Since you asked...

This is what keeps me awake at night (or at home on a Friday evening):

No matter how much I do, or anyone I work with or consort with does, no matter how much the international donor community does to support safe drinking water and sanitation around the world, no matter if every international donor dollar is spent in exactly the right, highly coordinated way, all we can hope for is for all of those resources collectively to be the cherry on top of the cake, or at best a little gas to get the water development engine going.

Where's the real money? Approximately 70 cents of each dollar that is invested in water/sanitation/hygiene in the developing world comes from public sector finance in developing countries themselves - Ghanaian, Nicaraguan, Vietnamese, Indian taxpayer dollars/rupees/cedis etc. Ten percent give or take comes from the international donor community, with the rest coming from international and domestic private investments in water and sanitation infrastructure.

The end game - universal coverage of water and sanitation, like we enjoy in the States, Europe, Japan - must be played and won by the developing country governments themselves. They must do a much better job of prioritizing water/sanitation in their own budgets over the long run, and do a better job of prioritizing water in international aid requests in the short/medium term (e.g. Millennium Challenge Corporation compacts). [So shouldn't I/we be lobbying those governments instead of the donor community here? Now you try to get some sleep with that question hanging over your head...]

Government subsidies, tax incentives, and grants are all partial answers to how developing country governments should tackle this problem. There are also a number of regulatory paths to take, and I just read of a couple more today:

The Disease Control Priorities Project (DCPP) is an "ongoing effort to assess disease control priorities and produce evidence-based analysis and resource materials to inform health policymaking in developing countries." They recently published a very insightful piece on Water, Sanitation, and Hygiene: Simple, Effective Solutions Save Lives.

It's a clear, short (4pp!) paper detailing both the problem and at least hinting at some interesting partial solutions. One example: with respect to sanitation infrastructure (e.g. building pit latrines), government subsidies are often unruly, inequitable and highly politicized. The DCPP recommends a regulatory approach to address the challenge:

In Bobo Dioulasso, Burkina Faso, for example, the local administration withdrew land tenure rights from owners who did not build a latrine on their plot within a specified time. As a result, 90 percent of households now have their own latrine. Another effective regulation requires landlords to provide latrines for their tenants.

Yay. Another opportunity for developing country governments to more effectively encourage the construction of pit latrines is through what is commonly known as social marketing, much and well-practiced by Population Services International in the donor arena. Governments are encouraged by the DCPP to promote latrines by almost any means possible, as it is perhaps the most cost-effective way to ensure their construction. It is also likely to come out ahead in any cost-benefit analysis. Pit latrines do NOT sell themselves, so governments stepping in to make them more compelling one way or another is part of the solution. And the scale of the solution matches the scale of the problem and I get to go out on Friday nights...

I also have self-doubts about the fact that if only the world's agriculture were 10% more water efficient, there might not be a drinking water supply problem at all, so maybe I should be working on that issue?!? But that's for another post.