A Drop in the Bucket? The Effectiveness of Foreign Aid in the Water, Sanitation, and Hygiene (WASH) Sector

This paper investigates the effectiveness of development assistance in the water, sanitation, and hygiene (WASH) sector at the global, country, and local levels. Two components of effectiveness- the impact of WASH aid on health outcomes and its responsiveness to recipient need- are defined and tested independently using a wide variety of statistical models applied to a cross-country panel dataset of 133 recipient countries over the fifty year period from 1960 through 2009. The global analysis is supported by two country level studies based on geo-coded datasets of WASH aid projects. Impact is examined using propensity score matching applied to survey data on 12,271 households and 56,218 individuals in the Republic of Malawi. Responsiveness is tested by comparing the location of World Bank funded WASH projects in the Republic of the Philippines with the geographic distribution of water-related disease among 82 provinces and 56 cities in that country. Results of the global and country level studies are broadly consistent and lead to three general conclusions. First, WASH aid is found to have had a measurable and positive impact on both individual and national level health outcomes. Second, the allocation of WASH aid across and within countries seems to be responsive to the relative need of intended beneficiaries, although it is not the sole factor driving WASH aid allocation. Finally, WASH aid appears to have the greatest impact in countries and communities with median, rather than high, levels of relative need. Based on these results, a framework is developed to understand aid effectiveness in the WASH sector, in which impact is constrained in high need countries by technical and environmental factors and in low need countries by diminishing returns to aid funding. This framework is applied to evaluate major donors of WASH aid and emerging modalities of aid delivery.