Poor Financing and Adaptation in Rural Cambodia

1. Introduction Climate change is intensifying risks to water, sanitation, and hygiene (WASH) systems in low-income and climate-vulnerable settings, particularly in rural areas exposed to flooding, drought, and water contamination. While climate-resilient WASH has become a central policy objective, far less attention has been paid to a critical implementation question: who pays for climate-resilient WASH services for poor households?

In rural Cambodia, WASH services are largely delivered by small-scale private suppliers, including family-run sanitation businesses and small water operators. These suppliers are increasingly expected to provide more resilient services and contribute to pro-poor outcomes, yet they operate under constrained margins, regulated tariffs, volatile demand, and high exposure to climate-related risks.

Despite their central role in service delivery, supplier perspectives remain underrepresented in the design of climate-resilient WASH programs and financing mechanisms, which often assume that resilience and equity can be achieved through supplier-led delivery or innovative finance alone.

This paper examines how small-scale rural WASH suppliers in Cambodia understand climate resilience, financing, and equity in practice. Using focus group discussions combined with a scenario-based preference-ranking exercise, it explores which adaptation measures suppliers are willing and able to deliver, which financing instruments they find acceptable, and how free provision of climate-resilient WASH services for poor households should be financed.

By centring suppliers’ assessments of feasibility, risk, and responsibility, the study highlights where pro-poor climate ambitions align—or clash—with the realities of rural service delivery. The remainder of the paper is structured as follows. Section 2 reviews the literature on pro-poor climate-resilient WASH finance and risk allocation.

Section 3-5 describes the study context, methods, and analytical framework. Sections 6 present findings on adaptation preferences, financing options, and approaches to free provision for poor households. Section 7 synthesises implications for pro-poor programme design and financing pilots, followed by conclusions.

2. Financing Resilient WASH in Low-Income Contexts Recent research shows that financing water, sanitation, and hygiene (WASH) services—including climate-resilient WASH—continues to rely predominantly on public and concessional sources. The so-called “3Ts” (tariffs, taxes, and transfers), together with direct household contributions, remain the backbone of WASH financing, even as climate change increases the scale and urgency of adaptation needs (Hyde-Smith et al., 2025; Fonseca & Pories, 2017).

Despite increasing policy attention to innovative and private financing, most WASH services in low-income contexts remain structurally dependent on public funding and donor support. At the level of service delivery, evidence from sanitation markets shows that small and family-run enterprises face acute cash-flow constraints and high sensitivity to income and climate shocks, limiting their ability to take on debt or absorb repayment risk without subsidies or guarantees (Pories et al., 2019).

Evidence from rural water systems shows that revenue collection approaches strongly shape service sustainability and access, with household demand volatility and user behaviour directly influencing operators’ exposure to financial and operational risk—particularly under conditions of environmental stress (Foster & Hope, 2017).

Blended finance has emerged as an important strategy in the WASH sector to mobilise private capital by combining concessional public finance with non-concessional commercial investment through instruments such as grants, guarantees, technical assistance, and risk-sharing mechanisms.