Drinking water supply in Mexico: neither equitable nor efficient

Abstract

This paper presents an economic analysis of the pricing of drinking water for household use in Mexico, at the state level. The difference between “strategic and national security service” and “commodity of national property” is clarified.
Econometric models are presented and estimated in order to explore the efficiency level of the drinking water pricing for household use and to clearly view how equitable is such service, assuming that efficiency refers to what actually is and equity to what is desirable. Based on information of the year 2000, the main conclusion that may be drawn is that prices for the service under study are not equitable nor efficient. Finally, a price system is proposed which considers efficiency -return of the production total costs (extraction, water treatment, storage, conduction, administration, etc.)- as well as equity: those who earn the most pay the highest rates (which is desirable).