Thirst for reform ? private sector participation in providing Mexico City's water supply

The case in Mexico City offered an opportunity to observe the advantages, and disadvantages of gradualist reform. Unfortunately, the authors find that the long-term nature of an incremental approach does not match well with the generally shorter-term horizons of elected politicians. Difficult decisions in implementation are left to later years, which pushes potentially unpopular actions onto the shoulders of future administrations, while allowing the current government to claim credit for instituting reform. The reform planned - and implemented - was not designed to tackle the city's most serious water problems, including over-consumption, and waste. And reform did little to change residential consumers'incentives to conserve water. Over-exploitation of the aquifer has been a problem since at least the 1930s. Mexico City is built on a series of drained lakebeds, and the land is soft, and prone to settling, or subsiding, as the aquifer is depleted. Several areas of the city center have sunk by over two meters in the past decade alone. And by virtue of its location, and elevation, the city's alternative water sources are expensive. The need for change is stark, but the power to undertake reform to tackle broad problems of resource management in the city, and surrounding areas, lies outside the jurisdiction of the Federal District, with the federal government. Such external funding of major supply projects, weakens the incentives for conservation. Reform reduced the increasing rate of over-exploitation of the aquifer, but partly by simply failing to meet demand. Reform to provide more equitable, and sustainable water delivery, must focus on improving the efficiency of operations, on substantially reforming the way water resources are priced, and allocated, and, on the design, management, and pricing of wastewater services. Federal subsidies for new production must be reduced, prices for system operators, and consumers must rise, and more must be invested in the treatment, and storage of wastewater - all of which requires strong political leadership.