OECD Studies on Water

2224-5081 (online)
2224-5073 (print)
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Water is essential for economic growth, human health, and the environment. Yet governments around the world face significant challenges in managing their water resources effectively. The problems are multiple and complex: billions of people are still without access to safe water and adequate sanitation; competition for water is increasing among the different uses and users; and major investment is required to maintain and improve water infrastructure in OECD and non-OECD countries. This OECD series on water provides policy analysis and guidance on the economic, financial and governance aspects of water resources management. These aspects generally lie at the heart of the water problem and hold the key to unlocking the policy puzzle.

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Water Charges in Brazil

Water Charges in Brazil

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27 Nov 2017
9789264285712 (PDF) ;9789264285705(print)

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This report examines the current system of water abstraction and pollution charges in operation in Brazil. It assesses the current system’s implementation challenges and provides possible solutions. The report explores how water charges can be both an effective means for dealing with water security issues, and a tool for enhancing economic growth and social welfare. Specific analysis is put forward for three case studies in the State of Rio de Janiero, the Paraiba do Sul River Basin and the Piancó-Piranhas-Açu River Basin. The report highlights that water charges need to operate in conjunction with an effective water regulatory regime and concludes with an Action Plan based on practical steps and recommendations for its implementation in the short, medium and long-term.

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  • Foreword and acknowledgements

    As a longstanding advocate of the Polluter-Pays and User-Pays principles, the OECD argues that economic instruments can play an important role for effective and efficient water resources management when designed and governed adequately, and when combined with other policy instruments. In particular, setting and governing abstraction and pollution charges that can deliver expected policy objectives is not an easy task and remains a necessity in several countries. A number of governments around the globe have been experiencing severe reform challenges as well as fierce resistance from users when putting in place water charges for the first time and/or raising their levels.

  • Acronyms and abbreviations
  • Executive summary

    A policy debate on water charges in Brazil is particularly timely and relevant for a number of environmental, economic and political reasons. The country is facing a range of water issues, from risks associated with too much, too little or too polluted water, to a challenging fiscal and political context. Strengthening water charges where they exist, and considering them where appropriate, could help to drive the necessary place-based actions to safeguard water quality and quantity (e.g. pollution and excessive abstraction) and to prevent water risks from becoming barriers to Brazil’s sustainable growth now and in the future. This report looks at why water charges can contribute to several current and long-term policy objectives in Brazil, and how water abstraction and pollution charges can work and deliver intended results. It outlines policy recommendations and provides a detailed action plan that identifies lead institutions that can implement actions over the short, medium and long term.

  • Assessment and recommendations

    Recent and ongoing droughts in Brazil create a momentum to think about different policy instruments that can contribute to water security and sustainable growth now and in the future. Water abstraction and pollution charges are among the instruments that can help the country to transition from water crisis management to water risk management, while setting incentives to use water efficiently and reducing the qualitative pressure on water resources.

  • Why water charges matter in Brazil

    This chapter makes the case for a more systematic use of economic instruments as a response to water challenges in Brazil. It explains the rationale for using economic instruments for sustainable water management and sets principles for setting and governing such instruments. The remainder of the report will focus on two specific economic instruments, namely abstraction and pollution charges.

  • Water charges in Brazil — The state of play

    This chapter describes how water charges currently operate in Brazil. It presents the legal and institutional framework for water charges and reviews the experience of federal and state governments, grouping them in five clusters: pioneers; followers; inspirational; newcomers; and aspirants. The chapter highlights several common challenges in terms of setting clear objectives for water charges, developing plans that can drive decisions, putting in place an adequate information system and making the most of collected revenues for the benefit of water users.

  • Practical issues for setting and managing water charges in Brazil

    This chapter discusses a series of practical issues related to the design and effective implementation of charges to manage water resources in Brazil. Each section states the economic principle, reviews international good practice and discusses the situation in Brazil. Drawing from international experiences, it concludes with sketching some policy recommendations.

  • Sector-specific issues for setting and managing water charges

    The chapter analyses challenges and opportunities related to the design and implementation of water abstraction and pollution charges for the main water users in Brazil, namely hydropower, water supply and sanitation, industry and agriculture. For each user, the chapter provides the key underlying economic principles, selected examples from international experience, a specific zoom on the issues for Brazil and some ways forward.

  • Governing water charges design and implementation

    This chapter analyses three sets of issues that affect the governance of economic instruments for water management in Brazil: the role of information for supporting decision-making in water charges; the issue of scale for managing water charges; and planning as a tool that drives both the design of water charges and the allocation of revenues from water charges.

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    • The Paraíba do Sul River basin

      The Paraíba do Sul River basin represents an interesting case-study on the implementation of water charges in Brazil for two primary reasons: i) it was the first interstate basin in the country to implement water charges, helping to improve the legal and institutional framework for the water charges system and serving as example for other basins; ii) it presents socio-economic characteristics that deserve special attention when implementing water charges aiming at changing users’ behaviour towards greater water security, e.g. highly urbanised and industrialised area subject to conflicts over multiple-uses.

    • The State of Rio de Janeiro

      The State of Rio de Janeiro is one of Brazil’s pioneers in the creation of a water charge system and its experience is important to understanding water charges implementation. From an institutional point of view, all the conditions are in place for water charges to achieve the expected goals (e.g. technical capacity, information and monitoring system); however the state’s economic (financial crisis) and environmental (drought) health are currently barriers to implementation. As a result, there are some questions concerning the future of water charges in the state as a management instrument to enhance water resilience in a very industrialised and urbanised state.

    • The Piancó-Piranhas Açu River basin

      In the Piancó-Piranhas Açu River basin demand for water exceeds supply. Human consumption and irrigation draw heavily on available resources, which are constrained due to drought and intermittent rivers and pollution from domestic sewage. The institutional framework and governance structure for water charges in this area are under development, including strengthening stakeholder participation into the basin committee’s activities and the awareness raising around water scarcity. The São Francisco River’s water transfer project (Projeto de Integração do Rio São Francisco, PISF) is paving the way for a concrete discussion on the implementation of water charges as they would impact of user behaviour and raise revenue for water management.

    • Action Plan

      Building on a policy dialogue that aimed to stimulate a discussion about water charges and provide governments and stakeholders with means to enhance water charges uses and impacts, this Action Plan was designed to set out concrete actions and suggests champions or institutions that can lead implementation over the short, medium and long run. It identifies key steps for the implementation of the main policy recommendations and the ways forward set out in this report. The ultimate goal is to create the conditions for the effective design and efficient implementation of water charges in a shared responsibility across levels of government as well as the public, private and non-profit sectors.

    • Charging for water abstraction and discharges – A checklist

      What is the problem you are trying to solve, and over what timescale? What policy outcomes do you want to achieve and how will charges (alone or in combination with other measures) help you deliver them? Charging is just one mechanism among many that can be used to deliver sustainable water management. It is not an end in itself, and for the purposes of managing a public good it cannot operate effectively without other delivery systems. In particular, permitting systems – “command and control” regulation – are essential for effective water allocation and pollution control. But charging can also help to ensure that water users internalise at some of the costs of their activities, and, over time, change their behaviours.

    • List of stakeholders consulted during the policy dialogue
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