Mexico’s Water and Wastewater Market
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- Water Prices for Mexico City (In US Dollars)
- Residential Use Commercial and Industrial Use
- Tariff Lower Limit
- Lower limit Higher Limit Fixed Fee
Pricing and Metering.The latest official information available shows that 59% of the government spending in the water sector came from the Mexican federal government while cash flows generated by municipal utilities covered only 7% of the total investment in 1999. Of all potable water produced in Mexico, 39.9% is unaccounted water – either lost through leaks, theft, or not metered –. From accounted water, 60% is billed to users with users paying about 65% of what they owe. This means that from the total water produced in Mexico, only 23.4% is paid for by the users. In addition to low collection, water prices are highly subsidized to most customers and therefore cash flows generated by local utilities are insufficient to provide for adequately maintenaing or financing additional system investment. Most rates are scaled with cross subsidies from industrial and commercial sectors. This tariff structure subsidizes domestic use which is the largest urban consumer. Tariff structures and prices are set at the local level, either by the local congress, by the water utility or by the state governor. The nature of billing varies radically from operator to operator, and some operations even charge a flat fee for unit of water consumed. To exemplify water tariffs structures, in Mexico City the government structured a scale where users pay a fixed fee for the lower limit of the scale level and an additional fee for each m3 consumed over the lower limit. Mexico City has one of the highest tariffs in Mexico and larger consumers as well as non-residential users subsidize urban water consumption. Water Prices for Mexico City (In US Dollars)
Private participation in the water sector requires tariffs to reflect the real costs of providing the service. The low political will to increase tariffs is one of the main causes for low private participation in the provision of these services, however those cities which have opted for some private participation scheme, have benefited from realistic tariffs as they allow for increased coverage, efficiency, and have reduced subsidies to the sector. President Fox mentioned that in order to maintain water supply levels and increase quality of the service, it is necessary to increase water tariffs an average of 50% on a national basis. This announcement caused anger among most local opposition governments who argued that is not responsibility of the President to set guidelines for how local governments manage their finances and that rising water tariffs would directly impact low income families.
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