Reflexions about the regulation of sanitation facilities

Abstract

The Brazilian sanitation sector is undermined by poor infrastructure and lack of adequate sanitation conditions that hinder the legal and legitime goal of universalizing sanitation services access, as guaranteed by Law n. 11.445/2007 (“Brazilian Sanitation Law”). The challenge of building facilities and broadening sanitation services networks makes the traditional paradox of private and public logics very pronounced: achieving maximum gains in the short term, on the one hand, and charging reasonable prices or even providing services free of charge to all citizens, on the other hand. Regulation is the basic concept to deal with such a paradox of opposing logics. In the case of the sanitation sector, economically defined as a natural monopoly, a broader and deeper notion of regulation – beyond the problem of market failures – should be pursued in order to assure public interest. This is the starting point for thinking about new regulation functions and tasks, including redistibutive mechanisms that make sanitation services universalization and social inclusion possible. Moreover, the Brazilian Sanitation Law regulates cross subsidies, both and non-tariff, designing a sectorial policy fully compatible with the economic and financial sustenaintability goal of this sector.