Identifying Eligibility for Sanitation Subsidy: SOIL’s Test of the EquityTool
In urban areas of developing countries like Cap-Haitien in Haiti, high-quality sanitation services are often unaffordable for low-income residents, whose ability to pay typically falls well below the full cost of delivering services. For a sanitation service provider such as SOIL, setting prices for service access requires a tradeoff between cost recovery and affordability for low-income households in order to promote positive social impact. Prices that are designed to achieve cost recovery are likely to exclude a large proportion of SOIL’s target market segment. This level of exclusion would limit the public goods and societal returns associated with sanitation, as community-wide benefits require a large proportion of the population (e.g., at least 60%) to be covered. Achieving such coverage typically requires subsidies, particularly for low-income households.
One key question surrounding subsidy programs is how to reliably and cost-effectively identify the poorest and most vulnerable households in the urban settings where we work to determine eligibility. Many different wealth measurement tools exist, such as the Demographic Health Survey Wealth Index and the Poverty Probability Index, however each tool assesses different constructions of wealth that may not always be applicable to a specific context. SOIL’s research team identified the EquityTool, which is a short survey consisting of 12 questions, that can be used as a measure of household wealth relevant to SOIL’s operational context.
In summer 2023 SOIL’s research and operations teams collaborated on a pilot of the EquityTool to explore its applicability to our customer base. Customer service agents visited more than 300 current EkoLakay households to measure their wealth as determined by their responses. The research team compared the EquityTool data against the households’’ payment behavior records. The teams aimed to identify whether or not household wealth aligned with favorable payment behavior trends, which would suggest the EquityTool is an appropriate measure for use in targeting customer subsidies.
Each houshold was placed into a national wealth quintile where quintile 1 is the poorest and quintile 5 is the wealthiest. Among the sample of 306 EkoLakay customer households, none were designated in the lowest two quintiles, 91 households (29.7%) were in quintile 3, 183 (59.8%) households were in quintile 4, and 32 (10.5%) households were in quintile 5. Statistical analyses suggest that as a household’s wealth increases, their payment behavior significantly improves (see table below).
The results of these analyses suggest that the EquityTool is an appropriate measure of household wealth that can be used to identify eligibility for an EkoLakay service subsidy. This subsidy will initially be applied to households already subscribed to the service that are struggling to make regular payments in order to support retention of their EkoLakay toilet, however, in the future it may be available to potential clients who hope to join the service despite the lack of sufficient funds to pay the standard service fees.
It is also important for the SOIL team to take into account extraordinary circumstances that could impact a household’s short-term ability to pay for the sanitation service. As such, the EkoLakay team will also incorporate a survey question that asks if a household has recently experienced financial strain that may impacted their ability to pay for the service. On a case-by-case basis, EkoLakay agents will be able to offer short-term subsidies to help households maintain access to the sanitation service during periods of instability.
Our research team continued to explore use of the EquityTool in the results-based financing baseline survey conducted in October 2023. A partnership with Aquaya has allowed us to further refine and adapt the EquityTool to our use-case, and we hope to launch a subsidy program using the EquityTool later this year.
Beyond the EkoLakay service, SOIL’s partners at DINEPA (the national Ministry of Water and Sanitation) and the national Ministry of Public Health (MSPP) have expressed interest in deploying a tool for use in other subsidy initiatives. SOIL has identified that the EquityTool is relevant and easy to deploy in the field and could be a great option for identifying vulnerable households and expanding equitable access to water and sanitation services more broadly throughout Haiti.
