Mexico

Mexico’s Water Challenges

Almost 35 million Mexicans live under severe water stress. The uneven distribution of water resources across the country is one of the reasons. In the central-highlands and northern regions –where a third of the population lives and almost 85% of the GDP is produced– we find only 32% of available water resources. This situation is worsening because of increasing development pressures and climate change. Water resources are also unequally distributed across different user groups, as we find that 76% is used by the agriculture/livestock sector, 15% for urban settlements, 4% for industrial use, and 5% for hydropower. Low efficiencies in irrigation –of approximately 50 percent– and reduced wastewater reuse are the norm. Clearly for Mexico, pursuing a more sustainable agri-water management must become a priority.

Due to several factors and path-dependencies, the country’s water resources are being rapidly depleted through severe overexploitation and pollution. Groundwater management is a critical water security concern, as it represents the source of 37%t of national water consumption. Unsurprisingly, 165 aquifers out of 635 are being overexploited at an unsustainable rate. One of the main drivers behind this trend are the drawbacks in water resources management –including a dated water allocation regime. Water pollution is caused by rapid/uncontrolled urbanization, grossly polluting industries (GPIs), and non-point agriculture sources. Still, according to official figures only 52% of municipal waters and 32% of non-municipal ones receive some form of treatment.

Significant budgetary cutbacks and disinvestment in the water sector since the 2010s, severely affect the building of new water infrastructure and the conservation/maintenance of critical storage, conveyance, and distribution networks. For example, 74% of the dams and reservoirs that serve irrigation districts have already surpassed their working-lifespan and receive only very little maintenance. The investments in key subsidy programs to support local water utilities also show worrisome cutbacks from an average yearly investment of US$362 million –in the period 2011 to 2016– to only US$104 million –in the period 2017 to 2022. Similarly, investments in irrigation infrastructure show dramatic cutbacks from an average yearly investment of US$434 million in the period 2011 to 2016 to only US$111 –in the period 2017 to 2022.

This disinvestment trend goes against what a water gap analysis developed by the National Water Commission (CONAGUA) recommended in terms of investment rates. A gap analysis conducted in 2011 estimated that by 2030 water demand will rise to 91.2 billion m3 –from 78.4 billion, mainly due to growth in productive activities and population. To bridge this gap, Mexico would require investments up to US$83 billion, meaning that US$4.24 billion needed to be invested annually over the coming years and until 2030. Patently, there is then a need to address this financial gap by harnessing financial resources from different sources –including public, private, social, and international ones– and by deploying innovative financial mechanisms in a coordinated and integrated manner. Accordingly, building a more robust water financial system is also a priority concern.

Finally, incomplete reforms as well as a relatively weak and dated institutional, legal and governance framework contributes to this challenging context, hindering the creation of a more enabling environment to pursue water security across the country. This complex situation coupled with broader political economic realities –such as poverty, inequality and exclusion– as well as the harsh socio-economic impacts produced by the COVID-19 pandemic, has prompted different stakeholders to push and advocate for deep reforms to the national water legal framework. This process is happening in the context of social cleavages and political polarization regarding the necessary changes required in the water sector and the principles and guidelines that should inform the new legal framework.

Approach and Results

The approach taken by 2030 WRG in Mexico was to establish a strategic alliance with the Consejo Consultivo del Agua A.C (CCA), an already existing MSP. Together with the CCA, government authorities, stakeholders, the World Bank Water Global Practice (Water GP) and IFC, we have supported initiatives to enable deliberative structures and collective action to support policy dialogues, policy change and institutional reform processes, as well as to implement innovative pilot projects and capacity-building activities to back the country’s pursuit of sustainable water resources management and water security. We have done this through the implementation of several workstreams, described below.

Strengthening the Mexican Water Financing System for Water Security, Circular Economy and Resilience

Following-up on recommendations produced by the World Bank report on the Mexican Water Financing System (2014), 2030 WRG in collaboration with CONAGUA, CCA and other stakeholders has: (i) developed CONAGUA’s multi-criteria capital investment prioritization system; (ii) assessed the prospects and challenges for PPPs for agri-water infrastructure; (iii) supported the Valley of Guadalupe circular economy project –developing a governance/financial model to support replication–; (iv) provided capacity-building to CONAGUA on Unsolicited PPP proposals, and (v) developed an initial study on the prospects and challenges of an emergency liquidity fund for water utilities (under the COVID-19 emergency response).

Currently, we are working in collaboration with the Water GP and IFC on assessing alternative financial mechanisms to increase the flow of financial resources to the water sector, and on developing CONAGUAs innovative finance unit.

Strengthening the Mexican Water Allocation Regime for Green, Resilient and Inclusive Development (GRID)

Together with the CCA, other strategic allies –like the Private Sector Centre for Sustainable Development Studies, CESPEDES– and the Water GP we implemented a policy dialogue to discuss challenges and prospects faced by the Mexican water allocation regime. From this dialogue stem several position papers with key policy recommendations to build the regime’s resilience and that have been shared with CONAGUA, the House of Representatives and other stakeholders.

We also supported CONAGUA in the design of water allocation instruments to help water utilities face the COVID-19 pandemic, and ensure they had the necessary water allocation to support the urban water demand surge. Currently, we are continuing with the deep dive analysis on the water allocation regime to support the continuous dialogue taking place in the context of the reform process to the National Water Law framework and make sure that the regime supports a green, resilient and inclusive development.

Social Pact for Water Initiative and CCA’s National Water Law Taskforce

The CCA –with the support of 2030 WRG and other organizations– launched the Social Pact for Water Initiative with the objective of creating a set of deliberative structures to bring different stakeholders together to discuss the many different challenges faced by the water sector, attempt to bridge differences, and arrive at some form of consensus on the necessary policy change and institutional reform priorities. Perhaps an even more important underlying goal of the Initiative was to deploy in the Mexican water polity an ideal or loadstar imbued with political symbolism regarding to what the CCA and its allies considers urgent and necessary for the polity, as without a true social pact for water –bringing together in a concerted manner the interests, resources and the will of key stakeholders and negotiating the trade-offs– whatever changes/reforms enacted will not truly work.

Out of this process the CCA produced a position paper, Normative Principles and Organizational Guidelines for the Mexican Water Sector to help inform the National Water Law (NWL) framework reform process. [links to the related publications] Furthermore, in the context of this reform process the CCA created a taskforce to support critical thinking, enable multidisciplinary expert evaluation, and increase awareness on the importance of sound reforms to ensure that the new NWL bids are thoroughly analyzed and incorporate the best available knowledge and practices.

Partners

2030 WRG started to work in Mexico in 2015 upon an invitation made by the CONAGUA. In 2016, 2030 WRG established a strategic alliance with the Consejo Consultivo del Agua (CCA), an already existing MSP, created by government and civil society to support multi-stakeholder participation throughout the policy process and to provide independent advice to the President of Mexico, CONAGUA, diverse ministries, and the House of Representatives. Since then, the 2030WRG became a full CCA member and holds a seat in its Steering Board, also playing the role of technical secretary of the joint initiatives. It is worth highlighting that the CCA’s functions and responsibilities are anchored in the National Water Law (chapter 14 BIS of the NWL), giving it a distinctive and influential role in the water polity.

The CCA is comprised of:

  • several private sector companies including amongst other, Grupo Modelo/ABInbev Nestlé, Coca-Cola Femsa, Heineken, Grupo Bal, Rotoplas, BAL Ondeo, Veolia;
  • some of the most important universities and research centers, including the Universidad Autónoma de México (UNAM), Instituto Politécnico Nacional (IPN), and the Tecnológico de Monterrey;
  • interests group organizations including the Asociación Nacional de Usuarios de Riego (ANUR), the Asociación Nacional de Empresas de Agua y Saneamiento (ANEAS), and the Consejo Nacional Agropecuario;
  • organizations of civil society, foundations, and private individuals.

The CCA also works closely with other stakeholders such as the Comisión de Estudios del Sector Privado para el Desarrollo Sustentable (CESPEDES) of the Consejo Coordinador Empresarial, and the Cámara Nacional de la Industria de la Transformación (CANACINTRA), amongst other strategic allies.

Resources