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Exploring water affordability through subsidy policies
Thalita Salgado Fagundes1, Rui Cunha Marques2, Diogo Filipe da Cunha Ferreira3
1Civil Engineering Research and Innovation for Sustainability (CERIS), Instituto Superior Técnico, University of Lisbon, Av. Rovisco Pais, 1049-001 Lisbon, Portugal; Lusófona University, RCM2+, Campo Grande 376, 1749-024 Lisboa, Portugal; Department of Hydraulics and Sanitation, University of São Paulo, Avenida Trabalhador são-carlense, 400, São Carlos-SP, Brazil.
Water Research
|July 23, 2025
Summary
Brazil's new water social tariff policy aims to improve access but may strain utilities and non-beneficiaries. The study highlights regional disparities and the need for equitable subsidy structures to ensure sustainable water and sanitation services.
Area of Science:
- Public Health
- Environmental Policy
- Economics
Background:
- Access to clean water and sanitation is a human right, yet affordability remains a global challenge, especially in low- and middle-income countries.
- Brazil enacted Law No 14,898 in 2024, establishing a national social tariff for water supply and sanitation to address affordability barriers.
- This policy represents a significant, rare nationwide intervention in the water and sanitation sector.
Purpose of the Study:
- To evaluate the financial impacts of Brazil's new social tariff policy for water supply and sanitation.
- To analyze the effects on potential beneficiaries, utility revenues, and non-beneficiary household bills.
- To identify regional disparities in affordability and the sustainability of the policy.
Main Methods:
- Utilized data from Brazil's Ministry of Social Development.
- Examined three distinct scenarios to model policy impacts.
- Assessed financial implications for utilities and different consumer groups.
Main Results:
- Significant regional disparities in water and sanitation affordability were identified, with greater strain in northern states.
- Cross-subsidization is the primary funding mechanism, potentially increasing bills for non-beneficiary households.
- The policy poses financial risks to utilities, particularly in economically disadvantaged regions.
Conclusions:
- Affordability analyses are crucial for designing effective public policies in the water sector.
- Equitable and sustainable subsidy structures are essential for balancing improved water access with utility financial viability.
- The study underscores the need for careful consideration of the financial repercussions of nationwide social tariff policies.
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