Results-Based Financing and Its Potential Role in Advancing the Nexus Approach - Governing the Nexus: Water, Soil and Waste Resources Considering Global Change - page 83

Outputs Outcomes

Inputs Impacts

Fig. 1 Basic results chain

However, time proved that often, the results of this methodology were not as
good as desired and, sometimes, the projects utterly failed to deliver the expected
results. As a response to these problems, some development institutions introduced
modi

cations to the design of their projects to make them more effective, making
certain payments contingent to the achievement of certain goals or producing
certain outputs. The health sector was (and still is) a notable leader in these efforts,
but other sectors joined. Education, energy and water (mostly water supply) are
among them.
The experience so far is somewhat limited and mostly driven by the develop-
ment institutions. However, it has been positive, as many successful projects have
been implemented or are ongoing, while the development community is gaining
experience and gathering knowledge about the conditions for success or failure of
the approach.
It is important to note that RBF approaches are not opposite to the traditional
way of funding development projects but complementary. Whether a project should
be financed through a traditional instrument, and RBF tool or a combination of both

should be assessed in each speci c case based on the issue to be solved and the

conditions surrounding it, like agents

'

skills and capacity to absorb risks, amounts
involved in each project component, availability of financing besides the public

funds, among others.

3.2 RBF Analytical Framework

Designing an intervention using one or more RBF mechanisms poses several
questions that demand a rigorous analytical process to improve the chances of
successful implementation. Figure 2 shows the schematic interrelation of the dif-
ferent elements to consider.
In some cases, the answers to the questions may produce a straightforward path
to the selection of an RBF tool and design of the intervention but, more often than
not, once some of the questions are answered, the need will arise to revisit the
different elements of the analytical framework before the final approach and design

can be completed. Many of the analytical aspects could be considered simulta-
neously and iteratively. What is the right approach depends on each particular
situation. This thinking process can incorporate a focus on relevant aspects of the
nexus approach to ensure that the development interventions are in line with it. A
quick look at the different elements of this analytical framework is provided in the
next section.