PRODES

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PRODES is an innovative program by the Brazilian federal government to finance wastewater treatment plants while providing financial incentives to properly operate and maintain the plants. It is a type of Output-based aid, as opposed to financing programs targeted only at inputs.

Wastewater treatment Converting wastewater into an effluent for return to the water cycle

Wastewater treatment is a process used to remove contaminants from wastewater or sewage and convert it into an effluent that can be returned to the water cycle with minimum impact on the environment, or directly reused. The latter is called water reclamation because treated wastewater can then be used for other purposes. The treatment process takes place in a wastewater treatment plant (WWTP), often referred to as a Water Resource Recovery Facility (WRRF) or a sewage treatment plant. Pollutants in municipal wastewater are removed or broken down.

Output-based aid (OBA) refers to development aid strategies that link the delivery of public services in developing countries to targeted performance-related subsidies. OBA subsidies are offered in transport construction, education, water and sanitation systems, and healthcare among other sectors where positive externalities exceed cost recovery exclusively from private markets.

Contents

The program, known under its Brazilian acronym as PRODES (Programa Despoluição de Bacias Hidrográficas or Basin Restoration Program), was introduced in 2001 and is managed by the National Water Agency ANA. Under it the federal government pays utilities (mostly public state or municipal water and sanitation companies) for treating wastewater based on certified outputs. Up to half the investment costs for wastewater treatment plants are eligible to be reimbursed over three to seven years, provided that the quality of the wastewater discharged meets the norms. If the norms are not met in one trimester, a warning is issued. If they are not met in the following trimester, the payment is suspended. If the norms are still not met in the next trimester, the service provider is excluded from the program. This provides strong incentives to properly operate and maintain plants. In short, the program does not fund promises, but results.

The program enhances the financial viability of utilities and thus increases their ability to access commercial credit, through development banks (such as the Caixa Economica Federal) as well as commercial banks. The operational risk is clearly assigned to the service provider, who is best able to manage that risk. In order to prevent over-investment, the treatment plants have to be included in basin plans adopted by water basin agencies as a necessary condition to be eligible for financing under the program.

Between 2001 and 2007 PRODES leveraged investments of US$ 290m with subsidies and subsidy commitments of US$94m, financing 41 wastewater treatment plants in 32 cities serving 2 million people. The program had a portfolio of 52 other projects to be financed serving 5.7 million people. Geographically, the projects are concentrated in the Southeast of Brazil, the country's most urbanized region with the most serious pollution problems. [1]

In terms of background, financing and cost recovery for urban sanitation is a challenge throughout the world. Many utilities do not levy separate tariffs for sanitation. Where such charges exist they are usually insufficient to finance operation and maintenance costs, not to speak of capital costs. This problem is particularly acute in countries that embark on ambitious investment programs to increase the coverage of wastewater treatment. The challenge is to devise programs to channel subsidies while promoting efficiency as well as operational and environmental sustainability. PRODES is an interesting case where a program has been introduced that fits these criteria.

Sanitation public health conditions related to clean drinking water and adequate disposal of human excreta and sewage

Sanitation refers to public health conditions related to clean drinking water and adequate treatment and disposal of human excreta and sewage. Preventing human contact with feces is part of sanitation, as is hand washing with soap. Sanitation systems aim to protect human health by providing a clean environment that will stop the transmission of disease, especially through the fecal–oral route. For example, diarrhea, a main cause of malnutrition and stunted growth in children, can be reduced through sanitation. There are many other diseases which are easily transmitted in communities that have low levels of sanitation, such as ascariasis, cholera, hepatitis, polio, schistosomiasis, trachoma, to name just a few.

See also

Access to at least basic water increased from 94% to 97% between 2000 and 2015; an increase in access to at least basic sanitation from 73% to 86% in the same period;

Water resources management is a key element of Brazil's strategy to promote sustainable growth and a more equitable and inclusive society. Brazil's achievements over the past 70 years have been closely linked to the development of hydraulic infrastructure for hydroelectric power generation and just recently to the development of irrigation infrastructure, especially in the Northeast region.

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References

  1. Presentation by ANA at the Water Tribune of the Expo 2008 in Zaragoza, July 2008