Referee! Rights to Sanitation and the ‘3 Rs’
Very pleased to have supported WSUP in preparing a discussion paper, 'Referee!' on the Responsibilities, Regulations and Regulating processes in 'filling in the gaps and using regulating for the progressive realization of safely managed sanitation'.
Using fascinating case studies from Bangladesh, Mozambique, Zambia & Kenya, along with an excellent overview from ESAWAS, the 'Eastern and Southern Africa Water and Sanitation Regulators Association', we explored aspects of regulating non-networked sanitation provision. In one way this is an unusual step as so much of Faecal Sludge Management does not involve capital intensive monopoly service provision. But where demand is weak and services are so limited the case studies show the potential of regulating.
The 'Referee!' title was taken from an earlier study (Franceys and Gerlach, 2008) where we were suggesting that the process of regulating (moving on from too much of an emphasis on 'regulations') can be seen as being similar to the role of a referee in a football match. The two teams represent a) the Government, Policy & Law-makers and b) the Service Providers - not the customers as so many initially take the analogy to represent, for they are the crowd consuming the ‘entertainment’! The referee’s task is to keep the game flowing towards its desired score draw, maintaining the rules of the game but interpreting them and using discretion and the advantage rule liberally to keep it all moving forward to the enjoyment (benefit of all).
In an early draft of the paper I suggested that 'Rights need regulating'. Why? Not in any way to suggest that the Human Right to Sanitation should be changed but to indicate that to achieve that right, we need the process of regulating to chart a flexible and appropriate pathway of progressive realisation of these benefits. We need the ‘umpire’ or ‘referee’ of regulating to ensure the ‘game’ gets to the desired goal – or even goals?
And in the same early draft (I was well past the target word count so WSUP had to do some necessary editing!) I concluded by another deliberately provocative heading of 'Regulators get it wrong!' , suggesting that it is worth remembering that every decision the regulator makes is based on very uncertain data. What are the actual service levels achieved? How many people are being served? And where do they live? Over what service area is the service provider being held accountable? What is the value of the fixed assets being used? In real terms or in nominal terms?
Every regulatory tariff setting or performance demand is always a best available approximation, never ‘right’, but it can always be a step in the right direction. The figure for inflation to use in any indexation of fixed assets or annual automatic revision of tariffs is suspect. But it should be the ‘best available not entailing excessive cost’ (the ‘BATNEEC principle’). Over what period should fixed assets be depreciated in order to fund capital maintenance? Another subjective judgement and not one which the accountant designers of depreciation charges ever had in mind. The costs of future investments to put into any tariff adjustments, when it is known that ‘the optimism bias’ can lead those numbers to be wrong by between 50% and 70% (initial estimates always on the lower side). Perhaps low-cost sanitation is more predictable? But when so much depends upon the actual take-up of the services, whether toilet building takes place or toilet emptying is actually paid for and when the efficacy of faecal sludge treatment plants at scale is so dependent upon so many variables – what accuracy is the cost prediction of those outputs?
The response has to be that the regulator has the best available data, however imperfect it may be, and then has make decisions which others will always find wrong in one way or another. But which overall will take the sector forward, improving services to customers and improving financial viability.