Theme 2: Financing capital and running costs

  • sharadaprasad
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Theme 2: Financing capital and running costs

Dear SuSanA Community,

I am Sharada Prasad. I am an assistant professor with the school of development at the Azim Premji University in Bengaluru.

As WaSH practitioners and professionals, we all understand that any treatment infrastructure, be it sewage or fecal sludge, involves two major components - Cost of Construction and costs related to operation and maintenance (O&M). However, the problem with treatment infrastructure financing in India, according to my understanding, can be broadly classified into three categories:
  1. Raising the necessary capital for building the infrastructure
  2. Generating revenue for O&M of the infrastructure
  3. Building adequate capacity for proper O&M of the infrastructure

Though there has been considerable effort to popularize decentralized treatment systems and fecal sludge management, a recent study by Cranfield University has found out that development banks have been investing 20 times more money is invested in sewerage infrastructure compared to fecal sludge management. While this might change in the coming years, it is doubtful that FSM will become as popular as sewer infrastructure. Nonetheless, treatment facilities for fecal sludge also needs to be financed. Research has also shown that poorest section of the society needs FSM more than the rest (the richer neighborhoods in the city usually get the sewer infrastructure first).

Sewer infrastructure, to a large extent, is not funded by directly by the people who get connected to it. The politics surrounding the tariff has been such that the users connected to sewers are not even paying fully for the operation and maintenance. FSM on the other end is a different story. Homeowner pays for the pit as well as the emptying of the pit. Government is not sharing the burden. It has not even providing the necessary infrastructure to treat the sludge. As a result, the current cost of emptying does not involve any treatment expenses. How do we change this? What type of financing structures do we need to treat both sewage and sludge without burdening poorer section of the society?

India is not focusing the treatment of waste as much as it is focusing on solving the access problem by building more toilets. India is not managing its waste, it is only moving it. Eventually, India has to face the problem of adequate treatment. That means it needs to think about how to build and manage treatment infrastructure. With this in the backdrop, we could discuss questions along the following lines:
  • What are the existing and new financing mechanisms and sources of finance?
  • Which financial institutions lend to the sector, to which sort of entity (private, government or non-profit), and for what (capital or running costs)?
  • What are principles (such as ‘the polluter pays’) that can be applied?
  • How to ensure that the investment in treatment infrastructure is pro-poor and equitable in nature?
  • What kind of legislation and enforcement is required?
  • How do we ensure that fecal sludge treatment gets the necessary financing?

Best,
CS Sharada Prasad (CSP), PhD
Academic, Sanitation expert, WaSH consultant, and Photographer
sharadaprasad.com
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  • arkaja
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Re: Theme 2: Financing capital and running costs

Dear Prof Sharada Prasad,

I am Arkaja Singh from the Centre for Policy Research. In Oct 2018 we organised a Dialogue around some of the legal and institutional issues relating to FSM, including the role of environment laws, health and safety, and the issue of manual scavenging, as well as options for financing FSM infra and services. Here is a link to video recordings of the event: www.cprindia.org/events/7313

As you would see from the recordings, some of the questions you ask have been of long interest to us too, and I will be following this discussion.

However, I'm wondering what you mean by 'polluter pays' in this context? I know NGT uses this term in context of domestic wastewater and faecal sludge, but to my mind those are really gross misapplications of the principle (which isnt uncommon for NGT in any case). But would like to hear more from you and the others on this.

Best, Arkaja

I am a lawyer by training and I am currently responsible for managing a programme on sanitation (SCI FI, or 'Scaling City Institutions for India') at the Centre for Policy Research. My current work is focused on the role of law and regulation for inclusive water and sanitation. I lead and manage research on various aspects of non-network sanitation, informal service provision, and its institutional and socio-economic dimensions.

My other interests and areas of work include: urban governance and policy, land, urban poverty, low-income informal settlements, environment law and water resources....
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  • Gunilla
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Re: Theme 2: Financing capital and running costs

Dear Professor Prasad and the SuSanA community,

I am looking for 'hard' data that demonstrates that
  • The most common approach is still centralized sewer systems
  • Considerably more funding is directed towards conventional sewer systems
  • And if possible – studies that demonstrate that most people in power as well as researchers in the sewage/sanitation/wastewater field hold the centralized sewer system as the ‘gold standard’

Would you by any chance be able to point me to some sources? For example the Cranfield study mentioned below, which shows that 20 times more is invested in conventional sewer systems.

I am also looking for figures on build-out rates. It seems evident that build-out rates for conventional sewer systems are too slow to be feasible for rapidly growing urban areas and that such an approach therefore will be a lost catch-up game from the start. It is one thing to say that this seems evident, and another thing to show it with 'hard' data. Anyone with access to (recent) build-out rates for conventional sewer systems would be much appreciated.

Gunilla Oberg, professor, University of British Columbia, Vancouver, Canada.

My research deals with the production and use of science for policy focusing on sustainable sewage management in growing urban areas and scientific controversies tied to risk assessment of endocrine disrupting substances. The questions that drive my research are: What kind of knowledge is needed, used and trusted? How does the knowledge used impact perceived solutions? How might we facilitate for decision makers and the public to ‘unpack’ assumptions, values and preferences that are embedded in such knowledge?

I also conduct research in higher education, with the questions above in the...
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  • sharadaprasad
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Re: Theme 2: Financing capital and running costs

Dear Arkaja,

Thank you very much for your comment and the link to "Legal Perspectives on Sanitation in Urban India" event. I am sure many of the participants will find that resource useful.

Polluter Pays principle in case of treatment could be that the house / apartment complex / commercial building bears the entire cost of collection, transport, and treatment. In that case, there will not be any kind of subsidy / support from the city's side (which is currently what is happening)

However, currently, at least in Bangalore and Hubli - Dharwad, where I have worked extensively, the money charged by the truck operator is mostly to move the waste from the household to a dumping ground, which could at times include farm lands. Households are not bearing the cost of the treatment.

Current emptying / collection costs do not account for several externalities. If sanitation workers need to be trained and paid proper wages, provided with necessary safety gear, and the waste needs to be treated adequately, the cost of fecal sludge emptying might be really high. Polluter pays principle might make it very expensive for poorer segment of the society.

Best,
CS Sharada Prasad (CSP), PhD
Academic, Sanitation expert, WaSH consultant, and Photographer
sharadaprasad.com
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  • sharadaprasad
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Re: Theme 2: Financing capital and running costs

Dear Prof. Oberg,

Thank you for your comment.

I am attaching the study I am referring to in my initial comment. I am also attaching another paper by Berendes et al which says "FSM needs scaled inversely with wealth: in the poorest quintile, households’ sanitation facilities were almost 170 times more likely to require FSM (vs sewerage) than in the richest quintile"

My own experience in Bangalore and Hubli Dharwad concurs with your statement. Sewer networks in those cities are not expanding at the same pace as the rate at which those cities are growing geographically. Far example, the area of the wedge between two radii increases drastically compared to unit legth increase in the radii farther from Bangalore's city center. That means, the length of the sewer network needed to cover that newly added area is very high. Further more, peripheral Bangalore is sparsely populated compared to the neighborhoods closer to the city center. Unless there is enough political pressure, the city will not expand its sewer network to every new lane.

Having said that, Bangalore is expanding its sewer network in the periphery. If rapid growth in the future means increase in population of a city (without an increase in its geographic area) - sewer network might not be too far behind in some cases. However, getting connected to the sewer does not always mean that the sewage flowing in that network is getting treated. Not all of Bangalore's sewage reach a treatment plant.

Septic tanks are here to stay and the requirement to treat fecal sludge will remain. But when I speak to Bangalore Water Supply and Sewerage Board (BWSSB) officials, they say that it is not in their mandate to worry about the fecal sludge. They think that sewerage will eventually reach all parts of Bangalore. Karnataka State Pollution Control Board can ask large apartment complexes to build an in house STP but is helpless when it comes to providing solutions to treat septage from smaller complexes or individual households.

Sorry for the long response. I know that not all of this is relevant to your comment. I wanted to add these comments to inform the community about the ground realities so that others can carry the conversation forward

I have been working with a colleague on FSM costing and capacity. Finding data on how much BMGF has spent on each of its treatment plants itself has been a struggle. I am not sure how easy it will be to collect hard data from the Indian government related to all its investment on sewerage. I am hoping that someone in this community might have an answer to your question.

Best,
CS Sharada Prasad (CSP), PhD
Academic, Sanitation expert, WaSH consultant, and Photographer
sharadaprasad.com

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  • nityajacob
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Re: Theme 2: Financing capital and running costs

Dear all,

On the question of costs of sewered VS septic tank systems, there is some indication of how much they are biased toward sewers. From the urban infrastructure development programmes of the Government of India, that started with the Jawaharlal Nehru National Urban Renewal Mission in 2005 and went onto the Atal Mission for Urban Transformation, it appears the single largest expenditure was on water infrastructure. This included water supply, sewage systems and drainage. While India's urban sanitation policy, of Swachh Bharat Mission Urban had a 5-year budget of Rs 63000 crore (Rs 6300 billion, roughly $1 billion), this is much less than the amount budgeted for infrastructure.

Looking at the toilet types, the 2011 Census showed about a third of urban toilets were connected to septic tanks and the same number to sewage systems. The rest used public toilets, shared toilets, unsafe sanitation or defecated in the open. As Sharada has pointed out, it is mostly the poor parts of large and medium cities that are unsewered and therefore, depend on septic tanks. Also, most of India's 4000 small towns are unsewered and depend on septic tanks. These are not made up of all poor people, but the ULBs are not well-off and cannot afford sewage systems.

The practice of governments providing the capital outlay to develop proper FSM should continue. I don't see the public being able or willing to finance this aspect. However, users (or polluters) need to pay for operations and long-term capital maintenance of the facilities through property taxes, collection charges, etc.

In slums of small and medium towns where people earn little, a cross-subsidy can be worked out where those in richer colonies pay more (through higher property taxes). User fees from public/community toilets can also offset some of these costs. I don't favour providing free services since these quickly descend into poor services. The poor should pay and indeed are willing to pay, but only what they can afford.

That said, the blind rush across the country to make faecal sludge treatment plants is worrying. Many do not conform to any standards but are being put up so cities can claim to be ODF++ and glean additional funds from the state or central governments. This is reminiscent of the toilet blitzkrieg that SBM unleashed on India. It also underlines the fact we are not concerned about treating pollution, merely papering it over.

Regarding legislation, building bye-laws need to reflect the need to manage pollution from septage and sewage. Septic tanks have to be made properly, not just single pit holding units. Their outlets, connected to open drains, must be disconnected and directed to soaking areas. Pit toilets have to be build in keeping with user needs, not national norms, i.e, the number of users in a house. Solid waste that chokes these has to be collected and handled properly. The use of treated water and sludge from STPs/FSTPs must also be part of the bye-laws. For all this model laws can be drafted and modified as individual ULB needs.

Hope this helps. I'm attaching a presentation I had made to the Quality Council of India recently on ODF+ and ODF++ ( 1drv.ms/p/s!At_gmyLuiQ-DivciNzSpUXbusHr9Xg )

Regards
Nitya
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  • Gunilla
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Re: Theme 2: Financing capital and running costs

Dear Nitiya

Thanks you for your response. The reason I am looking for build-out costs for conventional sewer systems is because I need hard facts when debating that conventional sewer systems hardly is the be-all-end-all in all situations, particularly in dense fast growing urban areas dominated by illegal and semi-illegal settlements.

Thank you for the power-point. Do you by any chance have the figures underlying the cost-estimates on slide 11

sincerely,
Gunilla Oberg

My research deals with the production and use of science for policy focusing on sustainable sewage management in growing urban areas and scientific controversies tied to risk assessment of endocrine disrupting substances. The questions that drive my research are: What kind of knowledge is needed, used and trusted? How does the knowledge used impact perceived solutions? How might we facilitate for decision makers and the public to ‘unpack’ assumptions, values and preferences that are embedded in such knowledge?

I also conduct research in higher education, with the questions above in the...
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  • nityajacob
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Re: Theme 2: Financing capital and running costs

Dear Gunilla

It was from Chapter 4 of Excreta Matters from the Centre for Science and Environment. The specific references are
Anon 2009, Compendium of sewage treatment technologies, National River Conservation Directorate, MoEF, GOI, and
Mukesh Grover 2011, ‘Water treatment technologies and a case study of 635 MLD water treatment plant at Sonia Vihar, Delhi’, Degremont,
presentation at Ministry of Urban Development, New Delhi, mimeo.

To get the publication, you can order it from CSE off their website, cseindia.org. The same publication analyses the funding of JNNURM on water (drainage, water supply and sewage treatment). I believe the direction of funding has not changed substantially since JNNURM ended in 2014 and was replaced by AMRUT.

I agree centralised sewage systems are not the only solution. But choices need to be tempered with caution. Decentralised systems may be cheaper to make and more eco-friendly than STPs, but their operators are usually small-time contractors. These people cut corners on maintenance and employ human beings who enter to clean septic tanks and sewers and suffocate. There are no simple solutions, unfortunately, other than holding the government to account to provide and run these systems, with public oversight.

Hope this helps.

Regards
Nitya
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  • Gunilla
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Re: Theme 2: Financing capital and running costs

Thanks Nitya, looks like it will be very useful indeed
best,
Gunilla

My research deals with the production and use of science for policy focusing on sustainable sewage management in growing urban areas and scientific controversies tied to risk assessment of endocrine disrupting substances. The questions that drive my research are: What kind of knowledge is needed, used and trusted? How does the knowledge used impact perceived solutions? How might we facilitate for decision makers and the public to ‘unpack’ assumptions, values and preferences that are embedded in such knowledge?

I also conduct research in higher education, with the questions above in the...
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  • paresh
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Re: Theme 2: Financing capital and running costs

Dear Prof. Gunilla,
The State Annual Action Plans (SAAP) prepared by state governments may be helpful to understand the current flow of investments in India.

They are available at amrut.gov.in/saap.aspx
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  • Gunilla
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Re: Theme 2: Financing capital and running costs

Dear Nitya,

I managed to get hold of the report 'Excreta matters'. My read of this document is that the costs do not include construction and maintenance of sewers. Am I reading this right? If so, do you by any chance have access to such data. My understanding is that the sewers generally are more costly than the treatment plants, both in terms of construction and maintenance.

thanks for helping out
Gunilla

My research deals with the production and use of science for policy focusing on sustainable sewage management in growing urban areas and scientific controversies tied to risk assessment of endocrine disrupting substances. The questions that drive my research are: What kind of knowledge is needed, used and trusted? How does the knowledge used impact perceived solutions? How might we facilitate for decision makers and the public to ‘unpack’ assumptions, values and preferences that are embedded in such knowledge?

I also conduct research in higher education, with the questions above in the...
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  • nityajacob
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Re: Theme 2: Financing capital and running costs

Dear Gunilla
It does not have the cost of installing a sewer system, just the STPs. I do not know what it takes to install a sewer system. Perhaps somebody from the Forum can answer this?
Sorry to not be of more help.
Regards
Nitya
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