Output-Based Aid in the Philippines

Abstract

The Philippines has been unable to meet
 its growing demand for adequate water services. Indeed, the
 share of the population with access to water has fallen,
 particularly among the poor, as a result of frequent
 political turnover, fragmented regulatory oversight, and
 lack of coordination among service providers. Many
 communities have struggled with governance issues caused by
 overlapping responsibilities among local, provincial, and
 national authorities for planning, financing, tariff
 setting, and sector oversight. Communities also have been
 unable to raise funds for the new connections needed to meet
 the rising consumer demand. One province, thanks to the
 political will of its governor, is exploring how best to
 respond to the issues of governance and unmet demand. After
 first dissolving the local Water District, the province is
 introducing an output-based aid approach to water supply
 under a concession contract. The private operator will be
 paid on the basis of performance, receiving a payment from
 the government for each connection made to a household
 preidentified as poor.