Roberto Olivares
Director General
National Association of Water and Sanitization Utilities of Mexico (ANEAS)

A Preventive, Not Corrective Approach

Wed, 11/01/2017 - 09:35

Mexico’s infrastructure industry has a reputation for taking a more corrective than preventive focus and water infrastructure is no exception. Climate change and increases in sea surface temperatures are factors that have contributed to a substantial increase in hurricane activity since the early 1980s, according to the American Meteorological Society. This spells trouble for Mexico, a country that is prone to hurricanes but desperately underprepared for their impact, says Roberto Olivares, Director General of the National Association of Water and Sanitation Utilities of Mexico, (ANEAS).

He offers the example of the 2013 Pacific hurricane season, which saw 12 tropical storms and hurricanes that affected Mexico. Hurricane Manuel in September of that year was a Category 1 storm that affected the entire eastern coast of Mexico and caused US$4.2 billion in damage. In Guerrero’s La Montaña region, for example, heavy rains caused landslides and the raising of the river level, which triggered extensive flooding.

“We need to adapt and anticipate these scenarios, even more so now as climate change has a greater impact,” he says. “We need to adopt a preventive mindset so we can find ways for our water systems to continue working in the face of these intense weather conditions. If we do not bridge the infrastructure gaps, the damage caused by these extreme weather conditions will mean loss of water through leaks will increase to 40-50 percent.”

He suggests that a potential solution to these shortfalls is a better-regulated and more highly promoted PPP system that would encourage the participation of the private sector. But the private sector is often reluctant to invest in water projects, due to the fact they do not offer the level of returns that those like highways and toll roads do. “The private sector is reluctant to invest in these projects because legally there is no clarity on the roles, responsibilities and returns of each party,” says Olivares. “There are only five to 10 successful cases of private investment in water infrastructure so for many investors this sector is still too risky.”

Olivares suggests the government could increase transparency by overhauling the General Water Law, which was last modified in 2005 and believes that, after a one-year transition period, this increased regulation would help the system work like it does in other countries. He takes the example of Cuba. “In Cuba, the authorities began substituting the water network little by little,” he says. “Now the country has finished this process and is already earning money with the system.”

Compared to Cuba, Mexico’s opportunities in water infrastructure are vast, he says. “In the north of the country, there is little availability and to create it, a great deal of investment is required,” he says. “In the central zone, water availability is unstable and in the south, there is a lot of availability but no infrastructure to connect it to the rest of the country.”

He reiterates that private participation is a “stupendous and noble solution” to decrease Mexico’s infrastructure gap but warns that this has been confused with privatization in the past and has been unfairly demonized. The way the government introduces PPPs to the public is extremely important. Olivares cites Baja California as an example of what should be avoided. “The Baja California government was correct to implement the PPP law but it was done in a bad way,” he says. Olivares stresses the need for state governments to be transparent when implementing these systems so the public can see exactly how they work.

One government he believes to have implemented the system in the correct way is that of Saltillo. “The previous water system in Saltillo was very poor so the state and municipal government examined how they could create an alliance with the private sector,” he says. A new body – Aguas de Saltillo – was created, with the state and municipal government owning a 51 percent share. Aguas de Barcelona was brought in as the project’s operator and owner of the remaining 49 percent. This model should be followed on a bigger scale, says Olivares, but there are certain conditions that must be established to guarantee success. “The service should have well-defined costs, roles for all parties and budgets,” he says.