The Buck Stops Where? Federalism, Uncertainty, and Investment in the Brazilian Water and Sanitation Sector
American Economic Journal: Economic Policy
vol. 12,
no. 3, August 2020
(pp. 374-401)
(Complimentary)
Abstract
This paper documents how regulatory uncertainty may undermine public service when different levels of government share a mandate on public service provision. I examine the Brazilian water and sanitation sector, which presents a natural experiment of shared provision between state and municipal companies. Using a difference-in-differences framework, I study a legal reform that clarified the relationship between municipal and state providers and eliminated any takeover threat by state companies. I find that after the reform, municipal companies almost doubled their total system investment, leading to significant increases in system access and decreases in child mortality.Citation
Kresch, Evan Plous. 2020. "The Buck Stops Where? Federalism, Uncertainty, and Investment in the Brazilian Water and Sanitation Sector." American Economic Journal: Economic Policy, 12 (3): 374-401. DOI: 10.1257/pol.20180327Additional Materials
JEL Classification
- H77 Intergovernmental Relations; Federalism; Secession
- L95 Gas Utilities; Pipelines; Water Utilities
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
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