Neighbors in Porto Alegre, Brazil, have been getting together regularly since 1989 to discuss the future of their city. Everyone is encouraged to speak at district meetings in churches, gyms and clubs, discussing everything from water supply and sewage to school construction and beach cleanings.

Porto Alegre is hailed as the birthplace of participatory budgeting. The practice has since been adopted by more than 2,700 governments throughout the world.This isn’t idle chit-chat, though. Citizens in Porto Alegre have historically had the power not only to demand city projects, but to fund them. In a system known as “participatory budgeting,” citizens engage in multiple rounds of debates and deliberations, and ultimately vote on how a certain percentage of the municipal budget gets spent.

Ironically, as the rest of the world continues to praise this Brazilian invention, the practice has fallen away in its birthplace. Porto Alegre recently suspended its participatory budgeting program. The rise and fall of the process in Porto Alegre is the focus of the first case study in the World Resources Report, “Towards a More Equal City,” offering lessons on how to protect the practice in other cities.

The Birth of Participatory Budgeting

Participatory budgeting was invented in Porto Alegre as a response to the city’s rapid growth and inability to provide basic services to its residents. In 1989, following its democratic socialist ideas, the newly elected Workers’ Party inverted the decision-making process so citizens decided how a portion of a city’s budget was spent.

Participatory budgeting contributed to a more equitable distribution of city services. By 1997, sewer and water connections went up from 75 percent to 98 percent; health and education budgets increased from 13 percent to about 40 percent; the number of schools quadrupled; and road building in poor neighborhoods increased five-fold. Importantly, participation in budgeting meetings grew from fewer than 1,000 people per year in 1990 to about 40,000 in 1999.The process gave a voice to the poor whose interests were usually ignored. They now had a say in which projects should be funded and built.

Things Fall Apart

But while participatory budgeting has gained new converts in cities around the world, its birthplace is becoming a case study of how quickly such schemes can fall apart.

Without participatory budgeting, it is possible that the interests of the poor will fall off the city’s agenda. Neighborhood associations, once a powerful voice from citizens, will lose the capacity to represent the urban poor in city’s decision-making, elevating the influence of the private sector. Government accountability might also suffer a setback with the suspension; the loss of participatory budgeting may make it more difficult for citizens to hold politicians accountable.

What Could Have Been Done Differently?

The World Resources Report case study on Porto Alegre not only tells the story of the rise and fall of participatory budgeting in the city, it also explores why the system fell apart. From this research emerge three factors that make or break a participatory budgeting system:

1. Political commitment: From the outset, legal arrangements need to ensure that proposals received from citizens through the participatory process are implemented. Thousands of projects approved in the 1990s and early 2000s are still pending implementation.
2. Financial resources: Two streams of funding are necessary: money that citizens can distribute (the participatory budget itself) and funding to support the process itself (such as outreach activities to inform citizens of how they can join).
3. Well-structured participatory arrangements: Participation must be well-structured and include capacity building to ensure active and informed participation by diverse segments of the population. The model should ensure inclusion of the poor in decision-making about projects of any scale – small and large.

Participatory Budgeting Can Build a Better City

Despite these difficulties, participatory budgeting remains a powerful tool to incorporate the priorities of the urban underserved into cities’ agendas. Policymakers must keep in mind that participatory activities don’t exist in a vacuum: Underlying institutional and political structures may also need to change. The political commitment launching the participatory budgeting process must ensure that additional attention and political capital are spent addressing underlying structures if these efforts are to last. Finally, those undertaking participatory budgeting should expect change over time and design for it.

Download “Porto Alegre: Participatory Budgeting and the Challenge of Sustaining Transformative Change” from wri.org.

Valeria Gelman is a Communications Specialist and Program Coordinator II for WRI Ross Center.

Daniely Votto is the Urban Governance Manager for WRI Brasil Ross Center.