Hydraulic ram pumps and Sling Pumps

OP-32-EPrivate capitalPrivate capital can be channelled into the construction of a WSS scheme, or to meet replacement,extension or recurrent costs. However, those who provide the capital involvement look for high ratesof return to justify their investment, often through future contracts or ownership. It is difficult to applythis option in rural and low-income urban areas where users are not able to pay a “full-costs recovery”tariff which would include repaying investment costs and providing this rate of return.Advantages and disadvantages of private capitalAdvantages• Effective cost recovery through clearmanagerial practices.• Availability of resources to carry out largeinvestments.• Increases capacity to negotiate withgovernments and institutions.Disadvantages• Users are unlikely to participate in decisionmaking.• Users pay a high tariff a) to repay the investmentcost, and b) to provide a profit.• Does not necessarily take into account ability topay, making it difficult for poor people to accessthe service.Cooperative fundsCooperative funds result from an initiative by a group of users or individuals who get together tofinance productive activities, not in the first place always related to WSS. The initial capital comesfrom contributions in cash or in kind from the members of the cooperative. Once the group hassufficient revenue, members may decide to use part of their funds to finance WSS services. However,the amount of capital available in this option depends on the results of the first stage investments. Withgood financial and organisational practices, this is a good way to administer WSS services.Advantages and disadvantages of cooperative fundsAdvantages• Allows the financing of a part of majorinvestments such as construction orextension.• Encourages productive activities which canproduce large resources.• Well-organised cooperatives use soundfinancial and organisational practices.Disadvantages• Access to cooperative systems could be difficultfor poor people who do not have the money topay the instalment or registration costs.• Financing productive activities can become moreimportant than financing water related activities.• They only benefit members of the cooperative.2.3.3 Subsidies and taxesDirect government subsidiesCentral government and local authorities allocate part of their budget towards constructing, operatingand maintaining public services. Subsidies can also come through reducing the price of spare parts andchemicals. Authorities may also, at the request of the community, provide free technical advice,technical staff or staff for community organisation and education. The use of public resources tosubsidise poor users depends on government policies and the legal framework, and also on theavailability of funds. Subsidies need to be arranged in such a way that they do not discourage efficientuse of water, nor send wrong economic signals to a market. Indeed, the subsidised price of parts orequipment for a particular project can compete with similar products available for sale, and thereforedistort a market.Subsidies can be used as promotion tools for a particular professional group, for instance the informaland formal private sector. They can also be used to promote access to water services by marginalisedgroups, with subsidies adapted to various levels of marginalisation.38