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Governance Innovations for Access to Basic Services in Urban Slums
Carlos Rufín
Associate Professor of International Business
Sawyer Business School, Suffolk University
8 Ashburton Place, Boston, MA 02108
+1 617 570 4897
crufin@suffolk.edu
Abstract
With rapid urbanization on a global scale, poverty is increasingly becoming an urban phenomenon. A key
component of urban poverty in developing countries is inadequate access to basic services, so
understanding the institutional setting for basic service provision is key to addressing this challenge. This
paper seeks to explain the institutional and organizational forms of service provision that emerge in
developing country cities, where the urban poor living in informal settlements constitute a significant
proportion of the urban population. The paper does so by examining the contemporary case of the Rio
de Janeiro metropolitan area in Brazil, based on fieldwork conducted over the 2007-2014 period, for three
key services: electricity, water, and sanitation (sewerage). I argue that the traditional forms of interaction
between the state and informal settlements in Rio, based upon pork-barrel politics, have declined due to
the absence of law enforcement and subsequent rise of organized crime in these areas, but also because
of the emergence of new actors and organizations, including private service providers. Where the state
remains the service provider, the decline of pork-barrel politics and the incentives related to public
ownership have resulted in a policy of neglect towards informal settlements, significantly limiting access.
In some cases, however, I show that private actors are constructing new approaches to service provision
through collaboration with community and nonprofit organizations. These approaches entail
collaborative forms of governance that have the potential not only to increase access, but to offer an
alternative to the existing institutional setup beyond basic service provision. As such, they are of interest
not only to scholars and practitioners interested in basic service provision, but more generally for the
broader challenge of urban poverty and exclusion in the developing world.
KEYWORDS: urban informality; slums; water and sanitation; energy; institutions; governance
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Urbanization, informal settlements, and access to basic services by the urban poor
Informal urban settlements, simply called slums1
by the United Nations (UN-HABITAT, 2003), continue to
grow relentlessly in the cities of the developing world. While the transition from rural to urban has been
completed in Europe and North America, and nearly so in Latin America, recent years have witnessed the
beginning of the largest migration from countryside to city of all time—in China. Equally massive
migrations are taking place elsewhere in Asia and increasingly in Sub-Saharan Africa. Thus, the United
Nations estimated that, for the first time in history, in 2008 the urban population of the planet would
overtake the rural population in number (UNFPA, 2007). And urbanization, at least in the developing
world, means informal settlements to a very significant extent: 900 million persons according to the latest
estimates of UN-Habitat.
Faced with the lack of institutional and economic capacity of the authorities to accommodate the
influx of rural immigrants, many immigrants choose to do it themselves, squatting on unused land,
building their own housing, and meeting other needs through their own efforts as best as they can. Here,
in essence, lies the meaning of the term “informal:” following unwritten, locally-observed rules rather
than the written, public, and state-issued and –enforced rules that correspond to the “formal” dimension,
whether in urban planning (Finlayson, 1978), employment relations (Hart, 1973), economic activity
(Bruton et al., 2012; Godfrey, 2011; Portes & Sassen-Koob, 1987), or even politics (Helmke & Levitsky,
2006).
Of all these manifestations of informality, one of the most salient—used, in fact, by the United
Nations to identify informal settlements (UN-HABITAT, 2003)—regards access to the physical networks
that provide key services in urban agglomerations: mobility (road and transport networks), energy
(electricity grids and natural gas distribution networks), communications (fiber optic lines for internet
access), potable water (water mains and service lines), and sanitation (sewers). As Figure 1 and Figure 2
show, for water and sanitation respectively, the poorer segments of urban populations in a variety of
3
countries across the world suffer from a significant lack of access to piped water in both absolute and
relative terms, and, less precisely, access to sanitation is also highly problematic in many countries. Given
the fundamental human need for potable water, evacuation of waste, and energy (at the very least to
cook food and provide heating), but also given the physical proximity to water and energy distribution
networks in urban areas, it should come as no surprise that, faced with lack of formal access, the urban
poor find other means to obtain these basic services. Figure 3 and Figure 4 provide examples of such
means, more specifically “self-built” connections to electricity and water networks, respectively.
[insert Figures 1 to 4 about here]
Informal access has significant consequences for the urban poor in terms of the quality of service
they receive (and more controversially about the cost), and for the organizations providing basic services.
For the urban poor, informal access means more interruptions in service, as substandard materials fail
and networks are overwhelmed by demands that exceed the original design. Water pressure may be too
low for many uses, such as taking a shower, or water may only be available a few days a week; voltage
fluctuations can burn out appliances; and sewage may spill onto streets and homes, causing health
hazards. Moreover, not paying utility bills does not necessarily mean lower cost. The urban poor may
have to pay informal intermediaries who set up the informal connections; or they may have to pay for
very expensive trucked water, or spend many hours a day waiting to fill water cans and bring them back
to the house (UN-HABITAT, 2006). For the service supply organizations, informal access normally means
high levels of pilferage of their networks, known as “non-revenue water,” or “non-technical losses” in the
electricity sector. In turn, pilferage entails adverse financial impacts and worse quality for paying
customers. The scale of this problem is shown in Figure 5 for the electricity sector. Notice that losses
increased in all regions of the world from 1980 to 2000 (the last year available on a global scale) except
for the highest-income ones (W. Europe, N. America, E. Asia).
4
[insert Figure 5 about here]
All this makes the question of access to these services a major challenge for a rapidly urbanizing
world. Demand for water and sanitation for cities in emerging economies, for example, is expected to
account for most of the growth in the global demand for such services for the next decade, as shown in
Figure 6. However, meeting this demand, and improving the lives of millions of the urban poor, poses the
question of what institutional and organizational structures can deliver these services in an efficient and
equitable manner. As basic services that have a major impact on the condition and quality of life of the
poor—and indeed on the quality of life of an urban agglomeration as a whole—basic services are
politically very salient, attracting strong attention by urban residents. High salience leads in turn to close
control by politicians. These have a strong interest in ensuring that services are provided at a politically
acceptable combination of cost and quality, either through public sector organizations or heavily
regulated private companies; in some cases, the supply of these services can become the object of political
exchange, being traded by blocks of votes in areas that benefit from supply improvements (Mitlin, 2014).
[insert Figure 6 about here]
This paper examines the institutional and organizational forms of service provision that emerge
in developing country cities, where the urban poor living in informal settlements constitute a significant
proportion of the urban population. The paper does so by analyzing the contemporary case of the Rio de
Janeiro metropolitan area in Brazil, based on work conducted over the 2007-2015 period, for three key
services: electricity, water, and sanitation (sewerage). The paper argues that the “pork barrel politics”
that traditionally characterized the interaction between the state and informal settlements in Rio has
become much less relevant, mainly due to the rise of organized crime in these areas as a result of neglect
of law enforcement, but also because of the emergence of new actors and organizations and, in some
cases, the privatization of service provision. Where the state remains the service provider, the decline of
opportunities for “pork” and the “governance failure” of public ownership (Baker & Kooy, 2008) have
5
resulted in a policy of neglect towards informal settlements, significantly limiting access to basic services.
In other cases, however, private actors are constructing new approaches to service provision through
collaboration with community and nonprofit organizations. These collaborations entail collaborative
forms of governance (Ansell & Gash, 2008; Donahue & Zeckhauser, 2011; Emerson et al., 2012) or co-
production (Ostrom, 1996) that have the potential not only to increase access, but to offer an alternative
to the existing institutional setup beyond basic service provision.
The rest of the paper continues with an examination of the context of the Rio de Janeiro
metropolitan area, and its representativeness as a setting for the research question, in the section that
follows. Next, the institutional and organizational arrangements for service provision in Rio are examined,
first at the bottom level of the slums, and then from the perspective of the major institutions and
organizations in charge of service provision. Another section focuses on emerging patterns of governance
as a means to provide basic services to Rio’s poor, and a final section concludes.
Access to basic services in Rio’s favelas
The zika epidemic in Brazil, apparently transmitted by mosquitoes, and the appalling pollution of Rio de
Janeiro’s Guanabara Bay, have gained global notoriety in the context of the celebration of the Olympic
Games in Rio in 2016. Both of these issues are directly related to the failure to provide basic services to
the inhabitants of Rio’s vast informal settlements, known as favelas. Latin America’s cities, and Rio de
Janeiro specifically, offer a very valuable setting for studying the challenges of access to basic services by
the urban poor. Latin America has largely completed the urban transition, with more than 80% of the
region’s population living in urban areas. Yet unlike the developed regions of the world, a very significant
part of the region’s urban population continues to live in informal settlements suffering from the lack of
services that characterize these settlements globally, and which concentrate most of the urban poor.2
Hence, for Latin America poverty has become an urban phenomenon, unlike South Asia and Sub-Saharan
6
Africa, where rural poverty is still significant, if rapidly losing ground to urban poverty. This situation has
made Latin American cities, and certainly Rio, key laboratories for the development of solutions to the
challenges of urban poverty—in Rio’s case, with the added attention brought by the celebration of the
Olympic Games in 2016. It would not be an exaggeration, indeed, to argue that Latin American cities are
showing what the urban future of the planet portends.
The Rio metropolitan area comprises the municipality of Rio plus its hinterland, specifically the
Baixada Fluminense and all municipalities bordering the Bay of Guanabara, notably Niterói, adding up to
a total population of some 12 million. In the city of Rio itself, about 22% of the population lives in favelas
(slums) (Cavalieri, 2005); the proportion is certainly higher for the metropolitan area as a whole,
particularly if informal subdivisions are included and not just favelas.3
These areas suffer from significant
deprivation, as these two examples show: 300,000 residents and 40% of schools in the Baixada’s largest
city, Duque de Caxias, lack connections to piped water, and the inhabitants of informal settlements in the
Baixada with piped water connections receive as little as two days of water per week (Observatório das
Metropóles, 2014). Serious drainage, sewage, and trash collection deficiencies are also obvious to the
visitor to these areas. Electricity, while widely available, is obtained in many cases through informal
connections—theft, in other words.
Figure 7 shows a composite index of access to basic services for the metropolitan area, pointing
to huge disparities in access even within the municipality of Rio. Government data show that in 2012,
although 91% of the population of the city had access to piped water, only 78% of homes were connected
to the sewer network, and only 50% of the collected sewage was treated, while 55% of water supplied to
the city was unaccounted for (Instituto Trata Brasil, 2014). As a result, the Bay of Guanabara is too
polluted for swimming, and its fish population has dwindled (Coelho, 2007).
[insert Figure 7 about here]
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In the same year, the two electric utilities supplying the metropolitan area, Light and Ampla, lost
respectively 24% and 19% of the electricity that they purchased, with most of these losses being due to
theft in informal settlements (Abradee, 2013): as Figure 8 shows for Light’s case (with losses measured as
percent of electricity supplied at low voltage), the contrast between losses in Rio’s rich South Zone (called
“Litoránea” in the graph) and in the more rural areas of the Paraíba valley (“Vale”), on one hand, and on
the largely poor urban areas of the East and West zones of the city and of the Baixada, on the other hand,
is truly staggering: below 7% in the former, vs as high as 88% for the more than one million customers in
the Baixada (Light, 2013).
[insert Figure 8 about here]
The problem of underservicing and informality, moreover, goes beyond basic services in the Rio
area, to a broader problem of lack of presence of the state, in the Weberian sense of the institution with
a “monopoly on violence.” As territories occupied with weak or nonexistent property rights, Rio’s informal
settlements seldom saw any presence of the state, other than in the negative sense of evictions and
removals of favelas, until the early 1980s, and then only in a very skewed fashion. While Governor Brizola
(1983-1987 and 1990-1994) and programs such as Favela Bairro (1995-2005) brought important
improvements to some settlements in the form of schools and some physical infrastructure, Brizola was
also responsible for the removal of police presence in these areas (Heinz & Frühling, 1999). This led to
the “informalization” of the “monopoly on violence” itself, just like basic services. During the 1980s, many
settlements were taken over by organized crime (mainly drug-related), which saw them as valuable
distribution points for drugs and fertile areas for market growth; the late 1990s and early 2000s saw in
turn the emergence of militias formed by off-duty security personnel (police and fire), initially to stop the
violence associated with drug trafficking, but soon becoming organized criminal groups too (Cano &
Duarte, 2012). The takeover of much of the metropolitan territory by such “parallel powers” is shown in
Figure 9, with colors referring to the main groupings: militias (blue) and the three major drug gangs,
8
Comando Vermelho (red), Amigos dos Amigos (yellow) and Terceiro Comando Puro (green). In turn, these
conditions only worsened the challenge of service provision, as formal service supply in these areas
became simply too dangerous for utility personnel to undertake.
[insert Figure 9 about here]
Service provision from the Bottom up: From pork to famine
Traditionally, the activity of the state in the favelas Rio took place, as in most other such settings, through
the establishment of relations of political exchange between their inhabitants and political entrepreneurs
or political parties that saw in these populations potential vote blocks to be captured in exchange for the
provision of individual help to individuals, or of local collective goods such as water standpipes, road
paving, or access to electricity (Gay, 1994). This pattern matches, in fact, the one observed in other cases
of urban formation, notably with immigrant communities in the industrial cities of the U.S. (Menes, 2006).
Basic services are ideally suited for pork-barrel bargains, because their supply can be circumscribed, within
some limitations, to a specific geographic area, thus targeting a specific block of votes, and it can be turned
off or at least constrained subsequently (for example, through lack of maintenance) if the community
withdraws political support for the party or politician (Holland, forthcoming).
This pattern of political incorporation marked profoundly the experience of access to basic
services in Rio. First, as mentioned above, the pattern seems to have been one of incomplete access at
best, i.e. forbearance (Holland, forthcoming): to maintain their bargaining power, political patrons would
ensure that basic services were provided free of charge or at a low nominal fee, but not fully formalized.
For example, water service would be in the form of a standpipe at the entrance of the settlement, or
electricity to a transformer to which service lines to houses could be extended. Without full formalization,
residents remained dependent on the politician’s will to provide service, as there would be no regular,
enforceable contract for supply. This also meant that self-supply remained an important element of
access to these services, such as running a service line from the transformer to one’s house, or fetching
9
water from the standpipe; in some cases, all the politician did was to pressure the utility company to
tolerate the informal connections, which would be entirely established by the residents (Diniz et al, 2013).
The second way in which this pattern left a deep mark is that basic services were obtained for free or at a
nominal cost, at least with regard to payments made to utility companies. This created an expectation
that basic services should be provided without user fees by the state, like paved roads or public schools.
It could also create financial hardship for residents if any attempts were made at formalization of supply
and households or local businesses were not previously paying for their informal access.
To be sure, political exchange of this kind was not the only possible form of political incorporation
for these settlements. Mobilization by programmatic parties, most logically those of the left, was also
possible and was indeed beginning to happen in Rio and Brazil in the years leading to the 1964 military
coup. It was, in fact, the fear of mobilization of the masses, such as the then rapidly growing favela
inhabitants, that led to the coup. Not surprisingly, the first years of the subsequent military regime (1964-
1984) saw a change of direction in the attitude towards favela communities, away from the previous
clientelism, and towards the eradication of informal settlements and the control of this population
through their forced removal to public housing projects in distant areas of Rio.
The transition to democracy initiated in 1983-84 once again brought forward the tension between
clientelistic or pork-barrel politics, and programmatic mobilization of settlement inhabitants. No longer
willing to alienate this population given the prospect of a return to free elections soon, the political allies
of the military regime did not hesitate to rediscover the old tactics (such as Paulo Maluf in São Paulo),
while the left (e.g. Brizola in Rio) once again sought to mobilize favelados (favela residents) to press for
social and economic reforms (Skidmore, 1990).
No one at that time could perhaps realize, however, that things were going to take a very different
turn: instead of a return to these previous patterns, the space left by the retreat of the military regime
was taken over, in Rio’s slums, by organized crime. Community leaders who attempted to resist this
10
takeover were either murdered, silenced, or co-opted (Barcellos, 2003: 234; Gay, 2005; Zaluar, 2004)
during the 1980s and 1990s. The result was that by the early 2000s, the political ties of the past had been
severely weakened throughout the vast areas of the informal settlements in Rio’s metro area, replaced
by much more tenuous connections between the drug gangs and political forces or individual politicians.
Only in the case of the militias was there an effort by the militia leaders to leverage their control over
settlements to gain political office. Some of these leaders were elected to municipal councils and other
local government offices, and mayors in some Baixada municipalities were alleged to have close ties to
militias. But even these ties proved to be fragile. The militias’ recourse to armed violence against the
state, particularly the murder of an investigating judge, set off a concerted law enforcement effort to
weaken, if not dismantle, the militias throughout the metropolitan area (Ramsey, 2014).
In the case of the drug gangs, not even such connections with political processes have been
established or documented. The reasons are well explained by Arias (2006: 428, 434): “To get into favelas
politicians must first make an arrangement with traffickers who then, usually through interlocutors,
present the politicians to the community. (…) Since traffickers are criminals they have only a limited and
fragile degree of respect within communities and they have difficulty directly interacting with state
officials. What contacts politicians have with traffickers actually may hurt politicians’ image with residents
who see them as even more corrupt and dishonest than before (…) in an effort to avoid overt and
potentially dangerous contact with criminals and their civic allies, politicians spend very little, if any, time
in the communities.”
At the same time, even if the slums have become a relatively inchoate territory for politics, it is
clear that organized crime has not entirely suppressed the impact of thirty years of democracy on the
organization of interests among the population of the slums. As democracy has stabilized and democratic
freedoms gained ground in Brazil, a variety of non-governmental organizations (NGOs) have begun to take
roots in the settlements of Rio, some originating outside the settlements, like Viva Rio—an NGO initially
11
focused on violence reduction, and at present also engaged in the provision of health care services in the
slums—and others set up by the residents themselves, such as Redes da Maré or Afro Reggae. The
organizations with the greater capacity to mobilize slum residents and to make their voices heard outside
the settlements, for example through social media, are increasingly demanding a voice in policy decisions
that affect these communities, particularly the provision of services such as education and policing.
Although their presence appears to be heavily circumscribed to specific settlements such as Maré,
dependent as it is on the highly specific interpersonal dynamics and leadership capabilities of each
community, they are becoming important actors in the political space, yet not necessarily linked to specific
political parties or personalities. Other organizations, particularly Pentecostal churches—like NGOs, some
independent, some affiliated with larger churches—also play an increasingly important role in the slums,
with pastors in leadership roles that can articulate community preferences, mediate with other
organizations inside and outside settlements, and exert influence over the local residents. Importantly,
some of the churches with a regional or nationwide scope are rapidly becoming important political players
in Brazil, both at the federal level and in Rio state. While the impact of this political dimension for the
slums is still unclear, it deserves further scrutiny.
Lastly, a new actor has emerged in the settlements when it comes to the provision of basic
services: the private sector. As a result of the privatizations undertaken in the 1990s and early 2000s by
the government of Fernando Henrique Cardoso, electricity supply and telecommunications services were
transferred to the private sector; moreover, in some municipalities of the Rio metro area, notably Niterói,
water and sewerage services were also privatized, a policy that still continues even if not uniformly and
very controversially. Privatization has introduced a further separation from the state in the settlements,
as private-sector suppliers are mainly motivated by regulatory incentives and bottom-line considerations,
and as such are significantly more removed from political pressures than public sector utilities. If, for most
of these companies, the settlements would be areas to be avoided and ideally not serviced, being too
12
physically complex to serve, too violent, and too poor, regulatory pressures and the realization that the
settlements can also be a source of profit are changing company policies. The impact of regulation is
examined in the next section, which considers the current role of the state; as for potential profits, the
experience of cellphone operators and a growing number of businesses has shown that, although
relatively poor, the inhabitants of the slums are willing to spend money on whatever they consider
important, and the size of this pie has only grown under the redistributive policies and economic
conditions of the last decade in Brazil. Utilities thus increasingly recognize that the slums are becoming
important sources of market growth, and that tapping this growth may be possible with the right business
model.
In recent years, the State government of Rio de Janeiro has undertaken a major effort to assert
its “monopoly on violence” in Rio’s settlements. In 2008, the main unformed police force (known in Brazil
as “military police” and controlled by the States) began the deployment of “pacification units” in the
informal settlements of the city of Rio, in some cases with the support of army and navy units which were
given the task of flushing out the heavily armed drug gangs. The pacification units, known as UPPs from
their Portuguese acronym (Unidades de Polícia Pacificadora) established a permanent presence in the
settlements in order to stop the violence related to organized crime and its violent periodic confrontations
with the police, which before the UPPs would only enter the settlements during anti-drugs operations
lasting just a few hours. By 2015, 38 UPPs had been established, all within the municipality of Rio.
Although the settlements with UPPs have experienced significant drops in violent crime (Fórum Brasileiro
de Segurança Pública, 2012), the effectiveness and viability of UPPs remains very much in question. After
several years in operation, it has become increasingly obvious that the training of UPP police officers
remains problematic with regard to the building of trust or at least a workable relationship with the
residents of the slums. The officers are unprepared to undertake foot patrolling in the intricate streets of
the favelas and to work the poorer and darker-skinned inhabitants of these communities (relative to the
13
rest of Rio’s population and many of the officers’ own backgrounds). The disruption of the drugs trade
has not been compensated with public programs to relieve poverty in the “pacified” settlements, with the
result that in some areas drug trafficking is making a comeback despite UPP presence. Lastly, the UPP
program, relying as it does on a heavy presence of especially trained officers, is expensive. This means
that only a relative small portion of settlements has received UPPs (in general, the most visible
settlements in Rio’s rich southern districts, in the central business district, and in the areas near the
international airport highway); no settlements elsewhere in the metro area have received UPPs, and there
are grounds to doubt the financial capacity of the state to sustain a permanent UPP presence in all
informal settlements of the metro area, let alone of the state of Rio as a whole (ibid.). Hence, although
utility companies have taken advantage of the UPPs to formalize service in these settlements, it is unclear
that the companies can count on police support as the means to address the problem of informal access
to service.
The upshot of these various trends and transformations is the increasing complexity in the supply
of basic services in Rio’s informal settlements. Organized crime, but also new forms of organization of the
population, and an increasing private-sector presence, combined with weak linkages to the political
system, have created a complex landscape where no specific actor appears to have a dominant role in
structuring the supply of basic services. Organized crime is fragmented and has neither the expertise nor
a clear preference for a specific form of service provision; at best, its attitude varies between an interest
in basic services as another business with racketeering potential, in the case of the militias, and a desire
to protect residents from economic hardship, in the case of the drug traffickers; but nothing indicates
that, at least in the latter case, it is impossible to reach a modus vivendi with the traffickers that would
allow for better conditions of access to basic services. NGOs and other locally present organizations
generally express the desire of the local residents to be treated as full citizens and thus have access to
basic services on a formal basis, while also being concerned about the affordability of the services. Lastly,
14
the private sector is both attracted by the potential market and pressured by regulators to formalize
service. Moreover, it possesses far more technical knowledge than other actors, and can mobilize
significant financial and human resources. But it is concerned about the violence in the slums, its ability
to provide affordable service, and the complex landscape in these areas, with its attendant uncertainties.
At the same time, the fact that the linkages of the informal settlements with the political system are weak
and complex does not mean that the state, in its various functions and activities, has ceased to play an
important role in basic service supply. The next section turns to this aspect.
Service provision form the top down: institutional structures and governance
The involvement of the public sector in the specific matter of basic service supply is, first of all,
complicated by a good deal of role ambiguity and confusion as regards the allocation of responsibilities
across the various vertical levels of government, specifically municipal, State and federal. As a legacy of
the military dictatorship of 1964-1984, water and sewerage services in Brazil are largely provided by
enterprises owned by the States and thus with a service area extending over the territory of each State.
Some of these companies were privatized during the reforms of the 1990s, but most remain under public
control, as is the case of the company serving most of Rio de Janeiro State (including Rio city), CEDAE.
Direct responsibility for service supply depends, then, on contracts entered between municipalities and
State governments delegating municipal responsibility to the State-owned utility companies, and that
predate the 1988 Constitution. However, the Constitution delegates the responsibility over water and
sewerage to municipalities. This means the validity of these contracts depends on their interpretation by
the courts, particularly where municipalities decide to privatize service through concessions to private
operators, as happened in Niterói, which successfully reasserted its control over these services after a
long litigation process with CEDAE.
15
In the Rio metro area, this has led to a hodgepodge of arrangements, resulting in notable voids
regarding service provision. In general, CEDAE has resisted giving up profitable areas such as the central
and southern zones of Rio city, or Niterói, which was only able to wrest control away from CEDAE after a
lengthy judicial battle. At the same, CEDAE has also sought to avoid providing service in costlier or more
complex areas to service, particularly informal settlements. As a result, in the city of Rio the responsibility
over water and sewerage in the non-pacified slums has been left to the municipal government, as has that
over sewerage services in the entire fifth administrative zone of the city, a largely poor area. In the poor
municipalities of the Baixada, such as Duque de Caxias, CEDAE simply limited its service contracts to piped
water supply, and thus most of the sewage of the Baixada is untreated since the municipal governments
have done nothing about it, leading to very high levels of pollution of Guanabara Bay. Thus, water and
sewerage services for the informal settlements of the metro area have not received systematic attention
and in many cases have simply “fallen through the cracks” (Instituto Trata Brasil, 2014). This contrasts
with electricity, natural gas and telecommunications, all of which are provided under concession contracts
awarded and regulated by the federal government, and which include universal service obligations.4
Another element that complicates water and sewerage service provision in Rio’s settlements is
the poor coordination between the public service providers. The problem is largely caused by split
between the State and municipal ownership of these providers. Municipal responsibility for trash
collection and drainage infrastructure, at least in Rio city, hampers coordination with water and sewerage
services furnished by State-owned CEDAE. This has important implications in the slums. Poor trash
collection clogs sewers and causes sewage to spill on to drainage structures; but lack of adequate sewer
networks has the same effect, forcing sewage on to ditches and waterways. To deal with this problem,
the municipality of Rio invests in expensive treatment plants to treat the waters of rivers and other
waterways, instead of supporting efforts to expand the sewer network and treat the sewage. Poor
coordination also impacts the design, construction, and maintenance of drainage infrastructure and
16
waterways, since municipal boundaries do not coincide with the physical boundaries of river basins. This
is important, because many settlements, especially in the Baixada, lie on a floodplain and experience
periodic and destructive floods.
Even for service providers under federal regulation, it is clear that the one-size-fits-all approach
of federal laws and federal regulatory agencies is detrimental for service provision in informal settlements,
not only because conditions in the slums are quite different from those in formal areas, but because these
conditions vary significantly among the different settlements. For example Maré is a settlement with a
regular street pattern, adequately paved, and well communicated, whereas Complexo do Alemão, just a
few blocks away from Maré, is a maze of alleways occupying a hilly, irregular area. At present, the only
element of flexibility in federal regulation of electric utilities is the existence of a discounted rate, but by
law it is limited to families eligible for the federal Bolsa Família program of conditional cash transfers, and
is established as a set discount on the regular rate, rather than being tailored to local conditions in
different areas.
Of all factors influencing the governmental role in access to basic services in the slums, the most
important ones are unquestionably those directly shaping the behavior of the service providers
themselves. In the case of private sector providers, these factors are the behavioral incentives created by
concession contracts and the regulatory agencies that enforce the contracts. For electricity access, the
critical issue has been the degree to which utilities have been allowed to cross-subsidize informal access
by formal customers. Cross-subsidization can be easily undertaken by charging the cost of electricity lost
to informal access (“non-technical losses”) to paying customers, in the form of higher prices. Over time,
as federal regulators have become less willing to tolerate such cross-subsidization, Rio’s utilities and
especially Light (serving Rio city and the Baixada) have been forced to formalize access (Light, 2013). A
similar situation applies to private providers in water and sewerage, in this case via application of the
clauses of concession contracts by municipal counterparts. The city of Niterói, which has the only
17
concession to a private operator in the metro area, has apparently enforced the clauses requiring the
private water and sewerage service provider (Águas de Niterói) to extend full service to Niterói’s
settlements,5
as evidenced by the available access data (Instituto Trata Brasil, 2014).
For public sector providers, and more specifically CEDAE, behavior towards slum communities is
driven by different governance arrangements and processes. Together with the school system and
policing, water and sewerage services are arguably the most important services directly provided by the
public sector in terms of their potential impact on these communities. This makes CEDAE’s behavior
inherently political: it represents the direct action of the state in meeting the basic needs of the
population, in contrast to services such as electricity, telecommunications, or transport, where private
concessionaries become intermediaries between state and citizen.
CEDAE has a poor record of providing formal access to water and sewerage. In addition to the
“cherry picking” already noted, it has consistently failed to attain the objectives of successive plans to
clean the Bay of Guanabara (which focused on collecting and treating the sewage of the metro area, the
sole source of pollution of the Bay at present), experiences high losses of water, and has not brought
universal access to sewerage for the metro Rio area (Instituto Trata Brasil, 2014). There is little evidence
of the kind of political exchange that had originally prevailed in the favelas, as described above, in CEDAE’s
behavior towards these areas, which is consistent with the decline of such practices as a form of
articulation of the slum population with the political system and the state. At best, CEDAE practices a
policy of benign neglect, tolerating informal access to piped water in settlements, and simply letting
sewage flow to the waterways and from there to the Bay and the sea. Benign neglect can be interpreted
as a passive behavior towards slum communities, appeasing their demand for basic services by offering
them a lower cost, if poor quality, access to these services, rather than as an object of political exchange
Instead, CEDAE’s focus is on other constituencies commonly favored by State-Owned Enterprises (SOEs):
its own employees and major suppliers.
18
SOE employees usually have strong bargaining power if they can organize cohesively. They face
a counterpart that does not have to worry overmuch about profits, because it can always have recourse
to tax revenues. Moreover, when SOEs perform essential services, as is CEDAE’s case, governments are
less willing to tolerate the public pressure that comes from disruptions of service caused by strikes and
other industrial actions. In CEDAE’s case, an additional factor is the technically demanding nature of the
work carried out by its employees, due to the significant expertise needed to operate a modern water
supply and sewerage system for a large metropolis. As a result, many of its employees are engineers or
technicians, who have their professional status in common and are difficult to replace. Not surprisingly,
then, CEDAE’s labor force appears to exert a strong influence on the company’s behavior, in a case of
“professional capture.” This matters for the informal settlements. Engineering professionals are more
interested in the challenges of designing and operating technologically complex facilities for water supply
and treatment, than in the humdrum work of connecting households to the network, installing meters,
billing and collecting, and maintaining local networks. In informal settlements, where prejudice and large
social distance create a different, social rather than technical, set of challenges, the reluctance of
engineering professionals is even higher (Gómez et al., 2006).
For CEDAE’s political principals, the main value of the company appears to be its capital intensity.
Utility companies rely on vast physical networks and large facilities, whose construction requires large
amounts of money. With CEDAE’s other possible sources of political value blunted by a cohesive,
professionalized labor force (limiting opportunities for patronage) and by the weakened state presence in
the slums (limiting opportunities for “pork”), it is not surprising that major construction projects offer the
best prospects for the Rio state politicians who control CEDAE. Such projects provide high political
visibility, easily showcasing “achievements” (“ribbon cutting”), and above all they offer excellent
opportunities for large kickbacks from construction companies in order to finance electoral campaigns or
personal kitties. In fact, the successive programs for the cleaning of the Bay of Guanabara, which began
19
in 1994 and have mobilized more than one billion dollars, have probably offered excellent opportunities
for graft due to the extraordinary sums involved, while their notorious failure to achieve their goals likely
reflects this kind of rent-seeking. For example, the programs led to the construction of several sewage
treatment plants around the Bay that were never put into operation because their feeder sewerage
networks were never built (Alencar and Schmidt, 2014).
In such a setting, it is clear that providing formal access to basic utilities in the Rio metro area
remains a very challenging task due to the institutional weaknesses highlighted above, which could even
be regarded as “governance failures” (Bakker & Kooy, 2008). However, this would be too pessimistic a
conclusion. Recent and ongoing experiences, which involve the forging of innovative, hybrid collaboration
across different sectors, may show the way forward. The next section examines these alternative paths.
A new path? Collaboration and co-production as means to address governance failures
In the absence of effective direct action by the state to offer formal access to basic utilities to the
inhabitants of metro Rio’s slums, progress in making such access possible has come to rely on a
combination of autonomous initiatives of non-state actors and, for the private service providers,
regulatory incentives embedded in concession contracts or established by regulatory agencies. The
combination of deepening democracy, leading to the emergence of the organized groups mentioned
above, with increasingly stronger incentives to engage proactively with slum communities, is leading these
non-state actors to forge new alliances and forms of engagement in order to improve access within the
very difficult conditions, particularly violence, of these communities. What follows are brief descriptions
of three of these initiatives identified and studied during my fieldwork in Rio in the fall of 2014. Whereas
the first two rely on collaboration with “civil society”—local non-state actors—approximating a variation
on the concept of collaborative governance (e.g. Donahue & Zeckhauser, 2011), the third case can more
properly be characterized as a form of co-production (Ostrom, 1996).
20
Collaborative governance without the state: Águas de Niterói6
and Ampla’s Reta experiment7
Niterói’s water utility, Águas de Niterói, is a private-sector provider with a service area
encompassing more than 150 favelas, while its concession contract calls for universal access to water and
treatment of all sewage by 2017. Thus, for Águas de Niterói providing access in favelas is no longer at a
pilot stage, but is a company-wide program developed to meet contractual requirements.
Águas de Niterói relies on a combination of trust-building with each settlement community and
the deployment of technology. Technology, and specifically investment in measurement and monitoring
equipment, has allowed the company to identify the areas with the highest incidence of informal access
and prioritize its efforts accordingly. However, technology can only go so far. Unlike electricity or
telecommunications, in the water sector it is not possible—or would be prohibitively expensive—to
protect the physical network from theft, or to remotely disconnect of customers who engage in fraud or
theft. Hence, Águas de Niterói must place a heavier emphasis on trust-building. In effect, in the favelas
run by organized crime, the company cannot use the threat to disconnect customers who don’t pay or
who take water informally; it can only try to persuade them to pay their water bills. The company has
sought to develop a close and highly customized relationship with its customer base in the settlements
through community leaders and local representatives. Its persuasion tools are community reinvestment
and the better service offered to paying customers. The community reinvestment component is
particularly interesting, because the company has taken a radical approach with its “zero a zero” (“nil-nil”)
program, whereby it commits of keeping within the community all the revenue (and not just profit, or a
portion of profit) collected in the community from paying customers. This is done by using the revenue
to improve the water and sewer networks, drainage infrastructure, and public spaces such as parks and
squares. As a result, since 1999 overall water losses have declined from 40% to 16%, while access to piped
21
water and treated sewage have increased from 72% to 100% and from 35% to more than 90%,
respectively.
Also serving Niterói, but also neighboring municipalities along Guanabara Bay, Ampla is one of the
two electric utilities operating in the metro Rio area, and unlike the other two companies examined here,
it is part of an Italian multinational, Enel, that owns several electric utilities in some of Latin America’s
largest cities. Ampla began in the early 2000s an aggressive anti-theft program built exclusively around
technology. Specifically, it made theft much harder and riskier by placing its higher-voltage network below
the low-voltage networks, thus creating a barrier against informal access. It also impeded fraud by placing
meters directly on the low-voltage wires. However, this approach led to widespread anger, particularly
as consumers mistrusted the readings from the remote meters, which were claimed to overheat and
malfunction during Rio’s blistering summers. Moreover, this approach did not fully solve the problem of
informal access. To implement it, Ampla had still had to be able to enter a settlement and change the
entire wire network. This was simply impossible in areas dominated by organized crime, where not even
the police were patrolling.
Reta favela, in the municipality of Itaboraí, was one such favela. To overcome this challenge,
Ampla sought an intermediary that could convince the community, including drug traffickers, that formal
access was better than informal access. For this purpose, Ampla began a collaboration with Viva Rio, a
well-established Rio-based NGO that had focused its work on the prevention and reduction of violence in
the metro Rio area. A Viva Rio expert, who had been a community leader in a nearby favela, moved to
Reta and proceeded to identify and communicate with key actors in the settlement, including religious
leaders, well-respected persons, and local organized crime leaders. This was followed by an extensive
process of communication and negotiation with these actors and more broadly with the community, in
order to explain the implications of formalizing access to electricity—particularly the need to pay for
electricity once access was formalized—but also to build a relationship of trust with the utility that would
22
position the latter as a partner and not an exploiter of the community. To demonstrate its commitment
to the Reta community, Ampla sponsored a program to enhance the employability and labor market
insertion of local residents through training in employment skills such as resume writing and
communication; a second Ampla-sponsored program supported local entrepreneurs with training in basic
business skills that would enhance the chances of success of their ventures. It was only after such efforts,
and when in the opinion of the local Viva Rio manager the community was ready to accept the
formalization of electricity access, that Ampla began the process of replacing the local network with the
new network that made theft much more difficult, in parallel with the registration of all households and
businesses in the community to turn them into formal customers.
Although the concept of collaborative governance was originally envisaged with a government
agency in a leading role, the governance pattern observed in these two cases could be described as a
variation on collaborative governance, “collaborative governance without the state.” Emerson et al.
(2012: 3) define collaborative governance as the “processes and structures of public policy decision
making and management that engage people constructively across the boundaries of public agencies,
levels of government, and/or the public, private and civic spheres in order to carry out a public purpose
that could not otherwise be accomplished.” In the cases above, the key public policy issue of supplying
potable water and sanitation has been effectively delegated to non-state actors, Águas de Niterói and
Ampla, but otherwise the “processes and structures” are substantially similar: engaging various groups
and persons across private and civic spheres in a context of violence and neglect where adequate supply
of these basic services would otherwise be very unlikely. As Donahue (2004: 4) acknowledges, there are
solid grounds to make a “significant distinction between the domestic and international variants of
collaborative governance” regarding the participation and role of public sector entities in such initiatives
in relation to the “robustness and sophistication of formal government.”
23
Co-production: Light’s Zero Loss Area pilot at Rio das Pedras8
The other electric utility in the metro Rio area, Light, has been piloting a new design for
transforming informal into formal access at several informal settlements, including one called Rio das
Pedras. For its design, called “Zero Loss Area,” Light borrowed from other experiences,9
including Ampla’s
earlier one with technology. As in Reta favela, organized crime has the “monopoly on violence” in Rio das
Pedras: it is reputed to be the birthplace of Rio’s militias (Cano & Duarte, 2012). But in contrast to the
collaborative governance approach taken by Ampla and Águas de Niterói, Light has opted instead to
involve some members of the community in the operational activities of electricity service, thus following
a co-production approach (Ostrom, 1996).
Under such a co-production, Light is relying on a different set of actors for the creation and
maintenance of trust between the company and the community: local microentrepreneurs, hired directly
by Light as agents, and tasked with monitoring electricity connections for possible theft or fraud, and most
importantly, with establishing personal relationships with local customers and helping resolve any
difficulties regarding electricity service. For example, if a family is experiencing financial difficulties that
compromise their ability to pay their electricity bill, the local Light agent can help negotiate a payment
plan with the company. This approach borrows from the successful experience of Energía Social, an
electric utility in Colombia’s poor Caribbean coast, which provides service through local
microentrepreneurs (Unión Fenosa Colombia, n.d.). Like Energía Social, Light aims to draw on the local
knowledge of the microentrepreneurs to develop a highly customized relationship with each member of
the community. Trust is built not only by drawing on the social capital that these agents can draw upon
and on the development of personal relationships, but also by using the agents and Light’s other resources
to facilitate access by community members to valuable programs. Specifically, through its agents, Light
helps local households register for the Bolsa Família conditional cash transfer program of the federal
government (Brazil’s main anti-poverty program), and, counterintuitively, helps these households reduce
24
their electricity bills through an energy efficiency program that replaces, for free, old appliances such as
refrigerators with new, efficient ones.
Light’s program does share, however, a common element with those of Águas de Niterói and
especially Ampla: the use of advanced technology to supplement the contact with the community in the
quest to discourage theft. Thus, the intensive use of information technology for electricity distribution
and use, known as “smart grid,” is paradoxically not being rolled out among Rio’s most sophisticated
technology users, such as the major companies located in downtown Rio, but in the informal settlements
of the urban periphery. Advanced technology allows Light to monitor individual consumption to detect
any abnormal patterns that could point to theft or fraud, and it allows remote disconnection (and
reconnection) of customers found to be engaging in theft or fraud.10
Conclusion
Meeting the massive and urgent “last mile” needs for access to basic services in urban informal
settlements around the world is an enormous challenge. The various “governance failures” identified by
Bakker and Kooy (2008) continue to deprive hundreds of millions of urban residents around the world of
water at an adequate cost or quality, and of sanitation services that can prevent the spread of infectious
disease and the pollution of waterways. The Rio de Janeiro metropolis is no exception to this picture, but
here, the regulatory pressures placed on companies holding concessions for water, sanitation, and
electricity supply, are leading to experimentation with new forms of governance and organization that
offer new hopes for addressing the last mile challenge in the cities of the developing world.
The key to these experiments is the realization by the different stakeholders that securing
adequate access to basic services cannot be achieved solely on the back of a single entity, be it a service
provider, a community organization, a government agency, or an NGO, requiring instead some level of
collaboration across the boundaries of business, government, community, and nonprofits. Such
25
collaboration is crucial for building and maintaining trust between service providers and slum
communities. In turn, the need to build and maintain trust, not only between service providers and
communities but also among all the actors involved in these collaborative ventures, appears to be pushing
the ventures to go beyond the question of access to basic services, to income generation more broadly
and to community participation in decisions that have major impacts on community well-being. In this
regard, this pattern follows earlier experiences elsewhere in Brazil that appear to be successfully scaling
up: in São Paulo, electric utility AES Eletropaulo began in 2004 a program with similar components that
by 2013 had provided formal access to more than 500,000 families, and was on target to reach 2.7 million
people by 2015, leading to a reduction of electricity losses from 14% to less than 10% over the 2004-2015
period (AES Eletropaulo, 2015).
Such a pattern is in fact consistent with, but also extends, the concept of basic services as
“platforms” (Mejía, 2011) that possess significant potential to transform informal settlements. In the
original formulation of this concept by the Inter-American Development Bank (ibid.), “platform” takes a
fundamentally economic meaning, referring to the potential to use the “capillarity” of basic service supply
to virtually every community member, in order to offer other products (such as consumer credit, as
originally done in Bogotá by the electric utility Codensa). The emerging experiences in Rio show that the
platform concept can also extend to governance, by turning utilities into vehicles to structure community
participation, and in this way altering profoundly the neglect or manipulation of these communities by
state institutions.
Whether these incipient experiences realize their transformative potential on a wide scale or not
is at this point too premature a question to answer; but one question that can already be answered is that
they do transcend the debate between public and private ownership that has obfuscated, often behind
ideological dogmas, the question of access to basic services in Latin America and other developing areas
of the world. This is not only because the actors involved cannot be neatly classified as private or public
26
(CEDAE has private shareholders; Light is a subsidiary of CEMIG, an electricity company owned by the
State of Minas Gerais); it is also because the real problem of service provision is one of governance and
not of ownership. The weak institutions associated with poor governance will result in inefficient or
corrupt provision by SOEs, or by monopolistic abuse under provision by the private sector, as such
institutions will be incapable of restraining the capture and manipulation of both SOEs and regulatory
agencies. The promise of the emerging patterns of access highlighted above is that they cut across
traditional distinctions, relying instead on a variety of organized interest and stakeholders that can, from
the ground up, check and balance each other, at least for relatively specific tasks like the provision of basic
services.
1
Throughout the paper, I use the expression “informal urban settlement” with the word “slum” as the former is
rather unwieldy, and the latter is used in the same sense by UN Habitat.
2
To be sure, some cities such as São Paulo contain significant numbers of urban poor in degraded central districts
not unlike the inner city ghettoes of the US, but this only occurs in some cities, and accounts for a relatively small
proportion of the urban poor in any case.
3
Informal subdivisions are, like traditional favelas, characterized by self-built housing and underservicing, as well as
often uncertain property rights, as they are the product of improperly registered land sales and conversions of rural
land into urban use without meeting legal requirements (such as permits and construction of service networks).
Often, their only difference with favelas is the more regular street pattern, as the buyers of the plots demand better
conditions than on occupied or squatted land.
4
The major role of the State and Federal governments in Brazil makes the urban regime framework (Stone, 1989)
less applicable in the Brazilian case to the understanding of institutional and organizational forms and processes, in
contrast to other countries like South Africa, where municipal responsibility for basic services places urban regimes
at front and center of analysis (e.g. Kracker-Selzer, 2012).
5
Of course, the question of regulatory enforcement of concession contracts does not constitute a full explanation;
it raises the question of why do regulatory authorities behave thus instead of taking a more lenient interpretation
of the contract, or agreeing to a contract renegotiation. This important issue remains for future research.
6
Information about this case comes from interview with Fábio Coelho, Commercial Manager, Águas de Niterói,
December 12, 2014, unless otherwise noted.
7
Information about this case comes from interview with Osmar Vargas, Reta Project Manager, Viva Rio, October
20, 2014, unless otherwise noted.
8
Information about this case comes from interview with André Duarte, Manager, Light, November 13, 2014, unless
otherwise noted.
9
The author was involved in a major study of international experiences in access to electricity in informal urban
settlements carried out for Light in 2011.
10
Lest it be thought that the company can freely engage in these actions, they are stringently regulated and
monitored by the federal regulatory agency and consumer protection entities.
Endnotes
27
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30
Figure 1. Inequities in access to piped water in urban areas
Graph from WHO and UNICEF, Progress on Drinking Water and Sanitation-2014 Update, WHO Library Cataloguing-in-
Publication Data
31
Figure 2. Proportion of the population using improved sanitation in 2012
Source: WHO and UNICEF, Progress on Drinking Water and Sanitation-2014 Update, WHO Library Cataloguing-in-Publication
Data
32
Figure 3. Informal electricity connections in Rocinha, Rio de Janeiro
Source: Author
33
Figure 4. Informal water connections in Providência, Rio de Janeiro
Source: Author
34
Figure 5. Electricity Losses 1980 and 2000
Source: World Bank
35
Figure 6. Expected demand for water and sewerage investment, 2010-2025
Graph from McKinsey Global Institute.2012. Urban world: Cities and the rise of the consuming class.
36
Figure 7. Access to water, sanitation, electricity, and trash collection (D4 index), Rio metro area, 2010
Source: Oliveira & Nery, 2013
37
Figure 8. Electricity theft by sub-area of Light’s concession, 2012
Source: Light, 2013
38
Figure 9. Militias and drug traffic gangs in Light’s concession area (2013)
Source: Light, 2013 based on INFOGLOBO

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Governance Innovation for Basic Service Access

  • 1. Governance Innovations for Access to Basic Services in Urban Slums Carlos Rufín Associate Professor of International Business Sawyer Business School, Suffolk University 8 Ashburton Place, Boston, MA 02108 +1 617 570 4897 crufin@suffolk.edu Abstract With rapid urbanization on a global scale, poverty is increasingly becoming an urban phenomenon. A key component of urban poverty in developing countries is inadequate access to basic services, so understanding the institutional setting for basic service provision is key to addressing this challenge. This paper seeks to explain the institutional and organizational forms of service provision that emerge in developing country cities, where the urban poor living in informal settlements constitute a significant proportion of the urban population. The paper does so by examining the contemporary case of the Rio de Janeiro metropolitan area in Brazil, based on fieldwork conducted over the 2007-2014 period, for three key services: electricity, water, and sanitation (sewerage). I argue that the traditional forms of interaction between the state and informal settlements in Rio, based upon pork-barrel politics, have declined due to the absence of law enforcement and subsequent rise of organized crime in these areas, but also because of the emergence of new actors and organizations, including private service providers. Where the state remains the service provider, the decline of pork-barrel politics and the incentives related to public ownership have resulted in a policy of neglect towards informal settlements, significantly limiting access. In some cases, however, I show that private actors are constructing new approaches to service provision through collaboration with community and nonprofit organizations. These approaches entail collaborative forms of governance that have the potential not only to increase access, but to offer an alternative to the existing institutional setup beyond basic service provision. As such, they are of interest not only to scholars and practitioners interested in basic service provision, but more generally for the broader challenge of urban poverty and exclusion in the developing world. KEYWORDS: urban informality; slums; water and sanitation; energy; institutions; governance
  • 2. 2 Urbanization, informal settlements, and access to basic services by the urban poor Informal urban settlements, simply called slums1 by the United Nations (UN-HABITAT, 2003), continue to grow relentlessly in the cities of the developing world. While the transition from rural to urban has been completed in Europe and North America, and nearly so in Latin America, recent years have witnessed the beginning of the largest migration from countryside to city of all time—in China. Equally massive migrations are taking place elsewhere in Asia and increasingly in Sub-Saharan Africa. Thus, the United Nations estimated that, for the first time in history, in 2008 the urban population of the planet would overtake the rural population in number (UNFPA, 2007). And urbanization, at least in the developing world, means informal settlements to a very significant extent: 900 million persons according to the latest estimates of UN-Habitat. Faced with the lack of institutional and economic capacity of the authorities to accommodate the influx of rural immigrants, many immigrants choose to do it themselves, squatting on unused land, building their own housing, and meeting other needs through their own efforts as best as they can. Here, in essence, lies the meaning of the term “informal:” following unwritten, locally-observed rules rather than the written, public, and state-issued and –enforced rules that correspond to the “formal” dimension, whether in urban planning (Finlayson, 1978), employment relations (Hart, 1973), economic activity (Bruton et al., 2012; Godfrey, 2011; Portes & Sassen-Koob, 1987), or even politics (Helmke & Levitsky, 2006). Of all these manifestations of informality, one of the most salient—used, in fact, by the United Nations to identify informal settlements (UN-HABITAT, 2003)—regards access to the physical networks that provide key services in urban agglomerations: mobility (road and transport networks), energy (electricity grids and natural gas distribution networks), communications (fiber optic lines for internet access), potable water (water mains and service lines), and sanitation (sewers). As Figure 1 and Figure 2 show, for water and sanitation respectively, the poorer segments of urban populations in a variety of
  • 3. 3 countries across the world suffer from a significant lack of access to piped water in both absolute and relative terms, and, less precisely, access to sanitation is also highly problematic in many countries. Given the fundamental human need for potable water, evacuation of waste, and energy (at the very least to cook food and provide heating), but also given the physical proximity to water and energy distribution networks in urban areas, it should come as no surprise that, faced with lack of formal access, the urban poor find other means to obtain these basic services. Figure 3 and Figure 4 provide examples of such means, more specifically “self-built” connections to electricity and water networks, respectively. [insert Figures 1 to 4 about here] Informal access has significant consequences for the urban poor in terms of the quality of service they receive (and more controversially about the cost), and for the organizations providing basic services. For the urban poor, informal access means more interruptions in service, as substandard materials fail and networks are overwhelmed by demands that exceed the original design. Water pressure may be too low for many uses, such as taking a shower, or water may only be available a few days a week; voltage fluctuations can burn out appliances; and sewage may spill onto streets and homes, causing health hazards. Moreover, not paying utility bills does not necessarily mean lower cost. The urban poor may have to pay informal intermediaries who set up the informal connections; or they may have to pay for very expensive trucked water, or spend many hours a day waiting to fill water cans and bring them back to the house (UN-HABITAT, 2006). For the service supply organizations, informal access normally means high levels of pilferage of their networks, known as “non-revenue water,” or “non-technical losses” in the electricity sector. In turn, pilferage entails adverse financial impacts and worse quality for paying customers. The scale of this problem is shown in Figure 5 for the electricity sector. Notice that losses increased in all regions of the world from 1980 to 2000 (the last year available on a global scale) except for the highest-income ones (W. Europe, N. America, E. Asia).
  • 4. 4 [insert Figure 5 about here] All this makes the question of access to these services a major challenge for a rapidly urbanizing world. Demand for water and sanitation for cities in emerging economies, for example, is expected to account for most of the growth in the global demand for such services for the next decade, as shown in Figure 6. However, meeting this demand, and improving the lives of millions of the urban poor, poses the question of what institutional and organizational structures can deliver these services in an efficient and equitable manner. As basic services that have a major impact on the condition and quality of life of the poor—and indeed on the quality of life of an urban agglomeration as a whole—basic services are politically very salient, attracting strong attention by urban residents. High salience leads in turn to close control by politicians. These have a strong interest in ensuring that services are provided at a politically acceptable combination of cost and quality, either through public sector organizations or heavily regulated private companies; in some cases, the supply of these services can become the object of political exchange, being traded by blocks of votes in areas that benefit from supply improvements (Mitlin, 2014). [insert Figure 6 about here] This paper examines the institutional and organizational forms of service provision that emerge in developing country cities, where the urban poor living in informal settlements constitute a significant proportion of the urban population. The paper does so by analyzing the contemporary case of the Rio de Janeiro metropolitan area in Brazil, based on work conducted over the 2007-2015 period, for three key services: electricity, water, and sanitation (sewerage). The paper argues that the “pork barrel politics” that traditionally characterized the interaction between the state and informal settlements in Rio has become much less relevant, mainly due to the rise of organized crime in these areas as a result of neglect of law enforcement, but also because of the emergence of new actors and organizations and, in some cases, the privatization of service provision. Where the state remains the service provider, the decline of opportunities for “pork” and the “governance failure” of public ownership (Baker & Kooy, 2008) have
  • 5. 5 resulted in a policy of neglect towards informal settlements, significantly limiting access to basic services. In other cases, however, private actors are constructing new approaches to service provision through collaboration with community and nonprofit organizations. These collaborations entail collaborative forms of governance (Ansell & Gash, 2008; Donahue & Zeckhauser, 2011; Emerson et al., 2012) or co- production (Ostrom, 1996) that have the potential not only to increase access, but to offer an alternative to the existing institutional setup beyond basic service provision. The rest of the paper continues with an examination of the context of the Rio de Janeiro metropolitan area, and its representativeness as a setting for the research question, in the section that follows. Next, the institutional and organizational arrangements for service provision in Rio are examined, first at the bottom level of the slums, and then from the perspective of the major institutions and organizations in charge of service provision. Another section focuses on emerging patterns of governance as a means to provide basic services to Rio’s poor, and a final section concludes. Access to basic services in Rio’s favelas The zika epidemic in Brazil, apparently transmitted by mosquitoes, and the appalling pollution of Rio de Janeiro’s Guanabara Bay, have gained global notoriety in the context of the celebration of the Olympic Games in Rio in 2016. Both of these issues are directly related to the failure to provide basic services to the inhabitants of Rio’s vast informal settlements, known as favelas. Latin America’s cities, and Rio de Janeiro specifically, offer a very valuable setting for studying the challenges of access to basic services by the urban poor. Latin America has largely completed the urban transition, with more than 80% of the region’s population living in urban areas. Yet unlike the developed regions of the world, a very significant part of the region’s urban population continues to live in informal settlements suffering from the lack of services that characterize these settlements globally, and which concentrate most of the urban poor.2 Hence, for Latin America poverty has become an urban phenomenon, unlike South Asia and Sub-Saharan
  • 6. 6 Africa, where rural poverty is still significant, if rapidly losing ground to urban poverty. This situation has made Latin American cities, and certainly Rio, key laboratories for the development of solutions to the challenges of urban poverty—in Rio’s case, with the added attention brought by the celebration of the Olympic Games in 2016. It would not be an exaggeration, indeed, to argue that Latin American cities are showing what the urban future of the planet portends. The Rio metropolitan area comprises the municipality of Rio plus its hinterland, specifically the Baixada Fluminense and all municipalities bordering the Bay of Guanabara, notably Niterói, adding up to a total population of some 12 million. In the city of Rio itself, about 22% of the population lives in favelas (slums) (Cavalieri, 2005); the proportion is certainly higher for the metropolitan area as a whole, particularly if informal subdivisions are included and not just favelas.3 These areas suffer from significant deprivation, as these two examples show: 300,000 residents and 40% of schools in the Baixada’s largest city, Duque de Caxias, lack connections to piped water, and the inhabitants of informal settlements in the Baixada with piped water connections receive as little as two days of water per week (Observatório das Metropóles, 2014). Serious drainage, sewage, and trash collection deficiencies are also obvious to the visitor to these areas. Electricity, while widely available, is obtained in many cases through informal connections—theft, in other words. Figure 7 shows a composite index of access to basic services for the metropolitan area, pointing to huge disparities in access even within the municipality of Rio. Government data show that in 2012, although 91% of the population of the city had access to piped water, only 78% of homes were connected to the sewer network, and only 50% of the collected sewage was treated, while 55% of water supplied to the city was unaccounted for (Instituto Trata Brasil, 2014). As a result, the Bay of Guanabara is too polluted for swimming, and its fish population has dwindled (Coelho, 2007). [insert Figure 7 about here]
  • 7. 7 In the same year, the two electric utilities supplying the metropolitan area, Light and Ampla, lost respectively 24% and 19% of the electricity that they purchased, with most of these losses being due to theft in informal settlements (Abradee, 2013): as Figure 8 shows for Light’s case (with losses measured as percent of electricity supplied at low voltage), the contrast between losses in Rio’s rich South Zone (called “Litoránea” in the graph) and in the more rural areas of the Paraíba valley (“Vale”), on one hand, and on the largely poor urban areas of the East and West zones of the city and of the Baixada, on the other hand, is truly staggering: below 7% in the former, vs as high as 88% for the more than one million customers in the Baixada (Light, 2013). [insert Figure 8 about here] The problem of underservicing and informality, moreover, goes beyond basic services in the Rio area, to a broader problem of lack of presence of the state, in the Weberian sense of the institution with a “monopoly on violence.” As territories occupied with weak or nonexistent property rights, Rio’s informal settlements seldom saw any presence of the state, other than in the negative sense of evictions and removals of favelas, until the early 1980s, and then only in a very skewed fashion. While Governor Brizola (1983-1987 and 1990-1994) and programs such as Favela Bairro (1995-2005) brought important improvements to some settlements in the form of schools and some physical infrastructure, Brizola was also responsible for the removal of police presence in these areas (Heinz & Frühling, 1999). This led to the “informalization” of the “monopoly on violence” itself, just like basic services. During the 1980s, many settlements were taken over by organized crime (mainly drug-related), which saw them as valuable distribution points for drugs and fertile areas for market growth; the late 1990s and early 2000s saw in turn the emergence of militias formed by off-duty security personnel (police and fire), initially to stop the violence associated with drug trafficking, but soon becoming organized criminal groups too (Cano & Duarte, 2012). The takeover of much of the metropolitan territory by such “parallel powers” is shown in Figure 9, with colors referring to the main groupings: militias (blue) and the three major drug gangs,
  • 8. 8 Comando Vermelho (red), Amigos dos Amigos (yellow) and Terceiro Comando Puro (green). In turn, these conditions only worsened the challenge of service provision, as formal service supply in these areas became simply too dangerous for utility personnel to undertake. [insert Figure 9 about here] Service provision from the Bottom up: From pork to famine Traditionally, the activity of the state in the favelas Rio took place, as in most other such settings, through the establishment of relations of political exchange between their inhabitants and political entrepreneurs or political parties that saw in these populations potential vote blocks to be captured in exchange for the provision of individual help to individuals, or of local collective goods such as water standpipes, road paving, or access to electricity (Gay, 1994). This pattern matches, in fact, the one observed in other cases of urban formation, notably with immigrant communities in the industrial cities of the U.S. (Menes, 2006). Basic services are ideally suited for pork-barrel bargains, because their supply can be circumscribed, within some limitations, to a specific geographic area, thus targeting a specific block of votes, and it can be turned off or at least constrained subsequently (for example, through lack of maintenance) if the community withdraws political support for the party or politician (Holland, forthcoming). This pattern of political incorporation marked profoundly the experience of access to basic services in Rio. First, as mentioned above, the pattern seems to have been one of incomplete access at best, i.e. forbearance (Holland, forthcoming): to maintain their bargaining power, political patrons would ensure that basic services were provided free of charge or at a low nominal fee, but not fully formalized. For example, water service would be in the form of a standpipe at the entrance of the settlement, or electricity to a transformer to which service lines to houses could be extended. Without full formalization, residents remained dependent on the politician’s will to provide service, as there would be no regular, enforceable contract for supply. This also meant that self-supply remained an important element of access to these services, such as running a service line from the transformer to one’s house, or fetching
  • 9. 9 water from the standpipe; in some cases, all the politician did was to pressure the utility company to tolerate the informal connections, which would be entirely established by the residents (Diniz et al, 2013). The second way in which this pattern left a deep mark is that basic services were obtained for free or at a nominal cost, at least with regard to payments made to utility companies. This created an expectation that basic services should be provided without user fees by the state, like paved roads or public schools. It could also create financial hardship for residents if any attempts were made at formalization of supply and households or local businesses were not previously paying for their informal access. To be sure, political exchange of this kind was not the only possible form of political incorporation for these settlements. Mobilization by programmatic parties, most logically those of the left, was also possible and was indeed beginning to happen in Rio and Brazil in the years leading to the 1964 military coup. It was, in fact, the fear of mobilization of the masses, such as the then rapidly growing favela inhabitants, that led to the coup. Not surprisingly, the first years of the subsequent military regime (1964- 1984) saw a change of direction in the attitude towards favela communities, away from the previous clientelism, and towards the eradication of informal settlements and the control of this population through their forced removal to public housing projects in distant areas of Rio. The transition to democracy initiated in 1983-84 once again brought forward the tension between clientelistic or pork-barrel politics, and programmatic mobilization of settlement inhabitants. No longer willing to alienate this population given the prospect of a return to free elections soon, the political allies of the military regime did not hesitate to rediscover the old tactics (such as Paulo Maluf in São Paulo), while the left (e.g. Brizola in Rio) once again sought to mobilize favelados (favela residents) to press for social and economic reforms (Skidmore, 1990). No one at that time could perhaps realize, however, that things were going to take a very different turn: instead of a return to these previous patterns, the space left by the retreat of the military regime was taken over, in Rio’s slums, by organized crime. Community leaders who attempted to resist this
  • 10. 10 takeover were either murdered, silenced, or co-opted (Barcellos, 2003: 234; Gay, 2005; Zaluar, 2004) during the 1980s and 1990s. The result was that by the early 2000s, the political ties of the past had been severely weakened throughout the vast areas of the informal settlements in Rio’s metro area, replaced by much more tenuous connections between the drug gangs and political forces or individual politicians. Only in the case of the militias was there an effort by the militia leaders to leverage their control over settlements to gain political office. Some of these leaders were elected to municipal councils and other local government offices, and mayors in some Baixada municipalities were alleged to have close ties to militias. But even these ties proved to be fragile. The militias’ recourse to armed violence against the state, particularly the murder of an investigating judge, set off a concerted law enforcement effort to weaken, if not dismantle, the militias throughout the metropolitan area (Ramsey, 2014). In the case of the drug gangs, not even such connections with political processes have been established or documented. The reasons are well explained by Arias (2006: 428, 434): “To get into favelas politicians must first make an arrangement with traffickers who then, usually through interlocutors, present the politicians to the community. (…) Since traffickers are criminals they have only a limited and fragile degree of respect within communities and they have difficulty directly interacting with state officials. What contacts politicians have with traffickers actually may hurt politicians’ image with residents who see them as even more corrupt and dishonest than before (…) in an effort to avoid overt and potentially dangerous contact with criminals and their civic allies, politicians spend very little, if any, time in the communities.” At the same time, even if the slums have become a relatively inchoate territory for politics, it is clear that organized crime has not entirely suppressed the impact of thirty years of democracy on the organization of interests among the population of the slums. As democracy has stabilized and democratic freedoms gained ground in Brazil, a variety of non-governmental organizations (NGOs) have begun to take roots in the settlements of Rio, some originating outside the settlements, like Viva Rio—an NGO initially
  • 11. 11 focused on violence reduction, and at present also engaged in the provision of health care services in the slums—and others set up by the residents themselves, such as Redes da Maré or Afro Reggae. The organizations with the greater capacity to mobilize slum residents and to make their voices heard outside the settlements, for example through social media, are increasingly demanding a voice in policy decisions that affect these communities, particularly the provision of services such as education and policing. Although their presence appears to be heavily circumscribed to specific settlements such as Maré, dependent as it is on the highly specific interpersonal dynamics and leadership capabilities of each community, they are becoming important actors in the political space, yet not necessarily linked to specific political parties or personalities. Other organizations, particularly Pentecostal churches—like NGOs, some independent, some affiliated with larger churches—also play an increasingly important role in the slums, with pastors in leadership roles that can articulate community preferences, mediate with other organizations inside and outside settlements, and exert influence over the local residents. Importantly, some of the churches with a regional or nationwide scope are rapidly becoming important political players in Brazil, both at the federal level and in Rio state. While the impact of this political dimension for the slums is still unclear, it deserves further scrutiny. Lastly, a new actor has emerged in the settlements when it comes to the provision of basic services: the private sector. As a result of the privatizations undertaken in the 1990s and early 2000s by the government of Fernando Henrique Cardoso, electricity supply and telecommunications services were transferred to the private sector; moreover, in some municipalities of the Rio metro area, notably Niterói, water and sewerage services were also privatized, a policy that still continues even if not uniformly and very controversially. Privatization has introduced a further separation from the state in the settlements, as private-sector suppliers are mainly motivated by regulatory incentives and bottom-line considerations, and as such are significantly more removed from political pressures than public sector utilities. If, for most of these companies, the settlements would be areas to be avoided and ideally not serviced, being too
  • 12. 12 physically complex to serve, too violent, and too poor, regulatory pressures and the realization that the settlements can also be a source of profit are changing company policies. The impact of regulation is examined in the next section, which considers the current role of the state; as for potential profits, the experience of cellphone operators and a growing number of businesses has shown that, although relatively poor, the inhabitants of the slums are willing to spend money on whatever they consider important, and the size of this pie has only grown under the redistributive policies and economic conditions of the last decade in Brazil. Utilities thus increasingly recognize that the slums are becoming important sources of market growth, and that tapping this growth may be possible with the right business model. In recent years, the State government of Rio de Janeiro has undertaken a major effort to assert its “monopoly on violence” in Rio’s settlements. In 2008, the main unformed police force (known in Brazil as “military police” and controlled by the States) began the deployment of “pacification units” in the informal settlements of the city of Rio, in some cases with the support of army and navy units which were given the task of flushing out the heavily armed drug gangs. The pacification units, known as UPPs from their Portuguese acronym (Unidades de Polícia Pacificadora) established a permanent presence in the settlements in order to stop the violence related to organized crime and its violent periodic confrontations with the police, which before the UPPs would only enter the settlements during anti-drugs operations lasting just a few hours. By 2015, 38 UPPs had been established, all within the municipality of Rio. Although the settlements with UPPs have experienced significant drops in violent crime (Fórum Brasileiro de Segurança Pública, 2012), the effectiveness and viability of UPPs remains very much in question. After several years in operation, it has become increasingly obvious that the training of UPP police officers remains problematic with regard to the building of trust or at least a workable relationship with the residents of the slums. The officers are unprepared to undertake foot patrolling in the intricate streets of the favelas and to work the poorer and darker-skinned inhabitants of these communities (relative to the
  • 13. 13 rest of Rio’s population and many of the officers’ own backgrounds). The disruption of the drugs trade has not been compensated with public programs to relieve poverty in the “pacified” settlements, with the result that in some areas drug trafficking is making a comeback despite UPP presence. Lastly, the UPP program, relying as it does on a heavy presence of especially trained officers, is expensive. This means that only a relative small portion of settlements has received UPPs (in general, the most visible settlements in Rio’s rich southern districts, in the central business district, and in the areas near the international airport highway); no settlements elsewhere in the metro area have received UPPs, and there are grounds to doubt the financial capacity of the state to sustain a permanent UPP presence in all informal settlements of the metro area, let alone of the state of Rio as a whole (ibid.). Hence, although utility companies have taken advantage of the UPPs to formalize service in these settlements, it is unclear that the companies can count on police support as the means to address the problem of informal access to service. The upshot of these various trends and transformations is the increasing complexity in the supply of basic services in Rio’s informal settlements. Organized crime, but also new forms of organization of the population, and an increasing private-sector presence, combined with weak linkages to the political system, have created a complex landscape where no specific actor appears to have a dominant role in structuring the supply of basic services. Organized crime is fragmented and has neither the expertise nor a clear preference for a specific form of service provision; at best, its attitude varies between an interest in basic services as another business with racketeering potential, in the case of the militias, and a desire to protect residents from economic hardship, in the case of the drug traffickers; but nothing indicates that, at least in the latter case, it is impossible to reach a modus vivendi with the traffickers that would allow for better conditions of access to basic services. NGOs and other locally present organizations generally express the desire of the local residents to be treated as full citizens and thus have access to basic services on a formal basis, while also being concerned about the affordability of the services. Lastly,
  • 14. 14 the private sector is both attracted by the potential market and pressured by regulators to formalize service. Moreover, it possesses far more technical knowledge than other actors, and can mobilize significant financial and human resources. But it is concerned about the violence in the slums, its ability to provide affordable service, and the complex landscape in these areas, with its attendant uncertainties. At the same time, the fact that the linkages of the informal settlements with the political system are weak and complex does not mean that the state, in its various functions and activities, has ceased to play an important role in basic service supply. The next section turns to this aspect. Service provision form the top down: institutional structures and governance The involvement of the public sector in the specific matter of basic service supply is, first of all, complicated by a good deal of role ambiguity and confusion as regards the allocation of responsibilities across the various vertical levels of government, specifically municipal, State and federal. As a legacy of the military dictatorship of 1964-1984, water and sewerage services in Brazil are largely provided by enterprises owned by the States and thus with a service area extending over the territory of each State. Some of these companies were privatized during the reforms of the 1990s, but most remain under public control, as is the case of the company serving most of Rio de Janeiro State (including Rio city), CEDAE. Direct responsibility for service supply depends, then, on contracts entered between municipalities and State governments delegating municipal responsibility to the State-owned utility companies, and that predate the 1988 Constitution. However, the Constitution delegates the responsibility over water and sewerage to municipalities. This means the validity of these contracts depends on their interpretation by the courts, particularly where municipalities decide to privatize service through concessions to private operators, as happened in Niterói, which successfully reasserted its control over these services after a long litigation process with CEDAE.
  • 15. 15 In the Rio metro area, this has led to a hodgepodge of arrangements, resulting in notable voids regarding service provision. In general, CEDAE has resisted giving up profitable areas such as the central and southern zones of Rio city, or Niterói, which was only able to wrest control away from CEDAE after a lengthy judicial battle. At the same, CEDAE has also sought to avoid providing service in costlier or more complex areas to service, particularly informal settlements. As a result, in the city of Rio the responsibility over water and sewerage in the non-pacified slums has been left to the municipal government, as has that over sewerage services in the entire fifth administrative zone of the city, a largely poor area. In the poor municipalities of the Baixada, such as Duque de Caxias, CEDAE simply limited its service contracts to piped water supply, and thus most of the sewage of the Baixada is untreated since the municipal governments have done nothing about it, leading to very high levels of pollution of Guanabara Bay. Thus, water and sewerage services for the informal settlements of the metro area have not received systematic attention and in many cases have simply “fallen through the cracks” (Instituto Trata Brasil, 2014). This contrasts with electricity, natural gas and telecommunications, all of which are provided under concession contracts awarded and regulated by the federal government, and which include universal service obligations.4 Another element that complicates water and sewerage service provision in Rio’s settlements is the poor coordination between the public service providers. The problem is largely caused by split between the State and municipal ownership of these providers. Municipal responsibility for trash collection and drainage infrastructure, at least in Rio city, hampers coordination with water and sewerage services furnished by State-owned CEDAE. This has important implications in the slums. Poor trash collection clogs sewers and causes sewage to spill on to drainage structures; but lack of adequate sewer networks has the same effect, forcing sewage on to ditches and waterways. To deal with this problem, the municipality of Rio invests in expensive treatment plants to treat the waters of rivers and other waterways, instead of supporting efforts to expand the sewer network and treat the sewage. Poor coordination also impacts the design, construction, and maintenance of drainage infrastructure and
  • 16. 16 waterways, since municipal boundaries do not coincide with the physical boundaries of river basins. This is important, because many settlements, especially in the Baixada, lie on a floodplain and experience periodic and destructive floods. Even for service providers under federal regulation, it is clear that the one-size-fits-all approach of federal laws and federal regulatory agencies is detrimental for service provision in informal settlements, not only because conditions in the slums are quite different from those in formal areas, but because these conditions vary significantly among the different settlements. For example Maré is a settlement with a regular street pattern, adequately paved, and well communicated, whereas Complexo do Alemão, just a few blocks away from Maré, is a maze of alleways occupying a hilly, irregular area. At present, the only element of flexibility in federal regulation of electric utilities is the existence of a discounted rate, but by law it is limited to families eligible for the federal Bolsa Família program of conditional cash transfers, and is established as a set discount on the regular rate, rather than being tailored to local conditions in different areas. Of all factors influencing the governmental role in access to basic services in the slums, the most important ones are unquestionably those directly shaping the behavior of the service providers themselves. In the case of private sector providers, these factors are the behavioral incentives created by concession contracts and the regulatory agencies that enforce the contracts. For electricity access, the critical issue has been the degree to which utilities have been allowed to cross-subsidize informal access by formal customers. Cross-subsidization can be easily undertaken by charging the cost of electricity lost to informal access (“non-technical losses”) to paying customers, in the form of higher prices. Over time, as federal regulators have become less willing to tolerate such cross-subsidization, Rio’s utilities and especially Light (serving Rio city and the Baixada) have been forced to formalize access (Light, 2013). A similar situation applies to private providers in water and sewerage, in this case via application of the clauses of concession contracts by municipal counterparts. The city of Niterói, which has the only
  • 17. 17 concession to a private operator in the metro area, has apparently enforced the clauses requiring the private water and sewerage service provider (Águas de Niterói) to extend full service to Niterói’s settlements,5 as evidenced by the available access data (Instituto Trata Brasil, 2014). For public sector providers, and more specifically CEDAE, behavior towards slum communities is driven by different governance arrangements and processes. Together with the school system and policing, water and sewerage services are arguably the most important services directly provided by the public sector in terms of their potential impact on these communities. This makes CEDAE’s behavior inherently political: it represents the direct action of the state in meeting the basic needs of the population, in contrast to services such as electricity, telecommunications, or transport, where private concessionaries become intermediaries between state and citizen. CEDAE has a poor record of providing formal access to water and sewerage. In addition to the “cherry picking” already noted, it has consistently failed to attain the objectives of successive plans to clean the Bay of Guanabara (which focused on collecting and treating the sewage of the metro area, the sole source of pollution of the Bay at present), experiences high losses of water, and has not brought universal access to sewerage for the metro Rio area (Instituto Trata Brasil, 2014). There is little evidence of the kind of political exchange that had originally prevailed in the favelas, as described above, in CEDAE’s behavior towards these areas, which is consistent with the decline of such practices as a form of articulation of the slum population with the political system and the state. At best, CEDAE practices a policy of benign neglect, tolerating informal access to piped water in settlements, and simply letting sewage flow to the waterways and from there to the Bay and the sea. Benign neglect can be interpreted as a passive behavior towards slum communities, appeasing their demand for basic services by offering them a lower cost, if poor quality, access to these services, rather than as an object of political exchange Instead, CEDAE’s focus is on other constituencies commonly favored by State-Owned Enterprises (SOEs): its own employees and major suppliers.
  • 18. 18 SOE employees usually have strong bargaining power if they can organize cohesively. They face a counterpart that does not have to worry overmuch about profits, because it can always have recourse to tax revenues. Moreover, when SOEs perform essential services, as is CEDAE’s case, governments are less willing to tolerate the public pressure that comes from disruptions of service caused by strikes and other industrial actions. In CEDAE’s case, an additional factor is the technically demanding nature of the work carried out by its employees, due to the significant expertise needed to operate a modern water supply and sewerage system for a large metropolis. As a result, many of its employees are engineers or technicians, who have their professional status in common and are difficult to replace. Not surprisingly, then, CEDAE’s labor force appears to exert a strong influence on the company’s behavior, in a case of “professional capture.” This matters for the informal settlements. Engineering professionals are more interested in the challenges of designing and operating technologically complex facilities for water supply and treatment, than in the humdrum work of connecting households to the network, installing meters, billing and collecting, and maintaining local networks. In informal settlements, where prejudice and large social distance create a different, social rather than technical, set of challenges, the reluctance of engineering professionals is even higher (Gómez et al., 2006). For CEDAE’s political principals, the main value of the company appears to be its capital intensity. Utility companies rely on vast physical networks and large facilities, whose construction requires large amounts of money. With CEDAE’s other possible sources of political value blunted by a cohesive, professionalized labor force (limiting opportunities for patronage) and by the weakened state presence in the slums (limiting opportunities for “pork”), it is not surprising that major construction projects offer the best prospects for the Rio state politicians who control CEDAE. Such projects provide high political visibility, easily showcasing “achievements” (“ribbon cutting”), and above all they offer excellent opportunities for large kickbacks from construction companies in order to finance electoral campaigns or personal kitties. In fact, the successive programs for the cleaning of the Bay of Guanabara, which began
  • 19. 19 in 1994 and have mobilized more than one billion dollars, have probably offered excellent opportunities for graft due to the extraordinary sums involved, while their notorious failure to achieve their goals likely reflects this kind of rent-seeking. For example, the programs led to the construction of several sewage treatment plants around the Bay that were never put into operation because their feeder sewerage networks were never built (Alencar and Schmidt, 2014). In such a setting, it is clear that providing formal access to basic utilities in the Rio metro area remains a very challenging task due to the institutional weaknesses highlighted above, which could even be regarded as “governance failures” (Bakker & Kooy, 2008). However, this would be too pessimistic a conclusion. Recent and ongoing experiences, which involve the forging of innovative, hybrid collaboration across different sectors, may show the way forward. The next section examines these alternative paths. A new path? Collaboration and co-production as means to address governance failures In the absence of effective direct action by the state to offer formal access to basic utilities to the inhabitants of metro Rio’s slums, progress in making such access possible has come to rely on a combination of autonomous initiatives of non-state actors and, for the private service providers, regulatory incentives embedded in concession contracts or established by regulatory agencies. The combination of deepening democracy, leading to the emergence of the organized groups mentioned above, with increasingly stronger incentives to engage proactively with slum communities, is leading these non-state actors to forge new alliances and forms of engagement in order to improve access within the very difficult conditions, particularly violence, of these communities. What follows are brief descriptions of three of these initiatives identified and studied during my fieldwork in Rio in the fall of 2014. Whereas the first two rely on collaboration with “civil society”—local non-state actors—approximating a variation on the concept of collaborative governance (e.g. Donahue & Zeckhauser, 2011), the third case can more properly be characterized as a form of co-production (Ostrom, 1996).
  • 20. 20 Collaborative governance without the state: Águas de Niterói6 and Ampla’s Reta experiment7 Niterói’s water utility, Águas de Niterói, is a private-sector provider with a service area encompassing more than 150 favelas, while its concession contract calls for universal access to water and treatment of all sewage by 2017. Thus, for Águas de Niterói providing access in favelas is no longer at a pilot stage, but is a company-wide program developed to meet contractual requirements. Águas de Niterói relies on a combination of trust-building with each settlement community and the deployment of technology. Technology, and specifically investment in measurement and monitoring equipment, has allowed the company to identify the areas with the highest incidence of informal access and prioritize its efforts accordingly. However, technology can only go so far. Unlike electricity or telecommunications, in the water sector it is not possible—or would be prohibitively expensive—to protect the physical network from theft, or to remotely disconnect of customers who engage in fraud or theft. Hence, Águas de Niterói must place a heavier emphasis on trust-building. In effect, in the favelas run by organized crime, the company cannot use the threat to disconnect customers who don’t pay or who take water informally; it can only try to persuade them to pay their water bills. The company has sought to develop a close and highly customized relationship with its customer base in the settlements through community leaders and local representatives. Its persuasion tools are community reinvestment and the better service offered to paying customers. The community reinvestment component is particularly interesting, because the company has taken a radical approach with its “zero a zero” (“nil-nil”) program, whereby it commits of keeping within the community all the revenue (and not just profit, or a portion of profit) collected in the community from paying customers. This is done by using the revenue to improve the water and sewer networks, drainage infrastructure, and public spaces such as parks and squares. As a result, since 1999 overall water losses have declined from 40% to 16%, while access to piped
  • 21. 21 water and treated sewage have increased from 72% to 100% and from 35% to more than 90%, respectively. Also serving Niterói, but also neighboring municipalities along Guanabara Bay, Ampla is one of the two electric utilities operating in the metro Rio area, and unlike the other two companies examined here, it is part of an Italian multinational, Enel, that owns several electric utilities in some of Latin America’s largest cities. Ampla began in the early 2000s an aggressive anti-theft program built exclusively around technology. Specifically, it made theft much harder and riskier by placing its higher-voltage network below the low-voltage networks, thus creating a barrier against informal access. It also impeded fraud by placing meters directly on the low-voltage wires. However, this approach led to widespread anger, particularly as consumers mistrusted the readings from the remote meters, which were claimed to overheat and malfunction during Rio’s blistering summers. Moreover, this approach did not fully solve the problem of informal access. To implement it, Ampla had still had to be able to enter a settlement and change the entire wire network. This was simply impossible in areas dominated by organized crime, where not even the police were patrolling. Reta favela, in the municipality of Itaboraí, was one such favela. To overcome this challenge, Ampla sought an intermediary that could convince the community, including drug traffickers, that formal access was better than informal access. For this purpose, Ampla began a collaboration with Viva Rio, a well-established Rio-based NGO that had focused its work on the prevention and reduction of violence in the metro Rio area. A Viva Rio expert, who had been a community leader in a nearby favela, moved to Reta and proceeded to identify and communicate with key actors in the settlement, including religious leaders, well-respected persons, and local organized crime leaders. This was followed by an extensive process of communication and negotiation with these actors and more broadly with the community, in order to explain the implications of formalizing access to electricity—particularly the need to pay for electricity once access was formalized—but also to build a relationship of trust with the utility that would
  • 22. 22 position the latter as a partner and not an exploiter of the community. To demonstrate its commitment to the Reta community, Ampla sponsored a program to enhance the employability and labor market insertion of local residents through training in employment skills such as resume writing and communication; a second Ampla-sponsored program supported local entrepreneurs with training in basic business skills that would enhance the chances of success of their ventures. It was only after such efforts, and when in the opinion of the local Viva Rio manager the community was ready to accept the formalization of electricity access, that Ampla began the process of replacing the local network with the new network that made theft much more difficult, in parallel with the registration of all households and businesses in the community to turn them into formal customers. Although the concept of collaborative governance was originally envisaged with a government agency in a leading role, the governance pattern observed in these two cases could be described as a variation on collaborative governance, “collaborative governance without the state.” Emerson et al. (2012: 3) define collaborative governance as the “processes and structures of public policy decision making and management that engage people constructively across the boundaries of public agencies, levels of government, and/or the public, private and civic spheres in order to carry out a public purpose that could not otherwise be accomplished.” In the cases above, the key public policy issue of supplying potable water and sanitation has been effectively delegated to non-state actors, Águas de Niterói and Ampla, but otherwise the “processes and structures” are substantially similar: engaging various groups and persons across private and civic spheres in a context of violence and neglect where adequate supply of these basic services would otherwise be very unlikely. As Donahue (2004: 4) acknowledges, there are solid grounds to make a “significant distinction between the domestic and international variants of collaborative governance” regarding the participation and role of public sector entities in such initiatives in relation to the “robustness and sophistication of formal government.”
  • 23. 23 Co-production: Light’s Zero Loss Area pilot at Rio das Pedras8 The other electric utility in the metro Rio area, Light, has been piloting a new design for transforming informal into formal access at several informal settlements, including one called Rio das Pedras. For its design, called “Zero Loss Area,” Light borrowed from other experiences,9 including Ampla’s earlier one with technology. As in Reta favela, organized crime has the “monopoly on violence” in Rio das Pedras: it is reputed to be the birthplace of Rio’s militias (Cano & Duarte, 2012). But in contrast to the collaborative governance approach taken by Ampla and Águas de Niterói, Light has opted instead to involve some members of the community in the operational activities of electricity service, thus following a co-production approach (Ostrom, 1996). Under such a co-production, Light is relying on a different set of actors for the creation and maintenance of trust between the company and the community: local microentrepreneurs, hired directly by Light as agents, and tasked with monitoring electricity connections for possible theft or fraud, and most importantly, with establishing personal relationships with local customers and helping resolve any difficulties regarding electricity service. For example, if a family is experiencing financial difficulties that compromise their ability to pay their electricity bill, the local Light agent can help negotiate a payment plan with the company. This approach borrows from the successful experience of Energía Social, an electric utility in Colombia’s poor Caribbean coast, which provides service through local microentrepreneurs (Unión Fenosa Colombia, n.d.). Like Energía Social, Light aims to draw on the local knowledge of the microentrepreneurs to develop a highly customized relationship with each member of the community. Trust is built not only by drawing on the social capital that these agents can draw upon and on the development of personal relationships, but also by using the agents and Light’s other resources to facilitate access by community members to valuable programs. Specifically, through its agents, Light helps local households register for the Bolsa Família conditional cash transfer program of the federal government (Brazil’s main anti-poverty program), and, counterintuitively, helps these households reduce
  • 24. 24 their electricity bills through an energy efficiency program that replaces, for free, old appliances such as refrigerators with new, efficient ones. Light’s program does share, however, a common element with those of Águas de Niterói and especially Ampla: the use of advanced technology to supplement the contact with the community in the quest to discourage theft. Thus, the intensive use of information technology for electricity distribution and use, known as “smart grid,” is paradoxically not being rolled out among Rio’s most sophisticated technology users, such as the major companies located in downtown Rio, but in the informal settlements of the urban periphery. Advanced technology allows Light to monitor individual consumption to detect any abnormal patterns that could point to theft or fraud, and it allows remote disconnection (and reconnection) of customers found to be engaging in theft or fraud.10 Conclusion Meeting the massive and urgent “last mile” needs for access to basic services in urban informal settlements around the world is an enormous challenge. The various “governance failures” identified by Bakker and Kooy (2008) continue to deprive hundreds of millions of urban residents around the world of water at an adequate cost or quality, and of sanitation services that can prevent the spread of infectious disease and the pollution of waterways. The Rio de Janeiro metropolis is no exception to this picture, but here, the regulatory pressures placed on companies holding concessions for water, sanitation, and electricity supply, are leading to experimentation with new forms of governance and organization that offer new hopes for addressing the last mile challenge in the cities of the developing world. The key to these experiments is the realization by the different stakeholders that securing adequate access to basic services cannot be achieved solely on the back of a single entity, be it a service provider, a community organization, a government agency, or an NGO, requiring instead some level of collaboration across the boundaries of business, government, community, and nonprofits. Such
  • 25. 25 collaboration is crucial for building and maintaining trust between service providers and slum communities. In turn, the need to build and maintain trust, not only between service providers and communities but also among all the actors involved in these collaborative ventures, appears to be pushing the ventures to go beyond the question of access to basic services, to income generation more broadly and to community participation in decisions that have major impacts on community well-being. In this regard, this pattern follows earlier experiences elsewhere in Brazil that appear to be successfully scaling up: in São Paulo, electric utility AES Eletropaulo began in 2004 a program with similar components that by 2013 had provided formal access to more than 500,000 families, and was on target to reach 2.7 million people by 2015, leading to a reduction of electricity losses from 14% to less than 10% over the 2004-2015 period (AES Eletropaulo, 2015). Such a pattern is in fact consistent with, but also extends, the concept of basic services as “platforms” (Mejía, 2011) that possess significant potential to transform informal settlements. In the original formulation of this concept by the Inter-American Development Bank (ibid.), “platform” takes a fundamentally economic meaning, referring to the potential to use the “capillarity” of basic service supply to virtually every community member, in order to offer other products (such as consumer credit, as originally done in Bogotá by the electric utility Codensa). The emerging experiences in Rio show that the platform concept can also extend to governance, by turning utilities into vehicles to structure community participation, and in this way altering profoundly the neglect or manipulation of these communities by state institutions. Whether these incipient experiences realize their transformative potential on a wide scale or not is at this point too premature a question to answer; but one question that can already be answered is that they do transcend the debate between public and private ownership that has obfuscated, often behind ideological dogmas, the question of access to basic services in Latin America and other developing areas of the world. This is not only because the actors involved cannot be neatly classified as private or public
  • 26. 26 (CEDAE has private shareholders; Light is a subsidiary of CEMIG, an electricity company owned by the State of Minas Gerais); it is also because the real problem of service provision is one of governance and not of ownership. The weak institutions associated with poor governance will result in inefficient or corrupt provision by SOEs, or by monopolistic abuse under provision by the private sector, as such institutions will be incapable of restraining the capture and manipulation of both SOEs and regulatory agencies. The promise of the emerging patterns of access highlighted above is that they cut across traditional distinctions, relying instead on a variety of organized interest and stakeholders that can, from the ground up, check and balance each other, at least for relatively specific tasks like the provision of basic services. 1 Throughout the paper, I use the expression “informal urban settlement” with the word “slum” as the former is rather unwieldy, and the latter is used in the same sense by UN Habitat. 2 To be sure, some cities such as São Paulo contain significant numbers of urban poor in degraded central districts not unlike the inner city ghettoes of the US, but this only occurs in some cities, and accounts for a relatively small proportion of the urban poor in any case. 3 Informal subdivisions are, like traditional favelas, characterized by self-built housing and underservicing, as well as often uncertain property rights, as they are the product of improperly registered land sales and conversions of rural land into urban use without meeting legal requirements (such as permits and construction of service networks). Often, their only difference with favelas is the more regular street pattern, as the buyers of the plots demand better conditions than on occupied or squatted land. 4 The major role of the State and Federal governments in Brazil makes the urban regime framework (Stone, 1989) less applicable in the Brazilian case to the understanding of institutional and organizational forms and processes, in contrast to other countries like South Africa, where municipal responsibility for basic services places urban regimes at front and center of analysis (e.g. Kracker-Selzer, 2012). 5 Of course, the question of regulatory enforcement of concession contracts does not constitute a full explanation; it raises the question of why do regulatory authorities behave thus instead of taking a more lenient interpretation of the contract, or agreeing to a contract renegotiation. This important issue remains for future research. 6 Information about this case comes from interview with Fábio Coelho, Commercial Manager, Águas de Niterói, December 12, 2014, unless otherwise noted. 7 Information about this case comes from interview with Osmar Vargas, Reta Project Manager, Viva Rio, October 20, 2014, unless otherwise noted. 8 Information about this case comes from interview with André Duarte, Manager, Light, November 13, 2014, unless otherwise noted. 9 The author was involved in a major study of international experiences in access to electricity in informal urban settlements carried out for Light in 2011. 10 Lest it be thought that the company can freely engage in these actions, they are stringently regulated and monitored by the federal regulatory agency and consumer protection entities. Endnotes
  • 27. 27 References Abradee (Associação Brasileira de Distribuidores de Energia Elétrica). 2013. Perdas na distribuição: baixa tensão, altos prejuízos -- Reportagem Especial Canal Energia. http://www.abradee.com.br/imprensa/artigos-e-releases/1018-perdas-na-distribuicao-baixa-tensao- altos-prejuizos-reportagem-especial-canal-energia. Accessed December 15, 2014. AES Eletropaulo. 2015. Programa de regularização de energia da AES Eletropaulo beneficiará 2,7 milhões de pessoas até 2015. https://www.aeseletropaulo.com.br/imprensa/nossos- releases/conteudo/programa-de-regulariza%C3%A7%C3%A3o-de-energia-da-aes-eletropaulo- beneficiar%C3%A1-2,7-milh%C3%B5es-de-pessoas-at%C3%A9-2015. Accessed March 4, 2016. Alencar, E., and Schmidt, S. 2014. Um mar de lixo e lama: quase R$ 3 bi gastos. E a poluição persiste. O Globo. 24 August. Ansell, Chris, and Alison Gash. 2008. Collaborative governance in theory and practice. Journal of Public Administration Research and Theory 18:543–71. Arias, Enrique Desmond. 2006. Trouble en route: drug trafficking and clientelism in Rio de Janeiro shantytowns. Qualitative Sociology 29: 427-445. Bakker K, and Kooy M. 2008. Governance failure: rethinking the dimensions of urban water supply to poor households. World Development 36(10):1891–915. Barcellos, C. 2003. Abusado: O dono do morro Dona Marta. Rio de Janeiro: Editora Record. Cavalieri, Fernando. 2005. Favelas in Rio – Data and Changes. Rio de Janeiro: Instituto Pereira Passos. Cano, Ignacio, and Duarte, Thais. 2012. “No sapatinho” : a evolução das milícias no Rio de Janeiro (2008- 2011). Rio de Janeiro : Fundação Heinrich Böll. Coelho, Victor. 2007. Baía de Guanabara - Uma História de Agressão Ambiental. Rio de Janeiro: Casa da Palavra. Diniz, Edson, Belfort, Marcelo Castro, and Ribeiro, Paula. 2013. Memória e identidade dos moradores do Morro do Timbau e Parque Proletário da Maré. Rio de Janeiro: Editora Redes da Maré. Donahue, John. 2004. On Collaborative Governance. Corporate Social Responsibility Initiative Working Paper No.2. Cambridge, MA: Harvard Kennedy School. Donahue, John D., and Zeckhauser, Richard J. 2011. Collaborative Governance: Private Roles for Public Goals in Turbulent Times. Princeton: Princeton University Press. Emerson, Kirk, Nabatchi, Tina, and Balogh, Stephen. 2012. An Integrative Framework for Collaborative Governance. Journal of Public Administration Research and Theory 22(1): 1–30. Finlayson, K. 1978. Squatting and the role of informal housing in incremental growth and self- improvement. ITCC review 7: 42.
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  • 30. 30 Figure 1. Inequities in access to piped water in urban areas Graph from WHO and UNICEF, Progress on Drinking Water and Sanitation-2014 Update, WHO Library Cataloguing-in- Publication Data
  • 31. 31 Figure 2. Proportion of the population using improved sanitation in 2012 Source: WHO and UNICEF, Progress on Drinking Water and Sanitation-2014 Update, WHO Library Cataloguing-in-Publication Data
  • 32. 32 Figure 3. Informal electricity connections in Rocinha, Rio de Janeiro Source: Author
  • 33. 33 Figure 4. Informal water connections in Providência, Rio de Janeiro Source: Author
  • 34. 34 Figure 5. Electricity Losses 1980 and 2000 Source: World Bank
  • 35. 35 Figure 6. Expected demand for water and sewerage investment, 2010-2025 Graph from McKinsey Global Institute.2012. Urban world: Cities and the rise of the consuming class.
  • 36. 36 Figure 7. Access to water, sanitation, electricity, and trash collection (D4 index), Rio metro area, 2010 Source: Oliveira & Nery, 2013
  • 37. 37 Figure 8. Electricity theft by sub-area of Light’s concession, 2012 Source: Light, 2013
  • 38. 38 Figure 9. Militias and drug traffic gangs in Light’s concession area (2013) Source: Light, 2013 based on INFOGLOBO