Do you want learn how to apply concepts of sustainable faecal sludge management (FSM) on a city-wide scale? This course starts with an overview of what faecal sludge is and an introduces you to the engineering fundamentals and required information for the design and selection of technologies. Sanitation solutions are prone to failure if an integrated planning approach that includes stakeholder involvement and the development of appropriate institutional, management and financial arrangements is not implemented. The course therefore dedicates a complete week to presenting the full picture, in addition to technology, that needs to be considered for sustainable solutions. It concludes with a focus on current research and innovations in technologies, to provide an understanding of the most up-to-date options. This course is one of four in the series “Sanitation, Water and Solid Waste for Development".
4.5 Financial transfers and flows models
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來自 École Polytechnique Fédérale de Lausanne 的課程
Introduction to Faecal Sludge Management
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從本節課中
Integrated approach to faecal sludge management
Sanitation solutions do not rely on technology alone, and are prone to failure if an integrated planning approach that includes stakeholder involvement and the development of appropriate institutional, management and financial arrangements is not implemented. Presented in week 4 is the full picture, in addition to technology, that needs to be considered for sustainable solutions.
與講師見面
Dr. Linda StrandeGroup leader
Management of Excreta, Wastewater and Sludge (MEWS), Eawag-Sandec
If you buy vegetables from a vendor at a market
what do you thing the vendor does with this money?
Most likely vendors have to make a number of payments with this money.
Some have to buy vegetables from a farmer
or they have to pay to produce them.
Maybe they also have to pay the employees,
pay rent for the stall,
or tax in the transaction.
We call of these payments financial transfers.
In this module we introduce you to different financial transfers
and flows in faecal sludge management.
Following this module, you'll be able to list different financial transfers
in faecal sludge management.
Name stakeholders involved in financial transfers.
And be able to discuss different financial flow models.
Money matters.
This is also true for the management of faecal sludge.
In faecal sludge management
money's exchange by different stakeholders
to cover their capital and operational maintenance costs.
Let's look at some of these cost before we look in how they are balanced
by financial transfers between stakeholders.
Capital costs are paid when buying equipment or infrastructure.
Let's consider for example this collection service provider
shown in this picture in Kampala.
Before you could start operating he had to buy a gulper
for faecal sludge collection.
And a pickup for transport of this sludge to a treatment plant.
In addition, he had to buy other personal protection equipment
such as gumboots, face mask and gloves
and other tools of trade.
Such as these blue barrels.
These are capital costs.
In contrast to these capital costs which are paid one time
or only every few years
operation and maintenance costs incure more regularly
often on day to day basis
for operation and maintenance of different faecal sludge management
services.
Let us consider again our previous example.
What would be operational maintenance cost
for this service provider?
Fuel for the pickup or payment of the salary of his staff
are examples for operational maintenance costs.
Replacing of personal production equipment
or cleaning supplies
or paying of a discharge fee at a treatment plant
are examples.
In this case the pickup is leased and the rent for the pickup
an additional operation cost.
Next to this example of this collection service provider in Kampala
capital operation and maintenance cost incure for all stakeholders involved
in faecal sludge management.
This includes environmental management authorities,
utilities, municipalities, private companies,
non-governmental or community based organizations
and household level users.
These costs can be at very different magnitudes and frequencies.
So, whereas the capital cost for the gulper
is usually several hundred US dollars
depending on in which country it is being manufactured.
A vacuum truck, as shown in this picture,
may cost several thousand or 10 thousand US dollars
And a city scale treatment plant as shown here in Kampala
several million dollars.
So that faecal sludge management service can be operated
over a long period of time.
Financial transfers need to balance these costs of the different stakeholders.
For example, our service provider would commonly cover
capital, and operation and maintenance cost.
Through a service fee that he receives from a household
for the collection of faecal sludge and transport to a treatment plant.
If this service fee is the only revenue stream
and cannot cover its cost
it will likely result in poor performance of the service
or it would go out of business.
The number of financial transfers in faecal sludge management
strongly depends on the stakeholder arrangement.
This slide shows different stakeholder arrangements
for faecal sludge management.
Each block represents one stakeholder.
In the first arrangement one stakeholder manages the entire
faecal sludge management service chain
and there are no financial transfers between stakeholders.
In contrast, other arrangements such as the last one
where four main, four stakeholders managing
the faecal sludge management service chain
includes more stakeholders
and also potentially more financial transfers between these stakeholders.
This slide shows a common example of institution arrangements
in faecal sludge management.
That consists of a household, a private company for faecal sludge
collection and transport,
a public utility for faecal sludge treatment,
And a farmer/industries that uses faecal sludge treatment products.
In a common financial flow model for this institution arrangement
the households pay a service fee
to the private service provider
for collection and transport for faecal sludge treatment.
At a treatment plant, the company pays a discharge fee.
This allows the service provider to legally discharge sludge.
This fee is paid in return for transferring the responsibility
managing the sludge from the collection and transport
service provider to treatment service provider.
The sale of treatment products by the utility provides revenue
for the utility.
So in this example, the service fee, the discharge fee,
and the revenue from the sales of treatment products
are financial transfers.
The direction of the arrows indicating which direction
the money flows.
This is why we also call this financial flow models.
Financial transfers have an effect up and down the service chain.
For example, in the model we just discussed
one implication could be when the utility chain has a very high
discharge fee.
It will likely be passed on to the household
by a high service fee charged by the collection and transport
service provider.
This could prohibit customers being able to afford collection
and transport services.
Especially when they're poor households.
Another implication could be,
that even when sludge is collected
collection and transport service providers illegally dump sludge
to avoid the high discharge fee as shown here.
In addition, as the public utility operates without financial effort
from the government authority treatment could be less subject
to regulations which could result in a poor treatment performance
or poor effluent quality.
How could this financial flow model be modified
to reduce fees at the household level?
Ensure that faecal sludge is safely collected,
reduce cost for the collection and transport service providers
that it can make sustainable business.
and ensure quality treatment.
One modification could be budget support
of the utility by a government authority.
The budget support could be funded through a sanitation tax.
A sanitation tax is the payment from households
to a government authority in return for service such as water,
waste water or faecal sludge management.
Sanitation's a public good.
And good sanitation has significant health and economic benefits.
This justifies that a budget support to the utility
can also be paid from other taxes.
Such as the property tax.
With this budget support the public utility does not entirely
rely on the discharge fee and revenues from treatment products.
It has initial revenues and thereby can reduce the discharge fee
which in turn reduce the total cost for this private collection
transport service provider.
And also maybe the service fee for collection and transport.
In some parts of the Philippines households paid 10 to 20%
of their water bill to cover collection, transport
and treatment costs.
This means that households that use less water
and which also maybe have less money pay less for faecal sludge management.
This is one example how the social economic realities
could be considered in the sanitation tax.
In parallel to the sanitation tax
government authorities could also consider issuing of operational
licences
for the collection and transport service providers.
This would be in return for the reduction of the discharge fee
to operate in a certain area offer issuing of a discharge license.
Such licensing could be a first step to formalize the collection
transport sector.
Improve standards and be enter point for further interventions
For example, for schedule faecal sludge collection.
As you have seen now the model has become more and more complex
and includes more stakeholders.
Reliable implementation of a financial flow model with more stakeholders
and more financial transfers
requires good coordination and management.
Such a model could be prone to corruption
and relies on reliable tax collection
that can be challenging
especially in urban poor areas
with difficult accessibility and tenure.
However, a sanitation tax could have the benefit of providing a reliable
income for the public utility
that's required for reliable operation and maintenance
of the treatment plant.
One tool to manage this increased complexity
could be to make financial transfers electronic.
For example, with phone based money transfer.
At the treatment plant in Kampala
collection and transport service providers
pay a discharge fee by transferring money
with their mobile phones to the account of the utility.
So there's actually no cash being handled.
These were some examples of financial flow models
developed for training purposes
and based on available literature
and our work in Uganda, Senegal and Tanzania.
There's no single financial flow model that has been shown
to be effective for faecal sludge management all situations.
With a number of different stakeholders that can be both public
and also private.
And the number of financial transfers
A large number of different financial flow models
could be developed.
In reality, as the urban areas in which they exist
these financial flow models can be much more complex
and dynamic will develop over time and maybe also exist in parallel
to each other in one area.
In this module we learned about different financial transfers
in faecal sludge management
depending on different stakeholder arrangements.
Financial transfers include a sanitation tax,
service or discharge fee, budget support,
a discharge and operational licenses,
and sales revenue from treatment products.
We also learned to read and discuss financial flow models.
What is the financial flow model in your city?
We hope that examples provided in this module inspired you
to explore what could work best in your city.
