Governance structures and their impact on tariff levels of Brazilian water and sanitation corporations

• We analyze the impact of governance structure on water and sanitation tariffs.
• Tariff levels are higher when the management of the corporation is private.
• Unregulated water corporations with private management apply the highest tariffs.
• The scope of the regulatory agency does not affect tariff levels.
• The regulatory regime has no significant impact on water and sanitation tariffs.

This study analyzes the effect of governance structure on the tariff levels applied by Brazilian corporations of water supply and sanitation. It aims to contribute to the traditional debate of public versus private management, and to determine the effect of regulatory structure on tariff levels. The results first show that, when jointly considered, the water supply and sanitation tariff levels are higher for privately managed corporations. Second, we have found that a corporation regulated by a local agency or a regional agency does not exhibit significantly lower tariff levels than unregulated corporations. Finally, the results indicate that the use of the rate of return and price cap/revenue cap regimes do not provide tariff levels lower than those set via negotiation with the municipality.