Water Charges: Paying for the Commons in Brazil

Abstract

This paper discusses the processes leading to the current basis for water pricing in Paraiba do Sul basin of Brazil. Reaching agreements required trade-offs between all parties involved. A simple method that could be promptly accepted by all was preferred. Agreements were reached between the various stakeholders, and water pricing started in early 2003. Although the current formula for water pricing is far from perfect, and will require further adjustments, the decision to levy bulk water charges has been generally accepted, and is now fully operational. The paper also addresses experiences for the state of Ceara, where water charges were established as a pioneering strategy to address cyclic droughts in this semi-arid region. Co-operation among the stakeholders transformed a water crisis scenario into a ‘win–win’ situation, laying the seeds for further regional economic development.