UNICEF asks why health and water are divided over subsidies

UNICEF has been asking itself why different approaches to user fees and subsidies are promoted and operated in different areas of work central to its focus on children and parents.

Why for example, if user fees are so important in water, has the health sector been promoting free distribution of mosquito nets and vaccines and services such as antenatal checks? Why is free primary school education seen as important, if free sanitation is not.

Private goods, public goods and merit goods

Paul Edwards, senior WASH adviser for UNICEF, set out to examine where user fees can become a barrier to essential services for the poor. His conclusion, in a paper presented at the Symposium, is that helping poor people generate income to meet their costs is a better approach than subsidising water and sanitation.

UNICEF distinguishes between private goods – best dealt with through the normal mechanisms of the market – and public goods, where the market may fail and the government may regulate, subsidise or set prices. Paul Edwards identifies ‘merit goods’ as those like education, which are important to society and to Governments, but may be less appreciated by the consumer at the time, and may therefore be subsidised or free.

Governments have to choose which merit goods to support and generally prefer to fund high-impact, low cost-interventions, especially those for which it is more difficult to find alternative sources of funding.

“For an organisation like UNICEF that is interested in promoting pro-poor policies in both the health and water and sanitation sectors, it is important to understand the reasons why these different approaches have been taken and what might be the most appropriate measure for governments and other to take to ensure access for the poor.”

Water “not undervalued”

Paul Edwards argues that drinking water is not undervalued by the consumer and it needs to be rationed which is best done through pricing.

“For piped supplies the poor are best helped by making it easy to connect to the system but they should still be charged for use. For community water points (e.g. handpumps) external investment is required. However, without a system for collecting user contributions maintenance problems are likely to arise. Systems to support the poor to pay these minimum necessary charges need to be considered.”

Sanitation – promote behavioural change

For sanitation, Paul Edwards says there have been bad experiences with subsidies and Governments would do better to invest in sanitation promotion for behavioural change with measure to increase the income of the poor, rather than offering household subsidies. Soap should also be promoted but “there seems no reason to subsidise the product”.

In the WASH sector, only products such as water filters for point of use treatment are said to match the characteristics of bednets. These, says Edwards, “could be considered for similar subsidy and promotion approaches, for example free distribution to a targeted population.”

Boost income of the poor

Edwards concludes: “For certain goods and services, it may be better for governments to boost the incomes of the poor so that they can then afford to pay for services rather than offer the services for free.” In his presentation at the Symposium he concluded that this would require broader work between agencies and reaching out beyond the WASH sector to develop social protection measures.

In an interview at the Symposium, Paul Edwards added: “In UNICEF we are starting to ask the question why we are having these different experiences and what changes we could make in any of the sectors in terms of particularly reducing those barriers to access for the poor. What we don’t want is to know that poorest people are going to get the lowest level of service - that is definitely the inequitable situation that we want to avoid.”

Paul Edwards’ paper, Reducing financial barrier to accessing WASH services, and the accompanying PowerPoint presentation are available online at the IRC symposium site at http://www.irc.nl/page/55870