Water is a strategic resource for Mexico’s economic and social development. However, its management faces growing challenges due to overexploitation, pollution, and the effects of climate change.
The National Water Law (LAN), enacted in 1992 during Carlos Salinas de Gortari's administration, modernized Mexico’s water regulation by replacing the previous system of allocations (public use) and concessions (commercial use) with a unified framework focused on economic liberalization. It also created the National Water Commission (Conagua) as the primary authority and established a concession system that enabled companies to access water for industrial purposes.
CONAGUA has played a fundamental role in developing public policies to guarantee access to drinking water, protect aquatic ecosystems, and prevent water-related natural disasters.
To analyze the evolution of the LAN, its impact on industry, and the challenges it faces in the context of increasing water scarcity, it is essential to consider the 2024-2030 National Water Plan (PNH), recently introduced by the federal government led by President Claudia Sheinbaum.
At Prodensa, we’ve developed this overview of Mexico’s evolving water management framework to provide valuable insights for companies pursuing nearshoring strategies or evaluating shelter services in Mexico. Understanding the regulatory landscape is essential for long-term operational planning and sustainable industrial development.
Major Changes in Mexico's National Water Law: Timeline and Impact
Track the major legislative reforms that have defined water management in Mexico, including the latest updates from the 2024-2030 National Water Plan.
- Establishes the legal framework for water management in Mexico.
- Creates Conagua, responsible for administering and regulating water resources.
- Introduces industrial-use concessions, removing previous limits and implementing a uniform payment system.
- Modifies LAN provisions to promote public and civil society participation.
- Emphasizes the need for sustainable water management.
- Amends Article 4 of the Constitution to establish access to water and sanitation as human rights.
- Mandates the creation of a new General Water Law, which has yet to be approved.
- Reserves water in strategic basins, prioritizing domestic and environmental use over industrial consumption.
- Introduces a bill to reduce concession terms from 30 to 15 years and require environmental impact studies.
- Introduced as a key strategy to address water scarcity and promote equitable access.
- Defines four guiding principles:
- Water policy and national sovereignty
- Water justice and access
- Environmental impact mitigation and climate change adaptation
- Integrated and transparent water management
Mexico’s Water Challenges: Key Facts and Opportunities
- Water Availability: Mexico has 446,777 million cubic meters (Mm³) of renewable water annually, yet only 20% is used sustainably.
- Water Use by Sectors: This chart shows that agriculture uses the majority of Mexico’s water (76%), followed by public supply (14%), and industry and thermoelectric plants (5% each). The data highlights the importance of improving water efficiency in agriculture to ensure long-term sustainability.
- Aquifer Management and Sustainability: 105 out of 653 aquifers face high extraction rates, exceeding natural recharge levels, highlighting the need for improved water conservation strategies.
- Wastewater Treatment: Only 1% of wastewater is recycled, with significant regional disparities.
Water Access and Industrial Growth: The Role of Concessions
- The Public Water Rights Registry (REPDA) records over 550,000 water concession titles, of which 20% are for industrial use.
- Industries such as mining, energy, and manufacturing in Mexico have increased water consumption by 30% over the past decade.
The graph compares annual per capita water consumption across selected countries. Colombia and Peru lead with the highest usage, while Mexico, at 697, is slightly below the OECD average (738), suggesting moderate water use compared to both high- and low-consuming countries.
Future Trends in Water Management and Industrial Growth
Industrial Demand
- Industrial water consumption is expected to grow by 15% by 2030, driven by the expansion of mining, energy, and manufacturing.
- This highlights the need for improved water management in regions with high demand, such as northern and central Mexico.
Water Reuse & Treatment Technologies
- Implementing advanced water treatment and reuse technologies is critical to alleviating pressure on water resources.
- According to Conagua, wastewater recycling could supply up to 20% of industrial demand by 2030.
Water Resource Management: Challenges and Sustainable Solutions
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Aquifer Pressure and Recharge Imbalance
- 105 of Mexico’s 653 aquifers experience significant pressure on their recharge capacity, with some regions, like Mexico City and the Yucatán Peninsula, reporting groundwater level reductions of up to 10 meters over the past 20 years.
Water Quality and Industrial Footprint
- Industrial activities account for an estimated 20% of water quality impacts in Mexico.
- Sectors such as mining and petrochemicals have a higher presence of heavy metals and complex substances in their water discharge, emphasizing the importance of improved treatment systems and environmental safeguards.
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Climate Variability and Water Availability
- Weather patterns, including extended dry seasons, are influencing water distribution across regions.
- In 2023, northern Mexico recorded notably low rainfall levels, with impacts on water availability for over 10 million people.
This graph compares water stress levels in Mexico with the global average from 2010 to 2020. Mexico consistently shows higher usage of available freshwater resources, indicating greater pressure on water systems compared to global trends.
Sectoral Implications: Water Use & Its Impact
A closer look at how different sectors—from agriculture to urban supply—interact with water resources and why efficient usage matters.
- Consumes 76% of Mexico’s water.
- Highly vulnerable to changes in water availability, especially in drought-prone regions.
- Solutions: Efficient irrigation technologies (e.g., drip irrigation) could cut water use by 30-50%.
- Water-intensive sectors: Mining, energy, and manufacturing.
- Sustainability strategies: Adoption of water reuse and treatment technologies is crucial for long-term viability.
- Growing urban populations increase domestic water demand, particularly in Mexico City and Monterrey.
- Infrastructure investments are needed to reduce water loss, currently reaching 40% in some areas.
Moving Towards Sustainable Water Management
Upcoming Reforms to the National Water Law (LAN)
The 1992 LAN needs comprehensive reform to address modern challenges. Key proposals include:
- Participatory governance: Involving local communities, civil organizations, and water users in decision-making.
- Climate change adaptation: Integrating measures to combat droughts and floods.
- Human rights approach: Ensuring fair access to water, prioritizing vulnerable populations.
- Concession review: Shortening concession periods and requiring environmental impact assessments to prevent overexploitation.
Infrastructure Investments
Mexico needs significant investment in water infrastructure, including:
- Wastewater treatment plants: Currently, only 1% of wastewater is recycled—expanding this is critical.
- Distribution network upgrades: 40% of water is lost due to leaks—modernizing pipelines could save millions of cubic meters annually.
- Seawater desalination: A potential solution for water-scarce regions like Baja California.
- Strategic aqueducts and dams: Projects such as the Rosarito Aqueduct and the Milpillas Dam are key to ensuring long-term supply.
- PNH 2024-2030 Investment: $20 billion MXN allocated for 2025, with over $105 billion MXN planned through 2030.
One approach being explored by many investors is the turnkey operation model, which allows for efficient setup of infrastructure while aligning with national regulations.
The chart outlines Mexico’s federal investment plan for major water infrastructure through 2030. The largest allocation—over $51 billion pesos—is dedicated to improving water systems in the Mexico City Metropolitan Area, reflecting the government's priority on securing supply in high-demand urban zones.
Key Takeaways
- The National Water Law (LAN) has evolved toward a decentralized, sustainability-focused model.
- Industrial water consumption has increased 30% in the past decade, exacerbating aquifer overexploitation and social conflicts.
- The 2024-2030 National Water Plan aims to reform LAN, boost infrastructure, and promote water reuse technologies.
- Government, private sector, and civil society collaboration is essential for effective water management.
- As a part of doing business in Mexico, companies must consider local water regulations as a core factor in operational planning.
- Innovation and education are crucial to securing water resources for future generations.