Despite decades of efforts that have dramatically improved access to clean water in India, more than 140 million people there still drink water contaminated by bacteria, chemicals, and other pollutants. Many of those Indians live in remote villages where it is not economically feasible to build infrastructure to filter water.
Shah, 36, moved to India in 2001 and eventually joined the Piramal Foundation, a non-profit started by a wealthy Rajasthan family to find solutions to healthcare, education, and employment challenges in rural India. Sarvajal, which was launched in 2008, operates as a for-profit division of the Piramal Foundation. It currently serves more than 110,000 rural customers and is now moving into India’s urban slums, where residents — mainly women and girls — often spend hours a day waiting for tanker trucks to deliver clean water.
In an interview with Yale Environment 360Â contributor Todd Woody, Shah discussed the challenges of expanding access to clean water in India and the lessons his company has learned in its first five years of operation. “The solutions came from what we actually saw in the field, rather than being invented elsewhere,” he says, “and that’s what makes it work.” Â Â
Yale Environment 360: You’re trying to leapfrog the water grid with your water franchises and solar-powered water ATMS. How did that strategy come about?
Anand Shah: Our social bias was really, how do you deliver water to the last mile? Our last mile was rural villages where there was no chance that water infrastructure was going to catch up any time soon, and people were spending a lot of time walking long distances to get water. They didn’t have any other choices because transporting water to a village in bottles costs a lot of money. It’s the last place retail folks wanted to go.
To avoid political conflict, we need a franchisee. If villagers were buying the water filtration service rather than the water itself from their neighbor or nephew, it was a lot less politically risky than from some big company. The second big issue was, how do we deal with this maintenance problem? We built machines with monitoring devices that allowed us to see what they were doing in real time, how much water was being sold, what the water quality was, how much energy was being used.
“The lesson we learned was that every government program we had seen had failed.”
The third problem was the collection issue, and we solved that by piggybacking on the prepaid model of cell phones. We turned our machines into prepaid filtration devices. Our franchisee would pay us in advance for, say, 100,000 liters of water a month. That would automatically trigger a refill to the machine. We went from 20 to 25 percent collection rate on time to 110 percent.
e360: How important is the data provided by the real-time monitoring of the machines?
Shah: The big thing for us was it showed us we could guarantee that the water coming out of the machine was safe, which is the premise of what water infrastructure is. The side benefit was we suddenly got all of these real-time snapshots about input water quality and output water quality and the time of day that people were operating these machines. We could tell the patterns in different villages — who was getting water at different times a day, what time they were waking up to operate the machines, when it didn’t work, when there were glitches, when demand was going up or down, whether it was correlating with weather. All that became information that was business intelligence for us. It’s big water data.
e360: How important was it that this technology was developed in India by Indians?
Shah: I don’t think that was critical other than that the context knowledge was very, very important. We were Indian Americans for the most part — developing this was a Stanford grad and I. The critical piece was that the solutions came from lessons of what we actually saw in the field rather than being invented elsewhere, and that’s what makes it work.
e360: Would it have been possible to do this 10 years ago?
Shah:Â Ten years ago it would have been impossible to do. We looked at other people that had tried to solve this problem, and they were subsidized by government, by donors — someone else would pay the capital costs.
The reason you couldn’t do that was it was so expensive to get to these places to see if they were working or not, and it was so expensive to service and maintain the machines. The only way you can do that is with information and technology. A cloud-based environment actually could give a real-time snapshot of the system across a region.
There were so many inefficiencies that could be cut out — middlemen could be eliminated, and we could track our service people by their phones. We said, hey, this perennial problem of how we get water to the last mile is potentially solvable if you have really smart technology.
e360: Water is free in India, if not always available. How big a challenge was it to get people to pay for water and use this new technology.
Shah: Not as hard as we thought it would be. The reason we chose to turn it into a business model that we thought we might be able to scale was because we realized that in many of these areas, if you simply made this solution available at the right price, people were willing to pay without any marketing having to be done. In the last 50 years, there have been hundreds and hundreds of programs funded by WHO (World Health Organization), funded by UNICEF, funded by the Gates Foundation around sanitation and water, but people didn’t have access to a solution. They tried home filters, but people had to be educated around them — they had to buy replacement cartridges, and they didn’t know how to use them. In areas where we operate, the water is brackish and people can’t afford the power sources to filter water.
“Every one of our franchisees is earning more than they would if they were doing a labor job nearby.”
In Rajasthan, we thought it would take large amounts of marketing around town [telling people] that this thing exists and you should pay for water But it turned out that the day we opened it, there was a line around it. We realized very fast that there was already a certain percentage of people in a village that knew about their water quality situation and that you could get those to be early adopters.
e360: Is the price you charge break even for the company?
Shah: It is not break-even right now, we lose money. We have a mandate from our benefactor that says you’re not allowed to raise the price of water, but you should figure out whatever you need to do to reduce the cost. The number would break even at some scale. I think for us it is somewhere close to 800 franchisees. But it does make money for the franchisees. Every one of our franchisees is earning more than they would if they were doing a labor job nearby. We’ve known from the beginning that this might take 15 years to figure out, and we’re fine with that.
e360: Now that you’re moving into urban areas where water is currently trucked in, how have government officials reacted and what kind of challenges have you faced?
Shah: In urban areas you’re threatening all kinds of people — everyone from drivers of the tankers that come in, to local people who have their power from helping people get water, to other people in the water business who sell these five-gallon containers. We were very reluctant to go urban early on because of these issues.
Our competitors would go to the government and lie and say our water was contaminated, so they would do an investigation and shut our franchisee down for two weeks. We have had people try to price fix with us, saying we’ll let you operate in this area as long as you’re selling for the same price we are. It’s been hard.
“In Delhi, 40 percent of square footage in a slum household is being used to store water.”
Urban settlements, by law, are supposed to get water from the government. The threat you pose to government when you propose to sell water is very significant. Both of those are very major issues. We spent a large amount of time convincing the Delhi government where we’re working that we’re not a threat to them. The solution was a pilot project to test this solution. Where this ends up going if it’s successful is that you’re able to show the government there is another mechanism by which you can deliver water economically.
e360: What kind of impact have you had in the villages on daily life?
Shah: There are lots and lots and lots of anecdotal stores that people who had digestive problems, intestinal issues, who had aching joints, and once they started drinking water they deem as safe, they realize that most of the problems have gone away. Doctors have started recommending it.
e360: Is there any data on drag on economic productivity from the lack of access to clean water and the need to spend hours a day securing water?
Shah: Not yet. The productivity argument is mostly an urban one as urban cases are easier to measure as people seem to value time more. We’re just starting to study the opportunity cost of waiting for water, for children waiting to go to school, or for householders that have to spend all this time waiting for water. One of the lessons we learned in Delhi is that 40 percent of square footage in a slum household is generally being used to store water, and this is a house that is only 100 square feet anyway.
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Shah: One of the most interesting early observations that we had in our pilot villages was that when people started paying for water, the men started going to get it. If you were paying cash for something it was seen as premium, and men wanted to be seen as the ones willing to pay for it. There are certainly dynamics that will change around that. We’ve seen enough data from our experience that shows that gender roles around water change when water is paid for. I don’t know how it will change in the slums where there are much more rigid time schedules.
One of the other interesting things we’re seeing is that technology plays a role as well. The fact that you’re using a smart card for water is something that people feel is not a poor person’s solution. They feel like they’re getting world-class technology. People have had visitors from the city come see them, and they tell their family, ‘Oh, you don’t have a smart card to get water? We do and we’re in the middle of nowhere.’ ”