Water and sanitation provision subsidies : neighborhood cases in São Paulo state

Water and sanitation provision subsidies:

Neighborhood cases in São Paulo state

Stephanie Leroux Caro

Universiteit van Amsterdam

Graduate School of Social Sciences

International Development Studies

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Abstract

São Paulo, a state located in the southeast region of Brazil, presents varied socio-economic conditions. On the one hand, it is the most prosperous state in the country. On the other, it also has one of the highest rates of inequality in the country’s GINI coefficient. Additionally, it is confronted with water scarcity and water distribution issues, since this region only has 6% of the country’s water resources yet contains 43% of the country’s population (DAE, 2014).

The purpose of this thesis is to explore whether subsidies can improve access and affordability of water and sanitation services (WSS) for low-income groups. In São Paulo state, subsidies are defined as a social policy instrument used to provide access to public services for all, especially for low-income populations. SABESP, the state’s main water utility company, incorporates subsidies into its tariff structure. The tariff subsidies were expected to play an important role in increasing access and affordability to the water and sanitation services, and consequently reducing the differentiation in service provision. Yet through a qualitative study consisting of observation, actor shadowing, focus groups, and interviews, it was revealed that the majority of residential consumers benefit from this subsidy, regardless of their socio-economic conditions.

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Acknowledgements

I would like to express my gratitude to my supervisors who helped me prepare this MA thesis. To Dr. Michaela Hordjik, for her assistance in ensuring that the research effectively communicated the results that it did, to Mrs. Raquel dos Santos, who provided me with excellent and useful insights into Brazilian water and sanitation policies and problems and to Dr. Luis Sérgio Ozório Valentim, my field research supervisor, who I would like to thank for his help in ensuring my on the ground research went as smoothly as possible. I would also like to thank the University of Amsterdam for providing me the opportunity to complete this Master program in International Development Studies, and thank the various Brazilian communities and organizations who graciously offered me their time and expertise in developing the central themes of my project.

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Abbreviations and Acronyms

ANA National Water Agency

ARSESP Regulatory Agency of Sanitation and Energy of the State of São Paulo CESB State-owned Water and Sanitation Companies

CNRH National Water Resources Council CVS Health Surveillance Center

DAE Department of Sanitation and Water Resources DAEE Department of Water and Electric Energy GIS Geographic Information System

HABISP Housing for the City of São Paulo IDEC Institute for the Consumer Defense IPVS Paulista Index of Social Vulnerability MDG Millennium Development Goals MMA Ministry of the Environment MRS Metropolitan Region of Santos MRSP Metropolitan Region of São Paulo

PLANASA National Water Supply and Sanitation Plan PLANSAB National Sanitation Plan

SABESP Company of Basic Sanitation of the State of São Paulo SINGREH National Water Resources Management System

TCA Technical Community Agent UN United Nations

UNDP United Nations Development Programme WHO World Health Organization

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Introduction ... 5

1. Theoretical framework ... 9

Models of water provision ... 9

Public vs. Private participation in the provision of public services ... 10

Public vs. Private Sector Water Pricing ... 12

Subsidies ... 15

2. Context and research location ... 18

3. Research Methodology ... 30

Analytical tools for the provision of subsidies ... 35

Ethical Considerations ... 35 Limitations ... 37 4. Data Analysis ... 39 Sub-research question 1 ... 39 Sub-research question 2 ... 48 Sub-research question 3 ... 67 5. Conclusion ... 73 6. Bibliography ... 79

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Introduction

Water access and its distribution is an increasingly relevant topic given the instrumental power of water as a precondition for dignified living standards and its profound implications for livelihoods. “Essential for life, fresh water provides a powerful lens with which to examine the broader debates on the legitimate roles of governments, markets, and communities in environmental management and the provision of public services” (Bakker, 2010:15).

Safe and clean drinking water and sanitation is a requirement for the exercise of other rights as stated by the United Nations General Assembly in July 2010. The statistics for 2012 indicate that 748 million people still did not have access to improved drinking water and 2.5 billion people did not have an improved sanitation facility (WHO/UNICEF, 2014).

Water and Sanitation Services (WSS) are subject to several definitions, depending on the context, and are contingent to the understanding of improved water sources (WHO/UNICEF, 2014). The improvement of access to water and its supply for drinking refers to the type of infrastructure, which is a technical approach to water, one that does not reflect the broader scope of issues to which WSS makes reference and its implications for human health. In spite of the fact that water and sanitation are closely interrelated, sanitation does not have the same priority as water because of insufficient public funds, absence of appropriate technical solutions and the difficulty of shared responsibilities and maintenance of WSS facilities (Isunju, Schwartz et al. 2011).

The challenges of WSS are growing given the increasing world population and its high density (Sophocleous, 2004) and overcrowding in the cities in the Global South. The demand for fresh water provision continues to grow, and the often unequal drinking water allocation in cities in the global South has profound implications for the lives of low-income groups in these cities. The inadequate provision of water and sanitation is related to “land tenure, housing security, the regulation of rental markets, environmental rights and responsibilities, the political basis for community organization” (McGranahan, 2006: 18) among other factors.

Water and sanitation utilities are often run as public entities; however, private participation is greatly increasing (McGranahan, 2006). Also, a mix of private and public participation schemes exist. The supporters of the privatization of WSS maintain that the private sector has the capacity to resolve failures affecting public WSS utilities, including the lack of provision for the urban poor. Conversely, private involvement is seen as prioritizing profits

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and economic efficiency, while the state concentrates on securing supply (Bakker, 2010). Certain strains of thought consider that water governance must be structured on the principle that water is a common good, while others strains argue that water must be conceived as an economic resource.

The topic of water access and distribution is particularly relevant in Brazil, a country with an abundance of natural resources and which is home to 12% of the world’s fresh water reserves, but which, nevertheless, has one of the highest inequality indicators in the world, with a 52.7 GINI index for 2012 (World Bank). The inequalities in São Paulo, located in the southeast of Brazil, are accentuated by environmental problems caused by water stress, given its high population density, water pollution, and drought and flood events which generate water scarcity. On the one hand, there is an increasing demand for access to water-related services, which are under pressure from commercial groups, industry groups and the elites; and on the other hand, as Bakker noted for Southern cities in general, the basic needs of the urban poor are not being met: “…for the urban elite, water supply is often relatively abundant and relatively cheap, but for the urban poor, the scarcity of potable water is a daily hardship” (Bakker, 2010:27).

Water provision, sanitation, and access to electricity can play a catalytic role in poverty reduction and improvements in living standards, health and productivity (Komives, 2005). Subsidies play an important role, since they facilitate the access and use of services, such as water and sanitation, to low-income households, and serve as an enabler for redistribution by increasing purchasing power. Consumer utility subsidies play a role in reducing the disparities in access to infrastructure between income groups and countries (Komives, 2005).

While the economic and social policy literature suggests that utility services subsidies should benefit low-income groups as their main goal, they do not delve in to whether there is a correlation between the criteria to allocate subsidies and the targeted population. Most of the literature addresses subsidies from the quantitative approach, by examining if subsidies have an effect in contributing to access services for low-income groups, but not if the subsidies are assigned accordingly. There are few studies that touch upon the subject of low-income communities’ access to water and sanitation in São Paulo. Gutberlet & Hunter (2008) addressed the topic of social and environmental exclusion through longitudinal studies of the unbalanced urban development in São Paulo. However, although water and sanitation are part of the basic infrastructure assessment, they are not the focus of this study. The closest significant study on this topic was written almost three decades ago, and addressed community mobilization strategies to obtain WSS in previously

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excluded areas (Watson, 1987). This current study aims at contributing to the body of literature related to policy design of consumer utility subsidies, especially for countries with high inequalities, to enhance the understanding of the effect of subsidies design for low-income groups.

The effects of subsidies deserve research attention, especially in a country as rich in natural resources as Brazil, and more specifically a region and a state with high inequalities and water allocation disparities. This thesis examines whether subsidies contribute to the accessibility and affordability of water and sanitation services for low-income households.

This research explores water and sanitation subsidies from a qualitative perspective, using three angles to approach the study of subsidies in the two neighborhoods in the state of São Paulo focused upon: the interlinked public and private sector interactions and the social and economic competing goals of the water company through the tariff subsidy component; through the spatiality and temporality analysis of water and sanitation provision; and the analytical lenses of inclusiveness, relevance and effectiveness.

From the first angle, the intertwined roles of the public and private sector (Bakker, 2010) are explored in the provision of water and sanitation services. SABESP, the main water and sewage company in the state of São Paulo, has private and public participation. SABESP’s subsidies are internal, meaning that they are embedded in the tariff structure. This is known as a cross-subsidy, and implies that the subsidies are included in the tariff structure by the compensation of different user categories; the overall balance is what prevails in this type of subsidy. SABESP does not receive funding for its subsidies from the government; instead it has to pay back to pay the state, as it is one of its shareholders.

The first research question explores how the specificities of SABESP interplay in the provision of WSS, specifically for the low-income population. Bakker and Kooy (2008) suggest that there is a governance failure; it does not depend on the ownership of urban water supply provision but rather on the interaction between public and private participation. Nevertheless, either private or public, it is difficult to conceptualize the provision given that water access has both a market-driven logic and human rights aspect. Also, in Brazil, water has an economic value and this is reinforced by the Dublin Principles. This research examines SABESP’s tariff structure components from the interaction of both private and public participation.

The second angle examines the spatiality differentiation of WSS. Statistics about water and sanitation services coverage usually hide the disparities in the provision, which is also

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limited by the lack of subsidies allocated to those who need it. The Millennium Development Goals (MDG) progress tracking does not address spatial inequalities within the country (and even less within a city) in the provision of water and sanitation (Satterhwaite, 2012; McGranahan, 2006). Moreover, these indicators are mostly technical, and are assessed statistically rather than qualitatively. Given the aim of this study to explore water and sanitation provision inequalities, the spatial characterization (homogeneity and heterogeneity) including Bakker’s theory of archipelagos and the temporality will be analyzed in the focus neighborhoods.

The third angle applies an analytical tool to examine how the services and subsidies are indeed serving the low-income areas through the instruments of inclusiveness, relevance and effectiveness.

The thesis structure is as follows. In the first chapter, the theoretical framework examines the models of water provision, the public and private participation in the provision of public services, public and private sector water pricing, and finally subsidies. It presents the analytical tool used to examine services and subsidies. In the second chapter, it presents the broader contextual overview of Brazil’s water governance, followed by the incorporation of private participation in to the provision of water and sanitation services. In the third chapter, the methodology used in the research is explained. In the fourth section, the research questions are examined based on the empirical information. Finally, the conclusions of this research study are presented.

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1.

Theoretical framework

This section presents the main concepts of this research. First, models of water management in cities are examined followed by an examination of water pricing, in connection with the private and public domain. This is then followed by an overview of the low-income group’s ability to pay for water and sanitation services. Finally, subsidies are examined, and an analytical tool to analyze them is formulated.

Models of water provision

Bakker (2010) identified three models of water management in cities, namely state, private and community-run/self-driven.1 _{These models refer to water supply systems led}

respectively by the state, private and community-run/self-driven provision. Emphasis is placed on the state and private models, since they are the most predominant. All models, especially state-led and privately run water supplies, present failures (Bakker, 2010), as is demonstrated by examples of both successful and unsuccessful results of these models of water management in cities. Market failure refers to the instance where markets cannot allocate goods and services efficiently. State failure denotes those occasions when governments are less productive, efficient and effective compared to markets. Bakker (2010) argues that the central thesis of the debate is not focused on the formal water supply networks but rather on the governance of the actors involved in urban water supply (Bakker, 2010).

In this context, and for the purpose of this research, the definition of privatization is as follows: “Privatization is a process of expansion of the market that creates new property relations, and in so doing, generates new society-nature relations. As such, it is inherently ideological and not solely technical” (Bakker, 2010:30).

One of the main difficulties in defining the scope of public and private models of water provision is based on the fact that water itself is not purely defined as public or private. Instead is taken as both a public good and human right, but with an economic value. Water is frequently defined as a public good. Often, this terminology is not precisely defined because it refers to several concepts. The “non-substitutable” component of water indicates how essential it is for life and its critical implications for public health, but the “public” element makes reference to its collective importance (Bakker, 2010).

Water and sanitation was, however, also declared as an essential human right through consensus in a UN resolution2 _{in 2010. The acknowledgement of the human right to water}

1_{“Community-run” and “self-driven” (Bakker, 2010:22) refers to individuals seeking their own solutions in}

circumstances where governments are unable or unwilling to provide the services

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includes legal entitlement to this resource, and deals with availability, quality, accessibility and affordability.

From an economic point of view, water is not seen as a public good. A public good is defined as non-rivalrous, non-excludable and non-rejectable (McGranahan, 2003: 10). Therefore, water consumption is not seen as a public good, since it can be considered exclusionary to some degree. Other economists and social scientists conceptualize water as a common-pool resource, which is non-excludable, but each individual’s access to this resource diminishes its benefit for other individuals. In the “Dublin Principles” of 1992, water is defined as an economic good. It was acknowledged for its economic value and competitive uses, and the economic and environmental costs implicit in the production of water for human consumption. The state can guarantee or support provision, depending on whether the country has ratified the Dublin Principles and the enforcement of water and sanitation service provision. In some cases, the access to these services is defined as the goods that people have a right to, independent of their ability to pay (Rogers et al., 2005).

These contrasting views of water provision can be summarized as follows: “More generally, a human rights approach tends to emphasize legal frameworks and issues of discrimination, participation and accountability, where a narrow economic approach tends to emphasize institutional structures and issues of choice, efficiency and mutual gain.” (McGranahan, 2003: 13)

One of the main arguments raised by Bakker (2010) is the conceptualization of how a public good, such as water services, is commercialized to customers, as opposed to using a more subsidized approach of service distribution to its citizens that takes into account social goals: “Accordingly, the calculus of profit maximization - which at times leads to the prioritization of efficiency over other goals - becomes central to water governance” (Bakker, 2010: 5).

Public vs. Private participation in the provision of public services

This subsection addresses the arguments both in favor of and against public and private participation in the provision of public services. It deals with issues pertaining to public vs. economic goods, state vs. private failure, the non-private intervention in environmental services vs. the marketization of nature and the comparative performance of private vs. public sector. The different competing claims of the public and private models and their discourses are reflected in their interaction in providing water and sanitation services. According to Budds & McGranahan (2003), the arguments favoring public sector involvement in water provision are based on the conceptualization of public goods and the

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capacity to regulate natural monopolies. The arguments supporting private sector provision are based on the conceptualization of economic goods and state failures. First, the arguments favoring public sector management for WSS suggest that even if urban water, drainage and sanitation networks can provide important public collective benefits, they are not purely public goods. The “non-substitutable” component of water indicates how essential it is for life and its critical implications for public health. Second, governments can avoid natural monopolies over water resources.

The arguments developed in favor of private involvement are founded on the definition of economic goods, where water and sanitation can be conceptualized as a good that can be assigned a price. First, residential water supply and residential sanitation are classified as a “consumer goods,” as part of a commodity or private good, and not as a public good (UNESCO, 2006). From a political perspective, this is controversial, as many low-income users are not willing to or cannot pay for its use. Second, governments are often unaccountable or unresponsive to the demands of citizens for WSS (Bakker, 2010). Water privatization involves many controversies, since it reflects disagreements over the state-market relationship and the “marketization of nature.” This debate is focused on aspects of coverage, ethics and environmental concerns (Bakker, 2010). First, those who are opposed to privatization argue that profit-driven management will not bring on changes in water supply access. The universal provision of water can only be accomplished through public sector ownership and management, as the private sector does not have the capacity to universalize the provision of water given that a large proportion of unconnected users have a limited ability to pay. Second, it is unethical to seek profit with a resource that is vital for life, the ecosystem and human dignity.

The arguments put forth by the promoters of the privatization of water, and their opponents, who focus on environmental factors, are as follows (Bakker, 2010). First, privatization supporters consider that commercialization leads to the environmental conservation of scarce resources through higher prices and the encouragement of rationalization. However, it is questionable whether the establishment of a market mechanism will effectively integrate environmental externalities through pricing. Conversely, those who are against water supply privatization maintain that private company involvement will not necessarily safeguard environmental health, dignity and well-being through an improvement in environmental quality (Bakker, 2010).

Two approaches regarding the comparative performance of public vs. private provision are presented by Bakker (2010). The first maintains that, independently of whether water management is publicly or privately owned, it does not affect management outcomes.

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The public administration literature suggests that the legal status of a public service provider is not related to its service delivery performance (Bakker, 2010; Batley, 1996). The second position maintains that the ownership, either by public or private body, has an influence on the performance and impact in relation to the water company. According to this approach, private sector involvement improves performance through greater efficiency and cost recovery, enabling additional sources of revenue or higher connection rates for low-income households. The counter argument claims that successful privatization outcomes apply only to the best performing companies. Some suggest that private sector involvement affects performance negatively through increasing the cost of capital, diminishing long-term investment in maintenance and replacement, increasing corruption, or decreasing affordability due to rate increases (Bakker, 2010).

Budds & McGranahan (2003) discuss the scale and the nature of private sector participation in the water sector, and how it involves and mobilizes private investment. First, the private sector usually gets involved in WSS through the competitive bidding process. However, bids rarely focus on improving services in low-income areas. This competitive process tends to overlook the need to consult with local stakeholders and the incorporation of mechanisms favoring underprivileged groups. Second, most of the financial resources for water and sanitation resources in the low and middle-income countries continue to be provided by the public sector, international development assistance programs and users. Third, WSS privatization has increased, especially in Latin America. Generally, the private sector has its own criteria regarding viable commercial opportunities and market conditions, and their definition is not necessarily aligned with that of the international development community.

Additionally, those favoring privatization cite the tax and efficiency benefits. Governments will reduce public expenditures for this provision, supplementing it with private capital, and increase the efficiency of water utilities via private management. These financial and efficiency elements are often related to the argument favoring low-income groups, since they will benefit by having increased access to water supply.

Public vs. Private Sector Water Pricing

This subsection addresses the arguments both in favor of and against public and private participation in providing water and sanitation prices.

As presented above, the duality of private and public participation and the respective market vs. state failure does not reflect the complexity in the water and sanitation services provision, given the difficulty of conceptualizing water in these areas. Water has an economic value, as specified in the Dublin Principles, and has a public/collective importance and it has been recognized as a human right.

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Defining the value of the use of water and water pricing is a complex process, since water is essential for life and has a social, economic and environmental value (Garcia, 2007). Setting water tariffs should take into consideration both customer and supplier expectations. While consumers desire high quality water at constant and affordable prices, the supplier wants to cover costs and ensure stable revenue. (Rogers et al., 2002) Water provision is much more cost-effective and direct in comparison to sewerage, the provision of which is more complex and expensive. An important difference is that water provision generates private benefits. This makes it more attractive for water provision companies and easier to charge for based on household consumption. Also, water provision is subject to a higher demand compared to sewer systems (McGranahan, 2003).

Those supporting public sector involvement argue that the government, through democratic political processes, addresses social needs, while neoliberal advocates believe in the importance of business for social functions and economic development (Budds, McGranahan 2003). Those who favor private sector involvement in the provision of services argue that the state fails to invest adequately in infrastructure in low and middle-income countries (Bakker, 2012).

Governments have introduced water supply management reforms to address these difficulties. For instance, they have increased commercialization through the implementation of cost recovery programs, privatization through the adjudication of private sector contracts, and liberalization of governance through major water sector reforms. The privatization of water supply utilities often implies the introduction of a legal framework advocating cost recovery, the definition of water as an economic good, and establishing the conditions for the emergence of water markets.

One of the strategies used in pricing and tariffs is cost recovery. Cost recovery is usually based on the payment of the full cost of water and sanitation utilities (i.e. installation, consumption, maintenance) by individual households. However, market logic is difficult to apply in the context of low-income groups, since they are unlikely to be able to afford to pay the full cost: “Cost recovery through user fees can be problematic when the full cost exceeds a low-income group’s ability to pay” (McGranahan, 2003: 26). The market logic of water and sanitation services is to invest if it will be economically sustainable and will provide a return. However, “when regulators are responsible for pricing, they can decide how best to ensure access for low-income groups without compromising operators’ required returns” (McGranahan, 2003:26). In this scenario, many people will agree that subsidies are needed for low-income groups, either through payments to the network provider or indirectly through subsidizing low-income users so that they can pay for the services themselves (McGranahan, 2003).

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This subsection addresses the arguments on the ability to pay for water and sanitation for low-income groups.

According to Rogers et al. (2002), equity, efficiency and sustainability are important conceptual elements for water tariffs, since “water consumers should perceive the tariff as fair, rates must be equitable across customer classes, the price must maximize efficient allocation of the resource” (Rogers et al., 2002). However, its implementation is politically difficult.

While most of the arguments on water prices claim that reducing them improves equity to water access, Rogers, Silva et al. (2002) mention that higher prices can generate equity because water utilities can expand their services to unserved customers, and thus reduce the dependency on water vendors, who trade water at extremely high prices: “There are clear examples that water pricing can improve the distributional equity for the poor in many settings” (Rogers, Silva et al. 2002). Furthermore, given the increased pressure on water as a natural resource to supply to an ever-growing population, it is argued that higher prices can limit its consumption and ensure that everyone has access to this necessity.

According to McGranahan (2003), there are three related considerations regarding the ability of low-income groups to pay for water and sanitation. First, low-income groups pay a higher amount for water, but often it is for proportionally smaller quantities that are mostly used for drinking purposes, which are often complemented with other sources. Second, informal markets providing reliable water and sanitation services respond in a more efficient and responsive way. Third, low-income groups are constrained by their limited income to pay a high fee for water consumption.

The provision of WSS to low-income groups can be understood from different perspectives. Certain argue that providing water to the low-income groups implies satisfying a market that does not have viable customers (WaterAid, 2010). Among the obstacles for serving low-income households are, first, their difficulty in affording high connection costs given their constraints in obtaining loans, and secondly, their inability to appeal in cases of disconnection because of the cost of procedures involved and, finally, the majority of the urban poor live in informal settlements, which usually do not have property rights (McGranahan, 2006). In contrast, the low-income household segment constitutes a potential opportunity, since it is currently a financial loss-maker for water companies (Uwejamomere, 2011). Thus, financial losses could be reduced if the low-income segment is regularized with the network.

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Most of the literature that emphasizes WSS from the provider’s perspective sees them as directly responsible for services provision. However, as McGranahan (2006) stated, the low-income groups located on the demand side have the capacity to raise their voice, can exercise their power to demand water and sanitary improvements, and are interested in water company expansion strategies. “Pro-poor water governance is usually facilitated by, if not dependent on, poor groups gaining more power and influence, either through representative political structures or through more direct participation in provision - whether in planning, installing, managing and/or monitoring provision” (McGranahan, 2006: 15). The urban low-income group’s ability to exercise pressure is subject to the degree of responsiveness by both governments and providers.

The conceptualization of water as an economic good sets the context for the implementation of subsidies as a direct or indirect enabler of low-income groups for water provision. Within market pricing mechanisms, subsidies are important for ensuring the accessibility and affordability of WSS. The importance of subsidies is their instrumental capacity to fulfill one of the necessary steps for the human right to water and sanitation, especially through increasing accessibility and affordability. According to UNDP, the cost of water should represent a maximum of 3% of household expenditure (OHCHR, 2010).

Subsidies

This subsection covers the definition of subsidies, followed by their objectives, dimensions, funding and the various types of subsidies. The creation of public services prices includes several objectives, and subsidy is one of them (Komives, 2005).

Subsidies serve different purposes. One of the main motivations for the implementation of consumer utility subsidies is the role they can play in reducing the disparities in access to basic infrastructure, between countries and income groups (Komives, 2005).

Theoretically, subsidies are provided as a motivator to compensate for the disparities in basic infrastructure services between and among countries by making them more affordable. Furthermore, subsidies act as a redistribution mechanism for expanding coverage to low-income households (Komives, 2005).

The importance of the subsidies is based on the effectiveness of reach and distribution of resources to low-income groups. One of the arguments for utility subsidies is that they are efficient instruments for expanding coverage and ensuring access for low-income households, while others argue that they are a social policy, acting through a redistribution mechanism (Komives, 2005).

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Utility service subsidies are prevalent in the water supply, sanitation and electricity sectors. The implementation of subsidies is of considerable importance to national economies, households, and to low-income households in particular.

Funding of subsidies

The implementation of subsidies is different per country and per region. Subsidies can be provided by the government, by other customers or not funded external actors at all. The governmental subsidies can be channeled in different ways, such as to the utility company, which will disburse the subsidy to the specific beneficiary, through a cash payment to the beneficiary household or via governmental financial support using grants, tax credits, exemptions, support for research and development (among others), which will be reflected in the reduction of the service fee. The disadvantage of the governmental subsidies is that they depend on the state’s ability to provide funding (Komives, 2005).

One common way to fund subsidies is through cross-subsidies. These types of subsidies are popular, because they allow the water company to reach cost recovery without depending on government transfers. However, it also entails a risk, since it is not always feasible to reach a balance between subsidy recipients and subsidizers. If they remain unbalanced, the subsidies become economically unfeasible. The cross-subsidy system is managed within the water company through the use of an internal tariff mechanism, which serves as their core tool to enable subsidies. The profits made off some customers are used to compensate for the losses in other parts of the subsidy structure.

Types of subsidies

Among the different types of water subsidies that exist, there are the block tariffs, the social tariffs and the banded charges fixed tariffs (McGranahan, 2003).

One of the most common tariff structures is the rising block tariff. A rising block tariff consists of a lower tariff, which is levied for a specific amount of water to cover basic needs, after which the rate increases for each additional volumetric block of water used. In this case, the additional consumption finances the first block. In theory, the rising blocks combine social, economic and financial objectives simultaneously. However, in practice, the implementation of the rising block tariff requires meters and, since low-income groups often do not have in-house connections, they cannot take advantage of this subsidy. Therefore, the middle- and the upper-income classes are often the ultimate beneficiaries. Under these fixed structures, or minimum consumption levels, the highest unit prices are paid by those who have the lowest consumption levels. Furthermore, it was mentioned that diminishing the first block is often part of the ongoing debate in policy circles.

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However, it is maintained that doing so would have a very limited effect on the target performance of consumption subsidies (McGranahan, 2003).

Second, the social or welfare tariff sets a low charge for low-income households at a specific flat rate, and is financed via cross-subsidies from high-income households. They are usually implemented when meters have not been installed.

Third, banded charges fixed tariffs, which are cross-subsidies allocated according to the socio-economic status of the geographical zone. It has some constraints, such as the complexity of defining socio-economic status across a city. Efforts to overcome this problem have been made and some techniques have been developed, such as taking into account the type of materials used for house construction as an indicator of socio-economic status.

A fourth tariff, the lifeline tariff, consists of a limited first volume of water, provided free of charge. Nevertheless, its implementation can constrain the unserved households that are more marginalized, as lower revenue generation may prevent the utility from providing new connections (McGranahan, 2003).

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2.

Context and research location

This context chapter addresses three main topics, following the same overarching elements presented in the theoretical framework. It starts from the broader context of water governance and then extends to subsidies, which are the main object of study. Finally, it presents the research location.

First, it presents a brief overview of Brazil’s water governance, and more specifically that of São Paulo, making reference to the governance structures and the interaction of private and public water management models. Second, it presents the development of tariff policies and subsidies. Finally, public services subsidies are addressed.

Water Resources Management

The first section describes water governance, which is divided into water resource management and basic sanitation. First, it presents the regulations that govern these sectors, and also deals with the water related institutions in both sectors. Then the emphasis is placed on national basic sanitation, with a brief historical overview followed by a description of the private and public participation over time. It concludes with an examination of São Paulo’s principal water company.

Laws

Brazilian legislation in water resources originated in the Water Code of 1934. This national regulatory framework was later revised in the National Water Resources Management Act of 1997.3 _{This law had implications for the conceptualization of water, for the creation of}

water related institutions and laws, and for the decentralization of water management. Water was now conceptualized as a public good, a finite resource and with an economic value, reflecting the Dublin Principles (Benjamin et al., 2005).This is important, since it incorporated the definition of water as a public good with an economic value.

The promulgation of the National Water Resources Management Act established the National Water Resources Policy (PNRH), which aimed at creating guidelines and public policies to improve and administer water supply both in quantity and quality. It also created the National Water Resources Management System (SINGREH), which is an instrument that gathers information regarding the availability of the country’s water resources. The National Water Agency (ANA) implements the National Water Resources Policy and the National Water Resources Management System, and regulates it according to the law of 1997. Some of the most important regulatory aspects consist of granting the rights to the use of water resources, charging for the use of the water, and oversight to

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ensure that water management bodies are using water in a rationalized manner. Furthermore, ANA carries out actions in management support, monitoring and planning for water resources and their performance, as well as the water resources plans and the classification of water bodies according to the their uses.

Water related Institutions

The national organizations related to the National Water Resources Management System are the Ministry of the Environment (MMA) which formulates the National Policy, and the Ministry of Planning and Budgets (MPOG), which coordinates water resources policies. The National Water Resources Council (CNRH) is responsible for the coordination and monitoring of policy implementation, and it is subordinate to the SINGREH (Indij & Domas, 2013). The Ministry of Cities is responsible for the coordination of sector policies, which are implemented by various ministries (such as the Ministry of Health), which handles certain issues regarding sanitation. The National Water Supply and Sanitation Policy was approved by the Council of Cities, and it identified steps, among which the most important are the institutional separation of the service providers and regulators and the development of a financially sustainable pricing schemes, including subsidies for the low-income groups (Alburquerque, 2001).

Given the devolution of authority of water management, municipal actors attained an important role, and related institutions were created at this level for this purpose. In São Paulo State, the main water related institutions are the Department of Water and Electric Energy (DAEE) and the Department of Sanitation and Water Resources. DAEE is the governing body for water resources in São Paulo State, and implements the Water Resources Policy in the State of São Paulo, as well as the Integrated Water Resource Management Plan which is the decentralized territorial planning and management of operations through units for water resources management4_{. The Department of Sanitation}

and Water Resources’ mission5 _{consists of the planning and executing of the state’s policies}

dealing with water resources and basic sanitation.

Regarding water and sanitation regulation, ARSESP is the agency responsible for the

regulation, control and monitoring of sanitation services, piped gas and electric power from the concession contracts in this state. The mission of this regulatory agency is to ensure financial balance and the improvement of public services based on the principles of quality, efficiency and fair tariffs (ARSESP, 2014).

4 _{They are coined as UGRHIs (Unidades de Gerenciamento de Recursos Hídricos).}

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National Basic Sanitation

The National Water Supply and Sanitation Plan (PLANASA) was the first Brazilian government initiative in water and sanitation, which dates from 1968 (Albuquerque, 2001;

Lucena, 2006). It was financed by three newly created institutions: the National Housing

Bank, which lasted until 1968. Its management was then handed to a Brazilian bank, Caixa Econômica Federal, the Employment Guarantee Fund, and 27 state-owned water and sanitation companies (CESBs). In 1971, State Water and Sanitation Companies (CESBs) were created in all the Brazilian states. The CESBs are mixed economy companies that have a municipal grant, and have a monopoly over the administration, operation, maintenance, and construction of water and sewage services, and rely on the tariff as the basis for their operations, covering both the operational costs and the extension of the system. Before PLANASA, the municipal bodies were responsible for the implementation of these services, either through direct administration or via autonomous services. Subsequently, water supply and sanitation faced the challenge of a lack of funding and lack of enforcement of the regulatory aspects, and it had many institutional and structural deficiencies. It also lacked a clear financing plan to improve low-income coverage, which used to be carried out by municipal companies (Lucena, 2006). From 1964 until 1985, the authoritarian dictatorship took power, but they did not alter the structural components of the sector (Alburquerque, 2001).

Favorable economic performances between 1971 and 1984 contributed to the viability of the system and to the expansion of service coverage. PLANASA was able to attain expansion of coverage, but it was unequal in nature, investing more in richer regions (UN-HABITAT, 2010). Furthermore, the investments were concentrated in water services rather than sanitation, since they required less investment and provided faster economic returns. PLANASA was suspended in 1990. The lack of funding and the democratization process contributed to its decline. The inability of state governments to pay their loan obligations for water and sanitation investments raised difficulties in the financing of state water companies, along with the process of democratization contributing to the delegation at the local level and the search for private concessions. In this period, the state governments adopted different strategies, such as granting concessions to the private sector, opening the company’s capital to private investors and contracting the management of the system to local private operators, which focused on privatization (Lucena, 2006).

The National Basic Sanitation Plan6 _{came into effect in 2007, and outlined the national}

policies in the sector, as well as the roles of the different bodies involved in the planning

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and execution of the federal basic sanitation policy (Albuquerque, 2001). Basic sanitation was clearly defined and included water supply, services and infrastructure facilities, sanitation, solid waste management and drainage of urban rainwater (MMA, 2014). This

legislation included the regulatory functions and the regulatory agencies, of which ARSESP

is one example. The policy tariff regulation is one of the most important aspects of the

regulation of public services, since it takes into account the profitability for investors and the safeguarding of the interests of consumers, where ARSESP is the responsible entity

for the state of São Paulo

The most recent development in this sector is the National Sanitation Plan (PLANSAB), with the goal of reaching universal access to drinking water and sanitation in urban areas by 2023 and 2033 respectively.

Decentralization

Brazil’s water governance went through reforms after the country’s return to democracy in the 1980’s. From 1985 to 1989 it shifted to a decentralized system, where the state, municipalities and civil society share equal representation in water basin committees and urban water management bodies. The transition to democracy, along with the reduction in federal funding, contributed to the decision of states and municipalities to devolve services to the local level. The new constitution of 1988 assigned the municipalities the responsibility of organizing and providing directly, or through concession permissions, the public services associated with water7 _{(Lucena, 2006).}

The Public Services Concession Law8 _{was approved in 1995, which provides for the}

concession contracts, and stipulates the financial balance principle in order for companies to achieve economic sustainability.

The decentralization scheme introduced in the National Water Resources Management Act of 1997 impacted both water resource management and basic sanitation through the granting and allocating the use of the water rights.

Regarding water governance, the river basins became the main tool to regulate water use and for planning and policy implementation. It introduced a decentralized management and participatory approach to water resources (Indij & Domas, 2013). This shift from a hierarchical and government controlled approach to a more participatory approach empowered formerly excluded actors and modified the decision making process. Although

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the water sector has increased the number of players and evolved to a more participatory approach, the technocratic actors still dominate the decision making processes for water management, and important decisions take place outside these established bodies. As such, power inequalities persist (van den Brandeler, 2014).

In this decentralization scheme included the right of access to water and the delegation of authority to municipalities. This act provided the right to grant access to water through concessions of the watershed in WSS, including water catchment, water disposal and the use of water to generate energy (Novoa, 2005). The municipalities can choose to provide the service themselves or to delegate the service to state companies. This deregulation process provided for the expansion of private sector involvement in providing basic services and infrastructures (Novoa, 2005). The majority of municipalities have chosen to delegate the responsibility to a state company, and in the state of São Paulo this is SABESP.

Companhia de Saneamento Basico do Estado de São Paulo (SABESP) was founded in 1973, and was the result of the merging of publicly- or state-owned companies for water supply and sewage collection and treatment, as part of the implementation of PLANASA. This company provides water and sanitation to 59% of the population in the state of São Paulo, serving 363 of the 645 municipalities in São Paulo State. It provides 28.3 million people with water access and 22.2 million with a sewage services (SABESP, 2014). The Companhia de Saneamento Basico do Estado de São Paulo, (Company of Basic Sanitation of the State of São Paulo-SABESP) is 50.3% owned by the government and 49.7% is capitalized privately. Since 2002, SABESP joined the stock markets in both São Paulo and New York.

The increasing private sector involvement in the provision of the water and sanitation services highlights the competitive market driven logic. Even if the water company is, for the most part, publicly owned, it is evaluated by their revenue generation and their share value on stock markets. The water company should fulfill both the goal of universal access to water, being democratically accountable and committed to the public’s well-being, all the while achieving economic viability with a resource that has economic value.

The orientation of this chapter leads to the focus of the research by presenting how the presence of private and public roles in WSS, through SABESP, are reflected in the public services subsidies structure, and the effect of its implementation on low-income group access to water and sanitation services.

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Water and sanitation tariff policy and subsidies

The examination of subsidies will be central to the analysis, since in a country like Brazil, being known for its persistent socio-economic inequalities, they are expected to play an important policy role in reducing inequalities, especially in São Paulo, given its growing population and the high levels of inequality.

This section presents the tariff policy and pricing notions for water and sanitation services in Brazil. First, the introduction presents the conceptualization of water and its economic value. Secondly, the respective laws for pricing in relation to the low-income groups will be mentioned. Third, the current tariff subsidy of SABESP water company will be presented.

SABESPs subsidy is defined according to the national decree9 _{of 2010}10_{as the economic}

instrument for social policy to ensure the viability of the maintenance and establishment of public services, with the objective of providing for the universalization of the access to water and sanitation, especially for populations in low-income zones. Given the decision to charge for water use, subsidies became an essential tool for the provision of services to low income groups.

Second, the origins of the tariff prices for public sanitation services are based on the

decree11 _{of 1978. At the time of PLANASA, it was thought that having only one water and}

sanitation company would generate economies of scale, which in turn would make WSS operations in all municipalities sustainable, by compensating those that had more resources, which could then be used to compensate the poorest municipalities

(Albuquerque, 2001). SABESP’s tariff origins are based on this national decree, in which it

compensates between users from commercial and industrial categories, with the assumption that they have a higher purchasing power, and pay the water and sanitation tariff above the average cost tariff (Albuquerque, 2001), to then subsidize residential consumers. The cross-subsidies are currently implemented by SABESP. However, this system has encountered difficulties, since the amount of people who are able to subsidize has not always been sufficient to cover subsides for lower-income groups (Alburquerque, 2001). From the Brazilian legal perspective, judicial arguments maintain that this is not permitted, because there is a transfer of resources between consumers. Nevertheless, this cross-subsidy is clearly present in water and sanitation sector in Brazil (Alves, 1998).

10 _{This law is a follow up on the National guidelines for basic sanitation (Law no11.445, de 5 of January of}

2007).

11 _National

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The decree of 1978 refers to the socio-economic aspects of water and sanitation tariffs. Pricing faces the challenge of dealing with the tensions among the goals of productive efficiencies, distribution and allocation efforts (Albuquerque, 2001). Article 10 of the 1978 decree12 _{stipulates that the services should be accessible for the whole population,}

including low-income groups, and that the tariffs should be aligned with the purchasing power of the population, based on compatible mechanisms that can help fulfill social objectives. Article 11 specifies that the tariffs should be differentiated for various user categories and their various consumption levels, while ensuring those that have a lower purchasing power and small consumption levels will indeed benefit from the subsidy. Also, it specifies that the minimum consumption is ten cubic meters per month for the residential category.

Despite this decree, in Brazil there are no general rules or guidelines at the national level for water and sanitation tariffs, and specifically nothing referring to the determination of social inclusiveness mechanisms for low-income groups via the tariff subsidy (Special Rapporteur on the Human Right to Water and Sanitation, 2013). This lack of unified criteria at the national level is the reflection of the constitutional characteristics providing municipalities with the responsibility for water and sanitation, and as a consequence, each municipality can set the prices independently. This means that they do not have defined standards or rules for establishing social tariffs. This lack of a unified view creates discrepancies between different municipalities, since they cannot ensure financial accessibility for all individuals (Special Rapporteur on the Human Right to Water and Sanitation, 2013).

Third, water and sanitation tariffs and subsidies cannot be separated in SABESP’s tariff structure, since subsidies are integrated in the tariff within the cross-subsidies scheme. As part of the cross-subsidies mechanism explained above, the compensation to reach a financial balance is done by the subsidizers, commercial and industrial consumers, who subsidize residential consumers.

Water and sanitation users are categorized according to the state decree13 _{of 1996 as}

residential, commercial, industrial or public. SABESP allocates the tariff subsidy only to the residential category. For the purpose of this thesis, the residential category is the one that will be examined. The residential category consists of three segments - social, favela and normal residential tariffs.

12 _{National decree 82.587/1978. It was later revoked and incorporated in the 5.9 decree of 1991} 13

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The criteria to be registered under the social tariff are as follows. First, users living in a family unit should fulfill one of the following requirements: 1) Family income should be up to a maximum of three minimum wages; 2) Live in a subnormal agglomerates14 _{with a}

constructed area of maximum 60 m²; 3) have a maximum energy consumption of 170 kWh/monthly; 4) be unemployed (having received a last salary of up to three minimum wages). The unemployed tariff benefit can be received for a maximum period of 12 months and cannot be renewed. If users live in collective housing, then their housing should be categorized as social residence or vertical type of housing.

The Public Services Concession law of 199515 _{specifies an important component of this}

tariff policy in Article 13, which states that the rates can be differentiated according to the specific costs for different user segments. One of the most important elements of the subsidies, which will be further developed in the empirical chapter, is to examine if the target beneficiaries (low-income groups), are indeed subsidized.

Research location

This study has identified São Paulo state as the research location because first, despite being the most prosperous region in Brazil, it has significant social and economic inequalities. For instance, 30 percent of its population lives in slums. Second, this state faces major environmental challenges, namely water scarcity, water stress, water pollution, droughts and flood events, which are accentuated by climate change. Third, it is continuously challenged in providing water provision in the context of the constant urban expansion experienced the largest city in South America: “the most acute expression of the world’s water supply problems is now in urban areas: severely degraded water resources, highly inequitable access, and a scarcity of fresh, safe, reliable water” (Bakker, 2010: 82).

The research focused on the Greater Metropolitan Area (GMA) of São Paulo, which is made up of the regions of São Paulo, Campinas, Baixada Santista, Vale do Paraíba and the North coastal regions, in an area of 52 thousand square kilometers. The GMA holds around 31 million people, which represents 75% of the state’s population, and 16% of the country’s population. The GMA comprises the major economic and industrial driving force of the country, since it accounts for 83% of São Paulo’s state GDP and 28% of the country’s GDP (DAAE, 2013). The continuing growth of the population, combined with the constant expansion of the agricultural irrigation and industrial sector, has resulted in an increasing

14_{Subnormal agglomerates was coined in the 2010 census for the areas which were previously called irregular}

settlements, or more popularly called favelas.

15

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demand for water, which needs to be satisfied. In the GMA, human consumption amounts to around 49% of the water supply, irrigation to 20% and industrial use at 31% (DAAE, 2013).

The research focused on two areas of the state of São Paulo, the Metropolitan Region of Santos (MRS) and the Metropolitan Region of São Paulo (MRSP). The Metropolitan Region of Santos has a highly densely populated area hosting 1.7 million people, which is the third largest population in this state. The Metropolitan Region of Santos is a coastal region with a flourishing tourism industry, and home to the largest port in South America. This region faces an enormous housing challenge, given that most of its territory has an irregular topography and consists of large environmentally protected areas (Emplasa, 2012). The Metropolitan Region of São Paulo hosts the major national wealth hub, and is the most populous region, hosting around 20 million people, divided into 39 municipalities. However, a very large section of the low-income population is also concentrated here.

Both regions have socio-spatial contradictions, given that both have cities where the main economic activities are concentrated; however both have pockets of significant poverty (Silva, G & Fonseca, ML, 2013). While both regions have poverty, the situation in the MRS is more difficult, since it contains stilt houses, which represent extreme poverty conditions. The majority of the houses are built in environmentally protected areas, usually over mangroves, which results in conditions that have detrimental effects on human health, and make it difficult for the inhabitants to find places to live.

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The focus neighborhoods were Santa Cruz dos Navegantes and Prainha, in the Metropolitan Region of Santos (MRS), and Pedreira and Itajuíbe, in the Metropolitan Region of São Paulo (MRSP). The first neighborhoods were the main focus, and the second ones were the control cases.

Santa Cruz dos Navegantes and Prainha are located in the municipality of Guarujá (in the MRS). The municipality of Guarujá has 290,000 residents, and it is divided in to the district of Guarujá and the district of Vicente de Carvalho (IBGE, 2010). Santa Cruz dos Navegantes is located in the south west of Guarujá, and has approximately 33,000 inhabitants, of which 5,735 live in precarious settlements. The Prainha is located in the

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west area of the Vicente de Carvalho district within the municipality of Guarujá, and has a population of approximately 29,000 inhabitants, of which around 2,134 live in subnormal agglomerations (IBGE, 2010).

The Pedreira and the Itajuíbe are located in the Metropolitan Region of São Paulo. The Pedreira is located in the southern region of São Paulo city, and has approximately 2,000 inhabitants, and Itajuíbe is located in the extreme eastern part of the Metropolitan Region, and has a population of 1,480 residents.

A brief description of the neighborhoods will be provided to further illustrate the context. Santa Cruz dos Navegantes is surrounded by the ocean, contains an environmentally protected area, and has a spring as one of its water sources. Although it is accessible by car, most of the people commute to Santos by small boats. It has paved and muddy streets, and these lead to a neighborhood of stilt houses, which are built as an extension, built over the water around the area.

The neighborhood of Prainha is located on the side of the port of Santos, where, in contrast to the poverty of the surrounding region, around 25% of the country’s agribusiness exports pass through here. As one travels over the train tracks and approaches the sea branch, the stilt house become more apparent, and the area is a large extension. These two neighborhoods show considerable health risks, given that in many cases the sources of drinking water cross contaminated water.

The Pedreira district (MRSP), around the community center, presents a sloped landscape area, and the only way to access the neighborhood is by foot, given that the streets are extremely narrow. Most of this area has cement stairs connecting the different areas of the neighborhood. One of the most visible water and sanitation issues is wastewater collection, as the water company only collects sewage by main sewage branches, but the internal ones are built directly by the inhabitants in an improvised manner.

The brook is one of the first issues one notices in the Itajuíbe neighborhood, as the contamination smell is quite strong, and the appearance of the water is almost black. A community leader told us that, given the public health problems and overflow of the brook in the neighborhood, they are planning to build a park on top of this brook in order to cover it. It is composed mainly of paved streets.

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Santa Cruz dos Navegantes (Author) Prainha (Author: Eduardo Knapp/Folhapress)

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3.

Research Methodology

This chapter first describes the research methods used in this project, including, the research location, the research methodology (including an overview of the interview process, sampling, observation methods, use of focus groups, etc.). Finally, it presents the issues faced pertaining to ethics and limitations encountered during the research process.

The research aim was to examine whether water and sanitation subsidies in São Paulo state were effective in diminishing the differential provision of water to low-income communities. In order to pursue this research, qualitative methods were considered the most adequate technique, given that they capture the complexity of the study’s subject in a more comprehensive way. Research subjects do not depend on single variables but, rather, are linked to several interactions and practices of daily life (Flick, 2009). Spatial analysis using GIS software was utilized to create a map that can recreate the findings in the field, given that such a map did not exist for the in research in the studied neighborhoods.

Qualitative methods were used in the majority if this research, given this thesis intended to obtain this approach to subsidies from a social policy perspective instead of the traditionally qualitative way. As such, this research analyzes subsidies and the effect that they have on low-income groups from three different angles: the interaction of public and private participation in the subsidies structure; analyzing services and subsidies using indicators of effectiveness, relevance and effectiveness; and finally from the reflection of inequality in the provision of WSS through the spatial distribution of services.

Research methods

The qualitative methodology was applied using interviews, participant observation, actor shadowing and focus groups in order to obtain in-depth knowledge regarding the economic aspects of water and sanitation provision.

Semi-structured interviews

Twenty-six semi-structured interviews were conducted in order to gain information about water and sanitation services tariffs. These interviews were conducted with water related actors, namely, SABESP and ARSESP; with people in low-income communities and with NGO and civil society organizations. First, interviews were conducted at ARSESP, in the regulation section, in order to gain insights into the conceptualization of water subsidies and their implementation. Secondly, interviews were conducted with SABESP’s

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administrative employers in the Metropolitan Region of São Paulo business unit at the Tariff Section, Planning and Investment, Research, Technological Development and Innovation, and the Commercial and Regulation departments in order to discover the origin of subsidies and to understand the context in which water tariff subsidies were created, and also to gain in-depth knowledge about the functioning and implementation of water tariff subsidies. Semi-structured interviews were conducted with members of low-income communities in order to obtain insights on their perceptions regarding the service and the role of subsidies. Thirdly, interviews were conducted with SOS Mata Atlântica Foundation and other civil society organizations, namely Instituto Trata Brazil16_{, and the Brazilian}

Institute for the Consumer Defense (IDEC)17 _{in order to obtain a closer look at the}

provision of water and sanitation services and tariffs from a more neutral actor.

The interview guidelines were different for each of these groups. These guidelines were adjusted for each interview according to new contextualization elements. This fine tuning was a useful process, since the adjustments demonstrated an evolution in the understanding of the core matters of the water and sanitation provision, and the guidelines and data collection reflected this evolution.

Sampling

The shadowing method of following a Technical Community Agent (TCA) was used in the studied locations. Travelling with SABESP’s TCAs provided access and guaranteed safety. The locations visited in the Metropolitan Region of Santos (MRS) were in remote areas and became accessible to the researcher, who would not have explored them otherwise due to security reasons. The MRS areas had recently opened up and become accessible, since previously they contained criminal bands, and people from outside of the communities (including SABESP’s agents) needed either permission or even bodyguards to enter these locations.

Initially, the research intended to concentrate on one location only, and to use it as the focus area throughout the research. However, visits to both of the regions showed that a community in each one of them would only have shown one part of the picture. This study is enriched by having neighborhood cases in both the Metropolitan Region of Santos, specifically in Guarujá, and in the Metropolitan Region of São Paulo. These cases present heterogeneous and homogenous cases respectively. The case of Santa Cruz dos Navegantes is a location that exhibits a heterogeneous scenario with critical water

16 _{Instituto Trata Brasil is a civil society organization formed by companies interested in the advances}

sanitation and protection of water resources of the country.

17