Experiments with Institution Building
Abstract and Keywords
This chapter focusses on the interaction between law-making and the implementation of new reform models. The main focus of the chapter is on the decade following the passage of the 1997 National Water Law and on the process through which a diversity of actors participated in making a key component of the law operational: a pricing system for water use in which river basin committees would play a central decision-making role. Ambiguities in the 1997 law meant that pricing could not work without further legal reform. By creating new organizations, such as the National Water Agency, and by investing in a pilot experience in water pricing, the coalitional prospects for passing such legislation changed. Although the concrete results were frustrating from the perspective of water management, the process demonstrates the interconnections between organization building, experimental practices and law making.
In this chapter, we begin to explore what protagonists of the water management reform process did with the ambiguous legal framework that resulted from the multiple entwined processes described in the previous one. The legislation espoused a new approach but left the details to be worked out later. This working-out process involved a mix of experimenting with what could be done under existing legislation, discovering lacunae, negotiating over new rules and initiatives, adapting to different local conditions, and finding ways to get needed additional legislation passed to fill in some of the holes that framers of the first reform laws had left. It is complicated by the sometimes surprising mix of rigidity and flexibility in the Brazilian legal system, in which minute decisions that might in the United States be made in administrative rulings must be voted on by the legislature, often giving rise to a continuous loop of legislation, problem, and revision.
At the center of the institutional design package was the proposal that a new kind of organization—river basin committees—would be responsible for two sets of key decisions: how much high-volume water users should be charged and how the proceeds from those charges should be used. Another new kind of organization, river basin agencies, would be set up to provide technical assistance and help to implement these decisions. Exactly how those organizations would be created and how the funding mechanism would work was far from clear in 1997 when the federal law was enacted. As they experimented with making the new system work in practice, reformers not only discovered insufficiencies in the legislation but also had to adjust many of their own expectations about how the system would work. Pragmatist philosopher John Dewey would have understood (p.85) this as a process of active learning through experience (Menand 1997, 205– 211), in which a problem situation energizes those trying to find solutions, who learn by interacting with the problem and with each other, creating new organizations, mobilizing resources and relationships in new ways, and building capabilities. In the course of the implementation process, different actors moved into the reform coalition, changing the prospects for lawmaking. Their mobilization was responsible for the passage of a second wave of laws in the 2000s that made water pricing viable.
When we explore the interactions between institutional designs and the practical experimentation that takes place as people try to implement them, we follow in the footsteps of distinguished forebears.1 Pressman and Wildavsky (1984), 40 years ago, wondered how policies get implemented at all, given how highly politicized the implementation process seems to be. They suggested that, as complexity of implementation increased, the likelihood that the original objectives would be maintained decreased accordingly. A number of policy scholars responded by arguing that this kind of adaptation—in which complex networks of local government officials, firms, and nonprofit organizations rewrite the policies handed down from above in order to deal with concrete problems—can be positive.2 In a study of federal grants-in-aid for state-level water resources planning in the United States, for example, Ingram (1977) maintained that policy implementation is most effective when it allows creative actors the scope to adapt to local circumstances. In the process she studied, the federal government’s objectives gradually changed from trying to get state governments to draw up water resource plans whether they wanted to or not to prompting them to increase their capacity to do so. The diversity of bargaining situations (involving multiple actors in both federal and state agencies with different levels and kinds of commitments) guaranteed differentiated processes and outcomes, however much Congress in passing legislation might have stipulated uniformity.
As Werner and Wegrich (2006, 44) point out, “Policies are perpetually reformulated, implemented, evaluated, and adapted. But these processes do not evolve in a pattern of clear-cut sequences; instead, the stages are constantly meshed and entangled in an ongoing process.” Our study of (p.86) the progress of water policy reform suggests that this kind of intermingled process of policy making, institution building, and negotiating occurs not only before or after laws are passed but also throughout, as different kinds of actors try to enact change both locally and in a broader context. In this chapter we will focus on the way this complex process played out with regard to implementing the principle that high-volume water users should pay a fee for withdrawing, reserving the right to withdraw, or discharging effluents into watercourses. We show how actors developed clearer ideas about what further changes were necessary on the basis of concrete experiences, some of which functioned as small-scale tests that would inform subsequent legislative proposals. Many people who had initially expected the new legislation to lead more or less automatically to the changes they espoused realized that they also had to invest in organization building, both to guarantee the law’s implementation and to test ideas and mobilize resources for further legislative action.
Thinking about the way people build institutions as a series of real-time experiments does not imply any judgment about the quality or effectiveness of those institutions. We mainly seek to highlight the fragility and contingency of these processes and the policies they produce. Institutional designs do not become functioning institutions by themselves. In the case study developed in this chapter, we explore the interaction between the practical institution-building efforts of specialists committed to a new conception of water management and the strategies employed by powerful economic actors to make sure that no matter what new system was adopted, their interests would continue to be protected.
We begin the chapter with an account of the decision to establish the National Water Agency (Agência Nacional de Água, ANA), inaugurated in 2000 as a new national-level executive organization to oversee implantation of the new system. We will also briefly introduce the reader to some of the other actors involved in implementing laws, such as state governments and the World Bank. Not long after the creation of ANA, leaders of that new organization decided to invest a large portion of its resources in a policy experiment, the implementation of a water pricing system in a major basin, the Paraíba do Sul. That practical experiment, in turn, reconfigured ideas, resources, and relationships, giving rise to a new network of actors who mobilized and worked strategically to get the complementary legislation needed to make the experiment operationally viable passed at both federal and state levels. The outcome of this process taught the reformers a hard lesson: when the future payers of the user fees played a significant part in setting the rates, the prices they were willing to pay were too low to supply the kind of financing for river basin level water management that they had sought.
Soon after passage of the 1997 national water law, the core group of experts that had followed the negotiations since the 1980s—led by Flávio Barth— began to worry about the capacity to implement it, especially in light of its vagueness on key issues. Once again, they would use their political networking capabilities to try to address this. Through the Brazilian Water Resources Association, they organized seminars to assess the issues still pending, including ambiguities regarding federal and state government jurisdiction and what kind of relationship should exist between river basin committees and water agencies. The National Water Resources Council, established in 1998, incorporated many of the resulting proposals as it developed much more explicit rules for administering the system over the next decade. But it did not take them long to realize that rules and regulations were not enough; something had to be done to address the generalized lack of technical capabilities in monitoring, planning, and managing water resource use that plagued the policy field at all levels.
The idea they came up with was to create a new national executive agency, with substantial autonomy—the sort of insulated bureaucracy discussed in chapter 2 that Brazilians have traditionally used to try to make policy work. According to participants we interviewed, this idea emerged at a meeting of water engineers with the World Bank representative in Brasília. The meeting had been requested by Tasso Jereissati, governor of Ceará state (Interview 13, Brasília, 2002; Interview 34, Brasília, 2010). By the late 1990s, Ceará had pioneered a different model of water management, based on the creation of a powerful state water agency. Jereissati also wanted to pursue that idea at the national level. Barth, despite his long history of support for a more decentralized system, declared at this meeting that he had become convinced of the need for a strong federal agency to make the reform work. Three other engineers heavily involved in policy debates at the time were also present. One was Jerson Kelman, a professor at the engineering institute of the Federal University of Rio de Janeiro, who had been a key participant in the Ceará reform and was close to Jereissati. With the exception of the World Bank officer, the Ceará governor, and Barth, who passed away soon after, all of the participants at that meeting eventually served as directors of the agency they imagined that day.
“As soon as the idea came up, it seemed natural, it seemed so obvious,” recalled one of the participants at that meeting (Interview 13, Brasília, 2002). Independent regulatory agencies were a new institutional trend, responding to privatization of public services, a central element of President Cardoso’s state reform agenda. These agencies were to have nonpartisan oversight (p.88) boards, in which directors served for staggered terms (in order to prevent the simultaneous turnover of board members from generating policy instability). This format was especially appealing in anticipation of new ministerial and other government appointments at the beginning of Cardoso’s second presidential term, raising the possibility that the position of secretary of water resources would go to a political appointment who neither understood nor cared about the new model (Interview 19, Brasília, 2002).3
Soon after the meeting at the World Bank office, the group gained Cardoso’s endorsement for the agency in a manner reminiscent of Bezerril’s suggestion to the São Paulo governor more than a decade before, discussed in chapter 3. Jereissati arranged a meeting with the president in which he and Kelman spelled out the idea just days before the president was to attend a high-profile meeting about privatization of the energy sector. The president agreed that the idea of a regulatory agency for water would give the sector a sense of stability as it was being privatized. In his speech, he placed the proposal in the context of the broader state reform process: “We must transform the state so that it can continue to regulate the interests of the population and encourage actions that we believe will serve the common good. This National Water Agency is a move in this direction” (Agência Nacional de Água 2002, 29).
With presidential support, the lawmaking process went much more quickly this time around. Kelman, hired as a special adviser to the Ministry of the Environment to draft the new law, became a central actor at this point. By July 1999, only a few months later, the draft was already being debated at a seminar of water specialists. Within a year, the law had passed through Congress, and the agency was created. The president appointed its four directors, with Kelman in the lead position as director-president of the new agency.
ANA’s origins followed a classic Brazilian pattern, setting up a new insulated bureaucracy alongside (but independent from) a drastically reduced Water Resources Secretariat, both housed in the Ministry of the Environment. At around the same time, the secretariat lost the irrigation portfolio to the Ministry of Agriculture. It retained the executive secretariat of the National Water Resources Council along with responsibility for formulating water policy. Although ANA was formally only an executor, it ended up with the bulk of the funding and technical capacity. Water professionals were divided: some argued that the system needed an agency like ANA to make the water law operational, while others saw it (p.89) as recentralization and feared that ANA would replicate the centralizing role that DNAEE had earlier played. This second view was most common among professionals working in state governments, some of whom also supported greater civil society participation in decentralized management. Not surprisingly, much of the staff at the Secretariat of Water Resources regarded ANA as having usurped its role. Thus, after 20 years of institution building, many of the same conflicts were reproduced: tensions between federal and state governments and a new kind of interagency competition.
OTHER ACTORS ON THE STAGE
The implementation of the new water laws would depend not only on the creation of a strong national institution but also on the mobilization of institutional capacity and commitment on the ground, especially in state governments. There was tremendous variation among states with regard to investment in technical aspects of water management. This only partly reflects differences in state capacity and budgets between wealthier and poorer regions of the country.
São Paulo’s state agencies have long had the largest concentration of skilled water professionals in Brazil, and the two agencies responsible for water and environmental management had regional offices with well-qualified personnel who managed the executive offices of the new river basin committees. São Paulo was the only state that already had a well-developed permit system in place in the early 2000s. Minas Gerais and a few others built such systems over the next decade, as did the federal government (responsible for issuing permits on federal waters).
Some states, even relatively wealthy ones, resisted becoming involved in water management. In Santa Catarina, conservative governments responsive to agricultural interests interpreted water management as a form of environmental regulation, to which they were generally hostile, at one point changing the name of the state’s Secretariat for Sustainable Development to Secretariat of Sustainable Economic Development (Interview 70, Blumenau, 2007). For most of the last decade, that agency had only two or three professional specialists working on water management (Interview 66, Florianópolis, 2007). Efforts to compensate for the state’s lack of support had a formative impact on the Itajaí committee, as we will see in more detail in chapter 7.
Whether or not state government agencies invested in water management often resulted from decisions about political projects that had nothing to do with water per se. In Minas Gerais, for example, Governor Aécio Neves (2003–2010) undertook a liberalizing administrative reform of the kind discussed in chapter 2 (Corrêa 2007), one of whose consequences was (p.90) an overall upgrade of technical capacity for water management. The state water agency hired more specialists, a water resources fund was set up, and a general program of water-related infrastructure improvements began.4
Politics also mattered for state governments’ attitudes toward specific river basin committees, with partisanship sometimes affecting the role committees were allowed to play. Relations between the PSDB-run São Paulo state government and the Alto Tietê committee (described in the next chapter) took a turn for the worse after the Workers’ Party won the São Paulo municipal elections, and the new mayor became the committee president (Interview 30, Brasília, 2011).5 The previously energized committee was sidelined to the point where the government simply stopped presenting its plans for major water infrastructure projects to the committee for deliberation (Formiga Johnsson and Kemper 2005). In Brasília, an opposition politician’s endorsement of a group attempting to establish a Paranoá committee likely intensified the district government’s boycott of the endeavor. In other cases, committees gained more influence over infrastructure decisions because government officials believed it would contribute to their electoral success. This happened in Minas Gerais, after committee activists in the Velhas River Basin convinced Governor Neves to make cleaning up the river a priority (see chapter 7).
Some state governments, especially in the Northeast, wanted to invest in water management but did not buy into the decentralized approach expressed, at least in principle, in the national water law. One northeastern state, Ceará, pioneered an alternative approach over the 1990s. There, the choice was to increase the capacity of state-level institutions first, with a strong, new state Water Resources Management Company (Companhia de Gestão de Recursos Hídricos, COGERH) to coordinate studies, do the planning, and implement water charges. COGERH was the first agency in Brazil to charge for water by the amount consumed, but decisions about pricing and use of revenues remained centralized (Formiga Johnsson and Kemper 2008). The agency also developed an alternative model for participatory decision making, discussed further in chapter 5.6
(p.91) Along with a variety of domestic government officials, politicians, political parties, pro-reform administrators, intellectuals, and a few NGOs, external actors also played a role in espousing ideas and funding administrative reform. The World Bank was especially influential, pushing for institutional reform in water management throughout the country, often as part of infrastructure loan projects. In earlier chapters we noted that the bank has promoted IWRM internationally, particularly with regard to the creation of private markets for water rights (which in Brazil would have meant making it possible for users to sell permits). Although this proposal got nowhere in Brazil, the bank did spur federal and state investment in capacity building for water resources management, by making this a component of water supply and sanitation lending.
The World Bank–funded PROÁGUA program provided much of the funding for organization of water users associations and river basin committees in the Northeast. Begun in 1998, PROÁGUA was a $198 million dollar initiative intended to develop the institutional capacity of northeastern state governments to engage in integrated water management and to identify priority infrastructure for improving the lot of the poor in the region. For the bank, the institutional development side of the project was crucial: project failures for which the bank had been severely criticized during the preceding decade had often resulted from a lack of attention to institutional issues. For state governments, the prospect of new infrastructure investments was a powerful carrot; more than a decade of recession and fiscal adjustment had left the coffers bare. Not surprisingly, at a meeting to evaluate the progress of PROÁGUA held in Aracajú, Sergipe, in December 2000, many state officials told us quite openly that they were undertaking institutional reforms only because the World Bank said they had to.7
Yet interpreting the World Bank’s role as imposing outside ideas on Brazilian reformers would be off the mark. Brazilian government officials who contracted and administered PROÁGUA and other major bank projects often saw them as opportunities to finance the reform effort as they conceived it. Local organization of water users commissions and basin committees in most of the Northeast was promoted and financed by PROÁGUA or other bank lending. However, the institutional changes the bank required were filtered through domestic political processes that affected the form they ultimately took. In Bahia, for example, a World Bank institutional development project funded organization of municipal and intermunicipal water management consortia instead of committees, in (p.92) accordance with the state government’s policy preferences at the time. In Minas Gerais, a large bank-funded urban sanitation project in metropolitan Belo Horizonte, begun in the early 1990s, required the government to create a basin agency and draw up a water resources plan for the Velhas River Basin. But the state water law that passed shortly after the loan agreement was signed stipulated that river basin committees were to be in charge both of planning and of the agencies, meaning that to abide by the terms of the loan agreement, the state government had first to create the Velhas River Basin committee. The agency took another decade, as we will see in chapter 7. Thus, the bank influenced the adoption of new institutions but did not determine their form.
Another key actor for river basin politics has been the Ministério Público (MP, Public Ministry), an agency similar to a public prosecutor’s office responsible for defending the public interest. The MP is a highly professional and semiautonomous agency, known for its zeal for enforcing the law (Arantes 2002). It has offices throughout Brazil specializing in environ-mentallaw (Hochstetler and Keck 2007, 51–57; McAllister 2008).8 It has become involved in river basin conflicts when local actors, often environmental organizations, denounce the government’s failure to enforce existing regulations. Faced with the threat of a costly suit, public agencies often respond preemptively and sign on to what are called conduct adjustment agreements. The Lagoa da Conceição committee in Santa Catarina resulted from such a process, after local NGOs got the MP to investigate allegations that the government was not monitoring pollution in an urban lake. In the state of Rio de Janeiro, the MP helped the Lagos São João River Basin Consortium by negotiating a formal agreement with municipal sanitation companies to reduce sewage emissions. Other committees have sought its support to get state agencies to follow through on commitments.
WATER PRICING AND THE PARAÍBA DO SUL EXPERIMENT
A vitally important part of making the new system operational was putting in place a system that charged high-volume users for the water they consumed, polluted, or stored. Water pricing had been the most contentious (p.93) issue in the institutional design, but sources of dispute varied widely. Even this far into the process, the rationale for and necessity of water pricing were far from settled issues. The creation of actual markets in tradable water rights was never seriously contemplated in Brazil, despite the World Bank’s efforts to promote them. The idea of state control over natural resources had deep roots in the Brazilian national-developmentalist worldview, and the 1988 constitution clearly established public ownership of water resources (both groundwater and surface water). This position did not waver during the neoliberal 1990s, and the 1997 national water law reaffirmed the principle. However, opposing privatization of water rights did not imply the embrace of the current system, which in most of the country consisted of unregulated open access for those able to abstract water from rivers, lakes, and underground sources.
Brazilian reformers proposed charging users for the right to use specified quantities of public water resources, a procedure that would depend on improved information and permitting systems. Public authorities would issue water use permits in accordance with criteria and priorities established in river basin plans; users would be charged for the amount of water they had permits for, independent of how much they actually used.9 Besides identifying human and animal consumption as priority uses for water, the law also exempted low-volume water users from permitting and payment requirements. On this much, there was broad agreement. Beyond that, advocates of reform had very different views about the rationale for water charges and the social implications of the scheme, both consequential for the laws’ implementation.
Most mainstream water engineers subscribed to one of two proffered justifications for water pricing. One sees the revenues generated as a source of financing for such water-related infrastructure as water and sewage treatment plants, diversion channels, and flood contention dams, all of which tend to be extremely costly. This is often referred to in Brazil as the “cost recovery model” (Azevedo and Asad 2000).10 The second, more complicated argument sees water charges as a way to internalize the external (p.94) costs of water use. As long as an industry or public utility pays nothing for using water inefficiently or for discharging pollutants into a river, there is no incentive for it to stop (Azevedo and Asad 2000, 322). Making water consumption more costly would be an incentive to use it more rationally.
The cost internalization or polluter/user pays principle approach to water pricing is espoused by most World Bank documents and by a large portion of the mainstream water engineers in Brazil, at least as an ideal, if not a practical option. Numerous scholars and technical specialists have contributed to the seemingly inexhaustible task of determining the right price for promoting rational water use.11 Should it reflect the value of water as part of a production function? How could such a value be calculated? Or should it instead reflect users’ willingness to pay?12 A further complication is that water is used in different ways by different economic sectors. Should industrial users pay the same rates as agricultural users? The latter use so much more water than the former for every dollar they earn that charging the same could imply either charging virtually nothing to industry or bankrupting the farms. These questions convinced many water specialists to think of pricing as a task for economists. Yet this top-down approach would come into conflict with the more voluntary, collaborative notions of participation held by many reformers. The following account of the implantation of water charges in the Paraíba do Sul basin shows how involving water users in setting the rates and deciding how revenues should be spent was part and parcel of making water charges politically viable.
Water specialists were also divided on a particular innovation in the Brazilian water reform, especially in the 1997 law: river basin committees would decide the prices charged and approve investment plans for the revenues. The idea was inspired by the French system, in which water users share the costs of major investments through a slightly different pricing system (Barraqué 2000). In France, committees made up of water users, public officials, and a small number of civil society organizations negotiate investment plans. The price of water is then calculated so as to raise enough money to pay for those investments. In Brazil, committees, which include a greater proportion of civil society members than in France, would first determine the price they considered appropriate and their members were willing to pay. Investment plans would then be defined on the basis of the (p.95) revenues generated. Influenced by liberalizing reforms of the 1990s, many water reformers believed that even though they had a minority of seats on committees, water users would nonetheless support pricing, because they would understand that the resources generated would ultimately benefit them (Interview 34, Brasília, 2010). To make this idea more convincing, they were able to include in the national law and in many state laws the requirement that the majority of funds generated return to the basin of origin. Not all states followed this route, however. As mentioned above, in Ceará, for example, the reforms of the 1990s produced a centralized system of user fees. Over the course of the 2000s, some water professionals came to doubt the effectiveness of the participatory system of price setting and began to view the idea of a centralized model with more favor.
Outside the mainstream water engineering community, other actors involved in reform had other reasons for supporting or opposing the introduction of water pricing. Many environmentalists and NGO activists supported both the polluter pays principle and the belief that regulation of high-volume users was necessary on grounds of social equity and protection of the public good. Although members of this group were skeptical that such market mechanisms would advance environmental protection, they approved the notion that the proceeds could provide an autonomous funding source for participatory decision-making entities and were in favor of making users pay for the use of public resources for private gain. A good illustration is the statement on the website of São Paulo-based Rede das Águas (Water Network) asserting that the policy would counter the “false idea that there is abundant water in the country and that because this resource is in Nature it belongs to no one.” At the same time, these groups (like most representatives of users and of state or municipal governments) insisted that funds had to return to the river basin where they were generated. Here they were expressing a well-founded worry that revenues that flow into the public coffers often do not reemerge and a desire to ensure that revenues be invested in water management instead of becoming part of the common fund (César, Born, and Ribeiro n.d.). This group of arguments combines a preoccupation with the public nature of water with a distrust of the centralized state.
Overt opposition to the idea of water pricing came from outside the specialist community. Leading opponents to the proposal were the Catholic church and potential payers—especially farmers, for different reasons. The National Conference of Brazilian Bishops (CNBB) led the principled opposition, with a 2004 campaign about “Water: Source of Life,” one of whose platforms was the claim that water pricing would lead inevitably to acceptance of the idea that water was just one more commodity among many, to be governed by the logic of the market. This corresponded to the (p.96) official Vatican stance on the issue, as reflected in its statements both at the 3rd World Water Forum in Kyoto in 2003 and in the 2004 Compendium of the Social Doctrine of the Church (Pontifical Council for Justice and Peace 2004, paras. 484–485). Nonetheless, for the Brazilian church, with its history of liberation theology and defense of the rural poor, this became a particularly strong commitment. The campaign’s organizers considered pure malarkey the claim that charging for a publicly owned natural resource did not qualify as creating a water market:
The economic value of water has been the central mechanism applied to manage water resources, now considered scarce. The rationale is simple: if payment is required, water use will be more rational. … In the final instance, water is transformed into a commodity among others, ruled by the laws of the market. (CNBB 2004, 14)
Marketizing water would exacerbate social exclusion, reducing access for the poor. But even more broadly, campaigners claimed, “Reducing water to an ordinary commodity takes away from its character as a primary necessity, a fundamental human right, vital and sacred” (CNBB 2004, 15).
Opposition from the agricultural sector was more obviously self-interested, and in many states, it exercised a powerful influence on the new policy’s formulation. According to the Food and Agriculture Organization, in 1996, agricultural uses claimed 61 percent of water withdrawals in Brazil.13 Although farmers were certainly not the only private sector actors who opposed water charges, nationwide they were the most vociferous opponents. For example, in 2002, before the Santa Catarina state government had even broached the issue, the Itajaí River Basin Committee invited farmers from the region to an exploratory meeting intended to discuss the possibility of water charges. They were met by “caravans of farmers from all parts of the basin … prepared to stand firm against any proposal to charge user fees for water, armed with a petition, protest speeches, slogans and chants and everything else” (Liberato 2004, 214). In the face of such a strong reaction, the committee decided to postpone the discussion of water charges until the political climate changed. In neighboring Paraná, the 1999 water law passed the state assembly only after last-minute negotiations explicitly exempted the agricultural sector from having to pay for the wateritused (Ohira 2010).14
(p.97) Although this kind of interest-based opposition seems very different from the appeals to technical rationality, social equity, or human dignity previously discussed, all of these different positions reflect assumptions about how states and markets behave and beliefs about the state’s proper role in economy and society. Distrust of the state permeates the discourse of all actors in the story—it is too big, opaque, inefficient, misguided, or undemocratic. Yet both private users and civil society organizations still considered the provision of large-scale public infrastructure to be the state’s job—at least in the absence of obvious alternatives. This reflects the Brazilian state’s historical role as a decider and builder of things rather than as a regulator, and the underdevelopment of regulatory practice on the part either of regulator or regulated contributes to the great ambiguity of expectations about the state in this area. These worldviews, inscribed in actors’ experiences and the historical traditions with which they identified, have consequences for their practice.
The 1997 law declared that water use could be subject to charges, that river basin committees should decide the rates and approve spending plans, and that new river basin agencies would be established to collect the payments and implement the plans. Although this may seem straightforward, making it operational turned out to be much more problematic than the designers had anticipated. First, the financial mechanisms that were supposed to guarantee that public moneys would return to the river basin where they were collected ran up against existing budgetary structures that channeled all federal public funds into the centrally controlled national treasury. Second, the constitution is explicit that only official administrative units (defined as municipalities, states and the union) may collect and spend public funds; levying charges through new entities created at the territorial level of river basins, whose boundaries corresponded to none of these, turned out to be a tricky business. There were thus some glaring omissions in the 1997 law’s approach to water pricing.
Getting around these institutional barriers required the invention of a completely new set of financial arrangements—something that was accomplished through a daring piece of political entrepreneurship, spearheaded by Jerson Kelman and carried out through the (often contentious) efforts of personnel from ANA and a variety of actors from within the Paraíba do Sul basin. The decision to make the latter a test case for putting in place a system of user fees was made soon after the National Water Agency was created in 2000. That basin seemed like a good choice for a variety of reasons: it is (p.98) one of the most densely urbanized and industrialized river basins in Brazil; many previous projects had produced a great deal of information about water use there; and perhaps most especially, Kelman had been a central participant in those earlier projects, when he was a professor at COPPE, the engineering school of the Federal University of Rio de Janeiro.
The Paraíba do Sul basin covers parts of three states in the industrial center of southeastern Brazil: Minas Gerais, São Paulo, and Rio de Janeiro. Located between the country’s two largest metropolises (the cities of Rio de Janeiro and São Paulo), the region is also home to a highly productive agricultural sector (Gruben, Lopes, and Formiga Johnsson 2002). Although metropolitan Rio de Janeiro lies outside the basin, since the 1950s, nearly two-thirds of the river’s flow has been diverted into the neighboring Guandú River Basin, initially for hydroelectric power and eventually becoming the most important source of potable water for almost 9 million of its residents (Formiga Johnsson, Kumler, and Lemos 2007). The basin thus reflected the complexity of water problems and the conflicts over multiple uses that the new management model sought to confront. Because of the region’s wealth, there was also a very real possibility that water charges could generate enough money to have a noticeable impact on those problems.
The interstate river basin committee, CEIVAP, predates the national waterlaw.15 An earlier version was established in the 1970s as an attempt at interagency coordination but had become inactive by the 1990s. By that time, there had been various internationally sponsored hydrological and water management projects, most of them run out of the hydrology laboratory at COPPE that Kelman headed. The research team in one of those projects experimented with setting up a different kind of committee, in which 50 percent of seats were destined for civil society and water users (Interview 13, Brasília, 2002). As a result of that initiative, the Comitê de Integração da Bacia Hidrográfica do Paraíba do Sul (CEIVAP) was formally inaugurated in 1996. Lacking an agenda for action, the committee quickly got bogged down in administrative busywork. Once he became president of the newly minted National Water Agency, Kelman set out to reactivate it.
In 2000, ANA contracted COPPE’s hydrology laboratory to provide technical support for CEIVAP, as a first step toward creating a basin agency. A year later, the agency offered a carrot to try to get river basins to implement water pricing: ANA would pay half the cost of building new sewage treatment plants (a municipal responsibility) if water charges paid for 25 percent and other sources could be found for the rest. The first municipalities (p.99) to sign up for the program were in the Paraíba do Sul basin, but the funding could go through only if water charges had begun to be levied (Formiga Johnsson et al. 2003; Formiga Johnsson et al. 2007, 102).
Water user communities mostly stayed out of the early debates about water pricing that went on in CEIVAP. But when the committee passed a resolution in March 2001 to begin charging the largest industries and water utilities for the water they used, they paid attention. Both industrial and sanitation utilities particularly objected to proposed exceptions for farmers, energy producers, and the Guandú diversion. For more than a year, vehement debates took place over these issues at 10 committee-organized seminars and about 50 presentations on the proposal (Formiga Johnsson et al. 2003). According to Ioris (2008, 70), “During this phase of debates, CEIVAP meetings became a battlefield, where representatives of economic sectors, particularly industry, expressed their disapproval.”
By the end of 2001, CEIVAP had decided to postpone charging user fees until after the committee had approved a river basin plan and set up a basin agency. Furthermore, it demanded federal assurances that revenues would revert to the basin, warning that if they did not users would immediately cease to pay (Formiga Johnsson et al. 2003). This put the onus on the National Water Agency to resolve these outstanding issues as fast as possible.
Over the course of 2002, many observers noted the beginning of a shift in user discourse on water pricing—especially among industrial firms (Gruben, Lopes, and Formiga Johnsson 2002; Formiga Johnsson et al. 2003; Sousa Júnior 2004, 108; Formiga Johnsson et al. 2007; Ioris 2008, 69). Instead of opposing water charges altogether, they recognized that the policy could benefit the basin but were willing to go along with it only if certain conditions were met. Midway through that year, CEIVAP approved the creation of Brazil’s first river basin agency, a nonprofit organization called the Associação Pró-Gestão das Águas da Bacia do Rio Paraíba do Sul (Association for the Management of the Waters of the Paraiba do Sul Basin—AGEVAP) and lowered its proposed base rate for water charges; the National Water Resources Council ratified these decisions soon after. In anticipation of a meeting set for December 2002 to decide how the new agency would be run, industrial groups made a critical move to guarantee their control over it. They convinced other users and some civil society organizations that AGEVAP should be governed by a general assembly that would include all CEIVAP members and by an administrative council that assembly would elect. Ratification of this proposal was followed by elections for the administrative council and presidency of the agency. The industrial users managed to rally enough support to win both a majority of seats in the council and the presidency (Sousa Júnior 2004, 108). If on the (p.100) one hand the users had finally agreed to support water pricing, on the other they had definitively taken over the decision-making process. Water pricing would happen on their terms.
The terms were these: that all users (including those using waterways under state domain) would pay something, that the rate would be acceptable to them (read: “low”), and that the money would return to the river basin. The first condition was meant to ensure that any increase in production costs from water charges would affect all users in the basin. One precondition was that states would have to begin charging as well. The problem was that CEIVAP could charge only for the use of federal waters, but the Paraíba do Sul River Basin included many waters under state domain, such as any tributary that did not cross state borders. Until state governments instituted user fees, competing firms using waters from those tributaries would have an economic advantage over those using federal waters. A second requirement for starting to charge at all was that there had to be a basin-wide registry of water users. Since there was no such registry, the quick solution was to provide incentives for users to sign up voluntarily. Early signers were offered discounts on their rates and more water security. These incentives worked, persuading 3,645 water users to sign up by the deadline, 85 percent of which were from the agricultural sector, a fact that Pereira and Formiga Johnsson (2003, 55) attribute to the low rate that had been established for that group. A significant number would be classified as using negligible quantities of water and thus would pay nothing. Getting states to start charging for water was more complicated, as we shall see below.
In practice, with the commitment to obtaining prior user support for the pricing scheme, any idea that either technical or market criteria would determine the so-called right price was totally abandoned; the goal became simply to find one that was politically acceptable (Formiga Johnsson et al. 2007, 90). Besides lowering the basic rate, the new formula negotiated in CEIVAP incorporated a user demand that firms that treated their effluents pay less. With negotiated rates, the onset of water charges proved relatively uneventful. The first bills went out in January 2003. Of the 240 high-volume users charged during the first year, around 43 percent were industries, 27 percent were water and sanitation providers (mostly municipalities), and 24 percent were large farmers. There were also seven hydro-electric dams and a small number of other types of users (Agência Nacional de Águas 2003). By 2007, the number had increased only to 359 paying users (Agência Nacional de Águas 2010a), paying annual amounts that ranged from 20 reais (about 12 dollars) a year to millions.
Nonetheless, the conditions imposed by users meant that two major problems had to be settled if the system were to avoid coming to a screeching (p.101) halt. First, there was still no formal guarantee that the funds would return to the river basin. For the first two years of water charges, the National Water Agency provided a temporary fix, effectively a (preemptive) wager made by its leadership that the problem would be solved. The federal government collected the user fees, and as expected the money was absorbed into the federal treasury. In 2003, in a highly unusual (and somewhat risky) move, ANA transferred an equivalent sum out of its own budget to the basin to implement CEIVAP’s investment plan. Dissatisfied with the fragility of this mechanism for returning the funds to the river basin, in late 2003, the biggest water consumer in the basin, the pig iron factory Companhia Siderúrgica Nacional (CSN), went to court, claiming that ANA’s promise was not enough of a guarantee for the committee to feel secure about making investments. The company won an injunction allowing it to pay the3 millionreais16 a year it owed (a quarter of the yearly revenues for the whole basin) into an escrow account until the case was resolved. The pressure was certainly on to find a more satisfactory solution, but the authority to resolve it resided in the national Congress.
Second, in the name of fairness, CEIVAP required all users in the basin to pay, including those who used waters under state, rather than federal, jurisdiction. The most significant problem here was figuring out how to get the users of the water diverted into the Guandú basin to pay. The Guandú diversion rerouted two-thirds of the river’s waters into a state domain river basin, ultimately to provide drinking water for the Rio de Janeiro metropolitan region. Despite the huge proportion of the river’s total volume involved in the transfer, CEIVAP could only levy charges on users of water from the part of the river that remained under federal auspices. CEIVAP issued a declaration that if the Guandú users did not start paying by 2004, the whole system of payments would stop. As one interviewee put it, “Jerson Kelman had a knife to his throat” (Interview 32, Rio de Janeiro, 2010). But the solution to this problem would mean changing state water laws.
Resolving both of these problems would require further institutional entrepreneurship, strategic maneuvering, and political action at new territorial levels. In the process, new actors would have a chance to influence the design of the water pricing model. Experiments with putting the system into operation in a single river basin had had reorganized relationships and resources in ways that supported a new set of proposals for lawmaking.
The lead actors in the passage of the National Water Law and the creation of the National Water Agency in the 1990s were technical specialists in state agencies and universities. The second round was led by users, mostly from the industrial and energy sectors in the Paraíba do Sul basin, and by key actors at the National Water Agency. Industrial users from the Paraíba do Sul basin were the first to sound the alarm about the insecurity of the provision that revenues return to the basin. The evidence was from legislation passed in 2000 that transferred part of an existing levy on hydroelectric revenues to be allocated according to the water pricing provision in the 1997 National Water Law.17 Industry representatives pointed out that despite this requirement no one had consulted river basin committees on how those funds would be spent.18 The obvious conclusion was that the 1997 law did not guarantee that river basin committees could actually control the revenues from water charges (Interview 23, Belo Horizonte, 2003).
Although no one had said so when the 1997 law had passed, by 2003, legal experts had concluded that the National Constitution required that public money be controlled by a “federative unit”—that is, by a municipality, a state government, or the Union—not a river basin entity. If river basin agencies could not levy the water charges themselves, there needed to be a mechanism through which the federal government would be obliged to transfer funds collected in the basin to a basin agency controlled by the committee. In 2004, a group of CEIVAP members, led by representatives of industry, worked with Kelman and Minister of the Environment Marina Silva to figure out a solution.
And then, in a classic example of how multiple streams of institutional reform can interact (Pierson 2004), a separate reform process provided the legal instruments to solve the problem. As part of the broad administrative overhaul in the mid-1990s discussed in chapter 2, the government introduced legislation designed to facilitate public-private collaboration, specifically by allowing the state to transfer public funds to certified nongovernmental organizations. One key law passed in 1998, a year after the National Water Law, turned out to provide the mechanism that would legalize the financial relationship among government, river basin committees, and river basin agencies. While prior rules greatly restricted the government transfers to nonprofits, this legislation created a new kind of (p.103) management contract (contrato de gestão) that would make it possible for government agencies to subcontract complex services to NGOs. This legal mechanism provided an avenue for transferring funds from user fees, still collected by government organs, to nonprofit river basin agencies, which would in effect be employed by river basin committees to do their administrative work and implement programs. The contracts could thus oblige the government to transfer revenues back to the basin (through the basin agency) and allow the committees to ensure that the agencies’ expenditures follow the approved investment plans.
Throughout 2003–2004, industrial users from the Paraíba do Sul basin worked with ANA representatives in the National Water Resources Council’s technical subgroups to draft a law making these connections explicit. They convinced the government to issue the legislation by executive decree (Medida Provisória) in early 2004 and oversaw its transformation by Congress into ordinary law a few months later. The legislation stated that the National Water Council could delegate the powers of a river basin agency to NGOs. ANA could sign management contracts with such organizations on the condition that the contracts stipulated that control over the agencies be shared between ANA and the river basin committees. The key provision was the requirement that ANA transfer revenues collected in a basin back to the delegated organization for that basin. Within months, AGEVAP—CEIVAP’s basin agency—had taken this route, thus satisfying the first set of user complaints.
MULTILEVEL PRACTICES: GETTING THE STATES ON BOARD
Demands that all users in the basin pay—including those using state waters, especially in the Guandú basin—meant that even with the advances in national legislation the whole project was at risk unless states passed laws of their own.
Designers of São Paulo’s 1991 Water Law, whose negotiation we discussed in chapter 3, intended the question of water charges to be resolved in a subsequent, separate law, whose passage was expected to follow soon after the basic law. However, this phase of the process encountered vociferous opposition not only from the private sector but also from SABESP, the state-owned water and sanitation utility (Interview 31, Brasília, 2010). Leaders of reform efforts organized numerous projects and task forces that drew up pricing scenarios and discussed ways to overcome operational problems (e.g., lack of a complete registry of water users and the fact that no resources had been allocated to create one). Eventually, a draft bill (p.104) authorizing implementation of water charges was written, and Governor Mario Covas submitted it to the state assembly in 1997 (Barth n.d.). It took eight years to get the law passed.
The 1997 bill received hundreds of amendments and was sent back to the governor’s office for revision, since assembly rules do not allow a bill with more than 80 amendments to come up for a vote. Then the government submitted a revised version in 2000. This revised bill took five years to come to the floor for a vote, as a variety of interest groups (small and medium-sized businesses, small farmers, and the entire electric sector) sought exemptions from water charges (ISA 2005) or demanded, as textile firms did, that there be a cap on charges for pollution emissions (Folha de São Paulo 2003). Then, in 2003, when the bill actually reached the assembly floor with a good chance of passage, the governor had it taken off the agenda at the last minute to add a proviso that charges could not be passed on to consumers.
Alongside resistance from water users, many in the state government were not at all convinced that river basin organizations and not government agencies should control water revenues from user fees. Some officials were less concerned with rate setting than with the fact that the money would go directly to each committee’s account in the state water fund; they drafted a counterproposal that half the proceeds should remain in state coffers. Representatives of powerful industrial and agricultural user groups, who wanted to be able to influence how any money collected was used, roundly rejected this proposal (Viveiros 2003).
That phase of the legislative process finally ended in 2006, with a decision that all users would have to pay but farmers only after 2010. The revenues generated by each river basin would go into the respective committee’s subaccount in the state water resources fund. Firms were legally forbidden to pass the charges on to final consumers (Martinez and Lahoz 2007). Water pricing finally began in 2007 in the basins where those using federally owned waters were already paying (the Paraíba do Sul and the Piracicaba, Capivari, and Jundiaí basins) and was slowly expanded to the rest of the state.
The lawmaking process in the state of Rio de Janeiro was quite different. In spite of all the activity around the interstate Paraíba do Sul basin, the state government showed little interest in reforming water management and passed basic water management legislation only in 1999, emulating the 1997 federal law. The only river basin under state domain where a basin committee had been set up by 2003 was the Guandú. Although a State Water Resources Council was established in 2001, it foundered and had to be reestablished in 2003 (Interview 33, Rio de Janeiro, 2010).
(p.105) The explicit threat that CEIVAP would halt water pricing unless the users of the water diverted into the Guandú were also charged gave Kelman and his collaborators a strong motivation to find a solution. As a first step, they got the State Water Resources Council to pass a resolution in May 2003 authorizing charges in the parts of the Paraíba do Sul basin under state domain, beginning in January 2004, and calculated according to the pricing methodology already approved for CEIVAP. Fearing that a council resolution did not carry sufficient legal weight to ensure that water pricing actually begin on time, a group of high-level officials in Rio de Janeiro hoping to improve the state’s water management capacity pushed hard to get legislation passed on the subject. Providentially, Ícaro Moreno Júnior, the head of the state agency responsible for water management at the time, was a Kelman ally who was also close to the governor. At the annual conference of the Brazilian Water Resources Association (ABRH) in November 2003, the two brainstormed with other Rio de Janeiro-based water experts (mainly from COPPE) and worked out a strategy. They persuaded the governor to propose legislation that would initiate pricing throughout the state by January 2004. Demonstrating both the power of the executive branch over the legislature when there is interest in a law and the general lack of mobilization around water issues in Rio de Janeiro compared with São Paulo, it took only three days for the bill proposed in December 2003 to be brought to the floor for a vote and passed (Interview 32, Rio de Janeiro, 2010).
The Rio de Janeiro law offered a singular solution to a political roadblock that was common in many parts of the country. The state government would start charging all state users in 2004, whether or not a river basin committee existed or had approved the rates. The money would be placed in earmarked accounts for each river basin and would not be touched until committees were created. The rates charged for water use would initially be set at the same level as those set by CEIVAP for federal waters in the Paraíba do Sul basin, but once committees were formed they could establish their own methodology. This solution thus violated the principle that water pricing should always be decided by river basin committees but confirmed that they should control revenues and should ultimately set the rates. The law also solved the Guandú problem, by designating 15 percent of the user fees collected in that basin for transfer to AGEVAP as payment for the diversion.
CHANGING CONCEPTIONS OF WATER PRICING
Finally, the system was in place, the CEIVAP users were satisfied, and paying for water became routine in the Paraíba do Sul basin. Nonetheless, whether (p.106) the pricing system was worth all the effort that went into it was far from evident. Ramos (2007, 57) calculated that the water charges amounted to less than one U.S. dollar per inhabitant of the basin per year. Generally speaking, rates for water use are a fraction of those paid in European countries where similar schemes have been put into place. In the first six years of charging for water, the water users in the parts of the Paraíba do Sul basin under federal auspices paid only about 53 million reais (U.S. $31 million) (Agência Nacional de Águas 2010b). By contrast, the estimated cost of the master plan CEIVAP proposed in 2007 for dealing with the basin’s most urgent problems was around 4.7 billion reais (U.S. $2.8 billion) (AGEVAP 2007, VII: 7).19
Furthermore, it has turned out to be very hard to spend what money has been raised. The 1997 federal water law limits the portion of revenues that can be used to cover administrative costs to 7.5 percent, but even in a wealthy river basin like the Paraíba do Sul, this is not enough to run a viable agency. Lacking the in-house technical capacity to design the components of the CEIVAP investment plan, mostly small sewage treatment plants budgeted less than 1 million reais each (U.S. $2.8 million), AGEVAP subcontracted project design and oversight to the federally owned bank Caixa Econômica Federal. But even though new legal mechanisms were supposed to facilitate more flexible relationships between state and nonstate organizations, the bank has stuck to a conservative interpretation of the rules governing public spending, as a result of which the vast majority of funds collected after 2003 and deposited in the AGEVAP account remained unspent in 2010 (Interview 29, Brasília, 2010).
The decade-long story of instituting water charges in the Paraíba do Sul basin illustrates both how ideas about policy change through the process of making them work in practice and that this process is not reducible to a rationalistic conception of “social learning” (Friedmann 1987, 181–223). Those who believed in the power of market mechanisms to change the conduct of the business sector have been confronted with a fundamentally liberal dilemma: it is exceedingly difficult to get economic actors to act collectively to protect public goods, particularly if it means paying for something they previously got for free. For market mechanisms to change behavior, the liberal prerequisites of such a model require that firms voluntarily submit to the discipline of markets. But in Paraíba do Sul, local users used what influence they could muster mainly to lower the price of water, thus reducing the revenue that (p.107) charging for water could generate. The generation of self-regulating governance of natural resources, long studied by Elinor Ostrom (1990), does not appear to transfer to very complex settings like the one in the Paraíba do Sul basin, where decision making by economic stakeholders led instead to what some have called the legitimation of shirking (see, e.g., Ioris 2008; Ioris 2009).
Even those who viewed user fees mainly as a form of cost recovery—a way to prod the economic groups using water to invest in water infrastructure—turned out to have been overly optimistic. It is safe to say that in the years following passage of the national law, most Brazilian water specialists agreed with the statement made by the water management staffers in the Brazilian World Bank office: “The implementation of the national water resources management system [depends] almost exclusively on water fee revenues” (Azevedo and Asad 2000, 335). Ten years later, when revenues from user fees turned out to be minuscule even in such a wealthy river basin as the Paraíba do Sul, they were not so sure. In relation to the kinds of problems highly urbanized, industrialized regions face, the sums raised were a drop in the bucket.
For pessimistic observers, the CEIVAP story is yet another example of the continuing influence powerful economic sectors have over public policy, this time with a veneer of democratic procedures (Ioris 2009). More optimistic reformers, however, have been rethinking the purpose of water pricing and its place in a more integrated management system. One alternative expounded by an interviewee who remains deeply committed to change is to think of water user fees not as investment funds for resolving big problems but as seed money for jump-starting a process of seeking solutions.
We used to think that pricing was everything. … As a whole, the educational effect [in which users recognize the true value of water] has not had much effect in Brazil. The other major objective, which is to raise revenues, is hogwash, at least if you think that it will come close to the full amount of investments. But it’s not hogwash if you think that the money can be used intelligently to give autonomy to the committee, to create incentives for collective action and for mobilization to get other resources. It provides them with minimal conditions for leveraging other resources. (Interview 32, Rio de Janeiro, 2010)
This kind of reformulation represents a reinterpretation and reconfiguring of the relationships and resources that make up the new organizational domain or field of water management. For example, one of our key interlocutors, who spent years working for the consolidation of CEIVAP and now works for a state government agency, lamented the difficulty of getting (p.108) things done amidst the proliferating decision-making forums of the new water management system. Many decisions, she noted, have to be ratified by state committees, federal committees, technical subcommittees of those committees, the State Water Council, and both the General Assembly and the administrative council of the water agency. Sometimes the same individuals have seats in several different stakeholder bodies. Multiplication of participatory arrangements seems to have increased the number of people inside and outside the state who have veto power over policy making— often not for the sake of democratization and social justice but rather as a way for specific individuals to gain influence. In 2010, for example, someone from a Rio de Janeiro university occupied a civil society seat on at least seven different collegiate bodies related to water management at once and purportedly used them to block government proposals every step of the way (Interview 32, Rio de Janeiro, 2010). Institutional change, it might be said, sometimes adds new layers of complexity to the institutional setting, not always in ways that make things work better.
INSTITUTION BUILDING, EXPERIMENTATION, AND ORGANIZATION BUILDING
In 1999, when we began to conduct research on these reforms, the enthusiasm among experts in the sector was contagious. The passage of the water law was expected to provide both political legitimacy and the practical means to implement a more integrated, participatory, and decentralized approach to water management. Power over water policy had been wrested from the hands of the energy sector and placed within the Ministry of the Environment. Although some worried about the implications the creation of the National Water Agency might have for recentralizing the system, most of these enthusiasts thought that the speed with which it occurred reflected a high level of government commitment to water policy. Over the course of the 1990s, more than half of Brazil’s states had approved water laws, some in emulation of the São Paulo legislation, while later laws copied the federal one. By the early 2000s, the remaining states followed suit. In their opening sections, all of these laws claimed as their principles ideas that cohered with those of the international integrated water management movement: integration, participation, decentralization, river basin planning, and the introduction of economic instruments.
At the time, water specialists we met rarely mentioned the enormous lacunae in the legislation; most of those who began to collaborate with us in the Watermark Project seemed more focused on other aspects of the new system. Particularly striking was the fact that several years of fairly intensive (p.109) research exchange passed before we met anyone who mentioned that guaranteeing the return of revenues from user fees to the river basin where they were raised was, at the time, technically impossible. Many of the politically more progressive actors involved in water policy were particularly excited about the democratizing potential of the river basin committees. Few of them seemed concerned with how little civic groups had participated in the process thus far. Although seats were allocated on river basin committees for civic organizations, there were no mechanisms in the law to guarantee that these groups had the resources or information to enable them to participate effectively. Nor did our collaborators and interviewees seem to worry that—in the absence of clear legal mechanisms forcing governments to create river basin committees, provide them with technical and financial support, and follow the plans that they approve, let alone create new executive agencies at the river basin level with the power to raise funds and implement projects—the whole endeavor seemed to rest on the willingness of a large number of organizations to collaborate voluntarily.
In retrospect, it seems clear that the cards were stacked against such collaboration, because many powerful actors had little incentive to invest in the new system. How can we explain the apparent contradiction between the enthusiasm among reform-minded specialists and the weakness of the legal infrastructure being erected? One explanation may be that water specialists were caught up in the liberalizing narrative of the 1990s, which accompanied a worldwide trend promoting collaborative governance, the results of which—like the revenues raised by water pricing—would be felt only later on. Key leaders of the reform process clearly expressed at the end of the 1990s the belief that a participatory approach to pricing would work better than top-down approaches. Kelman (2000, 103) wrote, for example: “In countries with limited institutional capacities, such as Brazil, strategies that demand government enforcement should always be replaced by strategies based on the self-regulation of stakeholders.” Many believed that economic actors in Brazil were eager for market discipline.
Another explanation is simply that despite the lost battles and the weakened language, the specialists were encouraged by political recognition of a new policy field in which they were the protagonists. Although their proposals were still contested and could not simply be legislated into effect, the fact that they had been instantiated in law gave them a political legitimacy that they had not had as advocates of positions in technical debates. Part of this may have to do with the sense of ownership that technical experts had with respect to the new legislation and with some of the incipient organizations that were created through it. Over the course of the 1980s and 1990s, engineers and other water specialists had insisted on what seemed like obscure concepts. As chapter 3 showed, this process forced those (p.110) experts to go beyond intellectual debate in order to get these concepts into the laws. They had to use practices less associated with technical knowledge and more with politics: generating publicity, building networks, and leveraging personal ties with powerful authorities (see Gutiérrez 2006a; Gutiérrez 2009). By the 2000s, they had become experts in this kind of technopolitics, too, to the point that a number of them eventually took on political jobs in the organizations they had helped create. Through such institution-building practices, they essentially created a new policy field— however imperfect—and then occupied that field themselves through its organizations.
Institutional entanglement and the multiplicity of actors involved in institutional reform made it impossible to resolve all issues at once. The pragmatic solution was to construct the new institution in law and in practice, bit by bit. Logically, it might have been much more sensible to settle first the prerequisites in the federal legislation (e.g., operationalizing basin agencies) and at the state level (guaranteeing a simultaneous initiation of water pricing throughout the basin) so that the system could have begun in the Paraíba do Sul more smoothly and with fewer potential obstacles to overcome along the way. Yet this did not happen, in large part because no coalition of political actors was yet mobilized to pressure for those changes to occur. It was the halting efforts of the experiment itself that restructured the political scenario, mobilizing political actors—especially water users, who had not been involved previously. The institutional changes at the federal and state levels that occurred from 2004 on were simply much more possible once the pilot experiment of pricing in the Paraíba do Sul River Basin had set the ball rolling and, in so doing, committed a variety of actors to getting those changes made.
Like other models, integrated water resources management contains a set of ideas about how the world works, about the interests of different categories of actors and the way to build in mechanisms by which new institutions can constrain and motivate behavior consistent with the set of goals the model is intended to reach. But ideas do not leap from the drawing board into a set of well-established routines. They are mediated through the experiences of the actors whose actions will constitute the institutions in practice. All of the elements of the institutional design package—the goals, the interests, and the expectations about how different mechanisms will work—were continuously transformed through these actions. The institutional reform process described in these chapters is still under way, a continual process of institutional creation nourished through practical experiences that, while testing ideas, also transforms them.
(2.) See review by Sabatier (1986) of the top-down-versus-bottom-up debate on implementation. For an explicitly pragmatist approach but with a focus on enforcement, see Coslovsky, Pires, and Silbey (2012). Some policies purposely promote such creativity (Hill 2009, 198– 201). Elmore (1979–1980), for one, suggested that policy design was the partial result of implementation rather than the other way around. Sabatier (1999) was one of the clearest statements of the need to move beyond a stage-based theory of policy analysis. Thomas and Grindle (1990) applied the discussion to policy reforms.
(3.) It is noteworthy that no mechanisms were included in the law to guarantee that agency directors were nonpartisan, and it was not long before many of the appointments were party nominees who were not technical specialists. One such nominee, approved despite protest from agency staff on the grounds that he was totally unqualified for the job, resigned after being accused in late 2012 of influence peddling.
(4.) Luiza Marilac, oral presentation, Água da Gente conference, São Paulo (Watermark Project), August 2008.
(5.) Partido da Social Democracia Brasileira (Brazilian Social Democratic Party).
(6.) Another alternative to the committee approach came the state of Paraná, just south of São Paulo. There, anxious to ensure the financial sustainability of the water reform, the designers of the first version of the state’s water law attempted to give primacy to a consortium of the largest water users, on the grounds that the latter would be willing to pay for the new system only if they believed it was in their interest to do so. As a state whose politics had long been dominated by private sector interests, Paraná might have been a prime site for this kind of experiment, had the incumbent state administration not lost a crucial election to a more populist opposition candidate, who promptly sent the process back to the drawing board (Gutiérrez 2006a; Ohira, 2010).
(8.) Because the direct translation of this institution’s name is not descriptively helpful, it has become conventional in English-language work to retain the original Portuguese when referring to the Ministério Público.
(9.) The idea bears some resemblance to the notion that individuals can be charged for public services, such as electric energy or water supply. Charging for such services evidently puts market pressures into consumer decision making: the wealthier consumers can afford to waste energy, water, gas, and other services the state charges for, while the poor tend to economize. But it is not exactly the same as a market. In the case of water use charges, there is another subtlety: the charge is not for a public service (which a utility had to spend money to provide) but for access to a limited natural (and publicly owned) resource that has historically been free.
(10.) Internationally, “costrecovery” generally aims to cover costs of operating and maintaining necessary infrastructure and only sometimes (usually in the case of small projects) also to cover construction costs.
(12.) The classic solution for coming up with the ideal price is to combine an analysis of the costs for reducing pollution and of “willingness to pay,” maximizing the difference between the two so that the greatest relative benefit is associated with the lowest relative cost (Canepa, Pereira, and Lanna 1999).
(13.) http://www.fao.org/nr/water/aquastat/countries_regions/BRA/index.stm, accessed March 27, 2013.
(14.) According to Ohira, proponents of the law decided not to resist demands for the exemption because large-scale irrigation is a rare practice in the state, and most of the farmers there would likely be exempted from having to pay in any case.
(15.) Comitê de Integração da Bacia Hidrográfica do Paraíba do Sul (Committee for the Integration of the Paraiba do Sul River Basin).
(16.) Equivalentto about 1 million U.S. dollarsin 2003.
(17.) The 2000 law in question was the same one that created the National Water Agency (ANA).
(18.) Indeed, they discovered, much of the money had been sequestered by the Treasury Department to meet budgetary requirement for a high primary surplus.
(19.) Dollar equivalents in this section are for October 1, 2010.