Mexico, Effectiveness of New Water Policy Schemes for Managing Climate Change and Water Scarcity

Mexico, Effectiveness of New Water Policy Schemes for Managing
Climate Change, and Water Scarcity and Quality

Patricia Romero Lankao
Department of Politics and Culture
Metropolitan Autonomous University, Xochimilco
e-mail:

Prepared for presentation at the
Open Meeting of the Global environmental Change
Research Community

October 6-8, 2001

Keywords:

Water Management Reforms, Climate Change and Water Scarcity

1. Introduction

During the last ten years new schemes of water policy have been designed and implemented in Mexico as part of the “structural change”,[1] a broader and deeper transformation in Mexican economy, society, policies and environment, which has resulted in a new model of development characterised among others by an export-orientated economy and a segregated society (Romero, P. 2001). Water reforms represented a shift from centralised policies, orientated to the supply side, to more decentralised schemes. Although the "nation's”– common or public – original property over water is maintained, individuals are allowed to exploit, use or profit by national waters through concessions, allocations or licences granted by water authorities. New policy schemes contemplate the privatisation of water resources and systems, water rights trading, and changes in the mechanisms of water pricing. Last but not least they include more involvement of users in the financing and management of water systems.

Based on the revision of official documents, on secondary sources and on survey data, the study presented here describes the main components of the new schemes of water policy (Section 2). It assesses their outcomes and impacts using two kinds of contexts – urban and rural – as examples, namely some Mexico cities and irrigation systems (section 3). The study examines how water institutions do address current climate variability[2] and to what extent these institutions are able to scope with this phenomenon (section 4). It shows that the new schemes of water management have reached only moderate results as tools to address water scarcity and quality as well as climate variability. Other factors were not considered within the layout of new Mexican public water policies schemes, although they can influence a more successful management of these issues (section 5).

2. New Water Policy Schemes

Since the beginning of the 1990s Mexican water authorities have developed new schemes of water management, which have not been consolidated yet. Water authorities are convinced that federal government, represented by the National Water Commission (CNA), should reduce its participation in the management of water resources to a “regulative” and “consultative” one; local authorities and water users are expected to play a more active role in the “construction and management of water infrastructure” (CNA, 1997, 1999a and 2001b). In this sense water management should be more decentralised. Authorities assume that market and clear property rights are the most powerful drivers for an efficient use and allocation of water. Based on these assumptions the following new water-management strategies have been designed.

The laws, regulations and Mexican Official Norms (NOMS) allocating water resources and regulating their quality have been modified in at least three domains. First, although the constitutional principle of the nation’s original property over water has been maintained, private rights and private schemes for water management were promoted. Second, as mentioned, responsibility for water management was transferred from a federal government agency (CNA in this case) to local water utilities under the auspices of users such as state and municipal decentralised organisms or farmers. This means that later undertake the administration of these systems and – for the agriculture – water and land become privatised. Third, new environmental principles were incorporated, like the watershed management;[3] polluter pays principle, environmental impact assessment, or the cost-benefit analysis for the application of regulatory standards.

Within a parenthesis I would like to analyse Mexican environmental regulations regarding water scarcity and quality (Table 1). Most water regulations were introduced during the 1990s, what makes evident the huge efforts undertaken in this area. Nevertheless environmental regulations suffer from some deficiencies. There are no standards regulating patterns of water use/consumption, mostly driven by governmental organisms. In most water-related fields under responsibility of water authorities (like construction and management of urban water infrastructure, and hydroelectricity plants) these utilities are judges and targets of water regulations, what can limit compliance with the law. Under a simplification of environmental instruments, all standards regarding water pollution by different economic sectors were derogated in 1997 (Romero, P. 2001). And since 1996, water users are responsible for monitoring their sewage waters and comply with environmental standards. The danger of the last two regulative changes is that they can contribute to weaken already faint environmental policies, since there are no external mechanisms to warranty that all water users actually monitor their disposal waters, and comply with environmental standards.

Table 1. Recent history of water regulation in Mexico

Regulations/Ordinances

Source: Environmental Official Magazine (1988-2000) and CNA (2001a). * CC by G means command and control by the government, EI means economic instruments, and NE means not existent.

Table 2. Recent tendencies regarding
demographic dynamics and public investments
(Supply, waste and drainage systems)

Source: CNA (1999b). * Millions of Mexican pesos. ** For these years the amounts are integrated in the column of credits

Investment in water infrastructure by federal authorities is still a water-policy tool of the new schemes of water management (CNA 1997, 1999a and 2001b). But in the context of intense economic and fiscal crisis as well as of “new public management” reforms (see footnote 1), water investments have not grown at the same pace as water demand has. As can be seen in Table 2, population demanding water services continuously grew, while public water investments were actually erratic and in some years negative.

Demand management tools and new schemes of financing are designed, which comprise three elements. First, water bills based on the user and/or polluter pays principle are expected to become a powerful instrument and increasing source of resources as historically water services had been subsidised in some sectors (agriculture, industry, big domestic consumers) and in some cities. Although water is still conceived as a common – that is to say nation’s – resource, users are supposed to pay at least the cost of getting water from the source to their economic and domestic units. With the establishment of permits/payments for the emission of discharge waters authorities want to induce users to reduce the pollution of water bodies. Other source of financing is a mixture of international and national credits (WB, IBD, Banobras) as well as of federal budget administrated by decentralised water organisms (OPD) under approval, supervision and assessment of CNA (Table 3). Second, programs are designed aimed at increasing the efficiency in the consumption of water, such as renovation and maintenance of water infrastructure, retrofitting of plumbing equipment, and tariffs. Third, private participation in the financing, construction and administration of water services has been encouraged,[4] not only as source of resources for the investment in water services, but also as mechanism to improve the efficiency of water management.[5] Last but not least first steps have been undertaken to promote an “inclusive participatory approach” of water users as well as to use watersheds as the fundamental unit for water management. The most important actions in this direction are the creation of Basin Councils, Technical Committees for Groundwater (COTAS), and decentralised water organisms (OPD) as well as the transfer of irrigation districts/units and rain-fed districts to farmers.

3. Water management reform, some outcomes in urban and rural areas

How have these new management schemes been implemented? What are their impacts and outcomes? How are they addressing water scarcity and climate variability and change? To answer these questions, some components of implemented water reforms in urban and rural contexts will be shortly analysed, namely actions aimed at

• Increasing incomes through water fees,
• Expediting participation of the private sector in the management of urban water systems,
• Transferring irrigation systems to farmers, and
• Promoting a more participatory water management approach.

Actions aimed at increasing water-related governmental revenues

CNA has promoted the reform of urban-water laws in 26 of the 31 Mexican states; three of them are based on “model laws” designed by the Commission (CNA, 1997). Decentralised Water Organisms (OPDS) have been created and/or transformed, under the reform of the Article 115 of the Constitution (1983). OPDS function as quasi-autonomous organisations at state and municipal levels, in charge of constructing and managing urban water systems under the APAZU programme,[6] based on private and public sources of funding. The latter are supposed to decline according to CNA’s expectations, and be substituted by water fees. Urban-water laws of 19 Mexican states allow OPDS to establish the level of fees and to charge consumers with water-bills for supply and sewage systems; 20 laws allow for the implementation of a politically very ticklish action, namely to suspend water services if users do not pay.

All these measures have resulted in increasing total resources for CNA and local water authorities, which grew 96 and 19.4 percent respectively during 1995-1999 (Tables 3 and 4). A careful analyse of these data shows that fees for use of national freshwater are the most important source of revenues, followed by CNA’s delivery of water to urban and industrial centres; they make together an average of 70.1% and 16.4% respectively. Fees for freshwater consumption by urban sectors only augmented during 1998-1999 (Table 4). While irrigation services and the use of water bodies as receptors of pollutants still represent a very small share of governmental water revenues (Table 3). Authorities hence have not yet been able to increase their revenues from irrigation agriculture – which in 2000 consumed 83 per cent of the national total amount of withdrawn freshwater (CNA, 2001a) – nor have they implemented emission permits as polluter-pays principle (Table 3).

Table 3. CNA: Revenues for Water Uses, Systems and Services

(Millions of pesos)

Source: (CNA, 2001b). * Numbers in the first line of the column correspond to percentages of totals in the last line of the column. ** Includes consumptive and non-consumptive uses like supply water, hydroelectricity, aquaculture, and agriculture, although authorities have not yet charged farmers.

Contrary to governmental expectations, revenues from water bills are neither enough for the Mexican water sector to become financially auto-sufficient, nor to induce more efficient patterns of water use, and/or reduce highly regressive subsidies in some cities. In 2000 for instance, 55 percent or CNA’s budget came from federal grants, 5 percent from borrowed funds and 40 percent from water fees (CNA, 2001a). The situation is more striking at the state and local level. For instance, water bills only represent 20 percent of the amount the Federal District has to invest during 2001 in the administration of urban water systems (Reforma Newspaper, 02/0701).

Table 4. Revenues for water services in some and
all-Mexican cities

(Million of constant pesos)

Source: CNA (1999b).

Different obstacles impede tariffs to play a more decisive role as mechanism for the implementation of the user and/or polluter pays principle, namely:

• Water is a “political issue” in Mexican cities and water bills have been politically and not technically defined and set, in at least two senses. Politicians use water tariffs and provision as campaign slogan they fulfil through “clientelistic” relations to their target groups, especially poor people whose access to water services is conditioned to their support for the official party. Big users “negotiate” with and small ones press local authorities to receive water services, and avoid or at least contain increases in water charges, since a “no payment” culture is quite extended within Mexican water users, most of whom rightly argue about the low quality of water services (Gonzalez, 1995; Pineda, 1999; Zentella, 2000).

• In various cities, water authorities do lack legitimate, organised and total control over artesian wells, pipes, taps and other hydraulic infrastructure controlled in some cities by “industries”, vendors and “caciques” – petty chieftains who informally dominate access to water. This has two consequences: distribution systems are illegally opened or deviated by water users, and inhabitants, industrial, commerce and service enterprises just throw rubbish and hazardous wastes into collectors and open channels (Gonzalez, 1995, Pineda, 1999, Romero, 1999). As shown above, during last years water and environmental authorities have loosened water-quality regulations. How can authorities then meter and charge water consumption and/or oblige to pay for water pollution when their institutional setting is so weak, illegality so spread, and when environmental standards have been softened recently?

Private participation in the management of water

Some cases of private participation in water management will be shortly described for the reader to see how new water policies have been implemented in Mexican urban areas, whether they have been effective in addressing water scarcity and quality, and whether or not private participation is related to a more efficient management of water. The first three examples – Federal District, Aguascalientes and Puebla –
constitute different forms of private participation in the management of water services. While the other – four cities of the state of Baja California – appear to be cases of services still managed by public organisms, but under new – managerial – schemes of administration (see the eight indicators in table 5).

Water reforms were introduced in the Federal District since 1989, when authorities stated that supply-side strategies were no longer feasible, as water became scarce, costs were not recovered, financing was difficult and water pollution turned into an additional restriction. They introduced two kinds of demand management approaches (increases in water charges, retrofitting of water equipment), and created an OPD, the Water Commission of the Federal District (DDF-GEM, 1989, Romero, 1999a).

Within a extremely short and closed bidding process (November 1992 – March 1993), which lacked public participation of water users or their representatives, four companies were granted general “service contracts” by the Government and the Water Commission as private administrators of the water systems of the Federal District,[7] not of the whole Metropolitan Area of Mexico City and/or the Basin of Mexico, as both have been historically managed by different state and municipal water authorities. Three stages were included in the contract. 1. Actualisation and regularisation of users inventory, water taps and meters, and supply and drainage network. 2. Construction of new taps and connections to the sewage system, and billing of customers by metered usage (Nevertheless customers are still supposed to pay to municipal water authorities not to the companies). 3. Maintenance and repair of the distribution and drainage systems. As of 2000 only the first two phases had been implemented, not the third one.

Table 5. Cases of New Water Management Schemes in Mexican cities, some Indicators

1 They include: a) clear formal and informal regulations or rules around the design and implementation of the privatisation contract; b) governments capacity to regulate and supervise compliance with the contract, and c) accountability mechanisms i.e. design and implementation procedures open to the public. 2 It refers to whether water bills have fulfilled two criteria namely efficiency and equity. 3 It is related to how far water authorities actually apply a basin management approach. 4 It refers to whether or not water reforms have resulted in decreasing amounts of consumed water and/or increasing standards of water quality. 5 Only representatives of the private sector participate in the Administration Board in charge of supervising the activities of the Public Services Commission of Tijuana.