Current Issues in Regulation: Droughts, Renewables, Investments and You
December 5, 2014
Sao Paulo, Brazil
How can a country deal with water shortages caused by droughts? The first step is to realize that there is already a market for water resources and that a sustainable solution will always include making that market work more effectively. This was key takeaway from the seminar "Current Issues in Regulation: Droughts, Renewables, Investments and You" presented by PURC Director Mark A Jamison on December 5, 2014, to the Agência Reguladora de Saneamento e Energia in Sao Paulo, Brazil. The audience of about 30 directors and staff discussed a recent agreement between the city of Sao Paulo and Rio de Janeiro regarding the former’s access to water from a river traditionally used by Rio for its water resources. Although the terms of the agreement had not been released as of the time of the seminar, the fact that Sao Paulo had given something to Rio in exchange for rights to water implied a de facto market and a price for water resources, even though many countries, including Brazil, consider water resources to belong to the public. A problem with this de facto market is that it is very inefficient, in that only political actors directly participate, willingness to pay is determined by water’s political value, information is not transparent, and the value consumers, businesses, the environment, and future generations each place on water is apparently missing. There is no easy answer, but improving efficiency in markets for water is important. Dr. Jamison also discussed how to manage the politics of water, options for renewable energy, and how a regulatory agency can practice leadership in a political environment.