Allen Hammond, James Koch, and Francisco Noguera

The Need for Safe Water as a
Market Opportunity

There is a huge unmet need across the globe for access to safe drinking water. Das
problem kills millions of our brethren each year—780,000 in India alone.1
Diarrheal disease causes 1,600 deaths a day—more than any other. While we in the
UNS. and other Western nations simply turn the handle on a faucet to access drink-
ing water, people in many parts of the world spend a major portion of each day
seeking sources of water and gathering wood or other fuel to boil the water in
order to destroy potentially deadly microorganisms. This burden falls primarily to
women and young girls. It is revealing that seven of the eight Millennium
Development Goals (MDGs) are associated with having access to safe water. Diese
include achieving gender equality; combating extreme poverty (73 million work-
ing days are lost each year in India due to waterborne disease); providing primary
Ausbildung (37.7 million Indians are sick from waterborne disease each year—many
of them school-age children); and preventing child mortality (diarrheal disease
kills 400,000 Zu 500,000 Indian children under age five each year).2 Promoting
maternal health, combating disease, and ensuring environmental sustainability are
other MDGs related to having safe water.

Global trends suggest that both ground- and surface-water sources, especially
in developing countries, are becoming more, not less, polluted. These conditions
constitute an enormous social challenge that has persisted despite significant
efforts by governments and international agencies to relieve them. Another way of
looking at this problem, Jedoch, is to observe that it constitutes a large unmet
demand and hence a potential business or social-enterprise opportunity. Tatsächlich,

Allen Hammond is Senior Entrepreneur, Ashoka: Innovators for the Public, former VP
for Innovation at the World Resources Institute, and a founder of the Base of the
Pyramid strategy.

James L. Koch is the Executive Director of the Global Social Benefit Incubator™, Die
Bill and Jan Terry Professor of Management at Santa Clara University, and founding
director of the university’s Center for Science, Technologie, and Society.

Francisco Noguera is ,a Research Analyst for the New Ventures Project, Welt
Resources Institute, and co-managing Editor for NextBillion.net.

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while commercial approaches to urban-scale water treatment have encountered
well-known difficulties when attempting to reach beyond city limits, a new wave
of social entrepreneurs has not been discouraged from tackling the problem on a
smaller, community-level scale. Their efforts in bringing down technology-related
Kosten, such as working closely with local governments and communities to influ-
ence the way they relate to water, have resulted in a willingness to pay for clean
Wasser (Und, in manchen Fällen, sanitation services), even in very poor communities, als
experiences in India, rural Africa, and parts of Latin America have shown. In der Tat,
we believe—and this article documents—that community-scale water treatment is
potentially ready to take off and spur truly transformative change.

COMMUNITY-SCALE TECHNOLOGIES AND CAPITAL FLOWS

By community scale we mean that water sources and treatment facilities are sized
to serve all or part of a community or village (z.B., populations between 2,000 Und
10,000). We distinguish these from point-of-use water treatment devices designed
to serve an individual or a household—of which there are many, all of which face
significant distribution challenges for both the devices and replacement filters. Wir
distinguish them further from systems designed to serve an entire urban area,
which usually pipe water to individual houses.

Many different technologies for improving water quality are available, Und

their general effectiveness is well understood. The options include:
• Treatment by natural geological processes—such as filtration through sand,

gravel, and layers of soils—that can remove many contaminants; wells that tap
groundwater sources depend, in effect, on geological filtration to maintain the
quality of that groundwater

• Physical or chemical treatment processes such as coagulation and sedimenta-

tion or treatment with lime, which can remove many inorganic contaminants,
or chlorination, which can kill biological contaminants such as bacteria and
viruses

• Absorption by activated carbon or other materials, which is particularly useful

in removing pesticides and organic contaminants

• Ion-exchange processes, often used to remove iron, manganese, or calcium

(hardness)

• Treatment by ozone or ultraviolet light, typically used to kill biological contam-

inants

• Membrane processes such as reverse osmosis, which can be effective against a

wide range of contaminants, including saltwater intrusions.

The costs of these treatment options vary widely and depend to some extent
on the scale, Kontext, and purpose of treatment. The technologies used most com-
monly to deal with contaminants are ultraviolet (UV), ultra-filtration (UF), nano-
filtration, and reverse osmosis (RO). UV completely filters out bacterial contami-
nants but does not address the chemical contaminants. Light-emitting diode
(LED) UV-based devices are a promising technology due to their low energy con-

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The Need for Safe Water as a Market Opportunity

sumption, long lamp life, and ease of deployment. UF takes care of both bacterial
and chemical contaminants, although it fails to fully address the dissolved solids.
Nano-filtration is not as fully developed commercially, although it may emerge as
the future of water filtration. RO technology addresses both bacterial and chemi-
cal contaminants and dissolved solids. Although filtration technologies in general
have higher up-front costs, they are declining due to expiring patents and manu-
facturing being shifted to Asia. When applied to aggregated or community-level
needs, per-customer capital costs for many of these treatment options are attrac-
tive and likely to become more so. Das, together with innovation in business mod-
els, is changing the environment for investing in safe water.

Community-scale social ventures, unlike public systems, typically do not pro-
vide piped water. They instead provide water at a central point from which com-
munity members can fetch water in containers, which reduces the capital expendi-
tures associated with this approach. A World Health Organization report suggests
that the barriers to investment flows to these areas are attributed to the problems
of market creation, distribution, and financing models:
• Market creation entails developing customer awareness of the link between

water quality and human health, as well as the need to understand consumer
preferences—in taste, convenience, health benefits, and aspirations.

• Distribution involves the ability to design a reliable supply chain for deploying
and maintaining treatment plants that can provide treated water at affordable
Preise.

• Financing solutions must cover the up-front capital costs of water purification

technology.3

Over the last 20 Jahre, water-sector investment has been modest relative to the
rapid growth of investment directed at telecommunications (especially mobile
telecommunications) and energy, particularly when it comes to investment in
infrastructure and services for low-income communities in developing countries.
In India, Zum Beispiel, investment in the overall water sector grew at more than
twice the rate of GDP from 2003 Zu 2006 (15-20 percent versus 8.5 Prozent), Aber
this growth was concentrated in the bottled- or packaged-water sector (growing at
40 percent a year) and municipal water treatment, with middle- to upper-income
urban households as the target beneficiaries.4 Only 24 percent of India’s popula-
tion is served by a household water connection and stands to benefit from munic-
ipal treatment.5 Seventy percent live in rural areas, mit 750 million people spread
across more than 600,000 villages.

BENCHMARKING BEST PRACTICES
AND DOCUMENTING OPPORTUNITY

As part of its sector strategy, the Global Social Benefit Incubator (GSBI) of the
Center for Science, Technologie, and Society at Santa Clara University set out to
explore the implications of the declining cost of water-treatment technologies, neu
business models pioneered by social enterprises, and the foreseeable increase in

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capital flows to community-scale safe-water solutions, as reflected by numerous
announcements from investment funds that focus on emerging market infrastruc-
tur.

The GSBI integrates Silicon Valley mentoring expertise, distance-based educa-
tion, and an intensive in-residence boot camp to develop and validate innovative
business models for promising social enterprises. It emphasizes developing
earned-income or market-based solutions where they are applicable. The sector
strategy adopted by GSBI in 2007 involved recruiting a cluster of social enterpris-
es in the business of providing safe drinking water to communities for the 2008
GSBI class, and conducting research on the community-scale water-treatment sec-
tor. This included the geographic distribution of challenges, technology alterna-
tives, business models for replication, and insight into how governments might
accelerate the deployment of financially sustainable solutions. Zusätzlich, Sie
sought to benchmark best practices for the sector based on intensive interaction
and discussion with the social enterprises being mentored, as well as follow-on
case studies and field visits where relevant. The result was the creation of intellec-
tual capital to inform and inspire future entrepreneurial efforts, and to define the
potential for expanded investment in the sector.

The water-sector cluster included four enterprises, three from India and one
from Africa. As a result, some of the research (such as water-quality challenges)
was localized to focus on India. One of the enterprises, WISH (Pump Aid is the
parent organization) operates in areas in rural Africa, where water supplies from
groundwater sources and appropriate sewage management are the primary con-
cern, not water treatment (although additional treatment could be added if neces-
sary). One of the Indian enterprises, Riverbank Filtration Technologies, provides
treatment of surface waters with an approach that improves water quality but in
some instances may not remove all pollutants, depending on local conditions.
Hier, zu, additional treatment could be added as needed. Both WISH/Pump Aid
and Riverbank Filtration Technologies in some sense constitute “primary-stage”
water operations, and both are able to provide water at lower prices than other
local options. The other two enterprises, Naandi Foundation and the Environment
Planning Group Limited (EPGL), supply and provide more intensive treatment of
either ground or surface waters. These “secondary-stage” water operations are pri-
marily focused on communities that have no source of safe drinking water—which
in India includes a very large number of communities.

Zusammen, these four enterprises span a wide range of conditions, types of treat-
ment, and institutional character—including a nonprofit that leverages a corpo-
rate social responsibility (CSR) royalty revenue stream (WISH), an NGO that
works closely with government (Riverbank), a hybrid business model that incor-
porates both a social enterprise and an NGO (Naandi), and a fully commercial
Betrieb (EPGL). The main lessons learned from the work with these enterprises
can best be summarized by three key attributes of their operating models: a busi-
ness model, financing sources, and strategic partnerships.

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The Need for Safe Water as a Market Opportunity

Business models

Business models refers to an analysis of the income and expense drivers of these
ventures, which in turn determines the legal structures they choose to adopt and
the financing sources they’re able to tap into. In terms of income generation, beide
Naandi Foundation and EPGL operate under fee-for-service models and derive
100 percent of their revenue from the sale of treated water in containers, charging
a fixed amount per liter to their final users. Neither Naandi nor EPGL derives rev-
enue from the sale of water-treatment equipment to local governments or to any
constituency. It is interesting to note that the distribution infrastructure (kiosks)
developed by both Naandi and EPGL has the potential to offer other services to
communities and thus to generate additional streams of revenue in the future. In
fact, the centers where water is treated and collected could potentially be used to
provide low-cost health care, Internet access, and other services valuable to local
communities.

WISH, andererseits, doesn’t contemplate deriving its revenue from the
sale of water but from the sale, installation, and recurring maintenance of water
pumps and toilets in rural communities. Corporate advertising on the surface of
the pumps and toilets is another potential revenue stream being explored.
Jedoch, this revenue model is still not able to cover all of WISH’s costs and
expenses, which forces the venture to rely on sources of revenue such as grants and
corporate royalties from Pump Aid. zuletzt, Riverbank Filtration predicts that the
recurring costs and expenses at the treatment plants will ultimately be covered by
revenues generated by the sale of treated water (per liter) to nearby communities,
although it is seeking donor funds to help launch the model. Given its experimen-
tal nature (the technology has not yet been rolled out in India) and the character
of the organizations backing the project (an NGO in India and a university in the
Vereinigte Staaten), Riverbank Filtration operates under a not-for-profit structure.

Fee-based approaches allow Naandi Foundation and EPGL to cover all of their
operating costs. Like all of the foundation’s activities, Naandi’s safe-drinking-water
program does not intend to realize a profit. Its business model, Jedoch, has been
designed to cover all costs and produce a surplus, which is then reinvested in com-
munity-development programs in the villages in accordance to agreements made
with village governments. EPGL, andererseits, shares much of Naandi’s pro-
gram in terms of technology used, Operationen, Wartung, costs and fees
charged, but it works under a fully commercial structure that offers a return to
potential investors.

WISH is a good example of a nonprofit model exploring ways to transition
into a commercial, market-based model. The social enterprise has its beginnings in
Pump Aid, a CSR initiative of Thirsty Planet bottled water that operates a water-
pump technology called Elephant Pump, which has been successfully rolled out in
many African countries over the last six years. It has also developed a sanitation
solution labeled Elephant Toilet. Since its inception in Malawi, Pump Aid has seen
growing demand and a willingness to pay among various communities. This led

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Pump Aid to explore the possibility of engaging with microfinance institutions to
offer these communities a comprehensive solution that would consist of water
pumps, toilets for sanitation, and gardens for nutrition. This would occur within a
partially subsidized commercial model, whose subsidy portion would be expected
to decrease gradually over time, potentially enabling WISH to become a fully com-
mercial venture.

Financing

The source of capital for safe water enterprises depends on legal status. While non-
profits rely on grants and donations, social enterprises with earned-income busi-
ness models, replicable economic units, and a track record can attract commercial
capital. A third model is the hybrid or blended-income model, with revenue
streams that combine earned income with grants and, in some instances, revenue
streams from third-party economic buyers, including government and multilater-
al agencies. With strong social-impact metrics to balance somewhat lower finan-
cial returns, hybrid models have added operating flexibility due to their ability to
attract capital at rates of return below market. We believe that the declining cost of
treatment technologies, new business models being pioneered by social enterpris-
es that show significant potential for scaling, and the numerous funds announced
recently that are focused on emerging market infrastructure will increase capital
flows to community safe-water solutions.

Wieder, Naandi Foundation and EPGL are examples of this trend. Naandi part-
ners and works closely with state governments, which at present provide a large
source of financing for its water activities. Jedoch, Naandi has also been able to
tap into commercial finance sources, which it expects will become more central to
the growth of the water business. In contrast to this public-private model, EPGL is
exploring commercial capital as its main source of financing. Both organizations
have received financing from local banks in India, as well as financial support from
Acumen Fund, a nonprofit venture fund based in New York City. Jedoch, inter-
national financial institutions are still wary of investing in water businesses, espe-
cially those designed to serve low-income communities. Business-plan strategies
that mitigate perceived risks will be key to accessing commercial capital.

Riverbank Filtration and WISH are examples of charitable models in which
philanthropic capital is still the main source of financing. WISH has secured cor-
porate royalties from Pump Aid, which will subsidize a significant portion of the
materials and labor required to install the pumps and toilets. The remaining por-
tion will be financed through microfinance institutions that will provide loans for
communities to supply the matching funds the model requires.

Riverbank’s experimental phase has been funded by the leading organiza-
tions—TERI, a not-for-profit corporation that provides education financing and
information services, and the University of Rhode Island—while capital expendi-
tures related to installing the technology on site are expected to be financed
through grants from multilateral institutions and, ultimately, from user fees.

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The Need for Safe Water as a Market Opportunity

Strategic partnerships

Although partnerships are not formally considered part of a company’s business
Modell, it is important to make a specific note on this issue and to signal ways it
could be seen as a source of both risks and opportunities for the long-term sus-
tainability of the models described above.

The first type of partnership that can be found in the four models analyzed
relates to technology development. Naandi Foundation and Riverbank Filtration
have employed this kind of partnership to incorporate specific technologies into
their fundamental mission of providing safe drinking water to the poor. Naandi’s
case shows the value of partnering with different technology providers. Naandi is
itself not a manufacturer of water-treatment technologies. Stattdessen, it has devel-
oped skills in social marketing and other areas critical to working closely with
communities and local governments, leaving the technology end of its solution
open to vendors that are able to deliver tailored solutions. Zum Beispiel, the enter-
prise began its water work with a provider of UV and chlorination technologies,
but then added a provider of RO technology in order to solve a wider range of
water-quality issues. Partnerships are also key for both WISH and Riverbank
Filtration, especially for funding and technology development. Jedoch, there is
one crucial partnership for all of the models described in this document: partner-
ships with local governments and regulating authorities. Government participa-
tion in one form or another has been key to the successful participation of the pri-
vate sector in providing safe drinking water to rural villages.

Based on the benchmarking exercise, Naandi’s hybrid model offers many les-
sons for addressing the global water challenge. It combines CAPEX (“capital
expenditures,” or generally expenditures that create future benefits) start-up fund-
ing from grants and loans with a private-sector approach that provides water for
sale at affordable prices and includes intensive marketing and a businesslike
approach to continuous process improvement. Its financial model provides sub-
stantial economies of scale, with increased market penetration and the replication
of units. A more detailed description of Naandi’s model and an analysis of some
key factors for its success follows.

DIGGING DEEPER: A CASE STUDY

The water-treatment model developed by Naandi Foundation of Hyderabad,
Indien, is now to our knowledge the largest community-scale water-treatment pro-
gram in the world. Focused almost entirely on rural villages that heretofore have
had no widespread access to clean drinking water, the program has grown in three
years to around 800 units located in four states that serve three million people
daily.6 The scaling momentum continues: Naandi expects the number of units to
nearly double in the current fiscal year.

The Naandi model takes advantage of water-treatment technologies (reverse-
osmosis filtering and irradiation with ultraviolet light) that has been rapidly
declining in price, but that is not what sets it apart. Nearly a half-dozen for-profit

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and NGO entities within India alone are using similar equipment for similar pur-
poses, but for the most part without similar results.7 The keys to Naandi’s success
Sind:
• An efficient business-like approach that optimizes the entire value chain
• Forming trusted partnerships with state and local governments that aid busi-

ness development

• Intensive, sophisticated marketing designed to change community perceptions
and behavior—convincing individuals to value clean water and to pay for it
instead of getting free water that is often contaminated.

Naandi is an NGO with a focus on alleviating poverty. Jedoch, its board of
directors features a number of prominent CEOs and public figures and, nicht wie
many NGOs, it hires its staff primarily from the corporate sector by offering them
a highly professional work environment with excellent financial and nonfinancial
incentives. Naandi’s chairman, DR. K. Anji Reddy (founder and chairman of Dr.
Reddy’s Labs, a major generic pharmaceutical manufacturer), personally recruited
Amit Jain to head the water project. At the time, Jain had about 12 years of expe-
rience leading and building what became large social-marketing businesses across
rural India. At Naandi, he has fostered dedication to constant experimentation
with the value chain, such as changes in the size and construction of the water-
treatment building; constant improvements, such as jointly, with IDEO, designing
the jerry cans villagers use to collect their daily water; customizing the capacity of
the water-treatment unit to meet the requirements of catchment-area populations
ranging from 2,000 Zu 20,000; fine-tuning the marketing and health-awareness
strategy employed; and the recent pilot introduction of an automated water-dis-
pensing system driven by stored-value magnetic cards. Naandi’s experimentation
with this approach may reduce labor costs and has the potential advantage of
offering customers flexible payments and providing the ability to gather systemat-
ic end-user information from customers.

Jain has also worked with various suppliers—for example, in close technical
partnerships with WaterHealth International, TATA Projects, and Malthe Winje,
Norway—to drive procurement and deployment efficiencies steadily higher and
costs lower. He has shown an ability to build relationships with key government
officials and to close deals that have helped expand Naandi’s water business. Recent
examples include establishing a working-capital loan facility of three million dol-
lars with a leading nationalized bank, and a successful bid to deploy about 100
additional units in Punjab State. Naandi’s plants have been financed by a combi-
nation of state grants, donor funds, modest community contributions, Und,
recently, commercial loans. Despite pricing its water lower than many other
providers ($.04 Zu $.05 pro 20 liters, the quantity needed for a day’s use for drink-
ing and cooking by a family of 5-6) and planning for a 4-5-year recovery of capi-
tal for a typical water plant, the Naandi water program closed its third full fiscal
year with an approximately $500,000 operating surplus. Now Naandi is taking steps to spin off part of its water activity and capitalize it as a social for-profit water-services company that will build and service water 114 Innovationen / Sommer 2009 Von http heruntergeladen://direct.mit.edu/itgg/article-pdf/4/3/107/704452/itgg.2009.4.3.107.pdf by guest on 08 September 2023 The Need for Safe Water as a Market Opportunity units for Naandi and other water vendors, enabling that company to capture even greater economies of scale. The proposed company also plans a foray into the hith- erto untapped but vast potential area of supplying water in peri-urban slum areas, where Naandi’s research suggests a willingness to pay higher prices among resi- dents who are often denied formal access to municipal water connections. Naandi’s model, often with backing from the state government, approaches the Gram Panchayat (village-level government) with a partnership, offering to build and operate a water-treatment plant and create 1-2 local jobs, in return for a rent- free piece of ground, a source of raw water (surface or well), and an electrical hookup. Naandi builds a modern-looking building featuring a bright blue color and large glass windows, through which the stainless steel treatment equipment can clearly be seen. Originally the buildings were made of brick and mortar; now they are made of a prefabricated modular panel with a multilayer design that can be erected within a week. They are typically nicely landscaped and feature a raised platform that makes filling the jerry cans from the multiple faucets easier. These features make the water unit clearly stand out in the village, and they convey trans- parency and the high-tech character of the treatment process, thus reinforcing the promise of high-quality water. The water-unit structure and what it stands for are thus inspiring, even for those earning less than $2 pro Tag. Although the building
tends to more than double the cost of the water plant, the confidence it evokes in
the potential client is key to Naandi’s marketing strategy and clearly differentiates
Naandi from more marginal, low-cost providers.

Making clean drinking water synonymous with high-tech equipment and
modern, urban-quality services also addresses the feeling many villagers have that
they are slipping behind and not participating in the advances of urban India. In
addition, Naandi trains its water operators a month ahead of inaugurating each
unit, and has them go door-to-door to make villagers familiar with the new water
service that is arriving soon. It also pays for wall paintings and other visual adver-
tisements to raise awareness. When the water plant opens, it offers free samples and
stages an event attended by village leaders, shows videos explaining the health ben-
efits of clean drinking water, and conducts school and community programs.
Endlich, it hires a part-time safe-water promoter, usually a village woman, who con-
ducts a continuing campaign on the benefits of clean water and hygienic sanitation
Praktiken Methoden Ausübungen, and who interviews households that have not subscribed or any
dropouts from the program to ascertain their reasons—data that is rigorously ana-
lyzed to understand consumer patterns and thus refine marketing approaches.

Water is pre-sold on a subscription basis. Registered subscribers bring their
prepaid card to be punched as they pick up their daily allotment; the cards expire
at the end of the month. This eliminates handling cash daily and also acts as an
important inducement to use clean water every day, since it’s already paid for,
rather than buying it only when it is financially convenient—a practice that
Naandi found often negated the health benefits of its efforts.

This systematic and intensive marketing approach pays big dividends. A recent
survey of a half-dozen community-scale water-treatment enterprises in India

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found that the typical village penetration rates typically hover around 30 Prozent,
while Naandi frequently reaches 55 Prozent zu 60 Prozent (with a range from 30
Prozent zu 80 Prozent).8 Combined with Naandi’s successful market-development
efforts and its systematic development of the value chain, this explains why Naandi
stands out as a premier water-treatment model.

But there is no magic here—simply excellent and intelligent execution. Der
approach is potentially replicable, if others follow Naandi’s pioneering strategies.
Darüber hinaus, there appears to be strong interest in both private and public sources of
capital in supporting scalable clean-water solutions. These factors argue strongly
that the sector is positioned to scale, and that a businesslike entrepreneurial
approach can play a significant role, whether carried out by an unusual NGO like
Naandi, by a commercial entity, or by a hybrid value chain involving both types of
Organisationen.

CONCLUSION

The need for clean water is universal and the unmet demand huge. We believe this
article shows that there are sustainable, scalable solutions that could apply to many
rural and peri-urban communities, providing fee-for-service water at affordable
Preise. Deployment of these private-sector solutions could markedly improve
health and productivity in highland communities in Central America, in the peri-
urban slums of Africa, or in the rural areas of south and southeast Asia. Darüber hinaus,
this is a bottom-up entrepreneurial approach that creates jobs and wealth, not a
top-down development project—hence it necessarily taps local talent resources.
One of the authors, visiting a water plant in India, found it quite competently run
by an 18-year-old girl who had not finished high school—her mother, the original
entrepreneur, had gone on to a better market opportunity but had trained her
daughter to run the business, effectively doubling the family’s earning power. Wir
believe this private-sector approach may be the most effective and most reliable
way to achieve the water-related Millennium Development Goals.

We think there is a vast opportunity for more Naandi-style operators, ob
for-profit or NGO or hybrid. Jedoch, there may be an equal opportunity to fran-
chise a community-scale water solution, with local entrepreneurs, local NGOs, oder
other community groups as the franchisees and the franchisor providing the tech-
nology, Ausbildung, and branding. Franchise solutions tend to scale more rapidly and
have the virtue of providing significant technical and business-model support to
franchisees. We believe that community-scale water-treatment businesses are
potentially less risky than many others. Aside from the up-front capital costs, Die
main cost of goods sold for a water-treatment plant with access to a raw water sup-
ply is electricity: even intermittent power is not a significant problem because
treated water is readily stored; margins therefore are generally high. And a water
business, because it draws daily traffic, can be combined easily with other retail or
services businesses. Marketing, as the Naandi experience suggests, can be key, Aber
franchisors can provide marketing materials and protocols along with their tech-

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The Need for Safe Water as a Market Opportunity

nical support. Primarily, potential water entrepreneurs—whether franchisors or
franchisees or stand-alone operators—need to become aware of the opportunity,
and they need access to capital.

That in turn suggests an opportunity for social investment funds, sector-spe-
cific private equity, innovative venture capital groups, and foundation PRI money.
Bilateral and multilateral development agencies could play a significant role, beide
in financing and in capacity-building for entrepreneurs and potential franchisees.
Where are the franchise training institutes, the McDonald’s University for develop-
ing regions? Public-private partnerships may work well in many countries, as long
as operation of the units is clearly in private-sector hands. Even microfinance
funds seeking growth may find opportunity in financing the local water-treatment
franchisee, although the loans—typically $5,000 to $10,000—would be a bit larg-
er than the typical microfinance range.

If the technology is available, the business models viable, and the financing

achievable,, might we have a transformative market opportunity at hand?

1. Pruss-Ustun, A., Bos, R., Gore, F., and Bartram, J., Safer Water, Better Health: Costs, Benefits And
Sustainability Of Interventions To Protect And Promote Health, Genf: World Health
Organization, 2008.

2. Water Resources Division, India Assessment 2002: Water Supply and Sanitation. New Delhi:

Government of India Planning Commission, Water Resources Division, 2002.

3. Clasen, T., Scaling Up Household Water Treatment Among Low-Income Populations, Genf: Welt

Health Organization, 2009.

4. Braun, J., Oulaw, T., Clasen, T., Wu, J., and Sobsey, M., Safe Water for All—Harnessing the Private

Sector to Reach the Underserved, Washington, Gleichstrom: International Finance Corporation, 2009.

5. Ebenda.
6. Katz, J., and Mohnot, S., Bringing Safe Water to India’s Villages and Communities: The Naandi

Foundation, forthcoming case study, 2009.

7. Persönliche Kommunikation, Pat Guerra, cofounder of the Global Social Benefit Incubator and co-
investigator for water for the Acumen Fund Ripple Effect project analysis. Like Naandi
Foundation, Byrraju Foundation is also a best practice organization in community-scale water
treatment. Their expertise in market creation and segmentation is demonstrated in an average
adoption rate of 53 Prozent, broadly comparable with Naandi Foundation.

8. Jacob Verghese of the Byrraju Foundation in a personal communication recently described the
barriers to overcoming non-consumption of water as consisting of awareness, acceptance, Zugang,
and affordability. Based on its experience across 60 villages, Byrraju found that awareness was sel-
dom a hurdle (less than 2 percent in a village with a new water treatment facility are unaware of
this fact), but acceptance was the reason for non-adoption among fully 45 percent of nonusers.
These individuals were not sufficiently convinced of the link between drinking safe water and
health to spend money on water over other priorities. For another 40 percent of nonusers, Byrraju
Foundation found that access was the driving factor in adoption, Und 75 percent of these nonusers
were willing if home delivery could be provided. Price was cited as a reason for non-adoption by
nur 15 percent of nonusers. Katz and Mohnot, Bringing Safe Water to India’s Villages and
Communities.

Innovationen / Sommer 2009

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