Hydraulic ram pumps and Sling Pumps

OP-32-E• Option A: Immediate full cost recoveryIntroducing full cost recovery right at the beginning of the project can be done with communities thathave a good record of paying for services, and where community organisations managing the servicehave proper management skills. Introducing this strategy requires that communities and communityorganisations are fully aware of its financial implications, and are both able and willing to pay. Thisoption is rarely chosen, because in many countries it is still considered that covering the initialinvestment and the replacement costs is a government responsibility.• Options B & C: Progressive full cost recoveryIn these cases full cost recovery is introduced progressively either through phases or through acontinuous adjustment. In option B, only O&M costs only are covered to start with. In a second phase,community organisations become responsible for full cost recovery. It is difficult to define withaccuracy the proper timing to “switch” to full cost recovery. It is therefore essential that communityorganisations managing the service, and male and female users, are aware right from the start that theywill eventually be responsible for full cost recovery, and that they accept this principle. The timingmay be determined according to agreed steps in a process of increasing managerial responsibility andownership. Assistance from the agency may be an incentive to accept an additional financial burdenprovided the conditions have been agreed in advance. In option C, the agreement allows for periodicadjustment of the tariff structure and financial responsibilities over time, which leads to a morepermanent improvement in cost recovery. It is important to avoid lack of clarity or too frequentchanges that could discourage communities. During the period when communities recover only someof the costs, it is essential to define who will cover or recover the other costs, and how.• Option D: Recovery of O&M costs onlyThis option accepts that community organisations will not aim for full cost recovery, but will recoveronly O&M costs at community level. This is widely practised in the provision of rural water suppliesin developing countries, because of the assumption that, in most cases, it is difficult to askcommunities to recover all the costs through a tariff. Even in these situations, it is of paramountimportance to reach formal agreements about who is financially responsible and for what. In fact,there should be clarity about the reasons why part of the costs are not or cannot be covered by thecommunities. This should be part of the agreement, as conditions may change later on.• Option E: Recovery of O&M costs only, with initial use of subsidiesThis consists of introducing progressively an “O&M costs recovery only”, mainly by subsidising costs(for example the price of spare parts, the cost of fuel) at the beginning, and providing free technicalsupport for some maintenance. Although this approach can be necessary for poor communities, the useof subsidies can send wrong signals to a market, especially for spare parts. Just as in D, somearrangement will need to be made about who will recover the other costs that the community will notcover, and how.1.2.4 Analysing costs and benefitsCost can be analysed during various phases of the project cycle, although cost studies are very oftencarried out during the planning and evaluation phases. Cost records and cost comparisons can be usedas monitoring tools, both by project staff and communities. One of the major drawbacks of costanalysis though, is that it often requires experienced and skilled professionals. Analysing costs is oftenassociated with the analysis of benefits, since benefits are seen as somehow justifying costs. Benefitsassociated with a project intervention refer to a wide range of outcomes such as:a) Health: Reductions in water-borne diseases, fewer work days or school days lost to illness, lessmoney spend on medical care;b) Social gains: May stimulate community uptake of other, unrelated projects connected withenvironmental health or the position of women;c) Economic and financial gains: Saves cash, as the new system replaces water vendors and deliverswater at the lowest cost, improves agriculture, attracts external sources of revenue into the village;d) Institutional impact: The reorganisation or creation of structures and management capacity willstrengthen institutions.14