Innovative Partnerships for

Resource Recovery & Reuse (RRR)

WLE/IWMI 2013 World Water Week, Stockholm

1st September 2013

Agro-industrial waste - Energy

Wastewater – Water (irrigation, aquaculture)

MSW, Faecal sludge - Nutrients (ag. production)

Innovative RRR initiatives – to close water, nutrient and energy cycle loop

Beyond ecological benefits.…

• RRR offers significant opportunities for cost-recovery for the sanitation sector esp. in low-income countries

• Business opportunities that can attract private capital and leverage donor investments

Game-changing processes that can completely

alter the current sanitation-agricultural landscape

with the implementation of sustainable

business models and innovative

cross-sectorial partnerships

Stages of Business Life Cycle

Time

Phase I – Start-Up

Ou

tpu

t Phase II – Business Development

Phase III – Up- and Out-Scaling

Phase I – Start-Up

Time

Ou

tpu

t

Challenges • Buy-in of business concept by investors: capital

investment • Access to inputs • Development of suitable technology • No proven market • Regulatory environment

Solution strategies and partnerships • Finance (donors, govt, fin. inst.) – model

demonstration, info. • Inputs suppliers • Technology:

• Business partners – technology transfer • Research institutes – innovation

• Market strategy/entry – product awareness • Regulatory envt: incentives (tax breaks, subsidies)

Proof of concept New period of growth New markets and dist.

channels Larger market share New revenue streams

Organizational type: PPP

Idea: Devt. and testing of innovative tech. for wastewater treatment (domestic/industrial); avert pollution of water bodies

Value offer: Potable treated water, filleted retail packaged fish, animal feeds

Business model: value-driven & cost-driven end-sales

Scale: 70.000 m3/day

Case of Terraqua Barranca: Phyto-remediative wastewater treatment & fish production

Buy-in of business concept by multiple entities Cost of investment: $22 M Investors (IADB through govt, equity–pilot phase/ 60% of capital reqts);

rural campesinos invest land, municipality supply of ww Returns/ownership: 75% - Terraqua, 15% - municipality, 10% - campesinos Develop market niche via established distributors Driving factors: Water scarcity, abundant ww polluting water bodies,

land availability and conducive ownership structures.

Municipality WSP

Rural Campesinos

Government

WW

Land

Terraqua

Finance Expertise, finance

Export market

Domestic market

Fish

Clean water

$ $

$ Licensed

Wholesaler/

distributor

Time

Ou

tpu

t

Revenues increasing

New market opportunities

Smooth running of business process – stabilization

Competition is surfacing

Fine-tuning business model

Phase II – Business Development

Challenges • Increasing competition

- Input procurement - Output market

Solution strategies and partnerships • Input procurement:

- Incentives for consistent supply - Logistics – transportation

• Output market: - Existing and established partner

distribution systems – access new markets

• Research: Tailor products to market needs ; fine-tune technology

Fine-tuning business model results in growth and stability ; exploration of up- and out-scaling initiatives

Case of EcoFuel Africa, Uganda

Organization type: Private company

Idea: Alternative fuel sources to avert deforestation and burning of agro-waste

Value offer: Produce cheap and clean cooking fuel (briquettes)

Business model: Value-driven, micro-franchising scheme

Scale: 1000tons/yr

Form of financing: No subsidies, private equity, seed grant

Driving factors: unavailability of firewood, abundance of waste, low-cost & simple technologies

Increasing and stable sales and profits, however competition is growing

(local & intl).

Households Institutions

Briquette & Stoves

Briquette & Stoves

Transport

Training $

Logistics

company

EcoFuel

Africa Farmers,

Agricultural

residue

producers

Research &

Development

Distributor

Input

Expertise

$

Training, installation of stoves

$

$

$

Compost $

Partnerships to mitigate competition effects: 1. Input procurement and delivery • sources ag. residue from various farmers • outsource collection

2. Fine-tune technology: increase industrial capacity (research partners -Makerere Univ.) 3. Output market : outsource distribution and marketing; sale of complementary goods

Phase III: Up- and Out-Scaling

Time

Ou

tpu

t

Challenges • Adaptation of business model o Entry into new markets o Adaption of tech. to context

• Funds and resource mobilization (R&D, pilots, infrast., land…)

• Market information

• Regulatory environment

Choice of entity New period of growth New markets and dist.

channels Larger market share New revenue streams Increased

impact/beneficiaries

Phase III: Up- and Out-Scaling

Time

Ou

tpu

t

Solution strategies and partnerships Funds: • Devt. partners, local fin. inst. – proven concept,

lower investment risk, impact Resource mobilization: public, private • Land, access to waste.. • Technical support for H/E mitigation measures

Market info: Private marketing companies, ag. prod. org.

Regulatory envt: policy makers • Formulate and enact policy measures – interest

rates, tax breaks, subsidies – market entry; single window clearances for H/E & business licenses

Research partners: • Cutting-edge tech. new pdt. devt; pilot

Model adaptation: Licensing agencies – brand, distribution and marketing partners

Choice of entity New period of growth New markets and dist.

channels Larger market share New revenue streams Increased

impact/beneficiaries

Case of Waste Concern, Bangladesh

• Organizational type: Research-based NGO

• Value offer: Address waste challenge by transforming MSW into high quality and safe compost

• Business model: Decentralized community private-public partnership model

• Scale: 1 – 5 tons/day of waste processed

• Driving factors: low-cost and labor-intensive tech. and prod. processes, huge demand for compost, strong community ownership, inst. support

• Plans: Replication for impact – increased beneficiaries, CDM process

Private sector Community Public sector

Compost

Donor (supply of funds)

Community-based organizations allowed to operate, monitor

collection activities

DCC, PWD (allocation of land)

Waste Concern

$

Fertilizer company

$

CBO

CBO

CBO

Buy compost, enrich and sell to farmers

Technical assistance

Compost

$

MoEF $

Land

Carbon Emission Reduction market

Carbon credit

$

Decentralized multi-partnership community based model

Strategic partnerships

Adaptation of business model: 4 management models

• Mucpl. owned – mucpl. Operated, Mucpl. owned – comm. operated, Mucpl. owned – priv. operated, priv. owned – priv. operated

Fund and resource mobilization

• Cost of investment: $50K to $100K; self-sustaining after 3 years – private sector, intl devt agencies, local govt

• Physical resources: land (MoEF, local govt); marketing (private sector), laboratory testing and quality assurance of pdt (academia)

Community ownership: Motivated community participation through model demonstration; proven concept, benefits

Market: entry – private sector (fertilizer companies); new markts – carbon credits

Regulatory environment: Formulated and enacted 27 policies , incl. single window clearances for H/E & business licenses

Summary – Partnerships as solution strategies for RRR businesses

Business Phase

Type of challenges

Description of challenges Solutions requiring strategic partnerships

Phase I and III

Funds and resource mobilization

Lack of financial resources for pilot projects

Lack of adequate funds for R&D Lack of access to credit

facilities Scarcity of resources

Model demonstration and supply of information - investor buy-in; diversified revenue streams; piggyback on existing relationships with high-level officials.

Phase I, II and III

Market Information

Lack of information about related product market

No market niche

Product awareness, private marketing company partnerships, product innovation.

Phase I and III

Knowledge and skills

Lack of proper understanding from concerned govt. agencies and communities

Negative attitude of govt. agencies

Model demonstration; Education/ awareness building campaigns

Phase I and III

Regulatory environment

Greater no. of permits required than usual no. for general projects

Limited incentives to catalyze business development

Formulate and enact policies (e.g. interest rates, tax breaks, subsidies – market entry; single window clearances for H/E & business licenses

Conclusions

1.Strategic partnerships are imperative for

business development in the RRR sector.

2.What is required and can work is highly location,

context and business phase dependent.

3.Much more research needed to understand

nature of partnerships to enable up-scaling

specific to RRR subsectors (i.e. nutrient, energy

and water).

Thank you.

Miriam Otoo, Krishna Rao,

Jasper Buijs and Pay Drechsel

m.otoo@cgiar.org

http://wle.cgiar.org/rrr

IWMI, Colombo

Innovative Partnerships for

Resource Recovery & Reuse (RRR)

WLE/IWMI 2013 World Water Week, Stockholm

1st September 2013