Sanitization in Brazil Current Behavior Changes Analysis

Ongoing Behavior Changes

Based on the provided reports, the Brazilian sanitization sector is undergoing significant behavior changes primarily driven by the implementation of the New Legal Framework for Sanitation (Law nº 14.026/2020). These changes are reshaping relationships and demand dynamics across the value chain.

A key ongoing behavior change is the accelerated increase in private sector participation. The New Legal Framework actively encourages private investment through concessions and Public-Private Partnerships (PPPs) to meet ambitious universalization targets by 2033. [Portal Gov.br, Marco Legal do Saneamento] This has led to a substantial rise in the number of municipalities served by private operators, showing a 466% increase to 1,648 municipalities since the framework's implementation. [Value Chain Analysis, Players Analysis] Companies like Aegea Saneamento and Iguá Saneamento are expanding their footprint by winning bids for new concessions and PPPs. [Value Chain Analysis, Players Analysis] This behavioral shift among municipalities towards contracting private entities fundamentally alters the public-public relationship (historically between state and municipal entities) to a more public-private dynamic, characterized by long-term contracts, performance obligations, and risk-sharing mechanisms.

Another significant change is the heightened focus on achieving universalization targets. The mandate for 99% access to treated water and 90% access to sewage collection and treatment by 2033 is driving strategic planning and investment decisions. [Portal Gov.br, Marco Legal do Saneamento] This directly impacts demand behavior by identifying and targeting currently unserved populations and businesses. The demand is no longer just about maintaining services for existing customers but actively expanding coverage to bring new customers online. This requires service providers to change their operational focus towards network expansion and new connections, moving into previously unserved areas, including remote rural areas and informal urban settlements, where service provision is more challenging. [Final Customers Identification, Detailed Profiles of Customer Characteristics and Demographics]

The transformation in investment patterns is also a crucial behavioral change. With an estimated investment need of R$ 509 billion to R$ 551 billion by 2033 and a significant annual investment gap (estimated at R$ 24 billion for 2024), the sector is behaving more actively in seeking and structuring alternative financing mechanisms beyond traditional public budgets. [ABCON SINDCON, SANEAMENTO BÁSICO: Brasil precisa investir cerca de R$ 551 bi para alcançar metas de universalização], [ABREMA, SANEAMENTO DEVERÁ INVESTIR R$ 24 BI AQUÉM DO NECESSÁRIO EM 2024] There is a growing reliance on attracting private capital through the structured concessions and PPPs. Projected investments for 2025 are estimated at R$ 72.4 billion from planned bidding processes, covering a large number of municipalities, indicating a behavioral shift towards more aggressive project development and financing strategies. [Value Chain Analysis, Volumes and Sizes] This changes the relationship dynamics between service providers and financial institutions, as well as the behavior of public entities in preparing bankable projects.

Furthermore, there is an increased emphasis on operational efficiency and performance. With performance metrics and quality standards embedded in newer contracts, service providers are compelled to improve their operations. This includes a greater focus on reducing high levels of water losses (around 40% nationally), which is a significant operational and financial drain. [Nexo Jornal, Brasil perde quase 40% da água tratada, mostra estudo], [Instituto Trata Brasil, Perdas de Água 2023], [Poder360, Brasil desperdiça 40,3% da água tratada, segundo estudo] This behavioral change influences their relationships with infrastructure and technology suppliers, driving demand for solutions related to leak detection, network management, and efficient treatment processes.

Finally, the encouragement of regionalization of services represents a behavioral change in how municipalities approach service provision. By grouping together, municipalities aim to gain economies of scale and attract larger, more capable service providers. This impacts the B2B relationship between municipalities and potential operators, moving towards regional concessions or PPPs rather than individual municipal contracts.

Impact of these changes on the value chain

The identified ongoing behavior changes have a profound impact across the sanitization value chain:

Value Chain Step	Impact of Behavior Changes
Planning and Regulation	Increased activity and complexity: Need for structuring regional blocks and bankable projects. Regulatory agencies (ANA, state/municipal) are under pressure to standardize norms and oversee performance-based contracts. [Value Chain Analysis, Regulatory Complexity and Fragmentation], [Agência Nacional de Águas e Saneamento Básico (ANA), Normas de Referência - Saneamento] Relationships between public authorities and regulators are strengthened as compliance and oversight become more critical.
Infrastructure & Technology Supply	Increased demand and shift in requirements: Growing need for equipment, materials, and technology to support network expansion, treatment plant upgrades, and efficiency improvements (e.g., water loss reduction). [Value Chain Analysis, Infrastructure and Technology Supply Segment] Demand is likely increasing for advanced metering, leak detection technologies, and modern treatment solutions. Relationships with service providers are becoming more focused on long-term supply and performance-based solutions.
Raw Water Abstraction/Collection	Increased pressure on sources: Expanding service coverage means abstracting more raw water. This highlights the need for better water source protection and management, influencing relationships with environmental agencies and land users in watersheds.
Water Treatment	Increased capacity and efficiency needs: Higher volumes require expanding treatment capacity. Focus on reducing losses implies optimizing treatment processes to avoid wasting resources. Demand for efficient treatment chemicals and technologies is likely rising.
Treated Water Distribution	Major focus on expansion and loss reduction: Significant investment and operational effort are directed towards extending networks to unserved areas and reducing physical and commercial losses. [Nexo Jornal, Brasil perde quase 40% da água tratada, mostra estudo], [Instituto Trata Brasil, Perdas de Água 2023] This drives relationships with suppliers of pipes, valves, meters, and leak detection technology, and changes operational behavior towards more active network management.
Sewage Collection	Significant expansion required: Universalization targets necessitate a large-scale expansion of collection networks, particularly in urban areas. [Value Chain Analysis, Volumes and Sizes] This increases demand for pipes, network components, and construction services.
Sewage Treatment	Massive investment and capacity increase: The low current treatment rate requires substantial investment in new and upgraded treatment plants. [Assembleia Legislativa do Piauí, Brasil: apenas 50% do volume de esgoto é efetivamente tratado], [Brasil 61, Saneamento: apenas 52,2% do esgoto gerado no Brasil é tratado] This creates significant demand for treatment equipment, engineering, and construction services. Environmental regulations also drive demand for higher treatment levels.
Urban Cleaning & Solid Waste Management	Increased focus on formalization and proper disposal: The push to close open dumps and implement sanitary landfills creates demand for related infrastructure and services (collection, sorting, proper disposal). [Value Chain Analysis, Bottlenecks and Challenges] This impacts relationships between municipalities and private waste management companies, although this segment still faces significant investment gaps. [Value Chain Analysis, Volumes and Sizes]
Urban Rainwater Drainage & Management	Growing recognition of importance: Increased urbanization and climate change impacts highlight the need for improved drainage. While less data is available, the need for better planning and investment in this area is likely driving changes in municipal behavior towards more structured approaches and potential contracting. [Value Chain Analysis, Urban Rainwater Drainage and Management Segment]
Monitoring and Control	Enhanced data collection and analysis needs: Performance-based contracts and regulatory oversight require more robust monitoring and data systems. Demand for sensors, SCADA systems, GIS, and data analytics is increasing. Relationships with technology providers in this space are becoming more strategic.
Financial Management & Commercial Ops	Increased complexity and focus on viability: Attracting private investment requires financially viable projects and efficient commercial operations (billing, collection, loss reduction). [Value Chain Analysis, Financial Management & Commercial Ops] Relationships with financial institutions are critical for securing funding. The interaction with end-users remains based on tariffs, but there's a need to balance affordability with cost recovery, influencing tariff structures and social programs. [Final Customers Identification, Detailed Profiles of Customer Characteristics and Demographics]

Overall, the behavior changes, primarily driven by the New Legal Framework's universalization goals and the push for private sector participation, are leading to a more dynamic, investment-focused, and performance-oriented value chain. These changes are redefining relationships between public and private actors, increasing demand for infrastructure and technology, and highlighting the critical need for efficient operations and robust financial management to achieve the ambitious targets.

References

ABREMA. SANEAMENTO DEVERÁ INVESTIR R$ 24 BI AQUÉM DO NECESSÁRIO EM 2024. https://abrema.org.br/saneamento-devera-investir-r-24-bi-aquem-do-necessario-em-2024/ Assembleia Legislativa do Piauí. Brasil: apenas 50% do volume de esgoto é efetivamente tratado. https://www.alepi.pi.leg.br/2023/11/28/brasil-apenas-50-do-volume-de-esgoto-e-efetivamente-tratado/ ABCON SINDCON. SANEAMENTO BÁSICO: Brasil precisa investir cerca de R$ 551 bi para alcançar metas de universalização. https://abconsindcon.com.br/saneamento-basico-brasil-precisa-investir-cerca-de-r-551-bi-para-alcancar-metas-de-universalizacao/ Portal Gov.br. Marco Legal do Saneamento. https://www.gov.br/mdr/pt-br/assuntos/saneamento/marco-legal-do-saneamento Nexo Jornal. Brasil perde quase 40% da água tratada, mostra estudo. https://www.nexojornal.com.br/expresso/2023/10/19/Brasil-perde-quase-40-da-%C3%A1gua-tratada-mostra-estudo Instituto Trata Brasil. Perdas de Água 2023. https://tratabrasil.org.br/blog/perdas-de-agua-2023-indicadores-mais-recentes-e-analise-historica/ Poder360. Brasil desperdiça 40,3% da água tratada, segundo estudo. https://www.poder360.com.br/economia/brasil-desperdica-403-da-agua-tratada-segundo-estudo/ Agência Nacional de Águas e Saneamento Básico (ANA). Normas de Referência - Saneamento. https://www.gov.br/ana/pt-br/assuntos/saneamento-basico/normas-de-referencia Brasil 61. Saneamento: apenas 52,2% do esgoto gerado no Brasil é tratado. https://brasil61.com/n/saneamento-apenas-52-2-do-esgoto-gerado-no-brasil-e-tratado-pnews640250