Assessing regulatory governance for the water and sanitation Agencies in Brazil

Abstract

This paper focuses on evaluating and benchmarking the governance of regulatory agencies in Brazil's water and sanitation sector. Using a unique database obtained through the application of a questionnaire, we developed an index of regulatory governance and ranked all the agencies in Brazil that participated in the study. The index is an aggregate number of the evaluation of four key governance characteristics: Autonomy, Transparency, Accountability, and Tools & Capacity, including not only formal aspects of regulation but also indicators related to actual implementation. Based on 18 different indices, we analyze the positions of agencies with regard to different aspects of their regulatory governance, considering not only performance in each variable but also scores in the different components of each category. This evaluation identifies particular agency shortcomings regarding governance and indicates needed improvements. Although Brazil has strived to consolidate the governance design of its regulatory agencies, implementing the independent regulator model still faces several challenges. Various aspects of governance can be improved to pursue greater efficiency and quality in providing services, particularly in Accountability and Political Autonomy, where the country shows the largest number of regulatory agencies with the lowest scores. Conversely, almost half of the participating agencies show optimal scores in the Regulatory Autonomy aspect of governance. The results, for the most part, corroborate the institutional theory, in which the role of institutions is paramount for greater efficiency in providing public services, as it reduces information asymmetries and transaction costs and maximizes economic incentives.