Abstract
Mexican water price structure is set to reflect water availability and its economic value. Considering this framework, nine water availability zones have been established, in which the highest price is paid for zones with scarce amounts of water, and the lowest price is paid in zones with an abundance of water. Additionally, different tariffs have been established according to sectorial users, such as industry, households, and agriculture. This chapter develops a brief framework for water management in Mexico as a context for analyzing the pricing system of water actually used in Mexico. Also, the chapter briefly describes payment for environmental services—hydric (PES-H), as an instrument of environmental policy, because of its effects on pricing water from a forest conservation perspective. We conclude that although the water pricing system depends on water availability, the application of intra-regional tariffs for consumption (the largest water user being the agricultural sector) encourages irrational use due to subsidies applied to consumption.
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Notes
- 1.
The political administration in Mexico is organized, at the top by federal government, next the state governments (31), and last, the municipal government. The number of municipalities varies from one state to the other.
- 2.
They can be established as civil associations and granted certain fiscal privileges. The board of directors of these associations are selected by the assembly and composed of water users of the irrigation modules in the irrigation districts or units.
- 3.
To review the performance of water utilities in Mexico, see Guerrero (2008).
- 4.
Transferring the management of the irrigation districts to the users was foreseen as the proper strategy to create a different relationship between the government and water users.
- 5.
In the first instance, this water price structure is not explicitly considering the environmental issue; certainly, there is not an evident tariff for environmental services, but, in fact, water price takes into consideration the care of the environment when regional heterogeneity (water availability zone) is part of the price.
- 6.
It is important to mention that there is not a specific equation that converts the regional heterogeneity and the water users’ coefficients into efficiency use. In fact, there is not a rule. For water users, coefficients were established from a point of view of the estimated value that water produces into each economic sector. Regarding water availability zones, the procedures were similar, giving the highest coefficient where scarcity is the highest. It may look delicate, but the principle of this structure is to comply with economic performance of water users as well as the economic principle of scarcity. These coefficients have not changed over time, but tariffs indeed have had actualizations, principally in the form of inflation and taking into account social impacts.
- 7.
For more information regarding the determination of tariffs for pollutant discharges into water bodies, see CONAGUA (2013).
- 8.
Also, there are prices for special cases and other uses as commercial and services, livestock, irrigation for sporting fields, and aquariums. But they are few and do not have incidence in the cost, because they comprise approximately 1 % of the water withdrawal.
- 9.
Both programs are supported by the national forestry commission (CONAFOR—Comisión Nacional Forestal), whose purpose is to “develop, support and promote productive preservation and restoration activities in forestry, and to participate in plans, programs and implementation of sustainable forestry development policies.”
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Guerrero-Garcia-Rojas, H., Gómez-Sántiz, F., Rodríguez-Velázquez, J.R. (2015). Water Pricing in Mexico: Pricing Structures and Implications. In: Dinar, A., Pochat, V., Albiac-Murillo, J. (eds) Water Pricing Experiences and Innovations. Global Issues in Water Policy, vol 9. Springer, Cham. https://doi.org/10.1007/978-3-319-16465-6_12
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