Redefining Brazil’s Water Management System: the cases of the Paraíba do Sul and Curu river basins

1. Redefining Brazil’s Water Management System: the cases of the Paraíba do Sul and Curu river basins Rosa Maria Formiga Johnsson COPPE -Hidrology and Environmental Studies Laboratory Federal University of Rio de Janeiro - Brazil

2. Summary • Overview of the reform process in Brazil • Paraíba do Sul River Basin • Characteristics and main water-related problems • New institutional arrangement • Status of the reform process in the basin • Curu River Basin • Characteristics and main issues • Status of the reform process in the state’s context • Conclusions

3. < 2 habitants/km2 25-50 habitants/km2 > 100 habitants/km2 Traditional industries Trad.industries in transition Primary goods, forest products and mining “Industrial heart” of Brazil Human pressure on water resources in Brazil

4. Overview of the reform processes Maranhão Ceará Rio Grande do Norte Paraiba Piaui Pernambuco Alagoas Sergipe Bahia Mato Grosso Goiás Minas Gerais Espirito Santo São Paulo Brasília Rio de Janeiro Paraná Water law approved Santa Catarina State Committees Rio Grande do Sul

5. New water resources management approach: main principles and tools • river basin as the management and planning unit • pricingof bulk water - water as a public good with an economic value • basin committees with state, municipalities, water users and civil society representatives • often, basin agencies as the executive arm of the basin committees • Federal/State Water Resources Council as the regulator, with government, municipalities, water users and civil society representatives • strengthening of water use rights system

6. Area 55.500 Km2 Industry Irrigation Interbasin transfer ~1150 Km Rio de Janeiro Paraiba do Sul River Basin (Main water use)

7. Main water uses and demands • Urban sector: ~15 m3/s • Industrial sector: ~40 m3/s • Agricultural sector: ~71.000 irrigated ha use 40,00 m3/s (1993) Irrigation potencial: 390.000 ha or 195,00 m3/s • Water transfer to the hydroelectric complex Light/Rio de Janeiro metropolitan area: ~160,00 m3/s

8. Main water-related problems • 1 million m3/day of raw sewage • 7 tons/day of industrial waste • urban solid waste • intense erosion process • floods in urban areas • current and planned interbasin transfer flows

9. Muriaé Itaperuna Cataguases Juiz de Fora Campos Três Rios Novo Friburgo Resende Barra do Pirai Teresópolis Barra Mansa Volta Redonda Petrópolis Niteroi Pindamonhangaba Rio de Janeiro Taubaté São José dos Campos Jacarei Political and institutional complexity: Federal waters and state waters ESPIRITO SANTO BELO HORIZONTE SÃO PAULO RIO DE JANEIRO MINAS GERAIS RIO DE JANEIRO SÃO PAULO PARAÍBA DO SUL RIVER BASIN

10. Basin entities in the Paraiba do Sul Committee for the Integration of Paraiba do Sul Basin CEIVAP (1996) Federal Committee of Muriaé/Pomba (2001) State Committee of São Paulo (1994)

11. CRH (SP) CRH (MG) SRH CNRH CRH (RJ) Committee Muriaé/Pomba Other Committees Committee (SP) Committees (MG) Committees (RJ) New institutional framework of PDS river basin Ministry of the Environment ANA Executive Secretary CEIVAP Basin Agency CEIVAP Basin Agency Water Agency Muriaé/Pomba SP Water Management Agencies MG Water Management Agencies RJ Water Management Agencies Municipalities - Water Users (private and public) - Civil Society

12. 5% Federal 25% 15% Government State Government Municipalities 15% Users (private and public) Civil society associations 40% CEIVAP’s composition and main functions Water use conflict resolution § Approval of the basin’s water § resources plans Guidelines for water § allocation and water quality Water pricing criteria and § charges (to be approved by the National Water Resources Council) Integration among all § agencies and entities involved in the river basin’s management

13. Main functions of CEIVAP’s basin agency (under construction) • Technical functions: define the basin ’s water resources plans; perform the technical analysis of the investment proposed in the plan; monitor their implementation • Financial functions: submit water pricing criteria, actual charges and investment needs to the committee for approval; collect water charges (according to water use rights agencies delegation); verify the application of the collected revenues

14. CEIVAP’s basin agency: basic profile • Streamlined technical and administrative structure • Will not be the owner of water infrastructure • Will not carry out their construction or the implementation of other investments defined in the basin plan • Will not be responsible for O&M • Will not have any M&E functions (although it might have some influence over the water right system to be defined)

15. Bulk water pricing: why a transitional water charges system • CEIVAP ’s decision to overcome the skepticism about "cleaning up the Paraíba do Sul river” • Strong political will of ANA to speed up the reform process (through its ‘Treated Wastewater Purchase’ Program) • Lack of systematized methodology, which is deeply intertwined with the « new » water use rights system • Lack of data

16. Transitional water charges system: formula currently discussed Total monthly water charges = Qw x [ K0 + K1+(1 – K1) x (1 – K2 K3) ] x PPU • Qw = withdrawn volume during a month (m3/month) • K0 =multiplier of the unit price for withdrawal (less than 1.0 and determined by CEIVAP). • K1=is the consumption coeficient for the activity in question • K2=index of coverage of treatment of domestic or industrial efluents • K3= efficiency level of reduction of the BDO in the effluent treatment plant • PPU= Public Unit Price (R$/m3) for withdrawn, consumption and effluent dilution, for each m3 of water captada - already determined by CEIVAP as 0,02 R$/m3 or 0,008 U$/m3

17. Projected annual revenue - transitional system • About 15 million R$ ou 6 million US$ per year *domestic user: R$9 million or US$3,6 million *industrial user: R$6 million or US$2,4 million PPU= 0,02 R$/m3, • only the main industrial users and cities with over 10,000 inhab. • Federal water users only • consumption = 20% of withdrawal, K1=0,2; K0=0,5; K2=100%; K3=90% • 1 US$ = 2,5 R$

18. Investment needs in the basin (Source: World Bank supported PQA Paraíba do Sul for each state - 1996-1999) • Currently estimated at about 2,70 billion reais or 1,08 billion US dollars (1 US$ = 2,5 R$) • Rio de Janeiro State (20 years): R$1,6 billion or US$640 million • Minas Gerais State: (20 years): R$485 million or US$194 million • São Paulo State (8 years): R$618 million or US$247 million • The initial projected annual revenue will solve only about 10% of investments needs in the basin a year

19. Water use Pricing - Revenues from water use charges projected by PQA Program (1998) • Assumptions: • Consumption: 20% of withdrawal for industrial uses and 30% for domestic uses; 100% of withdrawal for inter-basin transfers through the Light/CEDAE System • No changes in the basin’s socio-economic context • Charges: US$ 0,0036/m3 (withdrawal); US$ 0,0180/m3 (consumption); US$ 0,1478/kg (biodegradable waste)and US$ 0,1245/kg (suspended solids)

20. Projected Financial Flows - Simulation PQASource: PQA-PDS - Rio de Janeiro State (1998)

21. Where does the money go?To earmark or not to earmark?Where should the earmarking stop?

22. Seeds of success ? • Permits for water use for effluent dilution: will they facilitate integrated water quantity and quality management? • The link between water pricing and the water permit system: will water pricing strengthen the permits system? • The agreement between ANA and the three states concerning water rights and pricing: is the carrot big enough?

23. Key challenges • Lack of political will to advance the reform process at the state level • States fear to lose or share control with basin-level entities • Interaction between CEIVAP and other sub-basin entities • Interaction between them and (i) environmental agencies, (ii) “old” entities involved in water allocation • Defining (or not) where the money goes. • ANA needs to demonstrate its leadership to all affected parties

24. Ceará State CuruRiverBasin

25. Curu river basin • Geographical, social and economic conditions • The voluntary nature of reforms in Ceará (with strong Bank support) • Basin entities: from local organizations built around reservoirs (“social cathment”) to basin committees • Main impact in practice: permanent negotiation for the allocation of water resources • Potential for the implementation of other management tools already introduced elsewhere in the state

26. Conclusions • Both in the Paraíba do Sul and Curu river basins, it appears necessary to strengthen intermediate levels for decision making, in order to encourage stakeholder participation • In the Paraíba do Sul river basin, the overall basin is too large and seems to be too “abstract” for local stakeholders • In the Curu region, the special hidrologic situation creates a strong link among users of reservoirs and other water bodies with regulated flows

27. Conclusions • The natural and socio-economic environment of the basins strongly influences the nature and structure of basin organizations Ceará/Curu: • more centralized system, with COGERH acting as defacto basin agency (the state maintains a strong direct influence on the process) • Basin committees do not control the resources created via water charges, nor do they define their level for industrial and domestic users • COGERH’s main tasks: allocation of water use rights, O&M of bulk water supply infrastructure (reservoirs, canals, etc.), technical support to basin committees, collection and management of water charges

28. Conclusions (continued) PDS River Basin • basin management more decentralized, based on the pair basin committee- basin agency • basin entities are expected to become self-sufficient via bulk water charges • state and federal government (will then) exert a far weaker influence on their decision-making process • radically different nature and structure of COGERH vs. CEIVAP’s agency under construction

29. Conclusions • In the Paraíba do Sul river basin, water charges appear to be the “motor” of the system: without their introduction, the new water management system is condemned to be still-born • In the Curu river basin, stakeholders already found a prior reason to work together: the allocation of water under nearly permanent rationing conditions

30. Conclusions • The importance of legal flexibility in putting principles into practice • In the Curu river basin, stakeholders already found a prior reason to work together: the allocation of water under nearly permanent rationing conditions