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Developing WASH-Accounts: An overview of the UN-

Water GLAAS TrackFin Initiative

Authors
Sophie Trmolet and Marie-Alix Prat.
Abstract
This paper sets out the overall vision for the UN-Water GLAAS TrackFin initiative, which
aims to define and test a globally accepted methodology to track financing to WASH at
national level, so as to improve our understanding of current total expenditure in the
WASH sector. This initiative proposes to support countries to develop national WASH-
Accounts, similar to the National Health Accounts that are developed in the health
sector.

This paper briefly presents the methodology to build the WASH Accounts and the
benefits expected for countries from implementing WASH-Accounts and having better
financial data on the WASH sector. This methodology will be tested in up to five
countries and results of this testing exercise will feed into the GLAAS 2014 report. In
the longer term, it is hoped that the methodology can be rolled out in many other
countries so as to contribute to strengthening national systems for the collection and
analysis of financial information for WASH sector policy-making and programming.

This paper is organised as follows:
Part 1 presents the rationale for developing the TrackFin initiative and its objectives.
Part 2 presents the expected findings and benefits from developing WASH-Accounts.
Part 3 outlines key steps of the methodology for preparing WASH-Accounts.
Part 4 presents the next steps for the TrackFin initiative.
Background
Why the TrackFin initiative?
Inadequate monitoring and limited availability of financial data limits countries ability
to assess progress in the sustainable delivery of water and sanitation services and to
improve their performance.

An internationally agreed standard methodology for tracking financing to WASH at
the national level does not exist at present, whereas it exists for health or education.
As a result, our current understanding of financing to WASH is limited, with numerous
gaps. Attempts to undertake global reporting and monitoring including through the
GLAAS report in 2008, 2010 and 2012 have not been fully satisfactory and do not
provide sufficiently robust evidence for policy-making at the national level and for
international comparisons. Moreover, very few countries have set up a dedicated
reporting tool to collect data on the financing to their WASH sector. By contrast, the
health sector is better able to successfully track financing through a system of national


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Health Accounts. Adopting a similar approach in the WASH sector could provide
evidence to WASH policymakers to help them make decisions over a wide range of
policy issues. Expected benefits of the implementation of such WASH-Accounts
(WASH-A) are outlined in section Error! Reference source not found..

Based on a review of existing methodologies, studies and tools to track financing to
the WASH sector, (Trmolet & Rama, 2012) recommended that developing a shared
methodological framework for tracking financing to the WASH sector would make
an essential contribution to the development of sector policy at a national as well as
at an international level. Demand for sound financial information for the sector was
expressed at the highest political level, including by Ministers of Finance and Ministers
responsible for water and sanitation at the Sanitation and Water for All High-Level
Meeting, hosted by the World Bank and UNICEF in Washington DC in April 2012
(Sanitation and Water for All , August 2012). This has provided the basis for the launch
of the WASH TrackFin initiative (as in tracking financing to WASH) by WHO on
behalf of UN-Water.
Objectives of the TrackFin initiative
The objectives of the TrackFin initiative are to define and test a globally accepted
methodology to track financing to WASH at national level, so as to improve our
understanding of current expenditure in the WASH sector so as to be in a position to
answer four basic questions:
What is the total expenditure in the sector (including public and private)?
How are the funds distributed to the different WASH services and expenditure types,
such as capital expenditure, operating and maintenance expenditure, cost of
capital)?Who pays for WASH services, and how much? Which entities are the main
channels of funding for WASH; what is their share of total spending?
This methodology aims to guide countries in collecting comparable data and compiling
it in a set of comparable tables, referred to as WASH Accounts (WASH-A).
The TrackFin initiative aims to develop this methodology:
Jointly with leading country sector institutions and international entities in charge
of financial tracking (such as UN Department of Statistics and OECD). The aim is to
develop a common language across different institutions and fields, so that, for
example, statistical departments in countries can work with WASH sector
institutions and produce information that meets sector policy needs. The resulting
methodology and the results (i.e., the data generated) will be a global public good;
Progressively so as to start with simple objectives and iterate more comprehensive
approaches over time to answer more complex questions (for example, linking
financing to water and sanitation coverage data so as to estimate cost-effectiveness


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indicators). With this in mind, the TrackFin initiative has set short and long term
objectives, as presented below.
In a modular manner, so that it can be adapted flexibly to different contexts and be
applicable to local, regional and national levels or to different sub-segments of the
WASH sector.
In the short term, TrackFin aims to improve the availability and quality of the
basic financial data, such as that collected for the GLAAS report or to be presented
in national sector review reports. To this end, it is important that countries reporting
financing information be provided with clearer guidance as to what is needed, so that
the information is comparable and overall reliability is improved. The methodology
developed for this purpose will be tested in selected countries for the GLAAS 2014
report. The aim is to prepare a guidance document that would be provided to all
countries completing the GLAAS questionnaire for the 2016 report.
However, given that national monitoring systems are generally weak at tracking
how much financing is allocated to the water sector, providing guidance on filling in
the GLAAS questionnaire alone is not going to be sufficient in most countries. As a
result, the GLAAS team is examining how national monitoring systems can be
strengthened so that countries can start generating WASH financing information that is
reliable, comprehensive and comparable. This longer-term initiative builds on the
experience of the health sector, which has developed methodologies to track financing
to health (referred to as the National Health Accounts) over the course of the last 30
years. National Health Accounts (or NHA) have now been prepared by more than 100
countries (including many less developed countries) and the exercise has been repeated
more than once in many countries. The underlying hypothesis is that the GLAAS process
can serve as a catalyst at country level to support the development of stronger national
systems for tracking finance to the sector.
Findings expected from implementing WASH-Accounts
WASH-Accounts are expected to make a significant contribution for evidence-based
policymaking in the WASH sector, in particular for answering the questions set out
below.
What is the total expenditure in the sector?
Information on total WASH expenditure could be used to:
Monitor funding trends over time;
Benchmark funding to the WASH sector, against other countries or other sectors.
Information on how WASH expenditure varies overtime and how the level of
expenditure compares to that in other countries and sectors could be used to raise
awareness on the need to attract more financing to the WASH sector so as to meet
agreed physical targets and objectives. In a second stage, when reliable data is produced


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in terms of financial inputs, this data could also be related to outputs and outcomes in
order to estimate the efficiency of financing.
How are funds distributed?
Information on how expenditures to the WASH sector are distributed across regions,
urban and rural areas, subsectors, services, service providers and types of expenditures
could be used by policymakers for budgeting and planning in order to perform the
following types of analysis:
Identify inequities in the distribution of spending across regions and population
groups.
Allocate funds to sub-sectors, services, providers and programmes.
Plan national WASH policies and strategies.
Monitor policies outcomes and effectiveness.
Depending on countries requirements, WASH-A could show data on the share of WASH
expenditure by regions or by population groups with the greatest needs. In turn, such
analysis could be used to reduce inequities across population groups and regions by
relocating transfers to those regions and groups that need them most through targeted
pro-poor policies.
WASH-A could also provide information on the share of spending allocated to the
different subsectors (urban water, rural water, urban sanitation and rural sanitation),
services (on-site sanitation or piped sewerage, etc.) and types of providers (public,
private, community-based, small or large scale). This would help evaluating whether
funding is currently allocated to services and providers that need it most in order to
allocate budget more efficiently based on evidence. For instance a study on public
finance for household sanitation in Dar Es Salaam revealed that in the period 2006-
2010, 99% of public finance was allocated to sewerage and to wastewater treatment
whereas only 10% of the population was connected to the sewer network and only a
mere 3% of the population benefited from wastewater treatment (Trmolet S. , 2013).
By providing a complete picture of current spending, WASH-A could also contribute to
identifying funding needs and priorities and designing a national WASH strategy to plan
expenditure at a national level based on such priorities. Regular tracking of actual
spending to WASH services overtime could help monitor the efficiency of these policies
and reallocate budgeted funds based on evidence.
Who pays for WASH services?
Information on who really pays for WASH services and how much could be used by
policymakers to:
Define financing strategies.
Monitor trends and outcomes of financing strategies over time.
Coordinate donor aid and international transfers.
Track commitments and targets expressed in financial terms.


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WASH accounts could enable building a more complete picture of expenditure. It would
take into account public as well as private (including household) and donor
expenditure. This data could be used to define financing strategies and assess the
performance of policies designed to leverage investment over time.
A better understanding of WASH expenditures would thus facilitate greater
coordination of WASH financing at a national level. A substantial part of aid transfers to
developing countries is often channelled through NGOs out of governments budget,
making it difficult to evaluate total spending in the sector.
Data on actual spending to WASH could also be used to track governments and donors
commitments with respect to sector financing. Several governments have made
commitments at the international level which have been formulated with reference to
monetary amounts allocated to the WASH sector. For example, the eThekwini
declaration in 2008 committed signatory African countries to establish specific public
sector budget allocations for sanitation and hygiene programs. Compiling such indicator
in a consistent, comprehensive and comparable basis would be essential in order to
track the implementation of such a commitment.
How is funding channelled in the WASH sector?
Information on how the funding is channelled, via who and how much could be used by
policymakers to define and monitor financing strategies. Local governments often play
an important role in channelling funds to local levels. This information could be used to
evaluate the performance of decentralised financing policies. It could help identify ways
to support local governments that channel such budgets.
To sum up, WASH-Accounts can contribute to develop-evidence based decision making.
They could help address policy questions to support the allocation of budgets and the
definition and evaluation of financing strategies. They could also help monitor and
benchmark financing trends in order to attract additional funding, coordinate donor aid
and track commitments and targets of WASH funding. To get more concrete evidence
about how this information could be used to improve policy-making, it is useful to refer
to the experience of the National Health Accounts, as detailed in Box 1 below.
Box 1. What the Health Accounts have brought to the health sector.
In the health sector, Health Accounts (HA) have generated useful evidence for country-level policymaking
as well as for cross-country comparisons (The World Bank, World Health Organization and United States
Agency for International Development, 2009). Health Accounts have been increasingly institutionalised in
developing countries and used by policymakers to reform health systems and allocate financing more
efficiently.

For example, HA are used to evaluate whether funds were allocated to the neediest population. In South
Africa, for instance, HA were tailored after the Apartheid to show the distribution of resources by district
and income-levels and revealed a major lack of investments in poor neighbourhoods. HA findings were
used to design new policies to redistribute health resources in a more equitable manner (McIntyre & al,
1995).
In Mexico, in order to identify funding needs and inform budget allocation, HA were disaggregated to
show per capita health expenditure by state and compare it with health status data. After HA revealed
that states with major health needs were receiving lower transfers via the system, a policy was set up to


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channel public funds to protect the population of those states in major need. HA is the tool that is now
monitoring the implementation of this policy (The World Bank , 2010).

HA have also contributed to prioritise funding to major diseases according to different strategies of care
provision. In Rwanda, the government developed sub-accounts for HIV /AIDS in their first round of NHA
in 1999 to better understand the sources and distribution of financing for HIV/AIDS care services. It
revealed that 10% of all health funds were used for the prevention and treatment of this disease. Only 1%
of donors funds were targeting HIV /AIDS and households were carrying 93.5% of those expenditures.
These findings were used by the Ministry of Health to design targeted interventions to improve HIV/AIDS
prevention financing and to encourage donors to increase funding allocated to HIV/AIDS (Barnett & al,
2001). In Mali, HA findings were integrated into the 2008 Health Sector Strategic Plan to inform changes
in human resources and health financing and justify the priority given to regional levels in the resource
allocation (Health Systems 20/20, 2011).

HA are used to allocate spending according to cost-efficiency of service provision. In Sri Lanka, HA
estimated the total costs of diseases by types of providers (hospitals, ambulatory services,
pharmaceutical companies, etc.) and revealed the weight of hospitals costs. This finding influenced
policymakers to focus on enhancing primary health care and promoting specific preventive interventions
(Hernandez, 2012).

Moreover, HA provide insights on who pays for health service and enables to monitor for instance
households health financial burden. In Turkey, the 2001 HA report revealed that inequities in health
spending left many population groups without financial access to care. There was a need to harmonise the
benefit package across insurance schemes and mitigate out-of-pocket spending for the poor. This was
done through the Green Card holders program for targeted poor households. Green Card holders were
given access to care and pharmaceuticals and today, all insurance schemes have access to the same basic
benefits package. Formal health insurance coverage has also increased, reaching 87% of the population
compared to 67% of the population in 2002. Out-of-pocket payments had decreased from 27.6% in 2000
to 17.4% of total health spending in 2008 (Maeda & al, 2012).

HA findings are also used to gain support for donor aid coordination. In Tanzania for instance, the first
NHA study conducted in 1999 revealed that an important part (23%) of health sector expenditures was
financed by donors off-the-government budget, bypassing the government and directly funding their
own health programs. The government used NHA findings to convince donors to strengthen the
coordination between their interventions with the adoption of a Sector Wide Approach (SWAp) and to
channel their funds through a basket of funds managed by the government. This increased its leadership
and oversight over the use of health funds (De & al, 2003).

Finally, HA generate evidence to monitor policies impacting the health care services. In the Philippines,
HA have been used to evaluate the impact of the governments decentralisation reform in 1993. Prior to
the reforms, both central and regional government funding for public health care (services such as
immunisation, which benefits the community at large as well as the individual) was low, with central
government funding actually decreasing significantly. The comparison of national HA conducted before
and after decentralisation showed that spending on public health care actually increased from 25% to
35% of total government health spending between 1991 and 1997 (see figure below). This increase was
largely due to increased funding from local governments, which allocated more than half of their health
resources to public health care in 1997. The annual production of national HA provided significant insight
on the impact of decentralisation on health care ( Partners for Health Reformplus, 2002).

Overall, HA have improved the understanding of how the health sector is financed. It has generated
evidence for policymakers to better allocate the available resources and design policies to increase health
outcomes.




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A brief overview of the Trackfin methodology
The TrackFin initiative has developed a draft Guidance Document to support such
exercises, which is now open for consultation with sector experts and stakeholders.
1

Countries will be able to draw on this document to address their own policy questions.
Figure 1 below schematically outlines the main steps of the TrackFin Guidance
Document: readers are invited to refer to the full document for more detail. Countries
will need to broadly follow these steps, although in some cases the process is likely to be
an iterative one rather than purely linear (i.e. it might be necessary to revisit some
decisions taken earlier in the process to reflect realities on the ground).
Figure 1. Overview of proposed methodology to track financing to WASH at national level.

Key methodological issues that the Guidance Document proposes guidance on are set
out below.


1
This methodology builds on initial proposals that were set out in a Working Paper published by WHO in
August 2012, Tracking national financial flows into sanitation, hygiene and drinking water.


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Defining the boundaries of the WASH sector based on a list of potential services to
be included.
Adopting and using a common classification of products, services and activities relevant
to the WASH sector is essential in order to ensure that the information produced for the
GLAAS exercise (and beyond) is consistent, comprehensive and comparable. This
applies to the collection of financial information as well as to any other type of
information collected through the GLAAS report. Such a definition often varies from one
country to another. For instance, in some countries, the sanitation sector may include
solid waste management as well: to enhance comparability, it would need to be
separated out. This also applies to broader water resource management investments
(such as in dam construction) which may need to be excluded as TrackFin is focused on
water, sanitation and hygiene services. It is therefore essential to clarify what is
included in the sector in the country where the analysis is conducted. The Guidance
document presents a proposed common classification of WASH services, based on a
thorough analysis of existing classifications used internationally to classify industrial
sectors, products and services. Countries applying the TrackFin methodology will
therefore be able to refer to this proposed classification in order to clarify the
boundaries of their own WASH sector.
Defining a proposed classification of WASH sector actors that could be adopted for
this purpose and that is sufficiently broad to capture most (if not all) sector
organisations.
To allow international comparisons and to ensure that the information produced is
consistent, it is preferable that all countries participating in the exercise use the same
(or similar) classification of WASH sector actors and of the financing flows circulating
between them. The proposed classification distinguishes between actors (including
users, service providers, financing units and financing agents) and financing sources.
This proposed classification was developed so as to align with existing classifications
used at an international level (such as those used by SEEA-W or by the OECD for
financing sources, through its 3T typology), whilst proposing improvements to
overcome certain identified weaknesses with existing classifications. If possible, it
should be used across countries so as to present data on a comparable basis. Based on
this classification, countries are invited to identify and list all potential actors in the
WASH sector, gather basic information on these actors and map out how the sector is
organised and financed.
Defining methodologies to capture financing information.
The Guidance Document then sets out methodologies for gathering cost information so
as to be able to estimate sector financing. It suggests two main types of financial
information can be collected:
Information on financing flows. This can be used to estimate how much is spent
every year on providing different types of services, to cover different types of costs,


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such as operating expenditure, small maintenance, capital expenditure or capital
maintenance expenditure.
Information on capital stocks. Alternatively, and in complement, it can be useful to
gather information on capital stocks, to estimate how much has been invested by
economic actors in building WASH assets over the years.

It sets out that collecting information on financing flows can itself be done based on two
approaches, as described below, and provides initial guidance on how to apply each of
these approaches:

The Financing Source Approach consists of tracking revenues from each
financing source to estimate how much money is allocated to the sector and
aggregate those estimates. This approach seeks to capture data on funds
allocated to the WASH sector through tariffs, household expenditure, public
transfers, voluntary transfers and private repayable finance are gathered from
service providers, regulators, household surveys, donors, national and local
government financial accounts and commercial banking reports.
The Service Provider Approach consists of tracking the costs of different
services to estimate what is being spent and aggregate those expenses to
derive total expenditure figures. Data on funds allocated by the different service
providers is collected based on their financial statements and cost analysis and
classified according to the type of service or good provided and type of
expenditure.
To estimate financing flows, a combination of both of these approaches needs to be
used, in order to capture all types of flows to a level of detail that is necessary for the
analysis. Even though gathering information on capital stocks might be more difficult
(as most analysis is usually focused on financing flows), the methodology recommends
that applying this methodology be attempted as it presents several advantages from the
point of view of interpreting results.
Defining a common set of tables and indicators to present the information.
In order to conduct analysis and inform policy-making, the WASH-A team will need to
build a number of tables to present the information collected in a way that can be
analysed and used by policy-makers. These tables are referred to collectively as the
WASH Accounts. WASH Accounts tables are a means of displaying information on the
consumption, production and financing activities for a countrys WASH sector. It is on
the basis of such tables that comparable indicators can also be derived. The Guidance
Document proposes a set of tables and indicators that countries can choose from in
order to answer policy questions that are most relevant in the country context. WASH
Account tables are constructed in a way to track the flows of financing between all the
dimensions of the WASH sector financing presented above (WASH services, users of
WASH services, WASH providers, financing sources, financing agents, costs and service
areas). The classifications can be applied to WASH costs individually to produce


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expenditure tables for a single dimension (Expenditure by WASH users, service
providers, financing sources etc.). Additional information can be gained from cross-
classifications that use two or more dimensions. Many combinations of two and three
dimensions tables can be created, but the guidance document recommends that a
minimum set of common tables be prepared in each country in order to ensure
comparability of results (the proposed set of WASH Account tables to be prepared in all
countries is included in the guidance document).
Finally the document provides guidance on how to analyse, interpret and
disseminate the results of the analysis.
It suggests that in order to be effectively used by policymakers, this information needs
to be concise, directly meaningful and relevant to them.
Next steps
The Guidance Document is currently undergoing consultation with sector experts and
stakeholders. It will be tested in up to five countries between May and November 2013.
At present Morocco, Ghana and Brazil have volunteered for this exercise.

The objectives of the testing exercise at country level are as follows:
To evaluate the feasibility of collecting financing data on the WASH sector at
national level in a way that is comparable and consistent across countries, following
the guidelines of the developed Guidance Document. Participating countries have
been invited to provide feedback on the methodology based on the practical
challenges they encounter, so that the Guidance Document can be refined and
expanded as necessary. As in the health sector, the guidance for elaborating WASH-
Accounts is likely to be continuously expanded so as to reflect new methodological
developments;
To assess the extent to which national statistical offices are able to provide financial
information on the WASH sector in a way that can be used by sector policy-makers
and on reverse, the extent to which sector policy-makers could express their
demands to statistical offices so that information can be provided in a reliable and
standardised manner;
To obtain feedback on the long-term feasibility of national WASH Accounts and on
methodological developments that may be required over the long-term.
The testing exercise will have to make do with the available data sources and statistical
information systems. We anticipate challenges with obtaining expenditure data at a
disaggregate level, particularly when water sectors are highly decentralised. In effect, it
will probably be necessary to obtain data for a limited sample (for example, of
households, or of local governments) and to extrapolate from this data. Some
information such as capital assets might not be tracked in some countries and it will not
be possible to include them in the testing exercise. But the testing exercise will enable to


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kick start a progressive approach in countries, starting with simple objectives and
iterate more comprehensive approaches over time.
Results of the testing exercise will feed into the GLAAS 2014 report and will be used to
improve and finalise the TrackFin guidance document that will be rolled it out in other
countries. It is hoped that it contributes to strengthening national systems for the
collection and analysis of financial information for WASH sector policy-making and
programming.



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