Enforcement of water services payment for Mexican water utilities along the Mexico-U.S. border

Ismael Aguilar
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Ismael Aguilar: Colegio de la Frontera Norte

No 201017, Working Papers from Latin American and Caribbean Environmental Economics Program

Abstract: This working paper presents an analysis of enforcement policies that rely either on command and control (disconnection-suspension of water services) or economic incentives (late payment and reconnection charges) on billing collection rates for 35 Mexican water utilities located in five states along the Mexico-U.S. border. Our survey gathered data about water utilities characteristics and the legal background that might affect payment for water services. We also examined the impact of average household income and poverty levels on payment for water services. Our results suggest that low income is not the main factor for nonpayment of water services in the border region. Instead many water utilities do not collect their bills on time because of weak enforcement, a lack of commercial orientation that precludes the application of financial penalties for promoting payment, and most importantly, because of the perverse incentives of payment campaigns that waive charges and grant significant discounts. To improve payment of water services, we therefore recommend the cessation of payment campaigns and we urge water utilities to apply widely publicized selective disconnection measures while boosting payment plans for poor users. Future research should gather household data to better understand user payment behavior.

Pages: 30 pages
Date: 2010-11, Revised 2010-11
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