Brazil’s new Legal Framework for Basic Sanitation (Law No. 14,026/2020) is approaching six years in force, a period marked by regulatory transformation, increased private-sector participation, and persistent structural challenges to meeting the universalization targets set for 2033.

What has changed over the past five years?

Brazil’s Legal Framework for Basic Sanitation introduced mandatory competitive bidding for the delegation of sanitation services, prohibiting public entities from signing new program contracts without a prior tender process. It also established the regionalized service provision model, designed to create economies of scale and enable cross-subsidization between financially viable and underserved areas.

The legislation also established a core, non-negotiable target: to ensure access to drinking water for 99% of the population and access to sewage collection and treatment services for 90% of the population by 2033.

Growth in private-sector participation and the current landscape

Over the past five years, the number of municipalities served by private concessionaires has increased by 525%. Today, sanitation services are provided under private management – whether fully, partially, or through public-private partnerships (PPPs) – in approximately one-third of Brazilian municipalities.

Private-sector participation in sanitation investment rose from 15.1% in 2020 to 27.3% in 2023. During this period, companies operating in the sector invested approximately BRL 84 billion, taking a leading role in the expansion and modernization of sanitation networks.

Despite this progress, the 2026 Sanitation Ranking, published by the Trata Brasil Institute, indicates that investment gaps persist across much of Brazil’s major urban centers. More than half of Brazil’s 100 most populous municipalities invest less than BRL 100 per inhabitant per year – well below the average investment required to achieve universalization within the established deadline.

The study also highlights substantial regional disparities. The municipalities with the strongest indicators are concentrated in the Southeast and South regions, where the top-ranked cities report sewage collection rates above 98%. By contrast, the worst-performing municipalities are located in the North and Northeast regions, as well as in parts of the State of Rio de Janeiro, with collection rates limited to 28% among the 20 lowest-ranked municipalities.

As the 2033 deadline approaches, state and municipal governments are expected to accelerate initiatives aimed at attracting investment and advancing privatization and concession projects. Regionalization will continue to serve as the primary legal and economic basis for the auctions.

Sector opportunities

The substantial capital required to achieve universal access to sanitation services creates a long-term, high-demand market.

  • Investments and concessions: opportunities for investors, consortia, and funds in new privatization processes and PPPs;
  • Capital markets: growth in tax-incentivized infrastructure debentures, private equity investment funds (FIPs), receivables investment funds (FIDCs), and project finance structures aimed at funding capex;
  • Supply chain: continued demand for civil construction, environmental engineering, sanitation technology, water meters, automation solutions, and loss-control systems.

Key points of attention

The sector’s economic attractiveness is accompanied by risk factors that are typical of public infrastructure markets, including:

  • Regulatory risk: uncertainty arising from delays by local regulatory agencies in incorporating the guidelines issued by the National Water and Basic Sanitation Agency (ANA);
  • Economic and financial equilibrium: concession profitability may be affected by delays in obtaining environmental licenses, unforeseen geological conditions during construction works, and customer delinquency rates;
  • Compliance with targets: failure to meet the deadlines established under the Legal Framework may expose service providers to penalties.

To prevent or mitigate these risks, companies and investors operating in the sector should rely on strategic, legal, and contractual planning.