Output-Based Aid for Sustainable Sanitation

Results-based financing (RBF) has emerged as an important new way of financing public services in general and basic services in particular. One type of RBF known as output-based aid (OBA) tends to be used to target subsidies for poor customers by providing service providers the incentives to serve areas of greatest need. Unfortunately, experience with OBA in sanitation is limited. One of the motivations for this paper is to consider why this is the case.

The objective of this study is to investigate how output-based aid (OBA) could be used to increase sustainable access to sanitation services. This study arose from the observation that, even though OBA has gradually emerged as an important way to finance access to basic services, experience with OBA-type financing in the sanitation sector has remained limited, with mixed results compared to other sectors.