Market-Based Programming (MBP) refers to a range of programme modalities to understand and support local WASH-related market systems. Implementing MBP is not new to the WASH sector, with programmes that have traditionally functioned in a variety of capacities, such as including cash for work as part of water infrastructure reconstruction programmes (e.g. pipeline excavation), vouchers for water containers, fairs to present household water treatment products (e.g. filters or chlorine), capacity building of plumbers and masons, technical support to water utilities, and support for access to financial services (e.g. microfinance loans for reconstruction). Many of these approaches have worked well and at scale as well as in settings where technical and quality standards must be met.

MBP is often distinguished from in-kind delivery of goods or services, such as water treatment items, jerry cans and directly building water and sanitation infrastructure, although the boundaries between a perceived traditional in-kind assistance and MBP are fluid. The choice of the appropriate modalities depends on:

• Humanitarian context
• Type and phase of emergency
• Affected population’s WASH and other needs and vulnerabilities
• Potential public health risks
• Target groups and delivery platforms (individual, household, communal and institutional levels)
• Knowledge, attitude and practice of the affected population
• The need to go beyond the usual emergency outcomes to build resilience.

Thus, appropriate levels of needs assessments, technical WASH assessments and WASH market assessments should inform a proper response analysis, programme design and implementation.

Assessments

Multisector Needs Assessments seek to identify differ ent needs and capacities of a population affected by a crisis, including distinguishing who cannot meet these needs and why. Standard methodologies are available for this, including the Multisector Initial Rapid Assessment (MIRA) and Basic Needs Analysis (BNA). Most relevant to MBP is the BNA, as it defines the priority unmet basic needs of the population and the best modality to meet them. It includes the definition of a Minimum Expenditure Basket (MEB), including all items and services that households are likely to prioritise on a regular or seasonal basis and its average cost over time. By comparing the MEB with an estimated average current income of targeted households, agencies can calculate the current gap for households to meet their needs. Once this is defined, each sector and agency can try to fill that gap in the most coordinated and relevant way for the beneficiaries, either by using or supporting local markets, MBP modalities like cash/vouchers or in-kind assistance. 

Emergency Market Assessments seek to understand the capacity of local markets to meet the needs of a crisis- affected population. They include an analysis of critical local markets (e.g. market prices, quantity/quality of goods and services available), household factors (e.g. purchasing behaviour, financial literacy) and the enabling environment (e.g. access to markets and financial services, infrastructure, regulatory frameworks, currency stability). Depending on context, time and available resources, market assessments can be in-depth analyses, such as those detailed in the Emergency Market Mapping Analysis (EMMA) toolkit or as simple as a few questions added to existing assessments. Market tools such as a Pre-Crisis Market Analysis (PCMA) can be used to understand critical markets and when they function normally and to identify their capacity to adapt to future shock events, especially in cyclical or protracted crises. This understanding can improve future responses or design preparedness programmes that strengthen local market actors so that they can continue to operate in a crisis to meet needs in a faster, more appropriate and efficient way than direct in-kind support. 

Response Analysis is the link between assessments and programme design. It involves the selection of appropriate programme response options, target groups, modalities and delivery mechanisms. This selection should be informed by considering appropriateness and feasibility and should simultaneously address needs while analysing and minimising potential harmful side-effects. Modalities refer to the form of assistance (e.g. cash transfers, vouchers, in-kind distribution, technical support, community engagement, advocacy). Delivery mechanisms refer to the platform or service used to deliver the assistance to the beneficiaries, either in-kind or cash (e.g. in-kind water distribution via trucking operators or water vendors; direct cash distribution over the counter, via mobile money or bank transfer; voucher distribution via smart cards or prepaid cards).

Implementation: Four Types of Market-Based Programming

WASH markets can be both affected by a crisis and used to respond to WASH needs. To enable a more effective, efficient and quality response, it is important to understand the whole spectrum of MBP programme types and the possible levels of engagement with the market (see Figure 6).

1. Improving Market Demand and Access

Improving market demand for WASH goods and services can be strengthened by improving access to local markets. Barriers to access can be financial (lifted through Cash and Voucher Assistance (CVA)), physical (lifted by improving roads, organising fairs), or socio-cultural (changed through behavioural change strategies or social marketing).

Using markets through CVA: To generate demand for WASH services or products, cash grants can be provided. The use of the grant can be influenced by the design of the cash transfer. For instance, grants can be provided to individuals, households or communities. They can come at regular intervals, in tranches or as a lump sum. They can be conditional, requiring beneficiaries to fulfil conditions for either accessing the grant (e.g. cash for work) or using the grant (e.g. to connect to a piped water supply system), or unconditional if the grant is given to ensure beneficiaries can meet a range of basic needs. The latter is referred to as a Multipurpose Cash Transfer (MPC). Grants given in the form of vouchers can be restricted to specific commodities or services (e.g. water treatment products) or unrestricted value vouchers (up to a defined value for cash or commodities) redeemable with selected suppliers. CVA focuses exclusively on overcoming financial barriers faced by beneficiaries, without addressing other barriers to access.

Improve access to WASH market: Market actors may need temporary support so that users can adequately access goods, services or finances to meet needs in a crisis. A fair can promote innovation and create demand for goods and services. Vendors or service providers may need to be (pre-)qualified to meet the selection criteria (e.g. enabling vendors to receive digital payments) or standards (e.g. quality and format of accounting) of the CVA programme. Access to the market can also be improved by linking improvements in infrastructure (e.g. roads, bridges).

Improve demand through behavioural change strategies, including social marketing. While behavioural change strategies are routinely applied, social marketing is an emerging field in humanitarian WASH assistance. It aims to develop products and services that address user needs and to adopt marketing tools and promotional campaigns to influence users to, for instance, take up and use water purifiers. How behaviour is modified or adopted depends on the application of what is known as the marketing mix, which includes the product, place, price and promotion (4 Ps). Overall, a marketing intervention tries to steer the target population towards the intended outcomes, even if the total influence over each of the four Ps is limited. WASH marketing strategies also include behavioural change communication, which motivates the adoption of a particular behaviour (e.g. to boil water) or a complementary behaviour (e.g. handwashing with soap). ‘Behavioural economics’ is another field linked to social marketing; it studies the best way to improve the uptake of products, such as chlorine tabs, among the population (e.g. effects of free or subsidised distribution, direct or through voucher). These activities are challenging to implement in acute emergencies and may be more appropriate in the stabilisation and recovery phase, protracted emergencies or in disaster resilience building. 

2. Improving Market Supply and Availability

Using, supporting and developing markets can strengthen the availability and capacity of the market system to deliver critical goods and services in an emergency.

Using markets starts with integrating existing local market structures to deliver immediate humanitarian assistance, which is usually based on the local procurement of WASH goods and services or the use of CVA. Understanding the market is crucial to decide if the market can be used, and the temporary support of suppliers or vendors might also be needed to ensure sufficient supply (see below).

Supporting markets aims to restore market systems after a shock event, allowing humanitarian actors and beneficiaries to use the market as soon as possible. This can be done by providing grants to market vendors to recover stock; creating access to information on technology options, associated costs and contact details of suppliers of related goods and services; providing fuel vouchers or subsidies or spare parts to transport businesses (e.g. for water trucking operators); and supporting market traders to increase warehousing capacity (e.g. for water containers) and water utilities to restore or scale-up existing water treatment capacity (e.g. in host communities after refugee influx).

Market system change aims for long-term positive changes and strengthening the resilience of the WASH market system. This can be done through business model development (e.g. supporting private actors or communitybased organisation to set up safe water kiosks), value chain development (e.g. determining if there is a market for point-of-use water filters), supply chain development (e.g. for construction materials to be available locally at a more affordable price), product design (e.g. designing affordable water filters) and improved access to financial services (e.g. offering micro-loans for water kiosk operators to set up their business). These activities are unlikely to be carried out during acute emergencies. 

3. Reform of the Market Regulatory Framework

To help markets recover, humanitarian interventions can also include activities aimed at supporting the reform of the regulatory frameworks of relevant markets (national rules, norms, standards). This could be through advocacy for improved regulations (e.g. water quality assurance for safe water kiosks), a direct engagement in policy-making processes or by building the capacities of the actors involved (e.g. governments, regulators, utilities, etc.). 

4. Strengthening of Market Services and Infrastructure

For critical WASH market systems to function, the broader market services and infrastructure may need to be supported, restored or developed. This could include loan guarantees for microfinance institutions, digital cash delivery technologies, support to improved market information as well as the rehabilitation of roads, transportation and telecommunication networks. These activities are often not directly related to WASH and can pose a challenge to WASH actors unless they are carried out through cross-sectoral interventions and/or with multidisciplinary teams.

Benefits of Market-Based Programming

MBP is increasingly heralded as having a critical place in the future of humanitarian programming. The proposed benefits of working through existing market systems include improvements in efficiency, effectiveness and scalability of programming and increased beneficiary dignity and choice. Where feasible, MBPs might promote a faster economic recovery due to economic multiplier effects, a better transition to development programming as well as higher levels of acceptance and sustainability. The introduction of water tariffs and payments increases the probability that water will be valued by the beneficiaries and that the revenue and working ratio of service providers can be sustained, even if the CVA is slowly phased out during the recovery phase. In general, MBP represents a way to address humanitarian WASH needs with a context-specific and systemic approach, helping to build the long-term resilience of population and WASH systems.

Risks and Challenges of Market-Based Programming

Water supply infrastructure is technically complex, subject to regulation, expensive (high capital expenditure) and dangerous if poorly implemented. Working through markets partly shifts the handling of quality and safety risks to local market actors and beneficiaries, but this can result in less control over construction quality in a cash-based re-construction programme. This can become problematic if beneficiaries, for example, use less skilled labour and fewer salvaged materials. Providing beneficiary choice does not negate the responsibility of humanitarian actors to ensure access to well-maintained facilities and services that are safely managed, inclusive and meet minimum humanitarian standards. Therefore, close and regular monitoring is crucial, and the design of MBP interventions should include risk-mitigation strategies (e.g. use of conditional or restricted cash transfers) as well as enabling activities such as technical support and capacity building. Where WASH programmes have identified risk factors related to knowledge, attitude and practice, these need to be addressed with appropriate complementary activities, such as community engagement, and hygiene and sanitation behavioural change (see X.16) or marketing that seeks to understand sociocultural issues, build accountability and support healthy behaviour. WASH practitioners should always insist on a robust monitoring framework for MPC interventions that is informed by relevant WASH indicators and, if possible, epidemiological data, which can help anticipate disease outbreaks and sound an alarm on an outbreak as early as possible. This also implies a readiness to activate necessary additional and complementary action for containment.