Sustainable Water Fund (FDW) Sustainability Day, 9 April 2015

On 9 April the Netherlands Enterprise Agency (RVO) invited a variety of players related to the PPP facility Sustainable Water Fund (FDW) for the FDW Sustainability Day in The Hague. Among the organisations present were the PPPLab, the Netherlands Commission for Environmental Assessment (NCEA, Commissie voor de Milieueffectrapportage), PBL Netherlands Environmental Assessment Agency (Planbureau voor de Leefomgeving), AidEnvironment, Vitens Evidens International, Simavi and Plan Netherlands.

At the meeting on behalf of DGIS and RVO, IRC provided all participants with information about the three so-called ‘sustainability-instruments’ (the sustainability clause, sustainability check and sustainability compact) and developed guidelines, which stipulate the roles and responsibilities of the FDW consortium and other relevant parties towards ensuring the sustainability of project results after the PPP ends. The main role of the implementing organisations is to support national governments in realising their responsibilities. Therefore a compact, with all potential influencing parties that might influence the project’s sustainability, will be signed for a period of ten years. Examples of government commitments in the compacts are to increase the national budget for hygiene promotion, and to strengthen government-led monitoring systems. As a demonstration, UNICEF West Africa has developed nine country compacts so far.

The compact agreement and the related check procedure on sustainability aspects is mandatory for all FDW projects under Call 2, and is based on the existing ‘FIETS strategy’ (financial, institutional, environmental, technical and social sustainability measures of the PPP). The sustainability instruments should not be regarded as an extra administrative burden, but rather to help the project find its way to guarantee sustainable access to water and sanitation services in developing countries. After lunch, IRC gave a special workshop to clarify the concept of sustainability within FDW, and to explain the purpose and use of the sustainability compact and sustainability checks. By means of a virtual project the group was trained on how to use the instruments. Participants acknowledged the importance but still fear a lot of practical barriers to add this instrument on top of Planning, Monitoring and Evaluation and (sometimes troublesome) partnership agreements.

Aqua for All, as well as UNICEF also a pilot member for DGIS in the introduction of the sustainability instruments, contributed to the discussion. The organisation will apply the sustainability approaches in its new PPP arrangements from 2015 onwards, while exercising the instruments on the older PPPs in a “What if…” manner.

In the morning, after an introduction of DGIS and RVO, Mrs. Bobbi Schijf of the NCEA explained how the Environmental Impact Assessment (EIA) can be used as an instrument for sustainable development. An EIA can help the partnership organisations to clarify the possible risks in their (future) project, and to design measures for mitigation. Not only risks related to the environment, but also in social and economic contexts. The website www.eia.nl/en/countries provides partnerships with valuable information about the needs for environmental assessments in the countries where they (want to) operate. Mr. Hans Smolders of RVO presented the case of an irrigation project in northern Ghana, and how the Dutch-Ghanaian agricultural company Wienco and its partners have used environmental assessment analyses to design their project.

Mrs. Jetske Bouma of PBL and Mr. Jan Joost Kessler of AidEnvironment presented their study on PPPs and opportunities for Inclusive Green Growth (IGG), specifically paying attention to FDW partnerships. Although economic growth does not naturally reconciles with inclusiveness and sustainability, the study identified a number of success factors to realise growth, green growth, inclusive growth and IGG integrated in PPPs, based on desk research and interviews with nine PPPs (three FDOV, three FDW, and three energy projects). Clear findings include the need to have strong and reliable local partners in the country at stake (for durability, and for optimally acknowledging the interests of the poor), to apply a software-hardware combination in the PPP, and to act with an open learning attitude. Moreover, the research shows that institutional change is even triggered by PPPs, which means that indirect effects of the projects can have huge development potential. It was also found that sometimes ‘cost recovery’ as base for sustainability in public services can conflict with inclusiveness and affordability.  PBL and AidEnvironment will cooperate with the PPPLab when following-up the research results and recommendations.

During the day, ‘risks’ were often discussed. Besides Bobbi Schijf, also Mr. Sjef Ernes, director of Aqua For All and management team member of the PPPLab, brought the subject up. The in-depth study on business cases within PPPs and how they are financed, elaborated by the PPPLab (in cooperation with BoP Innovation Center and Rebel Consultancy Group), shows that all PPPs have very well analysed the various risks. However, few of the projects clearly allocated these risks within the partnership. According to gained insights within the PPPLab,  public-private partnerships are all about risks, so it is necessary to explicitly include this discussion when setting-up a partnership.

PPPs with a clear business case, often led by (commercial) private sector parties, are very focused on sustaining the PPP’s objective, using the FDW grant as subsidy.  The FDW PPPs with a focus on enhancement of local existing utility water supply, are less clear in continuity as soon as the partnership’s subsidy ends. In FDW, motivations to participate in PPPs vary from Corporate Social Responsibility (among the public water companies and water boards) to commercial objectives (license to operate, sales). Innovation and ‘first moves’ seem rarely to be an objective for FDW projects.  Sjef Ernes further explained that the sustainability of the business case, finance, partnership and inclusiveness requires a continuous monitoring and plan-do-check-act cycle, which helps sustaining the programme and also provides perspectives for future funding and finance.

Moreover, Sjef Ernes presented a potential tool for assessment of the business case, with options to indicate sustainability from a private sector perspective. The tool is an adaptation to the existing business model canvas to which the team of BoP Innovation Center, Rebel Consultancy Group and the PPPLab has added four elements which are relevant for PPPs: 1) the business ecosystem, 2) extended beneficiaries, 3) impact (social and public return of investment), and 4) governance. The model is applied to six PPPs to test its user convenience and its ability to get a better picture of business cases in partnerships, and of their potential. More information about the PPPLab’s sense-making studies and this canvas model for inclusive business will be available soon on our website.