Micro-credit and rainwater harvesting : paper presented at the IRC symposium ‘ Pumps, Pipes and Promises: Costs, Finances and Accountability for Sustainable WASH Services' in The Hague, The Netherlands from 16 - 18 November 2010

Rainwater Harvesting (RWH) has proven to be a viable alternative water source in challenging environments where other means of water supply have very little or no potential. RWH is often the only solution for water supply particularly in : areas where groundwater levels are very deep or contaminated due the composition of geological aquifers; lands that are arid or semi-arid lands; small coral and volcanic islands, and in remote and scattered human settlements. In the last two decades, interest in RWH has grown. However, one of the main challenges in relation to the construction of RWH systems is that initial investment costs for rainwater harvesting systems are relatively high, limiting replication in poor communities. Access to micro-credit could empower households in remote and underserved areas to finance their own RWH systems. Next to this, micro-credit could replace subsidy, making it a more sustainable water supply option. Through the promotion of RWH, there is also the possibility to enhance the income of poor people if it is combined with income generating (IG) activities and programmes.
In cooperation with BSP-Nepal, the RAIN Foundation, which was established in 2005, is currently conducting a 3-year pilot research project into the combination of RWH and microcredit
in rural areas of Nepal. The purpose of this pilot is to field-test a procedure for microcredit services that should result in access to water, adapted to the specific socio-economic and environmental context. In Nepal, it is estimated that more than 10,000 different types of Micro-Finance Institutes (MFIs) are operating at different levels, so there is a huge potential to promote RWH technology via micro-credit with the appropriate mechanisms. Based on a pre-feasibility study, four districts (Sindhupalchowk, Baglung, Gulmi and Syanja) were selected for a threeyear pilot, which started in April 2010. The Nepal Federation of Saving and Credit Union (NEFSCUN) assists BSP with trainings, the selection of MFIs and project implementation. In
the first phase of the pilot, subsidy and credit is combined for the construction of rainwater harvesting systems. Gradually the subsidy will be reduced and then replaced with credit. RWH systems will be one of the credit products for the MFIs. Women are the main target group of the micro credit pilot. The credit serves to stimulate the use of RWH for domestic as well as productive uses. The time that is saved for fetching water after the installation of a RWH system at their homes can be diverted into the productive work. Availability of water plays a significant role in IG activities such as the production and processing of vegetables, fruits, cereals, dairy milk, poultry, seeds, medicinal herbs and plants, spices, fishery, nontimber
forest products (e.g. bamboo products), etc. This paper summarizes the methodology of the pilot project and discusses a procedure for micro-credit services in relation to RWH. [authors abstract]