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FEATURE STORY February 4, 2020

Results-based Financing Provides Sustainable Water Supply in Rural Vietnam

Vietnam is committed in providing access to safe drinking water to all its citizens by 2030. Smart investments in infrastructure in rural areas as well as sustainability measures are key to delivering on its promise.

World Bank Group


Through a range of mechanisms, results-based financing helps deliver development outcomes, improves accountability and drives both innovation and efficiency. In Vietnam, the program has provided functional water connections to over 2 million people. And together with the private sector, more than 1 million people are served with sustainable water schemes.

Vietnam has made significant progress in providing reliable water supply, increasing access from 10 percent of the population in rural areas in 2000 to 70 percent in 2016. However, further progress has been slow due to water service coverage diminishing in remote and mountainous communities. It is also estimated that 30 percent of piped water distribution systems will only be partially functioning or out of commission after five years in operation. This is mainly due to systems characterized by poor investment and design, incomplete or low-quality construction and insufficient operation and maintenance linked to poor cost recovery — rather than the long-term sustainability of water supply schemes.

Linking incentives with results

The Government of Vietnam has signaled its strong commitment in improving access and ensuring sustainable and reliable water services through a National Rural Clean Water Supply and Sanitation 2020 Strategy. The strategy, which was developed in 2000, sets an overarching vision and goals for the sector, targeting vulnerable and remote communities.  Its key principles highlight community participation, sustainability and cost recovery. A three-phase National Target Program was also implemented to measure the country’s progress and set water quality standards.

The World Bank supports the country’s vision by introducing results-based financing that provides financial incentives to provinces that invest in better and well-managed water distribution systems. Funding is based on: providing clean water service to communities, with less than 10 percent service interruption. The program incentivizes optimized engineering designs, community engagement activities and good financial planning.

 “The people were consulted and were able to share opinions about the tariff.  We all agreed on a monthly collection to maintain the water system,” says Nguyen Thi Than, one of the project’s beneficiaries.

The program also rewards existing water schemes that are sustainable—water schemes that provide clean uninterrupted water service while utilizing recognized management models. The water distribution systems should be functional and connected to at least 70 percent of households with utility bills paid. The operational cost of the system should also be covered by tariffs.


"With this new approach, the public is able to participate in different stages of program implementation. This increases their understanding of the process and helps encourage timely payments."
La Hong Chung
Director of the Center of Rural Water Supply and Sanitation in Thai Nguyen province

“This is crucial for future work and investment in the sector as well as sustainability,” he adds.

Sustainable measures yield huge impacts

Results-based financing ensures that funding is linked to pre-agreed and verified results. Through a range of mechanisms, results-based financing helps deliver development outcomes, improves accountability and drives both innovation and efficiency. In Vietnam, the program has provided functional water connections to over 2 million people. And together with the private sector, more than 1 million people are served with sustainable water schemes.

Vietnam is committed in providing access to safe drinking water to all its citizens by 2030. Smart investments in infrastructure in rural areas as well as sustainability measures are key to delivering on its promise.



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