NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The first session I attended at this year’s Net Impact Conference was a lively panel on approaches to address water-related challenges in the developing world. It was moderated by Cheryl Choge of the Global Water Challenge, who began by reminding us of a few key water facts, for those of you who’re curious about the scale of the problem: There are 884 million people without access to clean water and about 2.5 billion without access to adequate sanitation, the burden of which is felt disproportionately by women and children.

Water-related diseases are a leading cause of death among children across the globe. Women in developing countries spend inordinate amounts of time walking to fetch water. The panelists spoke about their work in innovative, cost-effective business models for the BOP, and touched on supply chain models, distribution channels and approaches to pricing.

The water challenge: how is it being tackled?

The Water Initiative’s approach was presented by Kevin McGovern, a serial entrepreneur and co-founder of successful companies such as the SoBe beverage company. He and his team are supplying clean water to low-income consumers in Mexico, where The Water Initiative mobilizes teams of top scientists from Universities such as Cornell and UCLA to develop promising water treatment technologies at the point of use. The company works closely with communities in Mexico, studying local water conditions and deploying appropriate water solutions at affordable price points according to the recommendations of The Base of the Pyramid Protocol. (Side note: Stu Hart, one of the authors of the protocol, is a board member and a partner in this venture.)

At A Single drop of water, a Philippines-based nonprofit, Gemma Bulos and her team match civic society with local government groups to create hubs of local water expertise (PODS – people offering deliverable services). The local groups work to implement community-led WASH (Water and Sanitation) solutions. These organizations decide what technologies to implement based on the specific needs of the organization.

Finally, Bjorn von Euler works with ITT, a global supplier of water pumps and systems to transport, treat and control water and other fluids. The company follows a risk-reduction business model and has its operations spread across a variety of countries such as China, Honduras, Guatemala and India.

Following are a few sticking points from the panel:

“Appropriate” technologies matter more than “sophisticated” technologies. Although technology is a huge enabler, it isn’t in itself a solution. The technological know-how for water exists, but the technology that gets implemented is often not relevant to the needs of consumers. Says Gemma Bulos,”Appropriate technologies are key”. In addition success in BoP markets is contingent on several factors: First, technology works only if it is possible to source materials locally; second, the system must be easy to maintain and fix; third, the sophistication of the technology isn’t nearly as important as public buy in; and fourth, the product must be reasonably priced. If the people don’t think it works, they aren’t going to use it.

WASH – a holistic view of Water, Sanitation and Hygiene: In recent times, there is growing acknowledgement amongst players in the water industry that water management cannot be viewed in isolation. Water, Sanitation and Hygiene (WASH) are closely linked, and treating them as such helps businesses understand their consumers better. As Gemma said, “If a mother installs a faucet in her kitchen and doesn’t wash her hands while cooking, the technology becomes meaningless. For this reason, consumer education must be used in tandem with system implementation. It is the only way to ensure effective use of new products.

Community buy-in is key to success of BoP water businesses. At The Water Initiative, the team empowers communities to design products and distribution channels. The company brings cost-effective water purification systems to market, focusing mainly on technologies that remove carcinogens such as arsenic, flouride and harmful pathogens. Kevin calls himself a “pro bono” entrepreneur – “An entrepreneur who not just makes money solving pressing global challenges, but also creates jobs in the process”. Gemma noted that for the POD model to succeed, political will is extremely important. For this reason, the organization makes the government sign an MOU with the PODs to give PODS complete control of water management.

The developed world may need to look towards the developing world for solutions. Contrary to popular belief – innovations in “Point-of-use” water technologies are coming from developing countries and not from developed countries. Bjorn Euler brought up a great point about water challenges in the developed world; he predicted that disruptive technologies in emerging markets will likely provide next generation technological solutions to developed nations. Many western countries are struggling to revamp crumbling municipal water and sewage systems that were built decades ago. According to Bjorn, “Developed nations are going to have to work much longer” to fix their systems than emerging markets.

Top down or bottom up? Political will, all the panelists agree, is extremely important to get the job done. It isn’t necessary an insurmountable obstacle, however. Gemma mentioned how a measured, cooperative, “non-activist” bottom-up approach can actually work to influence the government. When you take time to build capacity, the government takes notice. When there is sufficient push from small grassroots organizations and civic groups, the government tends to cooperate, and actively includes innovation in its mandate. Gemma recounted that in the Philippines, “The government spends more money on WASH now, and has made it a priority.” Engaging municipal governments will get political will behind. It really can work both ways – top-down and bottom-up.

Large scale collaboration is needed. Bjorn pointed out that the lack of capital or technology isn’t as much of a problem as an inefficient use of existing resources. There are billions of dollars that go into water each year, but ineffective transfer of knowledge and wasteful use of resources in a highly fragmented global water market make it difficult to exchange new ideas and technologies. He also stressed out the need for collaboration. Single organization breakthroughs are unlikely to radically affect water challenges.

Trust and reputation mean everything at Base of the Pyramid markets. Finding long-term partners on the ground is critical to the success of water businesses. For this reason, a water business must work on building trust within the community even before it begins its operations. Kevin says, “It can be dangerous if even a few members of the community hold a prejudicial view of your business”. This is particularly important, given that water ownership is such a sensitive issue. In addition, creating services around the product can give people economic incentives to be involved.

For instance, women undertake product distribution and advertising, and have a clear economic incentive to do so. In terms of branding the product as it hits the market, it’s extremely important to involve the local population in the product’s messaging. Kevin urges water entrepreneurs to use focal points to help with community engagement. This is time-consuming but absolutely essential. Bjorn adds, “Schools, like churches, can be leveraged as focal points for discussions around water usage and practices.”

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What does the future look like?

When asked about their 5-year visions, all the panelists agreed that they wanted to focus their energies on women. Women are vital stakeholders in the scaling process. According to research conducted by ITT, the return on investment for water projects that involve women is nearly 10x higher than those that involve men. Women are more conscious about issues centered on health and family, and tend to be good advocates and partners in WASH initiatives. Given that women tend to multiply consumption behaviors in families and communities, no water business can be successful unless women are involved. From a purely practical standpoint, Gemma added, “The availability of women in the daytime is also a factor that makes them attractive partners for such businesses”