Launch of the OECD reports Environmental: Performance Review of Mexico and Making Water Reform Happen in Mexico


Remarks by Angel Gurría, OECD Secretary-General

Launch of the OECD reports
Environmental Performance Review of Mexico and Making Water Reform Happen in Mexico

Mexico City, Tuesday 8 January 2013

Minister of Environment M. Juan Jose Guerra Abud, Director-General of the National Water Commission M. David Korenfeld, Ladies and Gentlemen,

It is my pleasure to share with you the OECD reports Environmental Performance Review of Mexico and Making Water Reform Happen in Mexico. I am grateful to the new Minister of Environment and the new Director of the National Water Commission for being here. Their presence demonstrates the priority Mexico has given to these issues and to their partnership with the OECD.

As the world is changing, countries must take advantage of the crisis, now in its fifth year, to rethink and strengthen their regulatory frameworks, their institutions and their growth. The OECD has always insisted that the only way to consolidate recovery and succeed this transformation is to apply changes on three parallel fronts: GO STRUCTURAL, GO SOCIAL and GO GREEN!

Promoting GREEN GROWTH is fundamental for recovery strategies and growth in OECD countries. In all aspects, our government programmes must include an environmental dimension. There is no other option. Aware of the environmental challenges, Mexico has started a transition toward green growth and it is crucial to evaluate and measure its progress.

Allow me to start with the Environmental Performance Review of Mexico. This is the third review carried out in this country. According to this analysis, in the last years Mexico has given a higher priority to environmental sustainability and assigned additional budgetary resources.

This has helped improve the environmental quality of life for Mexico’s citizens: the number of days exceeding air quality standards in major cities has decreased. Mexico exceeded the Millennium Development Goals on improving access to water and sanitation services. Significant progress has been achieved in remediating waste and other sites posing serious risks to human health.

However, much remains to be done. Although the costs of environmental degradation and natural resource depletion have fallen over the decade, they were still estimated at 7% of GDP in 2010. This is very high compared to other OECD countries.

Our country has also made significant progress in the protection of biodiversity. Mexico’s biodiversity constitutes a global public good: it is home to between 10-12% of the world’s biodiversity. One-third of the country is forest. To safeguard this heritage, Mexico has pioneered the use of innovative policy approaches including Payments for Ecosystem Services and the recently adopted National Ecological Land Use Plan.

These important steps demonstrate a strong political commitment for the protection of biodiversity. However, Mexico must do more.  Further efforts are needed in our country to combat pressures on biodiversity, in particular from agriculture.

Mexico has made considerable efforts to address climate change. Important decisions and policies were consolidated in the General Law on Climate Change adopted last June. In 2010, Mexico hosted the annual climate change discussions and was instrumental in brokering the adoption of the Cancun Agreements.

Our country does not have binding GHG reduction targets under the Kyoto Protocol, but by adopting voluntary emission reduction targets for 2012, 2020 and 2050, it has set a precedent and provided an important example for all countries.

Nevertheless, while Mexico has one of the lowest levels of CO2 emissions per capita in the OECD, the energy and carbon intensities of its economy have been increasing over the last decade. A recent study suggested that, without additional policy measures total GHG emissions could increase by 70% by 2050, compared to the 2000 level. This scenario must be avoided at all costs.

To ensure the sustainable development of the country, strong decisions in various strategic fields must be taken in the coming months. Subsidies for energy consumption and water use are a good example where immediate actions can be taken.

Mexico spent 1.7% of GDP on energy subsidies over 2005-09, including those for transport fuels and electricity use by households and farmers. However, most of the subsidies benefit the rich more than the poor. The poorest 20% capture only about one-tenth of electricity subsidies and even less of transport fuel subsidies. Replacing these indirect subsidies with cash transfers would help the poor, encourage efficient use of energy and water, and help to promote more socially-inclusive green growth.

This study includes many more concrete policy recommendations to advance the protection of the environment. However, in order for these actions and new decisions to bear fruit, it is necessary to significantly strengthen institutions as well as their capacities to implement changes.

Reforms or laws are rendered useless if they are not enforced or cannot rely on efficient institutions. It will also be crucial for other ministries, such as the Ministry of Finance, the Ministry of Economy, the Ministry of Energy and the Ministry of Education to embrace the messages of this report and co-ordinate with the Ministry of Environment to raise the profile of environmental policies in the national agenda. Only then will we save the environment and the quality of life of this country.

Now, allow me to turn to the second report we are presenting on “Making Water Reform Happen in Mexico”:  

This is another crucial topic for the present and future of this country. Our food, our planet and our industrial production rely on water. The way countries cope with water challenges will determine their position, strength and importance in the coming decades.

In a country such as Mexico whose population is forecast to be nearly 150 million by 2050, which displays one of the highest levels of inequality in the world in territorial and socio-economic terms, which is highly exposed to the effects of global warming, and where population and economic growth is generated mainly in water-scarce zones — water policy is becoming a national security issue.

Over the past decade, Mexico has strengthened its water policy framework and increased significantly public investment in water infrastructure. CONAGUA’s budget equalled 38 billion EUR in 2011, three times as much as 10 years ago. Mexico does have a well-developed water policy framework with a number of institutions in place at federal and state level, and an array of useful economic instruments, from abstraction charges to water markets.

Mexico’s government is committed to progress on this issue. The “Water Agenda 2030” is a clear example. With this programme, Mexico has developed a long-term strategy and has generated a new momentum for change — an impetus to take firm steps in designing and implementing a more effective, integrated, and coherent water resource policy.

But much remains to be done, as we are still facing critical challenges in water management.

For example, Mexican river basin councils are not fully operational 20 years after their creation. Subsidies to electricity for irrigation pumping work against water policy objectives and have a catastrophic impact on the environment. They amounted to MXN 6.8 billion in 2010 – which is over 9 times more than the financing provided for efficient water infrastructure. The fragmented regulatory framework for service provision is also a concern.

In the face of such challenges, we are delighted that Mexico’s Pact signed by the main political parties on 1 December includes commitments to rethink the country's water management. This will require further effort to increase water productivity and the cost-efficiency of water policies, address the challenges of a three-tier government and river basin management, and support greater policy coherence with agriculture and energy.

Today, the country has an opportunity to design its own water governance model. As a federal state with huge disparities in terms of water availability and demand, Mexico would benefit hugely from a “tailor-made” policy package, based on empirical analysis. The OECD stands ready to help Mexico design this new model.

Ladies and Gentlemen:

Where the environment is concerned, countries cannot move forward with the same policies from the 20th century. It is essential to transform what we call the “industrial metabolism” of our economies. Mexico has made commendable efforts to transition towards a new phase of green growth and now, with a new administration, the country has an opportunity to complete this transformation and even take on a leading role at the international level.

We are confident that these two reports will help Mexico to strengthen its environmental and water policies in favour of a better quality of life for Mexico’s citizens and a cleaner planet. We stand ready to continue to support Mexico in the implementation of better policies for better lives.

Thank you very much.


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