OECD/Brazil policy dialogue on water governance

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This document summarizes a study on setting and governing water charges in Brazil. It finds that while water charges exist in some river basins and states, they are poorly implemented and low. It analyzes the legal framework for water charges and challenges, including weak river basin plans. It also examines the process of setting charges, interests involved, and role of councils. Finally, it discusses sectors charged, issues, recommendations like adjusting charge design to reflect local conditions, and governing charges through information, scale, and planning.

Presentations & Public Speaking

SETTING AND GOVERNING
ECONOMIC INSTRUMENTS
FOR WATER MANAGEMENT
IN BRAZIL
9th OECD Water Governance Initiative
Paris, 4 July 2017

• Assess the institutional setting and the performance of water charges
• Suggest policy recommendations
• Build consensus on short, medium, long term actions
Why? Enhance the use of economic instruments
where appropriate
• International experience (Portugal, Spain, UK, France)
• 3 Case- studies: Paraiba do Sul, State of Rio de Janeiro, Piancó-Piranhas
Açu
• Consultation with 80+ stakeholders at all levels ( Sept 2016, Feb & June
2017)
How? An evidence-based national policy dialogue
• How to design the economic instruments
• How to manage revenues from water charges
• How to govern water charges
What ? Focus on setting and governing water
charges
Rationale & Process

Legal and institutional framework
• Legal framework for water charges:
– The Water Law 9433/1997
– The Resolution No. 48/2005
• State of play:
– Water charges in place
• In 4 federal rivers (+2)
• In 6 states
• Key challenges (OECD 2015):
– Poorly implemented river basin plans
– Low water charges

Setting water
charges
Political and
technical process
in RBCs
Vested interests,
participation and
representation,
robust technical
analysis
Approving
water charges
Role of Councils
Proposals are
always approved
Implementing
water charges
Role of delegated
agencies
Legal gap / double
dominion
Governing water charges

Clusters vis-à-vis the experience with
water charges
Pioneers
Paraiba do Sul,
the PCJ River
Basin and the
State of Rio de
Janeiro
Followers
São Francisco
River Basin
and the States
of São Paulo
and Minas
Gerais
Inspirational
case
State of Ceara
Newcomers
Doce River
Basin and the
States of
Parana and
Paraiba
Aspirants
Paranaiba ,
Verde Grande,
Piancó-
Piranhas-Açu
River Basins
and the State
of Rio Grande
do Norte

• Charging for what?
• Fail to achieve economic and financial
objectives
• Inappropriate level, design, process
• Do not reflect local circumstances
• Expenditure programmes do not deliver
clear benefits for water users
Key issues

• A significant source of revenue
• Set nation-wide
• A small part is earmarked
Hydropower
• A significant source of revenue, where in
place
• Have limited capacity to drive behaviours
Water supply
and sanitation
• Can drive investment in water use
efficiency
• Industrial water pollution remains
significant
Industry
• Charges are distinctively lower
• No proven effect on competitivenessAgriculture
Sector-specific issues

• Charging for…
• Cheap water does not address poverty
• Water charges work in combination with…
• Use proxies
Ways forward
Take-away messages

• Move from pedagogical charges to charges
that bite
• Adjust the design of water charges
– Reflect local conditions in water charges
– Widen the range of pollutants covered by
pollution charges
• Enhance the effectiveness of spending
programmes
Ways forward
Selected recommendations

• Information-based decision:
– Invest in monitoring and modelling
– Review ability to pay and competitiveness impacts
– Educate, raise awareness
• Manage charges at scale
– Share experience by states and river basins
– Support the creation of sustainable water agencies,
and consider a unique water agency in big interstate
basins
• Planning:
– Support plans that drive decisions on charging and
spending
Ways forward
Governing water charges

• How is your experience with abstraction or
pollution charges similar or different from
Brazil’s?
• How can your experience with the reform
of water charges inspire Brazilian
authorities?
Questions for discussion

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