2023 Education and Research, Health and Social Protection, Organisation and Management of Aid Analysis

Payment by Results in Aid: A Review of the Evidence

Geske Dijkstra

The evidence on the effectiveness of Payment by results for outputs, outcomes and impact is mixed, especially when taking into account the quality of studies. To the extent there is evidence on improved transparency and accountability, and on innovation, it is mixed as well. Schemes that explicitly target poor and vulnerable groups were often successful in improving equity. But the risks and costs involved in PbR are real: the studies that do report on unintended effects often report one or more of these effects. In addition, schemes that do not apply explicit targeting often have negative effects on equity due to “cherry picking”. And while there is little information on cost effectiveness, the few studies that do report on it have mixed results as well.

It can be concluded that Payment by results appears to have been effective in some cases and circumstances, but that effectiveness, let alone cost effectiveness (or value added) of PbR in general is by no means certain.

It seems that PbR can have an added value if it can mobilize private resources for delivering goods and services to the poor, and especially in sectors, like energy or water, where the results chain is short and the results are tangible and can be measured relatively easily. In other sectors and situations, the added value of PbR is much less certain. All in all, the drive to payment by results in sectors like health and education often seems to be more induced by domestic motivations to “show results” than by considerations of aid effectiveness.