New Reform Proposal: No Water Concessions

President López Obrador's new reform proposal seeks to prohibit the granting of water concessions in areas of low water availability, as well as to give preference to personal and domestic consumption. Experts stress that political uncertainty in the sector has increased, as it has not yet recovered from the changes introduced by the Mining Law.

Since the beginning of his administration, López Obrador has refused to grant new mining concessions, arguing that past governments have put water and environmental resources at risk. However, according to CONAGUA data, 76% of Mexico's water is concessioned to the agricultural industry, 14% for public supply, 5% for the energy sector and 5% for the industrial sector. The volume of water granted to CAMIMEX’s affiliates is approximately 0.27% of the total national water volume. CAMIMEX emphasized that, as of 2022, almost 70% of the water used came from treated and recirculated wastewater.

In May 2023, changes were introduced in the Water Law that force mining concessionaires to measure the volume of water extracted from basins and aquifers, as well as water produced due to industrial activities. The president announced that the new reforms seek to protect the country's water from future governments, so preference will always be given to personal and domestic consumption over industrial consumption. "In case there is a risk of water availability for human and domestic consumption, the Water Authority will decrease or cancel the volume of concessioned water," said the president.

This reform is part of the new reform package delivered by López Obrador on Feb. 5. The package is already being rejected by several opposition parties such as PRI and PRD. However, PAN and Movimiento Ciudadano announced that they will first analyze them before making a decision. For these reforms to be approved, it is necessary that two thirds of the Chambers support them. MORENA and its coalition have 273 votes out of the 334 needed for a qualified majority in the Chamber of Deputies. In the Senate, they have obtained 71 of the 84 votes needed. "In case the reform is declared invalid, the population would be left unprotected," said the president.

Alberto Vázquez, Partner, VHG, highlighted that the new reforms add to the political uncertainty that the industry was already facing. "The industry has just come out of a reform and is going into another process that it cannot sustain. It is not possible, at the time a concession is granted, to know if it is an open pit mine or how much water it is going to use.... No one is going to explore knowing that they cannot be granted a concession,” explained Vázquez.

In Mexico, water stress levels in hydrological regions are classified into five levels: no stress, low, medium, high, and very high. In 2021, the regions with high water stress were some areas of the Baja California Peninsula, Sonora, Chihuahua, Coahuila, Durango and San Luis Potosi. Mexico City stands out as the only area in the country with a very high degree of water stress.