In Brazil, anti-competitive practices by state-owned enterprises significantly reduce private investment in the water and sanitation sector, meaning millions of people live their lives next to open sewage and without access to clean water. Backed by Atlas Network partner Livres, the recently passed New Sanitation Framework Bill ends the government’s near monopoly over the sanitation and water treatment sectors and opens them to private investment. Since July 2020, about $14 billion of private sector investment has been guaranteed, helping to provide clean water, quality sanitation, and the recognition of basic human dignity to nearly 20 million people in over 200 towns and cities. This reform sets Brazil on track to meet its goal of providing clean water and sanitation services to nearly all of its citizens by 2033.
“Our campaign for the New Sanitation Framework was based on our confidence that market tools are the best instruments to solve social problems,” said Magno Karl, executive director of Livres. “The nomination for the Templeton Award is important for Livres not only as an acknowledgment of our work but also as an opportunity to highlight the importance of human dignity in promoting the ideas of liberty.”
Millions of Brazilians were impacted by the virtual absence of competition in the near monopoly of state-owned enterprises in the sanitation sector in the country. Now, a Livres-backed reform marks a fundamental shift toward a new institutional framework. The New Sanitation Framework Bill (“Novo Marco do Saneamento”) was officially adopted in July 2020 and aims to modernize the country’s regulatory framework surrounding water and sanitation services.
One of the key functions of the bill is the development of national regulatory reference standards for public sanitation services through a new congressional committee. Subsequently, if a state-owned company is not meeting these requirements, at the end of their contract within the municipality, there is an auction wherein private companies can bid their services to take over the municipality.
One argument that critics cited when the reform was being drafted was a concern that no private companies would want to invest in small municipalities due to the lack of profitability. This concern was addressed within the bill, and part of the new framework established that if a river flows through multiple cities they are able to come together and form a “block,” thus creating more profitable interest for private players. The bill also helps protect a competitive environment by setting a standard that staggers the expiration of sanitation contracts. Another standard establishes that municipalities may break a contract early, but only after paying a fine.
Livres utilized a multi-level strategy to promote the reform. At the foundational level, they maintained the most up-to-date and comprehensive information about sanitation sector reform by meeting with industry stakeholders and performing a technical evaluation of the new bill. Notes from this research were provided to members of Congress to enrich their arguments, and also bolstered direct advocacy in Congress and digital advocacy campaigns on social media. In advocacy and promotion efforts, Livres not only highlighted how regulatory changes would benefit voters throughout the country, but also clarified myths promoted by opposition.
Livres is seeking to help Brazil achieve universal access to drinking water and sewage collection and treatment, and with the implementation of New Sanitation Framework Bill, they are well on the way to achieving that goal. Within a year of its implementation, a survey by the Economic Policy Secretariat showed the total value of projects in the contracting phase to have increased ten-fold. The reforms represent more respect for taxpayers’ money, and by opening markets, Brazil is taking a big step in improving the country’s international ranking of economic freedom. The next generations of Brazilians that reap the benefits of public policy that is based on researched evidence and free competition will see that economic and social freedom go hand in hand.
Livres is a non-profit civil society organization that acts as a non-partisan political movement in defense of liberalism. Livres works by promoting and popularizing liberal ideas, training leaders, developing social projects, and providing key stakeholders with recommendations for policy reform.
About the Templeton Freedom Award:
Named for the late investor and philanthropist Sir John Templeton, the Templeton Freedom Award has annually honored his legacy. Since 2004, the Award has identified and recognized the most exceptional and innovative contributions to the understanding of free enterprise, and the public policies that encourage prosperity, innovation, and human fulfillment via free competition. The Templeton Freedom Award is generously supported by the Templeton Religion Trust and will be presented during Atlas Network's Freedom Dinner on November 17 in New York City. The winning organization will receive a US$100,000 prize, and all other finalists will receive US$20,000 prizes. Find out more about the award HERE.
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