Mexico’s Water Crisis: How Tariffs Impact Consumption

Cancún, Mexico — Water tariffs in Quintana Roo align with the national average, while Mexico City employs a distinct system characterized by differentiated subsidies. A study by the Metropolitan Autonomous University (UAM) warns that these subsidies do not primarily benefit the most vulnerable populations. Instead, artificially low tariffs reduce revenue, distort the market, and fail to encourage responsible water consumption.

Mexico City’s Subsidy System

In the capital, domestic and mixed-use tariffs are determined by the Development Index (ID) of each city block: low-income neighborhoods receive subsidies of up to 91%, while high-development zones see subsidies around 60%. Mexico City is the only jurisdiction in the country using this model.

Although the system eases financial burdens for families, it also limits funds available for infrastructure improvements and service quality. The impact is evident in consumption patterns: Mexico City residents use an average of 366 liters per person daily—more than triple the 100 liters recommended by the UN for basic needs. By not reflecting the true cost of water, the pricing structure discourages conservation.

Billing Frequency and Efficiency

Another critical factor is billing frequency. While Mexico City maintains a bimonthly billing cycle, 97% of Latin American municipalities bill monthly, according to the Inter-American Development Bank. Monthly billing improves cash flow for service providers, enables quicker leak detection, and helps users adjust consumption habits in a timely manner.

Quintana Roo’s Tariff Structure

In northern Quintana Roo, the Water and Sewer Commission (CAPA) oversees several municipalities, while the private operator Aguakan serves Benito Juárez, Puerto Morelos, Isla Mujeres, and Solidaridad. The tariff structure includes a minimum charge for 0–10 m³ (10,000 liters), with additional fees for extra consumption. Drainage and sanitation charges are added per Article 46 of the State Law on Fees and Tariffs. Over 80% of residential customers pay only the minimum rate.

Though Aguakan does not set tariffs, the company reported assisting more than 25,000 families in 2023 through social programs such as No More Leaks, payment agreements, and discounts for low-income households, seniors, and people with disabilities.

This approach, combined with monthly billing, facilitates infrastructure investment, promotes responsible water use, and targets aid to those most in need. The results are measurable: Aguakan reports 100% coverage for potable water and sanitation in its service areas, compared to the national average of 96.1% for potable water, according to the National Water Commission (Conagua).

Broader Water Management Challenges

Water management extends beyond distribution—it includes ensuring potability, treating wastewater, and replenishing groundwater for future availability.

One area for improvement in Mexico City is the lack of distinction between commercial and industrial tariffs. Most states separate categories into domestic, commercial, and industrial, enabling more efficient cross-subsidies and tailored solutions for productive sectors.

In a country where most water utilities struggle to cover payroll, relying solely on underfunded public models perpetuates chronic inefficiency. Public-private partnerships are not a corporate whim but an opportunity to combine investment, technology, and professional management to ensure water access, treatment, and sustainability.