Water Resources Management in Mexico - Water Pricing, Cost Recovery and Subsidies

Water Pricing, Cost Recovery and Subsidies

Mexico lacks a coherent national policy framework for setting and linking water and sanitation tariffs, subsidies and cost-recovery goals. The absence of overarching policies produces a wide variation in the degree of cost recovery and subsidies across regions. Tariffs are set below costs – the most common form of user subsidy in water supply and sanitation.

Water service providers charge industrial and commercial user tariffs that are close to full recovery cost, and cross subsidize residential users. The average tariff across users, US$0.32 per cubic meter ($0.24/cu yd), is half the Latin American and the Caribbean average, US$0.65/m³ ($0.50/cu yd).

The level of collection efficiency in Mexico has been estimated at 72%, far below the levels achieved in developed countries (OECD 95%). Water tariff collections in water supply and sanitation have been estimated at US$1.54 billion in 2002. Billed revenues were estimated at between US$2.14 billion and US$2.9 billion.

Approximately 31% of water customers are not metered and are charged a flat rate, independent of consumption, differentiated by neighborhood.