Price and urban water management in Mexico

Abstract

This work aims to evaluate the potential price paid by users as a tool for management of urban water demand in Mexico. Our results, based on an analysis of data from hundreds of water utilities in the country, show that water demand is sensitive to price itself, as noted in other studies. However, we also find that the demand is even more sensitive to the effect of population and economic growth. Therefore, considering the demographic dynamics, urban and economic life, an increase in the price of the water itself may not contribute significantly to the stabilization of national requirements for water extraction for urban use. Furthermore, our analysis of the determinants of urban water price reveals that utilities routinely pass the cost of their technical and financial inefficiencies users, so that an increase in the price of water could also contribute to the improvement of its finances. We conclude that for effective management, efficient and sustainable urban water use, it is essential to a fundamental change in the way they operate urban water systems.