aggregationmodule 0807
TRANSCRIPT
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Models of Aggregation for Water Supply and Sanitation Provision
Capacity Building Module
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Outline of the presentation
What is aggregation? Aggregation models The process of aggregation Summary
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What is Aggregation?
Grouping of several municipalities into a single administrative structure for the provision of a service
town A town B
town Ctown D
Aggregated service provider
aggregation
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Aggregation: one of many management models
Aggregation of small towns
Professional support to medium operators
Scaling up demand response approach
Strengthening community management models
Public private partnership
Small scale independent providers
Engaging the public sector
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Aggregation: Essential Pre-requisites
Political support and commitment Identify a “Champion” to pilot the aggregation Adapt approach to local culture & circumstances Keep public informed of benefits attained and
progress Consider whether a carefully-constructed, well-
implemented public consultation, education and communication program is necessary according to local circumstances
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Drivers for Aggregation (1)
(Supply)
BOTTOM UP & TOP DOWN APPROACHES - DEMAND OR SUPPLY DRIVEN
Government Driven
Central Government
Province
District
Sub District
Village(Customer Base)
Customer Driven(Demand)
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Economies of scale
Access to professional & technical resources, in-house or procured
Access to water resources
Access to private sector,
local &/or international Access to finance
Cost sharingImproved management systems & technology
aggregation
Drivers for Aggregation(2)
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Outline of the presentation
What is aggregation? Aggregation models The process of aggregation Summary
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Aggregation: no standard blueprint
Each aggregation has a unique character
Tailor aggregation to specific circumstances and needs
Lessons can be drawn from other aggregations
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Scale: The optimum size of utility
SCALE
Two Towns Several Towns Regional Provider National TerritoryHungary, The Philippines,
FranceBrazil Italy, England and Wales,
The Netherlands
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Scope of Aggregation
SCOPE
A single servicee.g. bulk supply
All municipal services
All water and sanitation services
A single function e.g. procurement
All functionsSeveral functions
What services?
What functions?
Nimes (France), The Netherlandsonly water
Dunavarsany (Hungary), water first, waste water later
Italy,England and Wales
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Governance arrangements
temporary
permanent
Association
Time-limited agreement for specific purpose
Permanent aggregated structure
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Governance arrangements: Voting rights in Board
….Or a mixture of the various methods
Method Pluses (++) and Minuses (- -) Power tilted to…
Specific powers for the largest entity
++ Confidence for larger entity- - Small entities have limited influence
larger entities
smaller entities
% of population in each entity
++ Democratic- - Small entities have limited influence
Large entity needs vote of 1 or more smaller entities
++ Democratic- - Small entities have greater influence
# of connections or value of the assets
++ A sound economic basis - - Varies from year to year
One entity = one seat ++ simple and transparent - - can be unacceptable to larger entities
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Outline of the presentation
What is aggregation? Aggregation models The process of aggregation Summary
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Process of aggregation
PROCESS
Voluntary Voluntary with incentives Mandated
The Philippines, France, Brazil
Hungary Italy, The Netherlands, England and Wales
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Stages in the Aggregation Process
Preparatory Phase
Analytical Phase
Implementation Phase
•Initiate the aggregation process•Identify key drivers for aggregation•Identify aggregation candidates and stakeholders•Choose an appropriate consultation process•Establish group to lead the process•Choose an appropriate aggregation process
•Assess drivers, constraints, and potential issues•Assess benefits and costs for each entity•Assess benefits and costs for alternative groupings
•Choose the most appropriate aggregation model•Define an aggregation plan•Define procedure to resolve disputes•Monitor Progress against that plan
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Entry and Exit Conditions
Entry and exit conditions must be carefully specified
Entry implies commitment and obligations to partners and should not be entered into lightly
Exit has potential to damage/weaken the aggregated entity and should be made difficult and expensive!
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Is aggregation a suitable option? Adding up the pros and cons for the individual municipality
Potential Pluses ++ Possible Minuses - -
++ Facilitates access to water resources
++ Economies of scale in works, procurement & support services
++ Access to finance (private/donors)
++ Attract private operator
++ Cost sharing between towns
++ Integrated Water Resource Management
++ More professional staffing
++ Improved governance through greater network of accountability
- - Lower control over water resources
- - Lower tailoring services to the needs of the end users
- - Loss of competition
- - Lower accountability to customers & citizens
- - Resistance to cost sharing
- - Potentially high transaction costs
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Essential Trade Off
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Outline of the presentation
What is aggregation? Aggregation models The process of aggregation Summary
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Aggregation: define scale, scope and process
SCALE
Two Towns National Territory
SCOPE
A single service or function
All services and functions
PROCESS
Voluntary Mandated
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Improved efficiency of service delivery (economies of scale)
Enhanced professional capacity in service provision
Cost sharing to mitigate high-cost systems Multiple utility ownership will enhance
autonomy of the utility
Potential Benefits
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Need to balance interests of all participating municipalities to overcome resistance
Role of central government: assist; incentivize; and/or mandate
Aggregation without asset ownership transfer can overcome resistance (but gives aggregated utility less autonomy)
Aggregation must be seen as one element of broader reform process: Requires corporatization Might require reform of the oversight of service provider Might require adjustment (standardization) of tariffs and subsidies Sometimes combined with private sector participation
The politics of aggregation
Actual benefits depend on political & other local circumstances
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More information
Available from:
www.worldbank.org/watsan