Economic Instruments for Water Management

Economic Instruments for Water Management

The Cases of France, Mexico and Brazil

Ronaldo Seroa da Motta, Alban Thomas, Lillian Saade Hazin, Jose Gustavo Feres, Céline Nauges and Antonio Saade Hazin

This book argues that the economic appeal of using water charges to promote efficiency in usage and pollution control can be constrained by institutional and operational problems. Analysing the cases of France, Mexico and Brazil, the authors – respective local experts – illustrate that barriers are similar despite the existing differences among these economies.

Chapter 4: Country Case: Mexico

Lilian Saade Hazin and Antonio Saade Hazin

Subjects: business and management, management and sustainability, economics and finance, environmental economics, environment, environmental economics, environmental management, management natural resources, water


1 Lilian Saade Hazin and Antonio Saade Hazin 4.1 INTRODUCTION Since the establishment of a central agency in charge of the use of federal water resources in 1989, water management in Mexico and its regulation have been reformed to improve its efficiency and effectiveness. The process started with a system dependent on governmental budget allocations and for the most part focused on irrigation-related investments, and moved towards a more market-oriented scheme addressing the multiple needs of a growing urban population. The water supply system as a whole remains highly subsidized. Household water tariffs do not cover direct costs. Agriculture is by far the major user – with almost 80 per cent of the total water supplied to the system – and farmers get water at no cost, except for the electricity it consumes to pump it. As part of the strategy to modernize the water sector, the Mexican authorities have endorsed the use of economic instruments as one of the main approaches. Following this line of thought, the Environmental Program for 1994–2000 declared that: ‘economic instruments present advantages that make them attractive and necessary for public policies in environmental stewardship’. The water use charge from federal water bodies put into operation since 1986, and the wastewater charge implemented in October 1991 are the main examples of these instruments. After this introduction, the following section describes water problems in Mexico. The third deals with the institutional and legal frameworks for water management in Mexico. The fourth section describes water use charges in...

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