Barriers and challenges of expanding sanitation coverage in Brazil are debated at seminar
The Revista Conjuntura Econômica (Brazilian Economy Magazine), published by FGV’s Brazilian Institute of Economics (IBRE), held an event titled “Sanitation: A High-Impact Social investment” on June 29. Featuring two discussion panels, the seminar gathered experts to discuss the main problems and solutions for the sector.
By 2033, Brazil aims to provide universal access to water and sewage treatment and reduce water supply losses by 31%, according to the country’s National Sanitation Plan (Plansab) created in 2013. Currently, however, only 83.3% of the population has access to treated water. That number drops to 50.3% when it comes to sewage treatment. And the share of water supply losses in total water produced stands at a whopping 36.7%. The data also masks major regional discrepancies, as some regions are well below these levels.
According to the National Sanitation Information System (SNIS), 120 million Brazilians live in areas with no sewage treatment, while 40 million struggle with inefficient water supply. Studies show that the country would have to invest BRL 220 billion to significantly reduce its main sanitation issues over the next 20 years.
According to Gesner Oliveira, coordinator of the Group for Research on Infrastructure and Environmental Economics, the main issue is that the pace of investments needed to reach these goals has been sluggish. “According to one projection, if we continue on this pace, Brazil will only reach these goals by 2052,” said the researcher.
A few different factors can explain this phenomenon, says Raquel Soares, researcher at FGV’s Center for Regulation and Infrastructure Studies (CERI), who conducts a broad study on the subject. These include the complex institutional landscape in Brazil, which requires the involvement of several government agencies before a decision is made – which is further aggravated by the lack of cooperation between the different players involved, ultimately raising regulatory risks and legal uncertainty. Another factor behind the slow pace of investments is the current fiscal crisis faced by state and local governments, holding back any inflow of major investments in this area.
Considering this background, experts gathered to discuss which scenarios could enhance quality and efficiency, both in the short and medium term. The CERI researcher suggests that the effort to increase investments from the private sector must be accompanied by a campaign to improve the current public system’s efficiency, promoting best practices and supporting local governments in the deployment of their sanitation policies. “These measures must be aligned with an increasingly efficient provision of services, as well as the process of ensuring universal access to the service,” said Soares.
According to Jerson Kelman, President of Sabesp, increased public funding should focus on expanding sanitation services, which generate collective benefits. “However, there is usually a fierce battle for public funding in Brazil, typically concentrating funds in sectors with greater political clout,” said Kelman.
Another point brought up by the executive is the need to devise a policy that does not exclude municipalities that don’t offer economy of scale to companies. “In order to avoid this issue, the solution is to seek mixed funding from the different entities in charge of overseeing sanitation services, particularly state and local governments.” When it comes to enhancing the system’s efficiency and productivity, Kelman believes that is achieved by improving the tariff structure. “The way the tariff is currently divided among consumers is inadequate, because it provides misguided incentives.”
The seminar featured two panels, the first discussed Public Policy, Investments, Financing, Tariffs and Regulation, featuring Raquel Soares, Jerson Kelman and José Bonifácio de Souza Amaral Filho, Managing Director of the Sanitation and Energy Regulatory Agency of the State of São Paulo (Arsesp), and was mediated by Rafael Martins, CERI researcher.
The second panel discussed the “Positive Externalities and the Importance of the Private Sector to the Sanitation System,” featuring the executive superintendent of the Supervisory Board of Large Infrastructure Companies at Caixa Econômica Federal, Mario Augusto Pereira de Oliveira Jr., the CEO of AEGEA, Hamilton Amadeo, the head of FGV’s Infrastructure Economics & Environmental Solutions Group, Gesner Oliveira, and the president of Trata Brasil Institute, Édison Carlos. The second panel was mediated by Solange Monteiro, journalist and editor of The Brazilian Economy Magazine.