Economic regulators play an important role in ensuring the affordability, quality and accessibility of essential services, such as water and sanitation, as well as promoting the sustainable use of resources to ensure their continued availability. The stakes are high: regulators’ actions affect market outcomes and can have strong social and environmental implications. Exogenous shocks, such as the climate crisis, and a fast-changing political, economic and social environment make balancing these outcomes even more challenging. Regulators are expected to provide stability and to design regulations that protect the public interest without impeding innovation. Good governance is essential to ensure the effectiveness of the regulator and support better outcomes, especially in times of change.

Brazil’s National Agency for Water and Basic Sanitation (Agência Nacional de Águas e Saneamento Básico, ANA), an independent federal regulatory agency, has seen its mandate expanded significantly in recent years. Initially focused on water resource management (WRM), it now also covers aspects of dam safety, and, since 2020, water supply and sanitation (WSS). In the WSS sector, ANA contributes to ambitious national policy goals such as universal service provision, despite the challenges of Brazil’s uneven water distribution, external shocks affecting water security and availability, and the country’s complex multi-layered governance system. To support ANA at this important juncture, this review identifies six issue areas and provides recommendations.

This chapter summarises the main findings and recommendations of the Performance Assessment Framework for Economic Regulators (PAFER) review of Brazil’s national water and basic sanitation agency (Agência Nacional de Águas e Saneamento Básico – ANA). The recommendations aim to strengthen the regulator’s organisational performance and governance structures.

This chapter provides an overview of Brazil’s public institutions and describes the main features of the water resources management and water supply and sanitation sectors, as well as the legislative framework that determines the functions of Brazil’s National Agency for Water and Basic Sanitation (Agência Nacional de Águas e Saneamento Básico - ANA).

The Performance Assessment Framework for Economic Regulators (PAFER) was developed by the OECD to help regulators assess their own performance. The PAFER structures the drivers of performance along an input-process-output-outcome framework. This chapter applies the framework to the governance of Brazil’s National Agency for Water and Basic Sanitation (Agência Nacional de Águas e Saneamento Básico – ANA) and reviews the existing features, the opportunities and challenges faced by ANA.

Measuring regulatory performance is challenging, starting with defining what to measure, dealing with confounding factors, attributing outcomes to interventions and coping with the lack of data and information. This annex describes the methodology developed by the OECD to help regulators address these challenges through a Performance Assessment Framework for Economic Regulators (PAFER), which informs this review. It first presents some of the work conducted by the OECD on measuring regulatory performance. It then describes the key features of the PAFER and presents a typology of performance indicators to measure input, process, output and outcome. It finally provides an overview of the approach and practical steps undertaken for developing this review.