The Effect of OBA Subsidies Combined with Sanitation Marketing (SanMark) on Latrine Uptake Among Rural Populations in Cambodia

By: Hanh Nyugen – MIWM

For the first time in my career, I was working with my colleagues at Thrive Networks/East Meets West on two posters and a presentation at the same time to contribute to the WASH2016 conference in Brisbane occurred on 16-20 May. The WASH2016 belongs to the conference series, managed by the International Water Centre with the support of the Australian Government Department of Foreign Affairs and Trade, have brought together WASH practitioners from all over the world since 2006.

The first day of the conference there was an opening session following a range of presentations tackled multiple issues of sustainability in WASH, including Thrive Networks’ presentation about “The Effect of OBA Subsidies Combined with Sanitation Marketing (SanMark) on Latrine Uptake Among Rural Populations in Cambodia” (R. Rivera et al, 2016) – which I am also co-author.

Question: What is the proper role of subsidy in the delivery of improved sanitation to the poor?

Carefully designed subsidy programs demonstrably increase sanitation uptake among the poor in both experimental and scaled field programs. In an experiment in Bangladesh, subsidies to the majority of the landless poor increased latrine ownership among subsidized households (+22.0 pp) and their unsubsidized neighbors (+8.5 pp). Guiteras et al, 2015. Science 348(6237): 903–906. Meanwhile, in Vietnam and Cambodia, Thrive Networks/ EMW’s output-based aid (OBA) subsidy program delivered as much as 10,000 latrines/ month to the poor, with impressive leverage ratios on the donor dollar.

Together with the Water and Sanitation Program (WSP), we have generated evidence to inform the debate on hypothesized market-distorting effects of sanitation subsidies.

We ask: do subsidies pose risks to demand for latrines in geographically close markets and among the better-off population segments for whom subsidies are not available? In areas where a sanitation marketing (SanMark) approach is employed to foster local supply chains and demand for sanitation goods and services, does the introduction of time-limited poor-targeted consumer rebates dampen sales of latrines to other income groups?

Our research objective

Do subsidies interfere with, or instead, complement SanMark? We examine differences in latrine uptake in Cambodia across different income levels in villages exposed to an OBA subsidy (rebate and discount), SanMark alone, or both combined.

Background on the Interventions

SANITATION MARKETING (SANMARK) TARGETED OBA SUBSIDY (CHOBA)
Nurturing of existing sanitation product and service supply chains

·  Marketing support. Example: sanitation business owners are trained in the “4P mix”: product, price, place, and promotion

·  Village-level sales agents are linked with local sanitation business owners on a commission basis

·  Support on product design (affordable, aspirational, upgradeable—like the EZ latrine offset pit design from iDE)

Multi-level results-based incentives targeting poor HHs

CLTS “light” for demand creation

·  Local mobilizers earn performance-based payments after each verified installation by a low-income household

·  Low-income households benefit from a small ($18) subsidy (in Cambodia, this was a discount to HHs and a rebate to suppliers)

·  Full OBA costs for the program, including rebate/discount, is ~$41 per latrine built by the poor

Villages were selected to minimize bias via propensity score-matching (PSM), as the interventions were pre-existing and random assignment was impossible.

Villages employing SanMark and OBA subsidies either independently or in combination were matched on 40 census variables at baseline in 2012. The match process resulted in comparable levels of latrine coverage and poverty at baseline.

Original 2216 Villages, At Baseline 120 Villages, Post-Matching, At Baseline
Indicator OBA Subsidy SanMark Both
Latrine Coverage 34% 46% 32%
Poverty rate 22% 24% 28%
Indicator OBA Subsidy SanMark Both
Latrine Coverage 26% 26% 26%
Poverty rate 24% 24% 24%

Main Results (n = 1,965 households)

data-WASH-IWCAN

Conclusions

Our results are consistent with those of Guiteras et al, in the observation of the positive spillover effects of subsidy. The availability of subsidy to poor households resulted in increased latrine adoption among all households. Meanwhile there was no evidence of pro-poor subsidies acting as a disincentive to wealthier households to purchase and build latrines.

OBA subsidies and Sanitation Marketing must be recognized as complementary interventions, each targeting a particular income group within the population.

AUTHORS: Rivera1, G. Joseph2, S. Smets2, V. Chan2, P. Ljung3, S. Um3, H. Nguyen3, and J. Albert3

1John F. Kennedy School of Government, Harvard University

2Water & Sanitation Program of the World Bank

3Thrive Networks / East Meets West

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