Prices and Water: A Strategy with Limited Effectiveness

Abstract

This paper studies the characteristics of water markets in Mexico under the analysis of water and food security. Water management functions are related to the mechanisms of water allocation for the different areas of use: food production, environmental services preservation, social welfare promotion by ensuring direct water consumption to citizens, and economic prosperity by its productive use. Regular and stable water supply of sufficient quality, wastewater collection and treatment, and billing and collection of water consumption correspond to the Operating Organizations of Drinking Water, Sewage and Drainage. Water is a good with no substitutes, it is transversal and it constitutes a natural monopoly. The phenomenon of institutional evolution which results in a scenario of water resources management system fragility, characterized by the lack of coordination between different management levels related to water policy, is analyzed in the first part of this chapter. The phenomenon of financial sustainability required for water and food security promotion is discussed in the second part.