Gordon McGranahan, head of the Human Settlements Group, International Institute for Environment and Development (IIED), discussed the importance of local and community engagement in the provision of water and sanitation services for the urban poor. Although the Millennium Development Goals (MDGs) bring important attention to the problems of unserved urban populations, the international framework for monitoring has produced statistics that are meaningless and often misleading. What is needed, McGranahan argued, are statistics that drive local action and monitor local progress. He then addressed the debate surrounding water resource management, noting that water scarcity and water stress are significant issues, but they are not particularly relevant to those without access to water and sanitation and they draw attention away from efforts that could improve provision to deprived urban households. McGranahan stated that the private-public debates have similarly distracted attention from improving provision to the urban poor. The challenges are common to public and private providers alike and the difference between the two has been exaggerated. Large private water companies in Africa and parts of Asia were oversold, said McGranahan, while small, private operators in the informal sector—the most important to the urban poor—have been largely ignored. The water and sanitation problems of the urban poor have been neglected by local governments and the donor community for a variety of reasons: the localization of problems such as health problems and disease; a misplaced focus on rural development; and fears of over-urbanization. McGranahan concluded with an emphasis on the importance of community-driven initiatives that focus on sound principles rather than best practices; building on what works locally; linking community efforts to the government; investing in participatory processes; recognizing the importance of women and of gender relations; and understanding the community's ability to handle the financing of water. "For most urban water and sanitation issues, the last kilometer or so is the one that matters most, and the one that receives the least attention," he concluded.

The most severe sanitation problems are found in low-income countries where only 40 percent of the population has adequate services, said Ellen Brennan-Galvin, lecturer and senior research scholar, School of Forestry and Environmental Studies at Yale University, citing examples in African cities to illustrate the urgent need for satisfactory sanitation. In Africa, sanitation needs are met with latrines that households dig themselves. These are often filthy and difficult to access, causing a significant proportion of the population to resort to open defecation. Brennan-Galvin then discussed the health problems and diseases associated with poor sanitation, to which children are particularly vulnerable because of their behavior and their lower immunity to pathogens. Governments face the challenge of improving access to good quality, reasonably priced sanitation services. She addressed the concept of unbundling and demand-driven approaches as solutions to costly investment. "We have been using the same technologies since the late 19th century", said Brennan-Galvin. Approaches to sanitation in the developing world have been dominated by models from industrialized countries, she said, noting that conventional toilets flush away up to 15,000 liters of pure water per person each year to dispose of 500 liters of urine and 50 liters of feces. Brennan-Galvin then discussed alternatives offered by eco-sanitation. In this scenario, excreta are returned to the soil instead of the water while drinking water is preserved for drinking rather than flushing. Eco-sanitation requires a change in thinking to view excreta as a valuable resource and dispel old concepts of "waste." While eco-sanitation works particularly well in rural areas and other settings, it might be a challenging fit for the urban environment. Brennan-Galvin presented a range of innovations in sanitation, detailing the Sulabh sanitation movement in India, ultra-low flush and foam toilets introduced in China, and an eco-sanitation demonstration project for dry toilets in Tepoztlan, Mexico.

Allen Eisendrath, senior infrastructure finance specialist, Office of Infrastructure and Engineering, USAID, presented four practitioners hypotheses related to improvement of water and sanitation services for the urban poor. First, he emphasized the importance of water utility reform to the poor. Unsustainable utilities ration water and do not serve the least remunerative customers. Eisendrath presented three models for utility reform: local government management, a decentralized model; regional management; and water and sewerage corporations used where local government is weak. Eisendrath illustrated the need to solve the financial crisis of utility reform with a description of a USAID-supported reform project in Nagpur, India where 51-55 percent of treated water was being lost. He also cited the success of Uganda in corporatizing the NWSC. A second key variable driving better utility performance is corporate governance and economic regulation, said Eisendrath, citing an Asian Development Bank study that put water utility corporate governance as the central reason why the poor do not receive services. Third, small-scale and decentralized providers are a symptom of the problem and not part of the solution, argued Eisendrath. Higher costs and low sustainability of small-scale, decentralized systems are well-documented. Fourth, privatization has already occurred in public utilities that don't serve the poor. Water is sold by employers or stolen from the system and sold for more, Eisendrath explained, noting that street vendors charge the highest prices for water.

Pete Kolsky, senior water and sanitation specialist in the Water and Sanitation Unit at the World Bank, discussed how international organizations can contribute to the provision of adequate water and sanitation services. Every city has a mix of solutions, said Kolsky, noting that the most important decisions made about housing, water, and sanitation for the poor in a city take place in neighborhoods, city councils, and governmental ministries. The challenge to international organizations is to devise a strategy that moves the processes constructively. Against this background, Kolsky described the creation of suitable enabling environments, work on global public goods, and helping to match global development funds to realistic demands. Financing remains a major challenge, said Kolsky, noting that private investment in water and sanitation is dwarfed by investment in transportation, telecommunications, and energy. Water and sanitation comprise approximately 7 percent of the World Bank's current portfolio, with the strongest presence in East Asia and the smallest in Africa. Reflecting upon sanitation and sewage treatment, Kolsky observed that there is differences in the way people see the city (starting with their homes) and environmental agencies see the city (starting with the river). It is most important, he said, that clean water is supplied to households. In summary, development experts are constrained by the conflicting demands of the market. Donors and clients must work together to nudge processes in the right direction.