% construction.By that time the design period will alsobe almost over. In Dhading, it took 10years from 1981 to 1991 to complete theconstruction work of Dhadingbesi WASHScheme. There are other several evidencesof such long term projects in Nepal, andthey have many long term implications.The structures which are built at thebeginning needs rehabilitation by the timeof completion of the schemes, the marketrate fluctuates and the quality of worksare compromised to compensate theincreased rate of construction materials.Moreover the technical personnel assignedfor the schemes construction change suchlong time periods and hence supervisingworks are greatly affected.
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems213.3 Functionality and sustainabilityof water supply systemsTo date there is no central sectormonitoring system to review thefunctionality and sustainability ofwater supply interventions by differentagencies. In recent years there has beenincreased recognition for the need forsuch a government led systems, andin recent months an attempt has beenmade to develop some sector widerindicators to guide the establishmentof a sector monitoring system. In itsabsences agencies have been left toreview the functionality and sustainabilityof their intervention in their own way,but with no obligation to conduct suchmonitoring or share the result. Despitethis some agencies have made goodprogress in reviewing the sustainabilityof their interventions, which has led tosignificant learning for the whole sector.NEWAH with financial supports fromWaterAid implemented 228 hill WASHprojects between 1992 and 1998 in allfive development regions. A looking backstudy was conducted from 2001 to 2005of those hill projects. The objective ofthe study was to assess the sustainabilityof the projects and identify weak projectsin need of supports, as well as to modifyand develop new approaches to improvethe chances of sustainability for futureprojects.Rural Water Supply and SanitationFund Development Board (RWSSFDB)implemented 585 WASH schemes (bothhill and tarai) in three batches - batches I(completed in 1999), batch II (completedin 2001) and batch III (completed in2004) in all five development regions. Aseparate Long Term Sustainability Studywas conducted for each batch in 2007,2007 and 2008 respectively to assess thelong term sustainability of the completedprojects. In the same way, the RuralVillage Water Resources ManagementProject (RVWRMP), with support from theFinnish Government, commenced fromOctober 2006 for a period of four yearsup to October 2010. A midterm reviewwas conducted in 2009.This research study has reviewed theLong Term Sustainability Studies (LTSS)of NEWAH, Fund Board and the midtermreport of FINNIDA/ RVWMP. From thesethis research has extracted lessons learntfrom these studies.3.3.1 Sustainability indicatorsDifferent agencies have assumeddifferent sustainability indicatorsof the WASH Projects. However, themajor parameters adopted are broadlyconsistent; technical, institutional,social, environmental and financial.NEWAH and Fund Board have almostthe same parameters but FINNIDA has adifferent set of criteria. FINNIDA largelyrely on the comprehensive Water UseMaster Plan at the VDC and DDC level,rather than a particular scheme. It alsoconsiders the human resource capacityof the users.The sustainability criteria however do notdifferentiate for new, rehabilitation andreplacement projects. The criteria also do
22Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsIndicators of sustainabilityParameters NEWAH Fund Board FINNIDATechnical • Source yield • Source yield • Sustainable wateruse• Functioning ofwater points• Functioning of • Resource usestructures• Functioning of • Functioning of tapsstructuresSocial • Health andhygiene impact• Communityparticipation• Planning capacityof users• Implementationcapacity of users• People’sparticipationInstitutional • Status of userscommittee• Users committeestatus• Involvement of • VMW statususers committee in • MCTG statusother development • WTSS status• Status of care • Coordination andtakerslinkageEnvironmental • Hygiene andsanitation• Hygiene andsanitationFinancial • O&M fund status • Environment• Regular O&M• O&M fundcollectionnot explicitly specify the sustainabilityagainst the age of the projects afterconstruction completion.3.3.2 Approaches to address Operationand Maintenance of the systemsEach of the WASH organizations reviewedwas found to be strict in collecting acommunity O&M fund before the projectinterventions commenced, to ensurecommunity ownership and support withschemes sustainability through propermanagement in future. The upfront cashfor O&M fund is generally based onthe number of tapstands. The range ofupfront cash to be collected is from NRs1,000 to NRs 1,500 per tapstand. OnlyFINNIDA was found to have separateprovision of upfront cash with referenceto new and rehabilitation WASH schemes.The upfront cash for new scheme is NRs1,500, whereas for rehabilitation schemeis NRs 500 per tapstand. The Fund Boardin contrary enforces the community toraise 3% of the construction cost as theupfront O&M fund.The WASH organizations were also foundto have encouraged the communitiesto collect O&M fund on a regular
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems23Criteria for O&M fund collectionRWASH O&M supports by Upfront O & M Fund Regular O&M fund Provision ofagencies the agencies (by users) VMWFund Board No 3% (for Hills) of the WSUC decides to VMW/VHPconstruction cost collect in monthlyraised during the basis in terms ofdevelopment phase cash and or kindFINNIDA Livelihood and Rs.1500 per tapstand Users are VMWmulti-purpose by users (for new encouraged towater use to scheme) Rs 500 per raise fund (cashincrease capability tapstand for and or grains) inof users to raise rehabilitation scheme the monthly basis.O&M fundDWSS No Rs. 1000 (Min.) pertapstandCARE Nepal No Project don’t have Due to failure ofpractice of collecting project to collectfund upfront cash for funds, otheroperation and options are beingmanagement explored includingthrough VDC.NEWAH No Rs. 1,000 per Users are VMWtapstandencouragedto raise fund(cash andor orgrains) in themonthly basisbasis, generally on monthly, from eachhousehold. The water tariff is expected tocover the minor repair and maintenanceand also the incentives of the VMWassigned for the schemes. The watertariff is however paid by the communityin terms of cash and/or grains. The watertariff is generally ranges from NRs 5 toNRs 100 in a month.The study shows that every agency seekfull commitment from the users to collectup front cash for O&M, however only theFund Board and FINNIDA seek both thecash investment and up front cash forO&M fund. All the organizations werealso found to have ensured the provisionof Village Maintenance Worker (VMW)for the daily operation and maintenance
24Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsof the schemes. The VMWs are trainedto impart their knowledge and skill toeffectively operate and maintain theschemes. The VMWs are generally trainedduring the project implementationphase or even prior to this so that theycould take part during the constructionactivities. When they take part in theconstruction, their knowledge and skillare expected to enhance on variouscomponents of the schemes as well.3.3.3 Actual O&M systems in the fieldsOperation and maintenance systemswere found to have been establishedonly in about 53% of projects visited.An average Rs. 66,300 was found tohave been established in the 10 schemesout of 19 schemes visited. The fundwas generally raised in those schemesduring the construction or before theconstruction as the upfront cash forO&M. The upfront cash was raised asthe respective agencies had mandatoryprovision to raise the fund. There was noO&M fund for the remaining 9 schemesas the agency did not impose to collectthe upfront cash during the project. Of19 schemes visited, only in 4 schemes,the people were found to have beenregularly raising monthly fees for thesalary of Village Maintenance Worker(VMW). The monthly rate is Rs 10 permonth. Average salary for the VMW isNRs. 1,538 per month. Among the four,three schemes where upfront O&M fundwas established and regular monthly feesis also being collected are functioningwell and one scheme functioningpartially. Although it appeared thatschemes where O&M funds are notestablished and monthly fees notcollected were mostly defunct. Therewere also a high number of schemeswith O&M funds in place that also weredefunct. The correlation between O&Mand funds resulting in functioning systemwas not so strong, showing that otherinstitutional and technical factors alsohave an impact on functionality.Some of the projects are functioningwell where users are active and havea strong feeling of ownership. Forexample the Simle DWSS scheme wascompleted about 15 years ago and tillto date also it is running very well. Ithas proper Operation and Maintenancesystem. A VMW who was trainedduring the construction period is stillworking and is regularly paid fromthe monthly tariff collected from eachhousehold.3.3.4 Status of sustainability of watersupply systemsOver the past 30 years, although thenumber of water schemes constructedhas increased significantly, themajority of water schemes havenot functioned effectively for theirdesigned period. Resources had tobe allocated repeatedly for repair,rehabilitation, replacement andduplication of the schemes, whichwere implemented by both thegovernment and non-governmentsectors. Coordination and monitoringmechanism between stakeholdersremained ineffective. The lack ofintegrated efforts in planning,implementation and monitoringcontinues to be major challenges forsustainability of water schemes.
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems25Aspects of Indicators for NEWAH RWSSFDBsustainability (after 3-6 Batch I Batch II Batch IIIyears of (after 7 years of (after 5 years of (after 4 years ofcompletion) completion) completion) completion)1. InstitutionalSustainable 47% 0.0% 4.4% 8.7%Fair/Good 11% 70.0% 40% 64.1%Defunct 37% 30.0% 55.6% 27.2%2. Social and environmentSustainable - 15.0% 17.8% 21.7%Fair/Good - 70.0% 66.7% 65.2%Defunct 70% 15.0% 15.6% 13.0%3. FinancialSustainable 60% 25.0% 15.6% 50.0%Fair/Good 33% 35.0% 15.6% 22.8%Defunct 7% 40.0% 68.9% 27.2%4. TechnicalSustainable 30% 50.0% 55.6% 10.9%Fair/Good 50% 5.0% 37.8% 79.3%Defunct 20% 15.0% 6.7% 9.8%Overall sustainabilitySustainable 30% 15% 18% 3%Fair/good 50% 50% 60% 80%Defunct 20% 35% 22% 16%The 10th five year plan (2002-2007) statesthat most of the drinking water systemsbuilt in the past have become eithertotally or partially defunct. Sustainability ofscheme is thus the major issue to achieveMDG goal by 2015. When reviewed theLong Term Sustainability Study (LTSS) ofNEWAH and RWSSFDB following status ofthe sustainability of the WASH schemeswere found.The study reveals that only about 30% ofthe WASH schemes continued to functionwell after 3 to 6 years in case of NEWAHsupported projects, whereas, 15 to 18% ofbatch I and II WASH schemes supportedby Fund Board are well functioning afterthe 5 to 7 years of completion of theproject. Interestingly, only 3% of the batchIII WASH schemes are functioning well after4 years of the completion. About 20% of
26Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsthe scheme are defunct and need majorrehabilitation after the completion of 3 to6 years by NEWAH. The study also showsthat nearly 60% of the system supportedby NEWAH has broken down at least onceafter the completion. The case is worsewith Fund Board supported projects. About35% of batch I and 22% of batch II WASHschemes are defunct. Similarly about 16%of the batch III WASH schemes are defunct.3.3.5 Major causes of dysfunctional ofwater systemsOf the total 19 gravity flow waterschemes visited, only six werefound to be functioning well, sevenpartially functioning, and three underconstruction. Interestingly two waterschemes were found to have ceasedits functioning and one is a virgincommunity no one has yet intervened.Among the six schemes which wereThe table below shows summary of LTSS of NEWAH/WaterAid supported schemes:**Parameters Status Description of the statusWater source 71% intakes having some Reasons:sorts of problems • Leaks: 29%Among them, 92% are • Land slide: 9%stream sources • Flood: 9%• Run off water mixing: 8%• Source disputes: 3%O&M system 74% of caretakers are the 47% caretakers getting regularly monthlyoriginal trained ones. 26% paymentof them are new without 11% caretakers getting regularly kindtrainingincentives55% UCs having tool box 37% caretakers not being paidO&M fund Average size of fund: NRs 62% of the projects has the fund deposited19,244. Ranging from in the banknRs 290 to 230,720 50% of the project does not raise the fundregularly36% of project use the fund for O&M14% of project invest the fund for loan30% of the project never use the fundBreakingdown57% of project have broken 18% of the projects were repaired in1/2daysdown at least once aftercompletion** Long term sustainability study of batch I, II and III schemes, RWSSFDB, 2008
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems27Krishna Bhir WASH (Dhading district)It was constructed 16 years before with the support of WaterAid. It consisted of 25tapstands for 130 families. However its pipe line was washed away by Krishna Bhirlandslide some 10 years before. The people repeatedly contacted VDC and DDC forthe supports. They were supported a few times with a small amount for the pipeline but it was repeatedly disrupted by the land slide. Then the people gave up thehopes of maintaining the schemes and went back to the initial practice of waterfetching from traditional sources. The Krihna Bhir land slide is now under controlsince 5-7years, but none of the agencies have gone back to support them.functioning well, the life of the schemesis within the period of 5 years after theconstruction. It is quite natural that thesystems must be functioning well duringsuch young age of the schemes. The ageof schemes which are running partiallyranges from 9 to 20 years. It seems thatalthough they are within the design life,the functioning is reduced to partialonly. In most of the partially functioningschemes, there is lack of O&M fund andprovision of VMW.The life of the WASH schemes whichare defunct ranges from 8 to 16 years.Following are the reasons of schemes aredefunct or partially defunct:a. Weak capacity and motivation of Waterand Sanitation Users Committee (WSUC):Performance of WSUCs is one of the keyfactors that determines the success andfailure of a project. The role of WSUChas been influence by the policy andinstitutional mechanism establishedby the government within of thedrinking water sector in Nepal. Thesepolices place increased responsibilityon communities, and WSUCs as thererepresentatives, to operate and managetheir system without external support.As result the importance of buildingownership and capacity of WSUC toenable them to engage actively in thewater systems from planning and design,through implementation and monitoringto long term operations and maintenanceis vital.Examination of practices of variousstakeholders’ shows that more focushas been given to preconstructionand construction phases and verylittle attention has been given to postconstruction stage. But the experienceshows that users are found more activein the earlier stages of the project,but gradually become passive in postconstruction stage. A study conductedby NEWAH shows that about 50% ofWSUCs were found to be ineffective inholding meeting on regular basis, only5% WUSC holding monthly meeting, and40% WUSC held only one meeting tillthe survey. Such status of WSUC clearlyshows the weak motivation of WSUC isone of the pertinent reasons behind thefailure of project.
28Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsDue the sector’s broad adoption of aproject based approach and the lackof appropriate institutional supportmechanisms, assistance from externalagencies decline drastically once watersystem move from construction tothe operation stage. The lack of localgovernment led monitoring mechanismshas resulted in no effective mechanism toidentify and prioritise support needs andinvestments, leaving communities withlittle capacity or motivation to addressongoing technical and institutionalproblems.b. Inadequate and improper managementof O&M fund:The provision of a maintenance fund ofan adequate size is another factor thathelps keep water schemes operatingsmoothly. Its mobilization again dependsupon the institutional capacity of theWSUC and the supervising agency at thedistrict level. Having maintenance fundis not enough, it is also highly importantto mobilize it for the betterment of theproject. Often it is found that the onlymotivation for the WSUCs establishingan O&M fund is to fulfill the externalagencies requirements and securingexternal support. However in postconstruction stage with the decliningfrequency of monitoring from externalfunding agency the collection andmobilization of O&M funds is neglected,which causes ineffective operation andmaintenance of the project.Information from the field survey showsthat about 90% of project users reportedthat, fund is insufficient to pay fees forO&M workers, and maintain the project.The LTSS of NEWAH showed that about37% of the maintenance caretakersare not being paid for their services.The average size of fund NRs. 19,244,ranging from NRs 290 to NRs 230,720.Community people were found to beunaware of the maintenance funds inonly 7% of projects, which indicate somelack of transparency. How much O&Mfund should be within a community orlocal bodies to effectively operate thecompleted project by the communities, isa serious question for the stakeholdersworking in the drinking water sector.Pashupati WASH Scheme (Dhading district)It was constructed in 2000 with the support of the Fund Board. The following year,the pipe was burst up and the system was since then ceased. The total length ofthe HDP pipe is about 2000 m. The main reason of the bursting the pipe seemsto be due to a design fault. Low pressure pipes were designed not meeting thepressure of the static head of the pipe line alignment. The community people hardlytried to replace the burst pipes. Even they do not have O&M fund. As the VMW wasnot paid by the community, he is also not contributing to the scheme.
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems29c. Lack of regular service of trainedVillage Maintenance WorkerThe present of a skilled VMW is essentialfor ensuring the day-to-day operationand maintenance of water systems. Theabsence of VMWs has been a significantcause of drinking water scheme notbeing functional. In many cases thereare VMW but they have been poorlytrained or not provided refresher training.In other cases where there are VMWs inplace they are not motivated to do theirjobs, which is often related to lack of orinsufficient financial reward. To be ableto pay VMW communities need to haveboth an active and motivated WSUC andalso have sufficient funds in their O&Mfund to pay a monthly salary.According to the information of fieldstudies, about 60% of projects foundtrained VMW paid by WSUC. Howeverthe users reported that they are unableto fully pay VMW from the O&M fund.In the LTSS of NEWAH found that60% of completed hill schemes foundcaretakers out of them 74% were originalcaretakers, and 26% new caretakers.Total of 47% caretakers have a toolboxand rest 53% do not. In 47% of projects,it was found that caretakers are paidcash on a regular basis, and 11% inproject in kind and rest 37% of projectdid not pay wage to caretakers. This allsuggests that there is a lack of trainedVMWs available to oversee everydayO&M in the communities. Issueshave also been raised concerning theirtechnical competency and ability toundertake the responsibility with limitedexternal support after only short training.There is an argument that VMWsneed to be managed in a more formalway by communities, to ensure theyare motivated and accountable forconducting their responsibilities.Although it must be recognised thatthere are instance where in kindpayments or payment on “pay-as-youwork”basis have worked, generally theseinformal agreement don’t result in aneffective system to support long termsustainability. On significant advantageof formalizing the VMWs, is that thereis increased scope to create linkagebetween VMW within a VDC and DDC,and also with local government agencies,for technical support and backstopping.d. Involvement of incompetent manpowerPoor initial survey and design, aswell as poor construction, of gravityflow water schemes are mainly dueto the involvement of incompetentmanpower. With the involvement ofincreasing number of funding agenciesplanning and implementation ofdrinking water projects have beencarried out through local NGOs. LocalNGOs often don’t have the capacityto undertake the important designphases and overseeing of constructionrequired to ensure the water schemesremain functional for their designlife. Local NGOs find it hard to attracthigh skilled staff and rarely providesufficient training to their technical
30Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsstaff to fulfill the role expected ofthem. Often technical skills withinsupporting agencies are not basedat the project site, and therefore arenot able to monitor project workin a timely manner. This could becovered by increased linkages withlocal government agencies, but theserelationships are rarely made or sparecapacity effectively utilised.e. Lack of institutionalised monitoringmechanismIn the absence of established monitoringmechanism at district and national levelfor the sector as a whole there seemsto be a lack of accountability for theimproper maintenance of drinking watersystems. Local bodies have not takenup their responsibilities as set out inthe decentralized act, due to a lack ofclarity on roles and responsibilities.There is ambiguity among the MLD andMPPW to look after water sector in thedistrict.Various stakeholders apply their ownoperational modalities. As a whole thereis a lack of sector wide approaches inplanning and monitoring of the watersector. There is no information both atdistrict and national level that how muchinvestment is required and is investedin new, rehabilitation or replacementschemes. The Government has yet toput fund aside or allocated budget atthe district level to support WSUCswith significant O&M activities whichare beyond their financial or technicalcapacity.There is no coordination betweenWSUC, VDC and DDC to supportand sustain the completed projects.Supporting agencies handoverthe projects to Users, with littleinformation provided to the localgovernment agencies. As a resultgovernment have little accountabilityand take no responsibility for thecontinued functionality of the system.In conclusion, there is lack of aninstitutionally accepted monitoringmechanism to coordinate allstakeholders of the water sector forthe sustainable operation of drinkingwater projects. In the absence ofproper mechanism and supportingpolicy to WSUC there is increasingtrend of failure projects in spite ofincreasing financial investment in thewater sector.
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems314 RecommendationsExperiences of various stakeholdersand the ground realities of the sectoras a whole give us valuable learningto improve the drinking water sectorsignificantly. Major recommendationsfor rationale allocation of resources andsustainable operation of drinking waterprojects are briefly discussed in thefollowing section.4.1 Focusing investment effectively4.1.1 Social inclusion and access toservices included in selection criteriaThe Government of Nepal should takeleadership in developing some clearcriteria to guide project selectionundertaken by Local Government andother sector implementing agencies. Atthe forefront of any Government criteriashould be to ensure that financial andtechnical support is focused on thosecommunities made up of poor andsocially excluded groups who havenot been provided access to waterservices in the past. Project proposalshould included information on thecommunity members’ social identity,such as ethnicity and caste, as well asinformation on access to basic services,including WASH, education and healthcare.4.1.2. Recognition of investment in new,rehabilitation and replacement schemesThere is a need to increase awarenessand equity of investment between new,rehabilitation and replacement waterschemes. All project proposals should beclassified in this category while planning
32Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsand budgeting to equity and to reduceduplication and repetition. Priorityshould be given to new schemes, incommunities where water projects havebeen provided previously. Replacementschemes for those communities whosewater schemes are dysfunctional andbeyond their design lives should begiven the next level of priority.For those communities with dysfunctionalschemes which are within their designlife, careful review needs to be placedon the reasons for the systems notfunctioning. Those communities whosesystems are not functioning due toexternal factors, such as natural disastersdestroying infrastructure or poor initialdesign of the scheme, should be givenpriority over those schemes in whichcommunities have not implementedan effective O&M system. In suchscheme emphasis should be placed onrehabilitation rather than replacement,and the communities increasedcontribution (in cash and kind) andaccountability place on them to maintainthe new system sort.4.1.3 District level Operation andMaintenance FundThe establishment of an Operation andMaintenance Fund at district level to useexclusively for the repair and maintenanceof drinking water projects would supportthe sustainability of schemes significantly.Use of this fund should be linked upwith monitoring mechanism establishedwith the local bodies, as mentionedbelow, but the principle should be thatfund are allocated to those communitiesthat require financial or technicalsupport which is beyond their capacity.Communities should be prioritised forthe fund based on criteria that prove thatthey have been operating their systemeffectively. Communities should also berequired to make a contribution to theO&M works that the fund is supporting.The availability of funds for this purposeat the district level will help usercommunities to meet their need of repairand maintenance beyond their capacity ina timely manner, prior to more significantinvestment and rehabilitation beingrequired.4.1.4 Establishment of Sector WideApproachExperience of drinking water sectorover the decades suggests stronglythat there should be a sector wideapproach (SWAP) to allocate resourcesensuring equity across the regions andcommunities. This will help for a wellcoordinated planning both at nationaland local levels. Implementationresponsibilities of the projects willbe assigned as per the capacity ofdifferent stakeholders. Problemsof duplication and overlappingexperienced should be eliminated.Uniformity among stakeholders intheir operation modalities will easeuser communities to approach theirdemands through local bodies and
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems33enhanced ownership towards theirproject. It will help ultimately to takeoverall responsibility by local bodiesfor the caretaking of completedprojects introducing comprehensivemonitoring system in the district. ThusSWAP will be indispensable for thesustainable operation of drinking watersector as well as maintaining socialequity to large extent.4.2 Governance and monitoring4.2.1 Redefining the roles of variousactors at all levelsThere is still ambiguity among thevarious stakeholders in their roles andresponsibilities. Operation modalitiesare different among government, quasigovernmentand non governmentorganizations. Local bodies, especiallythe DDC, have not been empowered asenvisaged in decentralization act. Thisall has been resulted in uncoordinatedplanning, irrational resource allocationand improper maintenance ofcompleted projects. District level WASHCoordination Committees, chaired bythe LDO, and with representation fromrelated government agencies and othernon-government sector actors, needto be ignited. Part of the ignitionprocess need to establish clear role andresponsibilities of different actors, andalso a coordination mechanism, whichcan oversee planning, implementationand monitoring of WASH activities.4.2.2. Appropriate monitoring mechanismwith local bodiesTo enable District Level Stakeholdersto better target the limited humanand financial resources to thosecommunities who are most of those atneed and where maximum impact canbe achieved, an effective District (andarguably VDC) level monitoring systemmust be in place. The system shouldinclud information on current watercoverage, scheme age and status, aswell as information on who constructedthem. Through an effective coordinationmechanism all new schemes couldbe registered into the system too.This system would aid decisions onallocation on resources and alsohelp to identify the sustainability ofdifferent organisations interventionsand approaches. Establishment of“Data Bank and Information Centre”as envisaged in Rural Water Supplyand Sanitation National Policy 2004can be the milestone to initiate theappropriate monitoring mechanism atthe local level.4.2.3 Institutionalisation of Water UsersCommittee:A process of registering all WaterUsers Committees with local bodieswould increase their legitimacy andaccountability. Registration of WUCsshould take place in VDC, and in turnthe VDC should register them DDCand District Administration Office. A
34Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsmechanism should be in place to monitorall WUCs, as to whether they are bearingtheir responsibility in a representativeand transparent way. This mechanismwould best sit with the VDC, but untilthese are strengthened might be betterto reside with the DWSO. WUC should bemonitored (and supported) concerningthe best utilisation of the funds theyreceived from various sources, as wellas the O&M fund collected from theirusers. Linkage of the WUC with the localgovernment bodies help to make themaccountable publicly both to the usersthey represent and the VDC. To supportgaps identified in WUCs there should beregular capacity building provided to faceemerging issues of the sector, which areidentified.4.2.4 Strengthening the role ofFEDWASUNAs mentioned the role of users is crucialin operating and maintaining of thedrinking water schemes. Communitiescan also provide helpful informationto Government and sector agencieson the underlying problems thathamper sustainable operations ofprojects. Increasing the networkingand linkage between Users Groups,will both contribute towards sharedlearning and experience for the UsersGroups and sector as a whole. TheFederation of Water and SanitationUsers in Nepal (FEDWASUN) have acritical role in supporting such linkagesand strengthening civil society’s role insupporting effective prioritisation andsustainability of water schemes. Throughthe recognition of the important roleand legitimacy of FEDWASUN by localgovernment bodies, FEDWASUN canplay a key role in voicing the issues ofUser Groups and communities deprivedof access to water within the Districtcoordination mechanism.FEDWASUN has come into existencerelatively recently and therefore theircapacity needs to be developed priorto too much expectation or pressurebeing placed on them. However in thelong term there might be a role for themto support in district level monitoringactivities and conducting social audits ofcompleted projects. Similarly, FEDWASUNcould be involved during planning andallocating fund for maintenance andrehabilitation of water schemes as itcan give the true picture of the watercoverage status.4.3 Operational sustainability4.3.1 Technical capacity of WUCFor the regular supervision of thewater system from source to tap andcarry out necessary operation technicalcapacity of the WUC is required to bereasonably strong. The presence of atrained Village Maintenance Workers(VMW) has provided to significantlyincrease the chance of sustainability ofthe scheme. It has also been shownthat informal payment agreements
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systems35mean that VMW don’t undertake theirresponsibilities effectively. Through thecommunity formally employing the VMWon a contract basis their motivation andquality of work undertaken is increased.It needs to be recognised that VMWswill leave the community, that existingVMW may require refresher training andthat some problems will be beyond thetechnical capacity of the VMW. It istherefore important than a mechanism isin place to provide technical backstoppingtop VMWs to support them in their role,this would include refresher training.Technical backstopping could be providedin a number of ways; including throughestablishing a network of VMW at VDC orDistrict level, through FEDWASUN raisingissues at the District level or throughGovernment (DTO) or Local NGO agenciesproviding technical inputs.4.3.2 Improved O&M approach andmechanismConsidering the shortcomings inoperating projects in sustainable O&Mapproaches and mechanisms shouldbe developed at all levels involvingall stakeholders clarifying the rolesand responsibilities of every actor. Inthis connection an O&M guideline forcommunities and local bodies shouldbe developed. Users should be mademore accountable to operate their ownprojects undertaking regular supervisionand maintenance. Provision of O&Mfund with the respective size of it andVMW, role of VDC and DDC should alsobe mentioned in the guidelines.
36Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsAnnexFollowings were the list of schemes visited against each of the district:District New Rehabilitation ReplacementSankhuwa 1. Jusmure WSWS, Jaljala 2. Kharang WASH, KharangSabha VDC VDC,3. Raatmate WASH,Khandbari municipality4. Dandagaon WASH,Khandbari municipalityBaglung 5. Gahate WASH, 10. Balewa Narayansthan 13. BhimpokharaBaglung municipality WASH,Narayansthan WASH, Bhim6. Armaha WASH, VDC and pokhara VDCnarayansthan VDC Paiunpata VDC7. Paiyunpata WASH, 11. Pala WASH, BanglungPaiyapata VDmunicipality8. Damek WASHS, 12. Biukot WASH, Biukot VDCDamek VDC9. Baskotpagja DWS,Payuthanthap VDCDhading 14. Dhadingbesi WASH 15. Simle WASH scheme,Scheme, Nilkantha Bhumesthan VDCVDC16. Krishnabhir WASHScheme, Dhusa VDC17. Pasupati WASHScheme, Kailash VDC18. Galchhi WASHScheme, Baireni VDCKaski19. Dhikurpokhari-Kaskikot-Pokhari Sarangkot WASH,Dhikur VDC, Kaskikot VDCand Sarangkot VDC
Research into financial and institutionalstructures to support the functionality andsustainability of rural hill water systemsThe report reviews the equity of distribution of the investment andsustainability of rural hill water supply systems. It also explores thereal situation and suggests ways that would significantly contributeto reforming the larger policy regime of the state concerning theinstitutional and sustainability factors that contribute to improving thefunctionality of drinking water systems in rural hillcommunities. Moreover, it attempts to suggest for the rational ofallocation of available resources for drinking water that could be usedfor incremental development in the sector towards meeting the waterneeds of the people more equitably in the country.WaterAid transforms lives by improving access to safe water, hygiene andsanitation in the world's poorest communities. We work with partners andinfluence decision-makers to maximise our impact.For more information, please contact:WaterAid in NepalKupondole, Lalitpur, NepalGPO Box: 20214, Kathmandu, NepalTelephone: + 977 1 5552764 / 5552765 / 5011625Fax: + 977 1 5547420Email: firstname.lastname@example.org/nepal