34636 Sustainable Development Working Paper No. 24 Water Resources Management in Mexico: The Role of the Water Rights Adjustment Program (WRAP) in Water Sustainability and Rural Development August 2005 ---------------------- By: Musa Asad Héctor Garduño The World Bank Latin America and the Caribbean Region Environmentally and Socially Sustainable Development Department Musa Asad is a Senior Financial Analyst and Team Leader in the Environmentally and Socially Sustainable Development Department (LCSES) of the World Bank's Latin America and Caribbean Regional Vice Presidency. Héctor Garduño is an international consultant in water resources management, based in Mexico. This report was prepared under the direction of Musa Asad and coordinated by Héctor Garduño, The Annexes were prepared by local consultants Enrique Aguilar (institutional aspects), Antonio Díaz (administration and systems information), Julio Goicoechea (economic aspects), Jaime Tinajero (hydrogeology and water administration), María Luisa Torregrosa (socioproductive aspects), José Luis Trava (irrigation engineering and technical aspects); and international consultants Carl Bauer (public policies and water markets) and Regina Martínez (water resources legislation and related subjects). Due to the nature of this AAA and the time available to carry it out, the analyses presented in the Annexes are necessarily of a preliminary nature, but each Annex includes recommendations for possible future work. These Annexes are in CD format and are available upon request. We extend our thanks to Janice Molina for translating, editing, and formatting the report and preparing it for publication. ________________________________________________________________________ The findings, interpretations, and conclusions in this document are those of the authors, and should not be attributed to the World Bank, its affiliated organizations, members of its Board of Executive Directors or the countries they represent. Additional copies may be obtained from Musa Asad (masad@worldbank.org or tel. 202-473-4386), or from Dorothy Wallace Jenkins (djenkins@worldbank.org or tel. 202-473-7890). Cover photo credits: World Bank Photo Library ii Contents Acronyms ................................................................................................................................. vi Units of Measure ......................................................................................................................vii Foreword..................................................................................................................................viii Executive Summary .................................................................................................................. ix I. BACKGROUND..................................................................................................................... 1 1. Water Availability and Uses in Mexico.......................................................................... 1 2. Regulation of Users ........................................................................................................ 2 3. The Problem of Overdesign, Overconcession, and Overexploitation............................. 4 4. Several Previous Attempts by the National Water Commission (CNA) to Address the Problem...................................................................................................... 5 II. INITIAL APPLICATION OF THE WRAP..................................................................... 13 1. WRAP: An Innovative Approach by SAGARPA ........................................................ 13 2. WRAP Legal Analysis.................................................................................................. 14 3. Short-Term Recommendations to the Government of the State of Sonora .................. 17 a. Irrigation District 037 and the Caborca Aquifer ................................................. 17 b. The WRAP in Caborca ....................................................................................... 19 c. An Initial Map of Water Users in DR 037 .......................................................... 19 d. Recent Activities in Sonora ................................................................................ 21 e. Next Steps ........................................................................................................... 22 4. Recommendations to Expand the WRAP in the Medium Term................................... 22 a. Recommendations to Improve the WRAP's Concept and Efficiency ................ 22 b. Recommendations to Improve the WRAP's Effectiveness ................................ 24 III. BASES FOR THE EXPANSION OF THE WRAP ........................................................ 26 1. Selection and Prioritization Criteria, and Benchmarking Parameters .......................... 26 a. Irrigation Zones Supplied by Groundwater......................................................... 28 b. Irrigation Zones Supplied by Surface Water....................................................... 30 c. Recommendations to Improve Technical Selection Criteria............................... 32 d. Social Considerations ......................................................................................... 33 e. Benchmarking Parameters .................................................................................. 34 2. Regional Economy and Water Valuation ..................................................................... 36 a. Demographic Aspects and Sectoral Valuation of Water..................................... 37 b. Valuation of Water in the Agricultural Sector and Agricultural Competitiveness in DR 037................................................................................ 40 3. Analysis of Water Rights Market Experiences and Possibilities.................................. 41 a. Empirical Studies on Water Markets in Mexico................................................. 41 b. Recommendations for Future Research.............................................................. 42 4. Institutional Mapping ................................................................................................... 45 a. Institutional Dynamics of Irrigation Districts ..................................................... 45 b. User-Authority Relationship............................................................................... 46 c. Institutional Effort in Irrigation Districts ............................................................ 47 d. Stakeholders in DR 037 ...................................................................................... 48 e. Recommendations for Future Work.................................................................... 48 5. Proposal to Integrate the WRAP with Other Complementary Measures ..................... 49 CONCLUSIONS AND RECOMMENDATIONS ................................................................. 53 iii References ................................................................................................................................. 59 Boxes 1. Groundwater Technical Committees (COTAS) of the State of Guanajuato: Progress and Challenges............................................................................................. 11 2. Features of the WRAP................................................................................................ 13 3. Gross and Net Water Extractions for Irrigation and the Concept of Real Savings..... 35 4. Synthesis of the Bibliographic Analysis of Empirical Studies on Water Markets in Mexico.................................................................................................................... 44 5. Recommendations for Possible Future Work............................................................. 57 Graphs 1. Concessions for the Use of National Waters Recorded in REPDA from 1992 to 2003 (thousands of accumulated entitlements)......................................................... 4 2. Status of Irrigation Zones in Mexico and Dynamics of Aquifer Overexploitation ...... 5 3. Population Growth and Well Drilling in the State of Guanajuato, Illustrating the Ineffectiveness of Well Drilling Prohibition Orders..................................................... 6 4. Impact of Energy Consumption Tariff for Groundwater Pumping in Mexico ............. 8 5. Geographic Distribution of Electricity Subsidy in Agriculture, 2002.......................... 9 6. Volume Extracted and Area Planted by Agricultural Year ........................................ 18 7. Variation in Aquifer's Average Static Level.............................................................. 18 8. CNA Hydrological-Administrative Regions .............................................................. 27 9. Population Employed by Sector in the Caborca Region, Sonora and Mexico (2000) 37 10-a. Value Added of Water for Different Crops in DR 037............................................... 40 10-b. Physical Yield and Price Differential with USA (ton/ha and $/ton) in 2002.............. 41 Tables 1. Extractions and Number of Users in Mexico................................................................ 1 2. Areas with Hydro-agricultural Infrastructure ............................................................... 2 3. Ranges of Charges for Use of National Waters............................................................ 7 4. Revenue in 2001 from Charges in Accordance with LFD............................................ 7 5. Electricity Tariffs in 2003............................................................................................. 9 6. Typology of Producers ............................................................................................... 20 7. Classes of Productive Units by Type of Producer in DR 037 .................................... 21 8. Average Water Productivity by Hydrological-Administrative Region ...................... 27 9. Summary of Aquifers: Priorities and Percent of Overexploitation............................. 29 10. Groundwater: Areas and Potential Volumes to be Recovered and Amounts to be Paid .................................................................................................................... 29 11. Overconcession in Various Irrigation Districts Supplied by Surface Water .............. 31 12. Surface Water: Areas and Potential Volumes to be Recovered and Amounts to be Paid .................................................................................................................... 32 13. Benchmarking Parameters Proposed for the WRAP.................................................. 36 14. Dynamics of Population Employed by Sector in the Caborca Region, Sonora and Mexico (1990-2000) ............................................................................................ 38 15. Value Added, Water Consumption and Water Productivity in Selected Sectors of the Caborca Region (1998)..................................................................................... 39 16. Integration of Measures to Achieve Sustainable Aquifer Management ..................... 50 17. Programs Related to the WRAP ................................................................................. 51 iv ANNEXES (available on CD upon request; not translated into English) I. Las Reglas de Operación del PADUA II. Análisis de Carácter Jurídico para Aplicar el PADUA o su Eventual Redimensionamiento III. Procedimientos para Aplicar el PADUA en el Estado de Sonora, bajo las Condiciones Originales IV. Procedimientos para Aplicar el PADUA en el Estado de Sonora, con base en la LDRS V. Criterios para Expandir el PADUA en el Ambito Nacional VI. Estudio Social VII. Evaluación Económica VIII. El PADUA y el Mercado de Derechos de Agua en México IX. Análisis Institucional: Los Actores del PADUA y sus Interacciones v Acronyms AAA Analytical and Advisory Services AC Asociación Civil (Civil Association) ANUR Asociación Nacional de Usuarios de Riego BNWPP Bank Netherlands Water Partnership Program CC Consejo de Cuenca (Basin Council) CEAG Comisión Estatal de Agua de Guanajuato (State Water Commission of Guanajuato) CEH Consejo Estatal Hidráulico (de Guanajuato) (Guanajuato State Water Council) CFE Comisión Federal de Electricidad (Federal Electricity Commission) CNA National Water Commission (National Water Commission) COTAS Groundwater Technical Committee (Groundwater Technical Committee) DOF Diario Federación (Official Gazette of the Federation) FOFAE Fondo de Fomento Agropecuario Estatal (State Agricultural and Livestock Development Fund) DR Distrito de Riego (Irrigation District) GDUR Gerencia de Distritos and Unidades de Riego (Management Office for Irrigation Districts and Units) GE Gerencia Estatal (State Management Office) GoG Government of the State of Guanajuato GoM Government of Mexico GoS Government of the State of Sonora LAN National Water Law (National Water Law) LDRS Ley de Desarrollo Rural Sustentable (Sustainable Rural Development Law) LFD Ley Federal de Derechos (Federal Rights Law) OC Oficinas Centrales (Central Offices) PADUA Programa de Adecuación de Derechos de Uso del Agua and Redimensionamiento de Distritos de Riego (see WRAP below) PEF Presupuesto de Egresos de la Federación (Federal Expenditure Budget) PER Public Expenditure Review PMIR Programa de Modernización Integral de Riego (Irrigation Modernization Program) PT Programa de Transferencia (de DR) (Irrigation District Transfer Program) REPDA Registro Público de Derechos de Agua (Public Water Rights Registry) RO Reglas de Operation (Rules of Operation) SAGARPA Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca and Alimentación (Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food) SAL Structural Adjustment Loan TAL Technical Assistance Loan TC Título de Concesión (Concession Entitlement) TORs Terms of Reference URs Unidades de Riego (Irrigation Units) WRAP Water Rights Adjustment Program (see PADUA above) vi Units of Measure cm centimeter km3 cubic kilometer ha hectare M million mm millimeter m3 cubic meter ton ton vii Foreword Mexico is at the vanguard of developing countries in many aspects of water resources management and use. Under ongoing initiatives, for example, Mexico has made significant improvements in monitoring water quantity and quality, hydraulic infrastructure and dam safety, meteorological and hydrological forecasting, water resources planning at the basin and aquifer levels, and water rights administration. At the same time, water resources management represents one of Mexico's most urgent environmental challenges today, and one that impacts heavily on the economy. Mexico continues to grapple with water management problems resulting from a long period of unsustainable exploitation of both surface and groundwater resources in many areas. The root of such problems includes overallocation of concessions, unsustainable extraction patterns, and inadequate regulation and enforcement of the water entitlements. In recent years, the Government of Mexico (GoM) has identified a number of options to help address this overexploitation of its water resources. These options include the recovery of excess allocations by providing economic incentives, as well as other types of incentives to reduce subsidies, shift unsustainable water use patterns, and modernize water use equipment and techniques. In this context, one of the most recent and innovative initiatives launched by the GoM is the Water Rights Adjustment Program (WRAP). The following report addresses the strengths and weaknesses of the WRAP in its design and pilot implementation stage, as well as how the Program fits into the overall context of strategies to improve water resources management in Mexico. Due to the innovative nature of both the Program and the World Bank team's collaboration with the GoM, it is anticipated that this report would be of considerable interest to Bank, GoM, and other international water sector policymakers and practitioners seeking creative approaches to resolving protracted water management issues. John Redwood Director Sector Management Unit Environmentally and Socially Sustainable Development Latin America and the Caribbean Region The World Bank viii Executive Summary In many aspects of the management and use of water resources Mexico is at the forefront of developing countries. For example, under the ongoing Water Management Modernization Program (PROMMA), Mexico has made significant progress in: (a) the monitoring and evaluation of surface and ground water quantity and quality; (b) the operation of hydraulic infrastructure and dam safety; (c) meteorological and hydrological forecasting; (d) water resources planning in river basins; (e) the administration of water rights and the control of waste water dumping; (f) the establishment and strengthening of the Groundwater Technical Committees (COTAS); and (g) the preparation of studies related to the integrated, sustainable management of groundwater in several areas with overexploited aquifers. At the same time, water resources management currently represents one of the most urgent environmental problems and one of those that most strongly impact the economy. Mexico continues to struggle with water resources management problems resulting from a long period of unsustainable exploitation of both surface and ground water in various critical river basins and aquifers. The roots of these problems include overconcession, unsustainable patterns of extraction, and the lack of measurement, regulation, and actions to enforce concession entitlements. Despite the problems of overconcession and of deficiencies in the Public Water Rights Registry (REPDA) caused to a large extent by the massive regulation of users that was carried out from 1993 to 2002, it may be stated that Mexico is one of the few countries in which the large majority of users have been registered. Consequently, initiatives such as the Water Rights Adjustment Program (WRAP, or PADUA as it is known in Spanish) to recover overconcessioned water volumes by means of economic incentives--and its interactions with other programs--may contribute to refining water rights and turning them into a true instrument for the integrated, sustainable management of water resources. In recent years, the Government of Mexico (GoM) has identified various options to help reverse this overexploitation of its water resources. These options include other types of incentives to reduce subsidies related to the use of water and electricity for groundwater pumping, the modernization of irrigation infrastructure to promote more efficient water use, and the improvement of surface and ground water resources monitoring. The World Bank's assistance strategy includes various projects and Analytical and Advisory Services (AAA) which contemplate support to these and other activities. In particular, for the 2004-2007 period, this strategy includes the sets of activities shown below. The strategy implies collaboration among various initiatives; for example, the informal AAA on Water Rights should be considered not just an isolated work but an advanced component for the AAA on the Economic Valuation of Water, with a potential contribution to PMIR and PROMMA. Furthermore, because to achieve a more efficient allocation of water from a social, environmental, and economic standpoint water rights will need to be reassigned, a very close relationship between the Water Rights loan and those corresponding to the Development of Water Policy and the Development of Water Supply and Sanitation may already be expected. ix Fiscal Programmatic AAAs Related AAAs Investment/Adjustment Year Loans 2004 · Water Rights · Irrigation and Drainage Modernization · Decentralization of Infrastructure 2005 · Economic Valuation of · Environmental and Social · Environmental SAL I Water Phase 1 Safeguards · Infrastructure PER 2006 · Economic Valuation of · Policy Notes · Environmental SAL II Water Phase 2 · Integrated Management · Water PER of Basins and Aquifers · Water Supply and Sanitation TAL 2007 · Environmental Health · Economic Instruments · Water rights and Water Quality for Environmental · SAL for Water Policy Management Management Development 2008 · Water Supply and Sanitation Development In this document, a novel focus has been adopted,1 consistent with the World Bank's Water Resources Strategy which responds both to Mexico's realities and to the acknowledgement that the integrated management of water resources should be guided by internationally accepted principles. In order to yield tangible fruit it should be adapted pragmatically to the demands of each specific situation. So that solutions are not made on a case-by-case or ephemeral basis, but instead are institutionally feasible and lasting, they should conform to the current legal framework. This focus stems from a dynamic context driven by social and political forces. In effect, the GoM assumed the risk of implementing the WRAP as a program that was not perfectly designed because the response times imposed by political pressures are normally measured in days or weeks, while analysis, reflection, feedback, and lead time require months or years. It assumed this risk while immersed in the ever-present dilemma of addressing problems with the existing institutional capacity to enforce the law or to expect to strengthen the water authority before taking any action. For its part, the Government of the State of Sonora (GoS) assumed the challenge of applying it under very difficult conditions, within a framework in which it must daily address highly complicated social and political situations because water is very scarce in this region of the country and because the conflicts of Sonora's users with authorities and among themselves cannot be addressed simply by means of a strict application of legislation. Instead, strong realities must be considered, such as the serious situation currently experienced in Mexico's rural areas, dramatically exemplified by numerous outstanding loan debts with banks and confiscated agricultural lands and by a dynamic but not exactly orthodox land and water rights market. 1 The World Bank's 2003 Water Resources Sector Strategy states that: "The principal challenge of management is not a vision of Integrated Management of Water Resources, but rather a pragmatic focus albeit with principles and which seeks efficiency, equity, and sustainability while recognizing that water resources management is intensely political and that reform requires the step-by-step articulation of prioritized, practical and patient interventions." x The social and economic consequences of the overconcession and overexploitation of water resources are so serious that they require urgent attention. For this reason SAGARPA launched the WRAP in August 2003. The fact that a ministry of agriculture would lead a program with the objective of promoting the sustainability of productive systems as well as of river basins and aquifers, is unusual at the international level and represents a most valuable political willingness and a positive initiative with considerable potential to produce a favorable impact in the field. This initiative and the valuable lessons learned from its application in the Caborca aquifer in the State of Sonora, represent two highly relevant assets that must be taken advantage of. At the Mexican Government's request, the World Bank decided to join the effort by taking two parallel paths: real-time support to the Government of the State of Sonora and more detailed analytical work on the principal issues to be addressed in order to reconcile the sustainability of natural resources and of productive systems in Mexico's rural areas.2 The study's objectives, agreed by the GoM and GoS, were to: · focus on the WRAP's objectives of making agricultural production sustainable and achieving hydrological balance in river basins and aquifers; · develop a conceptual framework and operational guidelines for the WRAP, consistent with existing legislation, while maintaining flexibility for relative facility in the implementation and adaptation of state and local needs; · take into account the social dimension (i.e., identify the "winners and losers" in the process, anticipating effects and identifying appropriate solutions); · identify the economic logic needed and the financial support required to achieve national coverage that effectively contributes to resolving the problem of overconcession and overexploitation throughout the country; · promote the objective application of the WRAP, with authorities who make decisions and evaluations independent from operational authorities; and · involve relevant institutions at national, state, and local levels. The team formed by public servants of the Federal and Sonora State Governments, supported by World Bank local and international consultants, learned a great deal from the experience in Sonora, acknowledged the risks in the WRAP's original design and the need to link this Program with others that are ongoing or under preparation (including several with World Bank support). In less than six months a second iteration was made, modifying the WRAP's Rules of Operation to arrive at a version more aligned with current legislation, and work was carried out whose final chapter cannot be written in the short term, because it is necessary to continue with the "parallel path focus": working in the field, reflecting in offices, and providing dynamic, ongoing feedback on the process. 2 This report was prepared under the direction of Musa Asad, World Bank Team Leader, and coordinated by Héctor Garduño, Mexican international consultant in water resources management. The Annexes were prepared by local consultants Enrique Aguilar (institutional aspects), Antonio Díaz (administration and systems information), Julio Goicoechea (economic aspects), Jaime Tinajero (hydrogeology and water administration), María Luisa Torregrosa (socioproductive aspects), José Luis Trava (irrigation engineering and technical aspects); and international consultants Carl Bauer (public policies and water markets) and Regina Martínez (water resources legislation and related subjects). Due to the nature of this AAA and the time available to carry it out, the analyses presented in the Annexes are necessarily of a preliminary nature, but each Annex includes recommendations for possible future work. These Annexes are in CD format and are available upon request. xi Due to the wealth of information and prior experience in this matter, the report begins, in Chapter I, by broadly discussing the background, i.e., (i) the achievements and problems stemming from observance of the 1992 National Water Law, in terms of regulating all users of national waters (granting them their concession entitlements and registering them in the Public Water Rights Registry); (ii) the problem of overdesign in irrigation zones, overconcession of ground and surface water, and overexploitation of aquifers, (iv) the successes and difficulties of previous attempts by CNA to resolve this problem; and consequently (vi) the objectives of this study. Chapter II begins with the backdrop of the initial application of the WRAP in the State of Sonora, i.e., a legal analysis of the WRAP's Rules of Operation and of recent modifications, in light of the recently enacted modifications to the National Water Law (both changes occurred in April 2004). This analysis was enriched by the monitoring of the process in Sonora. Consequently, the recommendations proposed in this chapter refer to the means of reducing the difficulties of applying the WRAP through changes to the Program's concept and operation suggested for the short and medium terms. Chapter III begins by putting forth the scope of the problem of adjusting water use rights at national level, distinguishing the case of surface water from that of groundwater. It later proposes technical, economic, and social criteria to select and objectively prioritize those areas under irrigation that may be subject to incorporation in the WRAP. It suggests objective, benchmarking- style means of measuring and evaluating the effectiveness and efficiency of the Program's application. After discussing various economic and water market aspects as well as an initial conceptual approach to institutional aspects in their broadest sense (beginning with the principal actor, i.e., the water user­producer), the chapter presents what we consider to be the study's main recommendation, i.e., integrating the WRAP with other regulatory measures, social participation, and economic incentives, in order for it to be able to truly address the complex subject of adjusting water use rights in Mexico to the actual availability of water resources. Finally, Chapter IV brings together the study's principal conclusions and recommendations, including a summary of recommendations and terms of reference for future work identified in the annexes. These annexes include more detailed analytical work with regard to the WRAP's legal, institutional, socioeconomic, and technical bases. As indicated, in less than six months the GoM modified the WRAP's Rules of Operation (RO) to reach a version more aligned with current legislation, and developed work that is about to begin, although its final chapter cannot be written in the short term. The recommendations taken into consideration, or which still have to be acknowledged, included the following: · It is important to align the RO with current legislation: for example: (i) changing the Program's name from "acquisition" to "adjustment of water use rights," thereby opening the door to the financing of options that are aligned with the law; (ii) assigning the key role that corresponds to governments of the participating states; and (iii) establishing a coordination agreement between SAGARPA and the National Water Commission (CNA) as a basis for executing the WRAP. · The WRAP's immediate application could be less risky if its objective is first realigned, giving real application to the considerable number of provisions in the Sustainable Rural Development Law (LDRS) which the RO invoke but whose later development is not obtained, implying that the WRAP would replace its current role in the adjustment of water rights with that of promoter of productive activities, seeking water savings as its final objective. xii · Insofar as possible with available data, it is important for the WRAP to characterize the types of ejido and private producers and productive units, recognizing (especially in the case of Caborca) the likelihood of a significant potential for the production of high value export crops. · The "Management Indicators" utilized in the RO of the WRAP may be improved through the use of various benchmarking parameters to measure the Program's real physical and economic effects on the reduction of overdesign, overconcession, and overexploitation. · It may be stated that the improvement of the WRAP and its close linkage with other programs, some of them supported by the World Bank, could contribute toward implementing mechanisms in practice so that the GoS can cooperate intensively with CNA on water resources management. · It is proposed that the WRAP be integrated with other complementary measures. In particular, it is recommended that, within CNA, there be a closer linkage of technical, economic, legal, and administrative aspects of water use rights with efforts to develop and improve irrigation, water supply and sanitation infrastructure, as well as between CNA programs and those of SAGARPA and state governments, several of which are supported by the World Bank. This AAA, its analysis, recommendations, and conclusions were disseminated and discussed in a preliminary manner with relevant authorities at national and state levels, particularly with high level officials of the GoM (SAGARPA and CNA) and the State of Sonora. This initial dissemination process incorporated a series of workshops with World Bank experts, local and international experts, and local companies and users. This document is not meant to be the final word but rather an honest evaluation of the WRAP and a proposal of possible paths to follow. Consequently, it should be considered simply an input for discussion meetings that may be held with wide­ranging groups of GoM officials, World Bank staff, and other interested parties at state and local levels. xiii I. BACKGROUND 1. Water Availability and Uses in Mexico Mexico's average annual precipitation is estimated at 772 mm, equivalent to an annual volume of 1,528 km3, from which a virgin surface runoff of 394 km3 is generated. The average aquifer recharge is estimated at 75 km3. Total water extraction for consumption and non-consumption uses is 217.6 km3, distributed as shown in Table 1. The universe of users is 355,000 (CNA 2003), as per the breakdown by type of use shown in Table 1. Table 1. Extractions and Number of Users in Mexico USE EXTRACTION UNIVERSE OF surface ground Total USERS1 km3 km3 km3 % agric./livestock 36.8 19.6 56.4 78 178,000 public supply 3.3 6.2 9.5 13 165,000 CONSUMPTION self-supplied industry 5.0 1.6 6.6 9 12,000 SUM 45.1 27.4 72.5 100 355,000 NON-CONSUMPTION hydropower 145.1 145.1 100 ESTIMATED TOTAL VOLUME 217.6 TOTAL VOLUME REGISTERED IN REPDA 214.0 1users registered in Public Water Rights Registry (REPDA) + users in process of regulation + users who are known but not subject to regulation Source: own preparation with CNA 2003 data The total cultivable area is estimated at approximately 20 million ha (equivalent to 10 percent of the country's total territory), of which 11.3 million ha are cultivated with dryland farming methods that do not use improved technology. Dryland farming areas using improved technology total 2.4 million ha and include flood control, access roads, and water control infrastructure. The remaining 6.3 million hectares have irrigation infrastructure (see Table 2). Note that the total volume of extraction estimated for agricultural1 and livestock uses coincides to a large extent with the volume recorded in the Public Water Rights Registry (REPDA).2 With regard to the number of users, the figures do not coincide, basically because most users belong to associations and concession entitlements are granted to such associations. Of the 56.4 km3 of water used for irrigation, 65 percent is from surface water and 35 percent from groundwater. Most of the water that supplies Irrigation Districts (DRs) is from surface water regulated by dams, much of it for multiple uses (irrigation, flood control and hydroelectricity generation), and on average only about 5 percent is from groundwater. In contrast, Irrigation Units (URs) are supplied mostly by groundwater.3 1 Agricultural uses, as such, are not defined in the LAN. CNA has customarily adopted this term to include agricultural and livestock uses, under the terms established by sections LIII and LIX of the LAN. 2 However, it should not be inferred that these numbers necessarily reflect everywhere the real conditions of extraction, since in some river basins there is a significant number of clandestine users as well as numerous problems of overconcession. 3 According to article 50 of the LAN, besides those individuals or legal entities with irrigation concessions on lands owned by them, the Law refers to legal entities established to administer or operate an irrigation 2 LCR Sustainable Development Working Paper No. 24 Table 2. Areas with Hydro-agricultural Infrastructure TYPE OF INFRASTRUCTURE IRRIGATION DRYLAND FARMING W/ IMPROVED TECHNOLOGY Irrig. Irrig. Units TOTAL DTT Districts (URs) (DRs) AREA (million ha) 3.4 2.9 6.3 2.4 UNITS 82 39,492 39,574 18 USERS 537,091 901,963 1,439,054 NA NA: not available Source: Own preparation with CNA 2003 data 2. Regulation of Users4 According to Article 27 of the Constitution of the United Mexican States which took effect in 1917, water is national property and the Nation's dominion over this resource is inalienable and indisputable. Moreover, the only legal means of using or exploiting national waters is through a concession granted by the Federal Executive Authority. However, due mostly to insufficient institutional, human, and economic resources and to the fact that only the President of the Republic had the authority to issue concession entitlements, in the 75 years since the mandatory nature of concessions was established until 1992 when the National Congress approved the National Water Law (LAN), only 2,000 entitlements had been issued. However, there were a considerable number of irregular permits and provisional permits or authorizations, as well as a national registry of wells in which tens of thousands of groundwater improvements5 were recorded, albeit without full legal validity. The LAN and its regulation (issued by the Executive Authority) stated that, by 1994 at the latest, irregular and provisional permits must be recorded in the Public Water Rights Registry (REPDA), and that all users of national waters must obtain a concession entitlement and record it in the REPDA by the December 1995 deadline. To accelerate the process, the Director-General of the National Water Commission (CNA) issued a delegatory agreement to authorize the SubDirector General of Water Administration and Regional and State CNA Managers to issue concession entitlements. Since the deadline for regulation was too short, the President of the Republic issued several decrees for administrative and fiscal authorizations, from 1995 to 2002, which were system or for the mutual exploitation or use of national waters for agricultural purposes. According to this general definition, the LAN distinguishes two types of irrigation systems: Irrigation Units, whose particular legal scheme is established in Title Six, Chapter II, Section Three of the LAN, with a total area of 2.8 million ha, of which 1.5 million ha utilize surface water and 1.3 million ha utilize groundwater; and Irrigation Districts, whose legal scheme is established in Title Six, Chapter II, Section Four of the LAN, with over 3 million ha (60 percent of the total irrigated area), which are mainly irrigated by surface water sources. 4Cantú and Garduño, 2003. 5"Improvements" are considered to be wells and springs. Mexico: Water Resources Management 3 The Role of the WRAP in Water Sustainability and Rural Development disseminated by means of a wide-ranging communications campaign, and their application was supported by various public agencies such as SAGARPA, and by users associations such as the National Irrigation Users Association (ANUR), among others. The decrees indicated that concessions would be granted for 10 years, for the volumes that users stated they were using (because there was no practical way to determine actual water usage), and that such volumes would be adjusted once the Water Availability was published by means of Official Mexican Norms. The process turned out to be complex and institutional, human and economic resources were insufficient, and thus it lasted ten years (Graph 1) instead of the three years envisaged in the legislation. One of the problems that delayed the process was the fact that many users were reluctant to normalize their status because they feared that this initial control would later lead to charges for water use, which in fact started to occur in 2003 with a small fee charged to irrigation users (who were previously exempt) for what they use above the volume with water right concessions. At that time, the National Water Commission was more interested in formalizing water rights entitlements and recording them in the Water Rights Public Registry for the sake of having enough information for planning and water allocation purposes, than users were in terms of having a concession entitlement that would grant them legal certainty. Through normalization, information was obtained from nearly all6 users of national waters. However, due to the abovementioned limitations, the following stumbling blocks occurred: · in numerous aquifers and river basins, the volumes with water right concessions exceed water availability; · the principal features of well-drilling prohibition decrees, which remain in effect, were altered;7 · numerous users declared higher volumes than those actually used; and · the reliability of part of the information in the Public Water Rights Registry (REPDA) is questionable. If other factors are added to the above, which at one time affected consolidated rights, it is not difficult to understand that a difficult, complex problem must be addressed. From this standpoint, a political and legal solution is imposed and the authority faces the major challenge, in accordance with demands of the recently published modifications to the National Water Law (LAN), of ensuring that water concessions and allocations are based on the resource's actual availability. 6It is estimated that the number of known but unregulated users is no more than 5 percent of users already registered. 7The Presidential Decrees under which administrative facilities are granted and contributions of users of national waters and their inherent public assets are remitted, issued in 1995 and 1996, indicated that such benefits extended to users located in regulated or well-drilling prohibition zones, with the objective of facilitating the regularization of a de facto situation. This has led to the possible interpretation of the non- effectiveness of established well-drilling prohibitions, also by Presidential Decree, until the reference date of such decrees. However, it should be noted that the 1995 and 1996 Decrees made no explicit reference to the termination of well-drilling prohibitions. Furthermore, in its Temporary Article Three, the 2004 LAN confirms that "...Any declarations, prohibitions, reserves, and regulations of national waters issued by the Federal Executive Authority will continue to have legal effect." In addition, article d, subsection II, of the LAN states that the Federal Executive Authority has the exclusive power to "...issue decrees for the establishment, modification, or suppression of prohibitions on national waters, under the terms of Title Five..." In accordance with the above and with the exception of any legal criteria that CNA may issue in this regard, for the purposes of this report well-drilling prohibitions shall be considered effective unless the corresponding Presidential Decree is issued. 4 LCR Sustainable Development Working Paper No. 24 Graph 1. Concessions for the Use of National Waters Recorded in REPDA from 1992 to 2003 (thousands of accumulated entitlements) 350 300 250 200 150 100 50 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Graph prepared with CNA 2003 data 3. The Problem of Overdesign, Overconcession, and Overexploitation In Mexico's arid and semi-arid zones, a large part of Irrigation Districts (DRs) and Irrigation Units (URs), supplied both by surface and ground water, are facing serious problems. In many cases, irrigated lands, in general originally designed to respond to the needs of their area and with the hydrological information then available, are now overdesigned due to demographic pressure, urban growth, prolonged drought, and better hydrological statistics and hydrogeological studies. Added to this is the matter of overconcession of water use rights, as described above. The problem is worse in the case of groundwater because for years the storage of a large number of aquifers has been undermined. Currently, of the 654 aquifers identified in the country, 97 (which supply water for all uses) are overexploited to such an extent that they are expected to be undermined at a rate of approximately 8 km3/year, with a consequent lowering of water tables and in some cases salinization of groundwater. In addition to serious environmental damage, this has forced many farmers to abandon their lands due to high pumping costs and poor water quality, and if immediate measures are not taken, there is an imminent risk of economic collapse for many activities supplied by groundwater. For these reasons, besides the fact that the WRAP's first applications were in aquifers, this document mostly refers to groundwater. Graph 2 shows the status of irrigation zones and of the surface and ground water resources that supply them, and illustrates how the number of overexploited aquifers in Mexico (y axis) has increased fivefold in the past three decades (x axis). Mexico: Water Resources Management 5 The Role of the WRAP in Water Sustainability and Rural Development Graph 2. Status of Irrigation Zones in Mexico and Dynamics of Aquifer Overexploitation 120 100 80 60 40 20 0 1970 1975 1980 1985 1990 1995 2000 4. Several Previous Attempts by the National Water Commission (CNA) to Address the Problem The legislation of Mexico's waters, especially the National Water Law (LAN) and the water- related articles in the Federal Rights Law (LFD), provide four types of instruments to administer the use of national waters: · Regulatory concession entitlements for water use and their registration in the Public Water Rights Registry (REPDA) regulations, well-drilling prohibitions, and reserves · Order and control inspection and measurement sanctions · Economic users' obligation to pay for use water rights market · Participatory users associations river basin councils Groundwater Technical Committees (COTAS) With regard to regulatory instruments, the achievements and difficulties of a decade of efforts to award concession entitlements to all users of national waters and record them in the REPDA were described above. In addition, the approximately 100 well-drilling prohibition orders8 currently in effect began to be issued in 1948 and continued until the 1970s and 1980s. Looking at Graph 2, one may observe that these decrees did not have the expected effect since the growth in the number of overexploited aquifers became more intense beginning in the 1980s. This phenomenon of the lack of effective regulation is more evident in the case of the State of Guanajuato (Graph 8A well-drilling prohibition order may encompass more than one aquifer, since these orders were issued with references to political-administrative boundaries or geographic coordinates and not in accordance with the boundaries of river basins or aquifers. 6 LCR Sustainable Development Working Paper No. 24 3), which would seem to indicate that well drilling was being prohibited in most of the territory until reaching the entire state, while clandestine well drilling was increasing rapidly. Graph 3. Population Growth and Well Drilling in the State of Guanajuato, Illustrating the Ineffectiveness of Well-Drilling Prohibition Orders Source: Foster, Garduño and Kemper, 2004 With regard to instruments of order and control it may be said that, despite increased visits by CNA, illustrated by the fact that in the year 2000 alone 4,545 visits were made nationwide, i.e., more than three times those made from 1995 to 2002, the number of users visited was only 1.2 percent of those registered in the REPDA. This reflects the limited institutional capacity of the water authority in Mexico to enforce laws. Under the modifications to the LAN issued on April 29, 2004, now that causes for sanctions are stricter and economic fines are higher, the question is whether the authority will be able to enforce them and whether the amounts of fines are so high that, instead of promoting better behavior, farmers are forced to abandon their productive activity. With regard to economic instruments, according to the Federal Rights Law (LFD), charges for use of national waters are those shown in Table 3, with Zone 1 corresponding to municipalities with greater water scarcity and Zone 9 to those with greater abundance. In turn, Table 4 shows a sample of annual income; one can observe first that the amounts collected were equivalent to 66 percent of CNA's expenditure budget. Although this amount is highly significant, the values of charges for water use still need to be aligned since, as one can see, industrial, commercial, and service uses whose extracted volumes represent less than 10 percent of total consumptive use, contribute nearly 90 percent of income, which implies important cross-subsidies to irrigation and to water supply and sanitation services. Mexico: Water Resources Management 7 The Role of the WRAP in Water Sustainability and Rural Development Table 3. Range of Charges for Use of National Waters AMOUNT in 2002 millions m3 ) USE ZONE 1 ZONE 9 General Use 1,338.85 105.09 Drinking water 26.52 0.31 Recreation areas 0.76 0.08 Aquaculture 0.22 0.02 Agric/Livestock 0.0 0.0 Hydroelectr. 0.28 0.28 Source: Own preparation based on LFD Table 4. Revenue in 2001 from Charges in Accordance with LFD CONCEPT AMOUNT (millions of pesos) Budget 9,717.0 Revenue 6,378.4 Use or development of national waters 4,996.4 Uses (declared volume in billions m3) - agric./livestock 0.0 - aquaculture (193) 0.4 - hydroelectricity (128,875) 349.0 - urban public (1,179) 330.0 - recreational (127) 20.0 - general scheme­industry, commerce, and services 4,297.0 (1,032) Use of receptor to dump waste water 64.0 Bulk water to urban and industrial centers 935.0 Irrigation service 135.0 Extraction of materials 35.0 Use of federal zones 20.0 Various (for example: paperwork processing, 193.0 regulation, and fines) Measures are already being taken in order to achieve this alignment. For example, since 2003, in accordance with modifications approved in the LFD, users of water for agricultural irrigation purposes (previously exempt) are obliged to pay 10 cents of one Mexican peso for each m3 of extraction that exceeds the volume with water right concessions. Operators of water supply, sewer, and sanitation services, likewise in accordance with modifications to the LFD approved by the National Congress in 2003, must pay higher tariffs when they extract volumes larger than the volume equivalent to a daily allotment of 300 liters per person. Thus, the opportunity cost of this resource is passed on to operators; supply to industries at lower tariffs than those foreseen by the LFD for self-supplied establishments is avoided; and these operators are kept from using water for purposes other than those authorized in their concession entitlements. The counterparts to the above controls are encouragements envisaged in the abovementioned modifications to the LFD, i.e., the income obtained from operators is allocated for carrying out efforts to improve water supply, sewer, and waste water treatment efficiency and infrastructure, for which municipalities must allocate an amount equal to that of the charges returned. 8 LCR Sustainable Development Working Paper No. 24 In irrigated agriculture the Government of Mexico has implemented various programs to use water more efficiently, such as those for the efficient use of water, energy, and ferti-irrigation. Unfortunately, there are no precise indicators of the impact of these programs, although it is potentially negative, because groundwater users benefiting from these programs have used water savings to provide a full supply when only a partial supply was previously available, or to expand their irrigated area and plant more double crops. The economic instrument that has had a notable effect on the reduction of groundwater extractions is the subsidy reduction on electricity tariffs for agricultural pumping. In effect, the electricity subsidy for agricultural irrigation pumping has been offset to a certain degree by the increase in the cost of other inputs that has affected agricultural production but has contributed to the overexploitation of aquifers. Graph 4 shows the tariff's impact on energy consumption; electricity consumption decreased markedly during the two years in which Tariff 09 was increased, but when this tariff began to decrease, consumption rose again. One issue that will surely need to be addressed in the future development of the WRAP is the disparity of energy subsidies among states, as clearly shown in Graph 5. It is interesting to note that the state with the highest subsidy is Sonora, where the WRAP has begun implementation. In addition, Table 5 shows the current values of Tariff 09 in comparison with residential tariffs, highlighting the fact that, together with the abovementioned modifications to the LFD, the new tariffs for agricultural irrigation pumping establish higher values for energy consumption than that required to extract the volume of water with water right concessions. Another relevant issue is that a formula was established to calculate the volume extracted based on energy consumed, thus addressing the long-standing difficulty of directly measuring water consumption. Graph 4. Impact of Energy Consumption Tariff for Groundwater Pumping in Mexico Source: CFE Mexico: Water Resources Management 9 The Role of the WRAP in Water Sustainability and Rural Development Graph 5. Geographic Distribution of Electricity Subsidy in Agriculture, 2002 2,000 1,800 1,600 noi 1,400 at 1,200 popul rural 1,000 per Px 800 M 2002 600 400 200 0 iapas s toyarit aloa o la los o a ur s a lim Ch GuerreroOaxaca VeracruzHidalgo Pueblampechebasco l li Ta catecaanajua Na Sin Du rangTlaxca More Co deralal Avg. Ca Za Gu Quintana Ro ma Ta ulipasSonoraJaliscoihuahuarnia Ssca ienteCoahuilCa fornia Ch lifo tion Baja Ca Agua Baja Distrito FeNa Source: World Bank Report No. 27894-MX, Public Expenditure Review, pp. 86; 150-157 Table 5. Electricity Tariffs in 2003 TARIFF RANGE AMOUNT (Pesos/KWh) 1. Domestic services First 75 KWh 0.517 Rest of consumption up to 140 KWh 0.622 Rest of consumption, over 140 KWh 0.863 Surplus consumption 1.809 9. Low-tension pumping for First 5,000 KWh 0.337 agricultural irrigation Next 10,000 KWh 0.374 Next 20,000 KWh 0.410 Surplus consumption 0.448 9M. Medium-tension pumping First 5,000 KWh 0.337 for agricultural irrigation Next 10,000 KWh 0.378 Next 20,000 KWh 0.413 Surplus consumption 0.452 9CU. Low- or medium- Consumption equal to or less than 0.300 tension pumping for volume with water right concessions agricultural irrigation For surplus, if consumption is greater, - min. 0.337 tariffs 9 or 9M are applied, as the case may be - max. 0.452 Source: Own preparation with CFE data The issue of water rights markets is addressed in Chapter III-3 as it was the subject of a specific analysis in this study. 10 LCR Sustainable Development Working Paper No. 24 Finally, the most important instruments of participation for groundwater management are the Groundwater Technical Committees (COTAS). In fact, since the enactment of the LAN in 1992, CNA has promoted nationwide the establishment of these civil society organizations to help address the challenge of groundwater management, especially in the nearly 100 overexploited aquifers. As of November 2003, 64 more had been established in 64 other aquifers around the country. The degree of maturity and results of these agencies are highly variable, but as an example Box 1 shows the case of the COTAS in the State of Guanajuato. The most important lesson from this experience is that the COTAS are an instrument with great potential to create the social base required for the sustainable management of aquifers, but in general the Guanajuato COTAS could not have been established or last without the firm support of the State Government. Their future in large part depends on how willing CNA is to put into practice the mandate of the modified LAN with regard to the decentralization of state governments and agencies of society. In other words, a double focus is needed: bottom up and top down. Mexico: Water Resources Management 11 The Role of the WRAP in Water Sustainability and Rural Development Box 1. Groundwater Technical Committees (COTAS) of the State of Guanajuato: Progress and Challenges The Government of the State of Guanajuato (GoG) promotes the social bases for groundwater management with the goal of having them evolve into true aquifer management agencies. They work together with surface water Irrigation Districts (DRs) on the Guanajuato State Water Council (CEH) but their relationship with the Lerma-Chapala River Basin Council has not been properly resolved. Since 1998, the GoG has been supporting 14 Groundwater Technical Committees (COTAS) through a trust fund named FIPASMA; several private agencies and users pay them for services, and CNA has begun to provide economic resources. The Guanajuato COTAS have established an ongoing mechanism for interaction among users­State Government­Federal Government, in which each COTAS (as a civil organization with its own structure and financing) has the opportunity to seek new agreements and financing from other local sources and to adjust to their specific and unique features. Their principal achievements have been to: · establish dialogue with groundwater users and improve information on these users; · provide services to the groundwater users community; · support public communication campaigns on the importance, status, and needs of groundwater; and · facilitate and support the updating of the user registry and the monitoring of groundwater use, level, and quality. For these and future tasks it is important not to consider the COTAS as isolated but rather as intermediate, independent organizations, positioned between individual users or groups of users and municipal, state, and federal government offices, with the overall task of administering and protecting groundwater resources. The following table shows a preliminary proposal of the functions of the COTAS and of all other actors involved. Of course, the COTAS have provided services to users, but one must not overlook the fact that they: · are basically organizations in which all categories of users may be grouped together and represented; and · generally need to expand their roster of active members to ensure that the COTAS are truly representative. Civil Organizations Government Offices FUNCTIONS USERS COTAS CEH CEAG CNA-GE/OC OTHERS o CC Obtain/comply with water use rights R s E Operate and maintain wells/system R s s Measure groundwater extraction R s E Prepare/implement aquifer management plans R s c s E R Denounce clandestine wells/drilling c R E Denounce potential sources of contamination c R E s Reconcile water and energy data c R s a s Keep use/user profiles updated c R s E Update information on aquifer status R s a Promote public communication campaigns c R R a Monitor groundwater levels, uses, and quality c c R R Mobilize and evaluate COTAS contributions c c R Keep Public Water Rights Registry (REPDA) c c R updated Control disposal/treatment of waste/waste water R* c s H Resolve disputes of users/polluters c c s R c Formulate/implement water saving measures R* c c c E c Formulate/implement land use planning c* c c c R and E R responsible E enforce: USERS­groundwater users, individuals, or associations c contribution: CEH or CC­State Water Council or Watershed Council s support: CEAG­Guanajuato State Water Commission CNA-GE/OC­State Management Office or Central Offices of National Water Commission OTHERS­federal/state/municipal bureaus related to land use planning, environmental protection, or agricultural/livestock production and extension *The agencies/persons dealing with land development may carry out these functions instead of users. Source: Foster, Garduño, and Kemper 2004 12 LCR Sustainable Development Working Paper No. 24 The main conclusion drawn from the above experiences with the implementation of regulatory, order and control, economic, and participatory instruments is that, although these initiatives, basically by the National Water Commission (CNA), have achieved significant progress, it has not been long lasting. Perhaps one of the reasons is that there has not been sufficient integration among the various types of instruments used. The next section discusses SAGARPA's initiative which is the subject of this report: the WRAP. Chapter IV proposes that all these initiatives be integrated in the hope of achieving better and longer lasting results. Mexico: Water Resources Management 13 The Role of the WRAP in Water Sustainability and Rural Development II. INITIAL APPLICATION OF THE WRAP 1. WRAP: An Innovative Initiative by SAGARPA The social and economic consequences of the problem arising from the overdesign of irrigation zones, the overconcession of water rights, and the overexploitation of aquifers described in Chapter I, are so serious that they require urgent attention. For this reason, the Secretariat of Agriculture, Livestock, Food, Rural Development and Fisheries (SAGARPA) launched the WRAP in August 2003. The fact that a ministry of agriculture is heading a program aimed at promoting the sustainability of productive systems and of river basins and aquifers is unusual at international level and represents a very valuable political willingness and a positive initiative with considerable potential to bring about a real, favorable impact in the field. This initiative and the valuable lessons learned from its implementation in the Caborca aquifer of the State of Sonora, described in the second section of this Chapter, represent two highly relevant assets that must be used to advantage. Box 2 summarizes the WRAP's key purposes and features, as published in the DOF on August 12, 2003. Box 2. Features of the WRAP OVERALL To promote the sustainability of irrigation districts with problems of water availability, OBJECTIVE whose priority stems from recurrent droughts and from the evident depletion of sources of supply, determined in the technical studies formulated by the National Water Commission (CNA), through the acquisition1/ of entitlements for the use or development of water for agricultural, livestock, or forestry services issued by CNA. SPECIFIC I. To promote the recovery of water volumes to benefit aquifers and river basins, and OBJECTIVES II. To support producers so that, under criteria of co-responsibility and commitment, the sustainability of water for agricultural, livestock, or forestry use may become feasible in the medium and long terms. TARGET Civil associations of irrigation users or producers holding entitlements to develop or use POPULATION water for agricultural, livestock, or forestry purposes, issued by CNA, and who are recorded in the Public Water Rights Registry, and who are located in irrigation districts where technical studies of the sustainability of water volumes in supply sources, prepared by CNA, have identified water availability problems. COVERAGE National coverage program, aimed at irrigation districts where water availability problems have been identified. In an initial stage during the present year, the following irrigation districts may be supported: 005 Delicias, Chihuahua; 006 Palestina, Coahuila; 011 Alto Río Lerma, Guanajuato; 025 Bajo Río Bravo, Tamaulipas; 026 Bajo Río San Juan, Tamaulipas; 031 Las Lajas, Nuevo León; 037 Altar-Pitiquito-Caborca, Sonora; 066 Santo Domingo, Baja California Sur; 085 La Begoña, Guanajuato; 086 Río Soto la Marina, Tamaulipas; and 090 Bajo Río Conchos, Chihuahua. If there is an available budget, other irrigation districts may be considered. TYPES OF SUPPORT Economic supports will be granted so that civil associations of irrigation users or producers, who comply with the characteristics described in the target population and with eligibility criteria and requirements, can renounce the volume of water granted to them. 1/ Originally, the WRAP's name in Spanish. PADUA, was "Programa de Adquisición de Derechos de Agua." Its Rules of Operation (RO) and subsequent modification were published in the Official Gazette of the Federation (DOF) on August 12, 2003 and April 23, 2004, respectively. In the latter modification the Spanish name became "Programa de Adecuación de Derechos de Uso del Agua y Redimensionamiento de Distritos de Riego." 14 LCR Sustainable Development Working Paper No. 24 It is important to note that the WRAP's implementation grants certain priority to groundwater, due to the more serious problem of groundwater overexploitation (because water resources may be depleted or pumping depths may be too deep, making it unprofitable to continue exploiting this water), and to the priority explicitly granted by SAGARPA to irrigation zones with groundwater. 2. WRAP Legal Analysis The WRAP's legal basis, invoked in the RO but insufficiently developed, is the Sustainable Rural Development Law and its objective is the granting of direct support to producers who renounce their water abstraction entitlements. The objective of the legal analysis9 was to examine the consistency of the WRAP's RO with recent modifications to the National Water Law (LAN), the implications of its implementation under its current design and its eventual redesign. The effectiveness, on April 30, 2004, of important reforms to the LAN, whose precepts include seeking the tools to try to correct the major hydrological imbalance in numerous river basins and aquifers around the country, is the reason why the analysis extends to the main features of the scheme of concessions and allocations and the effects arising from intervention by the Executive Authority when reasons of public interest or eminent domain so require. The experience of the team appointed by the State of Sonora in the Altar Piquito Caborca District to implement the WRAP has also been used to highlight the legal aspects that require attention in order to make its framework fit under the necessary administrative intervention. The conclusions of the legal analysis were: · The WRAP's RO constituted a secondary regulation and did not adhere to the role that the LAN assigns to the National Water Commission (CNA) as the sole federal authority on this matter, in terms of responsibilities for water administration and on the interpretation of this law. · The implementation of the WRAP faced significant legal difficulties because, with its RO as they were written, the support that would have been granted to those who renounced a water abstraction entitlement without any additional consideration, would only take place in one of two ways: A purchase of rights by the Federation as an alternative to the recovery of rights, may not have legal basis; while it is true that, in light of recent modifications, the Water Authority is allowed to intervene in the water rights market in cases of emergency and on a temporary basis, its application to the WRAP through SAGARPA (which is not a water authority) wouldrequire an express ruling by CNA which is legally authorized to interpret the law. A cancellation of the right due to renouncement by the entitlement holder, but by granting him an economic compensation, would appear to exceed the limits of what is permitted particularly in regard to making references to compensation that would be overstepping the bounds of the Executive Authority regarding "compensations to private persons" at the time of the first draft decree through which the National Congress proposed modifications to the LAN. The legislature eliminated the term compensation from the corresponding article. · The immediate implementation of the WRAP could be feasible if its objective is first reoriented, giving real application to the considerable number of provisions in the 9The complete development is presented in Annex II. Mexico: Water Resources Management 15 The Role of the WRAP in Water Sustainability and Rural Development Sustainable Rural Development Law (LDRS) which the Rules of Operation (RO) invoke as their basis in the preface (for example, the duty of those who make productive use of lands to select techniques and crops that ensure conservation or increase productivity), but were not adequately developed in the RO. It would be feasible to develop such provisions of the LDRS, concluding with agreements signed with users.10 Under these conditions: the WRAP would replace its current role with that of promoter of productive activities, pursuing water savings as part of its final objective; the roles of CNA and SAGARPA should be part of the Collaboration Agreement which by law and according to the RO should be signed by these agencies; in this way, the reorientation would require commitments by users and would require the following for its implementation: o beyond being strictly subjected to the volumes with water right concessions under the terms of the law, it is the duty of the beneficiary of the Assistance to obtain water savings which is what the Federation expects and demands of him as a consideration for such Assistance; o users' duties should jointly incorporate third parties who, in virtue of contracts with the water rights holder, use the lands with the right to irrigation and are, in this respect, the true beneficiaries of this water; o if the lands to which the water right is economically assigned are subject to legal processes, prior agreement with the mortgagee will be required to ensure the freedom to decide how to use the water savings that are obtained; o the water savings obtained, according to the LAN, would be subtracted from the volume of water with water right concessions, since public resources are involved in generating it. CNA would be responsible for determining the allocation of such resources in accordance with the order of priority established by this law; o the Users Association to which beneficiary producers belong should at least agree with CNA on a way to calculate the volumes actually extracted and the direct and indirect measuring systems in order to ensure that the benefit stemming from the effort of producers benefiting from the WRAP would not be used by others who have not contributed. Subject to future studies, some of which are described in greater detail in the recommendations summarized in Box 5, several options to achieve the adjustment of rights in the medium term are envisaged: · Integration of the WRAP with a productive conversion fund, with additional contributions (for example, resources from Alianza para el Campo, PROCAMPO, savings from energy subsidies by pumping less water with Tariff 09, etc.), managed directly by producers.11 The fund could be presented as an enterprise whose shares are water rights and producers would be shareholders as long as they have valid concessions. · Analysis of institutional and users' capacity to address the water rights adjustment required by the modified National Water Law (LAN), under different schemes such as: 10Annex III contains the procedures and formats proposed by the World Bank to implement the WRAP immediately. 11Manuel Contijoch, personal communication. 16 LCR Sustainable Development Working Paper No. 24 sectoral programs along the lines of the WRAP, limited to Irrigation Districts (DRs) or also incorporating Irrigation Units (URs); intersectoral adjustment programs, considering surface and ground water as a whole, as well as the reuse of waste water; and a comprehensive offensive, exercising the authority given by the LAN to CNA, to regulate water rights for reasons of public interest or eminent domain, but with the participatory mechanisms that the law also provides (so that state and municipal governments and organized users can contribute to the enforcement of the law), and with the financial support provided in programs such as those indicated in the two schemes mentioned above. · Recommended immediate actions as a support to implementing any of the above:12 identify water-related functional and operational actions that can be delegated to states and municipalities and incorporate them in Coordination Agreements in order to obtain the cooperation of these authorities in complying with and implementing the law; make irrigation areas that are declared to be well-drilling prohibition zones according to the corresponding decrees, compatible with aquifer boundaries in accordance with the official publication of January 2003; update the census of users in well-drilling prohibition zones and the Associations' user records, not only to verify their interrelationship with records in the Public Water Rights Registry (REPDA), but also to integrate them with Groundwater Technical Committees (COTAS) and commit them to implementing the measures that should be included in norms to regulate uses and dumping; and prepare a very general model of the Aquifer Regulation that can be adjusted to specific conditions through consensus building. · Explore the advantages and disadvantages of a collective concession entitlement, taking into account that: the individual concession scheme in aquifer exploitation tends to reinforce users' behavior and hinder the implementation of sustainability measures; this could make it possible to intervene in matters of water rights in overexploited aquifers; before adopting this measure, a strict evaluation must be made of the background information that its implementation has generated, especially: o the lack of legal clarity regarding rights existing prior to the issuance of the collective entitlement, even though individual improvements have continued to be valid; and o the lack of a social fabric favoring collective management in benefit of the aquifer and favoring among users the request for individual entitlements as in the case of Caborca. · Take advantage of the fact the users associations in irrigation districts have a regulation, as prescribed by the LAN, to incorporate mechanisms that facilitate the implementation of the WRAP. · Propose content for the LAN's regulation, as a result of the experience from implementing the WRAP and in general from problems anticipated in the water rights adjustment required by recent modifications to the law, for example in the following issues: 12Chapter III-1 suggests several criteria to select and prioritize areas in which water rights would need to be adjusted. Mexico: Water Resources Management 17 The Role of the WRAP in Water Sustainability and Rural Development as it seems from temporary Article nine, the current concession and allocation entitlements are affected, because the duration of concessions has been reduced from 50 to 30 years and that of expirations from 3 to 2 years; the effects that the non-guarantee of the existence or invariability of volumes with water right concessions has on the concession entitlement: one possibility would be to adjust the volumes with concessions as an equal share of the average availability or safe yield; the regulation's strictness with regard to the transmission of rights, which grants power to the authority to deny the transaction even if it only implies changing the name of the holder, merits regulatory treatment to eliminate any use of discretionary power and to be able to use this economic instrument in reallocating the resource; and the factors that should be taken into account when determining the costs to be covered by users who are obliged at times of shortage to return surplus water which are the result of savings from investments, infrastructure modernization, and technical improvement of irrigation using their own resources; non-recognition of the economic value added that the user does not perceive, could become a clear discouragement to private investment. 3. Short-Term Recommendations to the Government of the State of Sonora a. Irrigation District 037 and the Caborca Aquifer Irrigation District 037, Altar-Pitiquito-Caborca, is located in the northern part of the State of Sonora. In this region, average annual precipitation is less than 150 mm, while average annual evaporation is over 2,000 mm. The District is supplied by water from the Cuauhtémoc dam and by the aquifer, by means of 832 deep wells that pump at an average dynamic depth of 100 m. These pumping systems are spread over an area of approximately 250,000 ha, but the average irrigated area has varied from 65,000 ha in 1970 to 30,000 ha in 2001. 70 percent of the area planted in the District is covered with perennial crops such as grapes, asparagus, olives and alfalfa; and the rest with annual crops such as vegetables, corn and wheat. Pressurized irrigation systems encompass an area of about 13,000 ha with a concentration of perennial crops. Graph 6 uses lines and diamonds to show the planted area and bars to show the extracted volume. The extracted volume has been estimated by indirect methods (IMTA, 2002), since only 20 percent of wells have flow meters, many of which are in poor condition or do not meet installation specifications. The trends of planted areas and water extractions are nearly parallel during the period in which the Irrigation District (DR) was administered by the Federal Government. Since 1992, when the DR was transferred to users and the concession entitlement was issued, the extraction curve rose to amounts higher than the historical maximums even though the planted area rose slightly for three years and then continued decreasing at the previous rate, an issue that is difficult to understand unless it is explained by a radical change to crops that consume much more water. Another explanation would be that extraction did not really have this upswing and that a volume of less than 400 Mm3/year continued to be extracted from 1994-2001, which would seem more consistent with the nearly uniform slope of the curve showing the drop in static levels in Graph 7. In any case, these apparent inconsistencies reinforce the pressing need to install meters and revise information and hydrogeological numerical models. 18 LCR Sustainable Development Working Paper No. 24 Graph 6. Volume Extracted and Area Planted by Agricultural Year 800 70 )3 700 Area m 60 of 600 50 pla nt onsliil 500 ed M( 40 thousands ( detcart 400 30 300 Ex 20 of meu 200 10 ha) Vol 100 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 7 7 7 7 7 8 8 8 8 8 9 9 9 9 9 0 Agricultural Cycle Graph 7. Variation in Aquifer's Average Static Level Año Agricola 17 37 57 77 97 18 38 58 78 98 19 39 59 79 99 10 0- 2- 4- 6- 8- 0- 2- 4- 6- 8- 0- 2- 4- 6- 8- 0- 197 197 197 197 197 198 198 198 198 198 199 199 199 199 199 200 0 ) -10 m( ocitatselevin -20 -30 dad -40 -50 undi ofrP-60 -70 The concession entitlement granted in 1994 by CNA to the Users Association stipulates that extraction was to be reduced from 798 Mm3/year to 301 albeit without full legal validity in 2005. The graph's values indicate that in fact extractions have decreased with a clear trend toward reaching the established target. However, meters need to be installed in each well, as stated both in the National Water Law (LAN) and the concession entitlement and volumes must be verified because, despite the apparent reductions in extractions, aquifer levels have continued to decrease as one may observe in Graph 7. This contradiction may also be due to the fact that when the concession entitlement was granted, the estimated safe extraction was 300 Mm3/year and recent IMTA estimates, based on a study prepared in 2004 with the annual hydrogeological data Mexico: Water Resources Management 19 The Role of the WRAP in Water Sustainability and Rural Development obtained by CNA and including the results of a mathematical simulation model of the aquifer, indicate that with an extraction of 150 Mm3/year, there would be an annual decrease of 7 cm, in contrast to the average decrease of 1.40 m per year over the last 30 years. This overexploitation of the aquifer has caused several zones of the Irrigation District to experience increases in the static depth of up to five meters per year, which has caused an increase in operating costs due to electricity, and consequently the reduction in the net utility of producers and the abandonment of irrigation infrastructure and agroindustry in a considerable area, as well as the increased possibility of seawater intrusion, especially in wells near the coast. Besides the lack of meters, it is known that various wells are subject to expiration because they have not been operated for two or more years. In addition, users have an accumulated unpaid debt portfolio of $615 million, 87 percent with banks and the rest of the Federal Electricity Commission. In other words, for various reasons it is evident that many users do not comply with current legislation and thus it is complicated to start up the WRAP as anticipated. b. The WRAP in Caborca Under the framework of the diagnostic summarized in the section above, it was thought that the implementation of the WRAP in DR 037 would favorably affect the immediate objective of decreasing the rate of depletion of the Caborca aquifer's static level. In the medium term, the WRAP would contribute to the aquifer's stabilization by forming part of a strategy that includes: · Decreasing the volume of water right concessions from 300 to 150 Mm3. · Installing meters in all wells with water rights. · Sealing all wells without water rights. · Controlling the volumes of water extracted in each well within water rights. · Applying the LAN, with the support of the State Government of Sonora and the Civil Association of Water Users, to users who do not respect the extraction of the water volume to which they are entitled. Since the end of 2003, the Caborca Users Association has expressed its intention to join the WRAP and 174 users have registered. However, a comparison of registration data with the original list showed that only 30 percent of cases (of registrations) corresponded to the well number and the entitlement holder's name (infringing on the entitlement conditions in terms of keeping an updated list of users in the REPDA). The analysis highlighted the legal difficulties of applying public resources in the face of noncompliance with various legal obligations by users. For this reason, an attempt was made to identify other alternative solutions in which the WRAP could have the additional benefit of encouraging strict compliance with the law, while modifications to the LAN (Chapter II-1) and to the RO (see Annex I) were reviewed. c. An Initial Map of Water Users in DR 037 The analysis used as a starting point was the report prepared by IMTA which was developed based on information obtained from 2,363 users through 397 research surveys given to an equal number of representative persons or holders of water extraction entitlements, i.e., to 397 representatives of 144 sets of wells and 200 individual wells. The land area recorded in the surveys is 24,494.9 hectares under production and 15,710 open to planting, totaling 40,204.9 hectares capable of producing. With this information a stratification was made of: collective private producers, individual producers, and ejidatarios; and of productive units: without a standing crop, smaller than 30 ha, from 31 to 60 ha and from 61 to 100 and over 100 hectares. 20 LCR Sustainable Development Working Paper No. 24 Significant changes have been noted in the social forms in charge of production in irrigation districts; in concession entitlements the proportion of ejidatarios was much higher, a situation that is reversed in the surveys analyzed, as illustrated in Table 6. Table 6. Typology of Producers Number of Number of Area Users­List Area surveys Users­List Owners Has Ha Land Holding Surveyed Total % Total % Total % Total % Small/private land 994 35% 1,448 63% 42,531 77% 20,427 85% owners Ejidatario 1,858 65% 762 33% 12,533 23% 1,806 7% Unspecified -- -- 79 4% -- -- 2,004 8% Total 2,852 100 2,289 100 55,065 100 24,237 100 39,947* *This would be the total area, considering the 15,710 ha open for planting, without standing crops. Of all 397 surveys analyzed only 33 percent are registered in the list of concession entitlement users; the remaining 67 percent are not on this list (see Table 7). Therefore, those who produce and who use water are not necessarily those registered in the concession entitlement recorded in the REPDA and thus are not subject to the policy as stated in the WRAP's regulation. The WRAP, as formulated until now, is not taking into account this situation which affects the 67 percent of producers who use water but have no entitlement record. A significant number of units without standing crops (29 percent of all units) was found; these producers had a higher number of unpaid debt portfolios (81 percent), and 82 percent of this same group of producers were classified as higher priorities for policy intervention. Such data constitute an important indicator of the trend to expel the population from agricultural activities; the reduction in cultivated area is another important indicator. In addition, and in line with the above data, the information points to important changes in the producer population and in the structure of productive units in Irrigation District 037. First, one can no longer speak only of small farmers as recognized in Article 27 of the Constitution, since what is recorded in the available information regarding collective private farmers are highly diverse forms of partnership and association, ranging from units with one member to units with over 30. In this regard, it is important for the WRAP to characterize, insofar as possible with the information available, the types of ejido and private producers and of productive units. Mexico: Water Resources Management 21 The Role of the WRAP in Water Sustainability and Rural Development Table 7. Classes of Productive Units by Type of Producer in DR 037 No Crop Less than 30 has From 31 to 60 has From 61 to 100 has Over 100 has N % % N % % N % % N % % N % % es to es to es to es to es es Productive 115 100 29 119 100 30 61 100 15 38 100 10 64 100 16 Units Private 5 4 1 11 9 3 5 8 1 6 16 2 8 13 2 Individual Private 51 44 13 63 53 16 38 62 10 25 66 6 45 70 11 Collective Ejido 31 27 8 31 26 8 8 13 2 5 13 1 5 8 1 No data 28 24 7 14 12 4 10 16 3 2 5 1 6 9 2 No. of 676 100 30 563 100 25 364 100 16 232 100 10 454 100 20 Members No. of 172 100 18 197 100 21 97 100 10 75 100 8 391 100 42 Wells Based on the above analysis, the population with the greatest potential participation is considered to be those who, due to their productive situation, no longer have standing crops, but the following aspects should be addressed, as described in greater detail in the recommendations presented in Annex VI. d. Recent Activities in Sonora During the first half of 2004, negotiations in Sonora with users became difficult because, when the GoS mentioned the Rules of Operation (RO) and that one of the parameters that could be considered to determine the amount of economic support was the "original allocation," they demanded that the support be calculated using this volume. A second cause of dissatisfaction was that the GoS informed them that those who have loan debts with banks would not have access to the Program, unless these lending institutions agreed to restructure debts and thus release irrigation lands from the corresponding liens. A third cause was that the GoS told those users who wished to partially renounce their rights, to keep 15,000 m3/year for domestic uses and to water cattle and this volume would be deducted to calculate their support. Finally, agreements were reached with the Association, but the number of persons interested in June 2004 had decreased to 50. Annex IV presents proposed agreements with users in which such commitments and others among SAGARPA, CNA, and GoS are reflected, establishing the conditions to ensure that eligible users are within the law, that the reduction of extractions corresponding to the renouncement of water rights is later complied with, and that support is provided to producers in their new activities. 22 LCR Sustainable Development Working Paper No. 24 e. Next Steps The general movement toward decentralization that is being promoted by the Federal Government, together with the recent modifications to the LAN, provides a framework that will surely facilitate the following initiatives by the Government of the State of Sonora: · Definition of the support needed to complement the available hydrogeological data and facilitate the mathematical simulation model developed by IMTA13 for improving the hydrological information and the numerical models of the Caborca aquifer since, although there is sufficient evidence to justify the extraction reduction measures that are being taken, information and analysis tools need to be perfected in order to evaluate, in sufficient detail in the near future, the effects of various management measures; · Definition of needs for groundwater quality protection measures; · Participatory preparation of a draft regulation of the Caborca aquifer; · Institutional transition, using as a basis the possible evolution of the Users Association toward a COTAS; and · Development of the capacity of institutions and of users and their organizations, based on study tours and close tutoring by consultants with GoS staff and with the state's research and higher education institutions. 4. Recommendations to Expand the WRAP in the Medium Term It should be acknowledged that the lessons drawn from the WRAP's implementation in Sonora are of great value in proposing improved schemes to adjust water use rights, and that many of the problems that have been observed certainly could not have been anticipated exclusively in a desk study. But it should also be pointed out that in order to effectively avert the risks that have been identified, substantial modifications are needed to bring the WRAP in line, over the medium term, with current legislation, as described in section II-1. Annex I presents a synthesis of the RO, including the April 23, 2004 modifications, and the recommendations made are listed below: a. Recommendations to Improve the WRAP's Concept and Efficiency · Modify the WRAP so it can be applied generally around the country, while recognizing and making use of the geographic, hydrological, and socioeconomic features of each area where it is applied. · Redefine the WRAP's concept to make full use of the current legal framework, i.e.: According to the Sustainable Rural Development Law (LDRS) and the 2004 Federal Expenditure Budget (PEF), SAGARPA continues to conduct the Program. In order to avoid confusion with regard to authority, recognize the precedence of the National Water Law (LAN) in relation to the Rules of Operation, in the sense that the National Water Commission (CNA) should interpret the law for technical and administrative purposes and its duty is to administer water use rights. Make use of the instruments provided by the LAN to adjust water rights, i.e.: 13 The objective would be to understand the form and speed of recharge, storage capacity, principal directions of flow, discharge or seepage zones, and possible contamination problems. In addition to understanding the average volume of extraction to stabilize the aquifer, it is important to determine the time needed to achieve this stabilization. Mexico: Water Resources Management 23 The Role of the WRAP in Water Sustainability and Rural Development o partial, voluntary renouncement, through Government support to users so that they can produce with less water and the country can recover water volumes; o recovery of total volume by means of compensation; o partial transfer of rights to (i) a legally valid person who represents ecological use; public-urban use to constitute reserves in exchange for support to use water efficiently; or (iii) industrial use to increase economic efficiency; and o mutually agreed aquifer regulation, issued by the President of the Republic, allowing rights to initial amounts to be adjusted, taking into consideration both the volumes with water right concessions and those actually being extracted, and including support to increase the productivity of water and land. It is important to point out that, as a first step, it is essential to have a reasonable technical understanding of the aquifer and to mutually agree with users on the formulation of a management plan. · Taking into account the fact that most of the groundwater volume for irrigation is used by Irrigation Units (URs), it is recommended that URs be included in the WRAP.14 · Make the application of the Rules of Operation more efficient through the following measures: Make the inclusion of aquifers or river basins contingent on the publication of water availability by CNA under terms of the law (not on "technical sustainability studies," as mentioned in the Rules of Operation) in order to provide greater legal soundness. Establish clear, transparent criteria for the selection of the irrigation zones to be benefited. Define objective but simple criteria to calculate the economic value of water. Specify eligibility criteria; for example: o list of users edited, updated, and recorded in the Public Water Rights Registry (REPDA);15 o meters installed and operating;16 and o compliance with the National Water Law (LAN), its regulation and concession entitlement. Specify the considerations to which the user is obliged, for example: o more efficient water use; o associations are obliged to assure that their associates comply with the law. 14The 1992 National Water Law established the transfer of Irrigation Districts (DRs) to civil associations of users and the grouping of these in limited liability companies. Most water supplied to DRs comes from surface water regulated by dams. In addition, the volume supplied to Irrigation Units (URs), which are not formally part of the DRs, comes mostly from groundwater. 15The lack of updated user lists in irrigation districts stems from the original text (1992) of article 67 of the LAN, which left room for interpreting that registration in the REPDA of changes made to the user list was voluntary. Thus, in most if not all irrigation districts, user lists were only registered when their administration was transferred to users associations. This explains the inconsistencies found in trying to implement the WRAP. Said article 67 was amended in 2004 to make it clear that it is the obligation of users associations, as concessionaires, to update the user list and its registration in the REPDA. 16In light of the reality faced in irrigation systems supplied by groundwater, where most wells lack meters or meters do not work properly, this eligibility criteria may be adopted, as the case may be, as the express wish of users to install and maintain the corresponding meters, in accordance with a program authorized and supervised by CNA. In the case of irrigation systems supplied by surface water and particularly in irrigation districts, water delivery to users associations and limited liability companies is measured, and thus the eligibility criteria is fully complied with. 24 LCR Sustainable Development Working Paper No. 24 Implement the provisions for monitoring and control that should be implemented jointly by CNA, the State Government, and organized users prior to the program's implementation; for example: o assure the destruction of wells with canceled rights; o assure the reduction of extractions; and o assure that no more wells are drilled. Establish impact indicators consistent with the program's objectives; for example: o effective reduction of water extractions or diversions; o recovery of water table levels; and o increase in water productivity ($/m3). Establish a working style "with users," not "against users." Establish mechanisms for effective communication: o consistent messages given to users by various interlocutors of the Federal and State Governments; o make use of the ongoing contact of Irrigation District (DR) staff with users; and o in a friendly but firm manner, make users see the "fragility" of rights supported by their concession entitlements, in light of the variability of rains and runoff and the behavior of other users, and the authority's powers to restrict extractions for reasons of eminent domain. · Improve institutional arrangements: Give the Rules greater institutional strength, subject to approval by the CNA Technical Council, with CNA and SAGARPA issuing them jointly, subject to consensus by the parties involved: o SAGARPA (Under-Secretariat of Agriculture and Legal Coordination); o CNA (General SubDirectorates of Water Administration, Hydro- Agricultural, Legal and Technical Aspects). · Recognizing the staffing and budgetary limitations that make it significantly difficult for CNA to exercise its authority, and the fact that no water rights adjustment strategy will work unless users are convinced, it is recommended that the following roles be strengthened, in line with the country's current movement toward decentralization: users: key players; Groundwater Technical Committees (COTAS): effective representatives who cooperate with the water authority; State Government: leader of the process within its territory and cooperating with the water authority; and National Water Commission (CNA): water authority and facilitator of the process. However, in order to consolidate these roles, it is necessary to support state governments, COTAS and users associations through economic resources and training. This could be achieved by means of collaboration agreements based on Article 116 of the Constitution and taking into account the new provisions of the LAN which seek greater participation both by users and by state and municipal governments. b. Recommendations to Increase the WRAP's Effectiveness To achieve the objective of promoting the sustainability of productive systems, river basins, and aquifers, the WRAP is essential but not sufficient. Moreover, various types of measures must be taken, such as: Mexico: Water Resources Management 25 The Role of the WRAP in Water Sustainability and Rural Development · Reducing the use of subsidized energy. · Replacing traditional crops with others that consume little water and have a high economic value. · Improving irrigation efficiency. · Consolidating or reducing irrigated area, if necessary · Improving agronomic practices. · Radically changing agricultural production systems. · Treating municipal and industrial waste water and reusing it in agricultural irrigation. In addition, overall effectiveness can be further increased if these measures and the WRAP itself are implemented under Alianza para el Campo, through programs such as: · SAGARPA Programs Agricultural Development Investment and Capitalization Productive Systems Research and Technology Transfer Credit and Marketing Support · National Water Commission Programs (CNA) Efficient Use of Water and Energy On-Farm Development Program (PRODEP) Irrigation Modernization Project (PMIR) Water Management Modernization Program (PROMMA) Integrated Management of Basins and Aquifers Project (GICA) In addition, it should be acknowledged that achieving the sustainability of productive systems and of river basins and aquifers is a process that will take decades, and thus it is urgent to take the first steps through successful, replicable pilot projects. It would be prudent to select pilot projects by taking into account criteria for the probability of success, capacity and complexity of both surface and ground water. In the case of groundwater, for example, it is recommended that its inclusion in the WRAP be subject to a revision of the list of users, their registration in the REPDA, and the installation of meters, and that support to users be granted gradually, as one after another the following are complied with: · Regulation of Irrigation Districts (DRs) and Irrigation Units (URs); · Strengthening of the aquifer's Groundwater Technical Committee (COTAS), including other users as well as irrigation; · Joint preparation of an aquifer management plan; · Establishment of effective participatory measures that ensure compliance with the reduction in volumes required by the adjustment of water use rights; · Publication of the aquifer regulation, under terms of Title V of the National Water Law (LAN); and · Evidence that overexploitation is being reduced. 26 LCR Sustainable Development Working Paper No. 24 III. BASES FOR THE EXPANSION OF THE WRAP Considering that the WRAP is a national program, although its start-up is aimed principally at the State of Sonora, part 1 of the following deals with considerations at national level, while part 2 focuses more on the specific case of Sonora. In this regard, the statistical data in part 1 include references to various aquifers, states, etc., while part 2 refers mainly to the case of Sonora. 1. Selection and Prioritization Criteria, and Benchmarking Parameters17 With the objective of having an idea of the scope of the problem at national level as regards irrigation areas subject to being withdrawn from agricultural production in order to adjust rights to water availability, as well as to evaluate the economic resources needed if a procedure similar to the original WRAP18 is implemented, methodologies were designed for groundwater as well as for surface water. This chapter describes the methodologies and applies them, using specific criteria as an example. However, these criteria (or their relative weights) could be changed, so that total investment does not exceed the total budget available for these purposes. The methodologies described in subsections a and b below only include technical, economic, and administrative criteria, but subsection c suggests the way to also take social aspects into account. Box 3 presents recommendations for more detailed analyses. The methodologies were applied with available information, the sources of which are described in Annex V, and of course are subject to improvement as better information becomes available. On the one hand, the "price" to purchase water rights was compared to an estimate of water productivity, with no adjustment; it is not known whether it would be acceptable both to the Government and to users of a certain area and thus should only be considered a reference value. On the other hand, it should be taken into account that Irrigation Units (URs) have a very high specific weight in obtaining irrigation zones with groundwater subject to incorporation in the WRAP, but the information on them with regard to location, current physical status, areas planted, volumes used, etc. is extremely imprecise. For comparative purposes, Table 8 presents the average values of the productivity of ground and surface water used for each of the hydrological-administrative regions of the National Water Commission (CNA), as shown in Graph 8. These compare with the maximum amounts envisaged in the WRAP's Rules of Operation (RO) to calculate economic supports. Note that the average value of water productivity is less than the maximum value envisaged in the RO, which may draw attention to cost-benefit considerations, but it is important to take into account that the value in the RO is the "maximum." In other words, considering the average values of water productivity, the economic support envisaged in the RO may be considered reasonably acceptable in principle. 17See Annex V. 18 Observe that, despite substantial modifications to the WRAP (as proposed in the Legal Analysis presented in Chapter II-1), the analyses presented in this chapter remain valid. Mexico: Water Resources Management 27 The Role of the WRAP in Water Sustainability and Rural Development Graph 8. CNA Hydrological-Administrative Regions Table 8. Average Water Productivity by Hydrological-Administrative Region PRODUCTIVITY REGION ($/m3) Groundwater Surface water I. Baja California Peninsula 2.47 NA II. Northwest 4.26 NA III. Northern Pacific 1.15 1.82 IV. Balsas 0.65 NA V. Southern Pacific NC NC VI. Río Bravo 1.10 0.96 VII. Central Watersheds­North 1.21 0.95 VIII. Lerma­Santiago­Pacífico 2.25 1.95 IX. Northern Gulf 0.99 NA X. Central Gulf NC NC XI. Southern Frontier NC NC XII. Yucatán Peninsula NC NC XIII. Valle de México 0.95 1.90 Average 1.93 1.52 Maximum amounts envisaged in WRAP Rules of Operation (RO) 2.50 2.00 to calculate economic support NC not considered as it deals with humid regions where there are no overexploited aquifers. NA not available because Irrigation Districts (DRs) irrigated with surface water in this region were not considered. NOTE: It is recommended that, in future studies, in the denominator of the formula to calculate water productivity, the net extraction value be used instead of gross extraction, for reasons explained in Box 3, Chapter III-e. The Management Indicators utilized in the WRAP's RO (see Annex I) consist exclusively of the percentage of requests serviced in relation to the number of requests received, and of the 28 LCR Sustainable Development Working Paper No. 24 percentage of supported volume in relation to overexploited volume, without measuring the Program's real physical and economic effects on the reduction of overdesign, overconcession, and overexploitation. Here various benchmarking parameters are suggested with regard to "system operation," "environment," "system activity from a business perspective," and "financial aspects." It is also suggested that other types of indexes be used, commonly mentioned in the literature as those related to land and water productivity. However, it is accepted that obtaining these parameters will be subject to information available in the irrigation areas. a. Irrigation Zones Supplied by Groundwater Annex V presents a list of the 181 aquifers identified as overexploited, indicating whether each had the following attributes: (i) its water availability has been published in the Official Gazette (DOF); (ii) a COTAS has been established; (iii) the COTAS has been given the formal legal denomination of Civil Association; and (iv) the aquifer is being utilized, or could be used, to supply water to an important population center. The first three attributes are indicators that measures to stabilize the aquifer would have a greater likelihood of success, and the fourth indicates that this is a source slated for water use that the new LAN defines as a priority. Taking these attributes into account, the following priorities may be identified: · Priority 1: given the priority established by the National Water Law (LAN) for domestic and municipal use, this group includes those aquifers located within the following categories of criteria: they currently or may potentially supply an important population center, with various combinations that measure the likelihood of the success of water rights adjustment measures, i.e., the aquifer's availability has been published in the DOF, there is a COTAS and this COTAS is set up as a Civil Association. · Priority 2: the dominant reasoning is the existence of a COTAS except in the case of an important population center that depends on the aquifer. · Priority 3: includes aquifers without COTAS or AC or important population centers, even though the aquifer's availability has been published in the Official Gazette. According to information from CNA's Groundwater Management Office, 18119 aquifers are overexploited, as classified in Table 9, according to the criteria described above. An additional refinement to define priorities that could be taken into account is the degree of overexploitation and the presence of salinity in aquifers. 19CNA 2004 information only mentions 102 overexploited aquifers. Mexico: Water Resources Management 29 The Role of the WRAP in Water Sustainability and Rural Development Table 9. Summary of Aquifers: Priorities and Percent of Overexploitation Region Number of aquifers Recharge Overexploit. % of overexploitation in terms of priority: volume volume (Mm3/year) (Mm3/year) 1 2 3 I 6 13 10 487.52 229.58 47.1 II 10 1 4 902.30 438.34 48.6 III 1 1 3 256.69 184.80 72.0 IV 2 1 6 241.41 132.05 54.7 VI 12 4 11 1,604.79 1077.67 67.2 VII 2 6 20 1,158.02 824.21 71.2 VIII 18 9 26 3,075.67 1,505.35 48.9 IX 4 1 7 663.32 73.32 11.1 XIII 3 1 0 597.17 106.31 17.8 TOTAL 58 37 86 8,986.9 4,571.6 50.9 To estimate the area subject to recovery, the unit values applied in the Irrigation District (DR) closest to each aquifer were used, and to calculate the amount of corresponding economic support the average productivity of water, also of the nearest DR, was used. Table 10 was therefore constructed. Table 10. Groundwater: Areas and Potential Volumes to be Recovered and Amounts to be Paid Region Feasible Area (ha) Volumes (Mm3/yr) Amt. to pay (`000 $) Prior. 1 Prior. Prior. Sum Prior. 1 Prior. 2 Prior. 3 Sum Prior. 1 Prior. 2 Prior. 3 Sum 2 3 I, Península de Baja California 6,277 4,324 13,577 24,178 37.780 106.090 81.720 225.590 93,128 261,512 201,440 556,080 II, Noroeste 45,382 4,014 854 50,250 317.554 58.750 11.850 388.154 1,454,106 164,735 34,477 1,653,318 III, Pacífico Norte 4,549 4,077 9,705 18,331 37.830 33.910 80.716 152.456 43,391 38,895 92,581 174,867 IV, Balsas 2,571 203 3,362 6,136 69.920 1.821 44.590 116.331 24,581 4,086 47,324 75,991 VI, Río Bravo 27,380 12,945 18,251 58,576 261.240 185.952 135.416 582.608 300,006 233,884 107,621 641,511 VII, C, Cent. 17,998 34,531 13,606 66,135 247.019 375.579 145.471 768.069 261,440 483,653 186,209 931,302 Norte VIII, Lerma- 132,199 13,922 11,021 157,142 1,013.584 98.991 88.177 1,200.752 2,291,364 231,275 184,998 2,707,637 Santiago-Pacif. IX, Golfo Norte 4,148 90 371 4,609 46.160 1.160 4.308 51.628 47,247 338 3,357 50,942 XIII, V. de 7,540 688 0 8,228 60.320 5.500 0.000 65.820 43,129 19,613 0 62,742 México TOTAL 248,044 74,794 70,747 393,585 2,091.41 867.753 592.248 3,551.408 4,558,392 1,437,991 858,007 6,854,390 30 LCR Sustainable Development Working Paper No. 24 b. Irrigation Zones Supplied by Surface Water For the case of surface water, the indicators defined by CNA's Management Office for Irrigation Districts and Units (GDUR) were used: · The volume that is stated in the Concession Entitlements (TC) granted to users as a consequence of the Transfer Program (PT) reflected the average historic volume that users had been using. As stated in article 100 of the RLAN, CNA authorizes the volume to be delivered each year to each civil association of users, in terms of available volume, stored as of October 1 or at the start of the agricultural cycle, although the TC indicates that when there is sufficient water in the supply source CNA should provide the average volume stated in the TC. According to the opinion of various CNA staff, the latter provision has caused the problems that have occurred in Irrigation Districts (DRs) in recent years, in which runoff has been below normal averages. · Based on long-term hydrological data, GDUR has defined "sustainable extraction" as the annual volume subject to extraction from a storage reservoir, especially in drought years, in compliance with restrictions set by the "Hydrological Deficit Norm" defined by the GoM en 1975,20 which is applicable to historic simulations of storage reservoirs at constant demand. Although annual demand is constant, its monthly distribution may be variable. The concept of "sustainable extraction" has been adopted by DGUR to issue general criteria for the authorization of volumes of irrigation water for users. The data available in GDUR show that in many irrigation districts, the "sustainable extraction" of water from dams is less than the sum of volumes with water right concessions and assigned. This situation has caused serious social, political, and diplomatic conflicts, for example in the basins of the San Juan, Bravo, Fuerte, and San Lorenzo­Culiacán­Humaya­Mocosito Rivers. To reverse the above situation, SAGARPA and CNA have begun a strategy that includes: · Regulating the basin to fairly distribute water among all users. · Decreasing concessions by granting economic support to those users who renounce their water rights. · Modernizing the water distribution network and making technical improvements to irrigation with federal resources; in exchange, the volume of water saved will be held by the State, through CNA, which will define its use and allocation. In addition, an initial criterion adopted to consider whether a DR supplied by surface water is subject to assistance by the WRAP is that "sustainable extraction" must be lower than the average volume considered. Table 11 presents DRs in various priority areas which, according to analyses performed by the GDUR, are subject to incorporation in the WRAP. Drawing from this table and following a procedure similar to the case of surface water, Table 12 was prepared. It should be kept in mind that the DRs are supplied mainly by surface water; for this reason both tables are presented. The intention is to propose a potential list of DRs and aquifers that may be eligible for WRAP assistance through the use of the sustainable extraction criteria. For various reasons, it is worthwhile to mention that the "purchase" of surface water rights, in contrast to the case of groundwater, also signifies the purchase of land for immediate use, probably different from agricultural activity and users could claim additional benefits by assigning a price to land. It is also worthwhile to take into account the experience gained in the past (for example, DR 017 Comarca Lagunera and DR 014 Río Colorado), when scheduled 20It would be worthwhile to validate this method with CNA's Surface Water Management Bureau. Mexico: Water Resources Management 31 The Role of the WRAP in Water Sustainability and Rural Development reductions of irrigation areas have been carried out, and thus, indirectly, of volumes of extraction from a supply source. The procedure in the past consisted of "compacting" the DR itself, and this process implied complex negotiations with the participation of various State Secretariats. Table 11. Overconcession in Various Irrigation Districts Supplied by Surface Water Irrigation Average volume Secure Overconcession. Storage District with concessions extraction (VC-VE)/VC x volume 100 (Mm3/year) (Mm3/year) (%) A. López Mateos 010 Sanalona 3,982.9 3,164.20 20.6 J. López Portillo Eustaquio Buelna G. Díaz Ordaz 063 1,208.1 1,029.4 14.8 La Boquilla 005 1,076.5 826.8 23.2 Fco. I. Madero 005 245.8 216.5 11.9 Luis L. León 090 150.0 114.0 24.0 San Gabriel 103 105.1 74.6 29.0 Lázaro Cárdenas 017 976.7 915.0 6.3 Plutarco E. Calles 001 45.1 31.3 30.6 Constitution 1917 023 23.4 20.9 10.7 José T. Fabela 033 5.4 3.7 31.5 Tepuxtepec­Solís 011 800.1 745.7 6.8 Ignacio Allende 085 109.2 98.9 9.4 TOTALS 8,728.3 7,241.0 17.0 32 LCR Sustainable Development Working Paper No. 24 Table 12. Surface Water: Areas and Potential Volumes to be Recovered and Amounts to be Paid Irrigation Average Overconcession Area to be Water Amount to District irrigation purchased productivity pay21 cycle 1990- 2002 (m3 / ha) (Mm3/year) (ha) ($/thousand (Thousand m3) $) 010, Culiacán ­ Humaya- San Lorenzo- 8,859 818.7 92,414 2,209 1,808,508 Mocorito, Sin. 063, Guasave, Sin. 11,207 178.7 15,945 1,423 254,290 005, Delicias, Chih. 15,806 279.0 17,652 1,094 305,226 103, Río Florido, Chih. 14,874 30.5 2,051 758 23,119 017, Region Lagunera, Coah- 15,457 61.7 3,992 945 58,307 Durango 001, Pabellón, Ags. 9,741 13.8 1,417 2,103 29,021 023, San Juan del Río, Qro. 8,190 2.5 305 1,802 4,505 033, EdoMex 3,300 1.7 515 1,897 3,225 011, Alto Río Lerma, Gto. 7,117 54.4 7,644 2,250 122,400 085, La Begoña, Gto. 10,520 10.3 979 3,120 32,136 TOTALS 1,451.3 142,914 2,640,737 NOTE: It is recommendable that, in future studies, in the denominator of the formula to calculate water productivity, the net extraction value be used instead of gross extraction, for reasons explained in Box 3. c. Recommendations to Improve Technical Selection Criteria On the one hand, for each proposed region of analysis, the following activities must be carried out: · Research on the real physical boundaries of aquifers and/or storage or other sources within the area under study, Irrigation Districts (DRs), Irrigation Units (URs) and unclassified uses. · Research on the characteristics of use in the zone, including water availability and uses, surface water infrastructure works and wells, information on agricultural production and factors affecting production, description of producers' level of organization. · With the above information, areas subject to being divested will then be identified, and a crop conversion program will be proposed for these areas, as well as a program to decrease extractions through the implementation of compensatory investments that allow 21Supposing that, as in the case of groundwater, the unit price is equivalent to water productivity. Mexico: Water Resources Management 33 The Role of the WRAP in Water Sustainability and Rural Development the modernization of principal and secondary distribution networks and the modernization of water use at farm level. · Based on the proposed investments and the change in crop patterns, new productivity indexes will be proposed that should be achieved in the short and medium terms (5 and 10 years, respectively), as well as studies that may be necessary to carry out in the short term to achieve the proposed objectives. On the other hand, when constructing impact indicators it is better to refer both water productivity estimates and water rights transactions to gross extraction as well as to net extraction (extraction minus return flow) and not to gross extraction. The concept of net extraction is valid both for ground and surface water and for all water uses, although it is more important in the case of agricultural use since this is the activity that consumes the most water in Mexico. In the case of surface water the concept of "overexploitation" should include the negative impact on the environment and not only consider the volume of flow that a dam can deliver annually. For example, overexploitation in the Lerma River basin has resulted in negative environmental impacts downstream in Lake Chapala. d. Social Considerations According to 2002 official figures, around 52 percent of the population had income levels lower than those necessary to meet basic needs (for food, etc.), while nearly 20 percent were at levels of extreme poverty (with income lower than that necessary to meet their nutritional needs). Extreme poverty figures are even more serious in rural areas: 35 percent in 2002. In summary, poverty continues to be an urgent problem that must be addressed.22 It is precisely in Mexico's rural areas where the WRAP could have important effects. Thus, in addition to the technical, economic, and administrative criteria described in the section above, the following social indicators have been defined.23 These should be taken into account to select and prioritize the irrigation areas to be assisted by the WRAP: · Percentage of producers with uncultivated land. Data for Caborca, and the experience of other studies, show that this is a very important indicator of producers' levels of polarization and of the need for policy intervention to support agricultural production. With specific regard to the WRAP, it should be taken into account that numerous holders of water use rights are not necessarily those who are using these rights, or in fact are no longer using them. Identifying them would make it possible to properly negotiate with them, since this is a population with major economic problems and more pressing needs, so that a proposal to allow them to begin an additional activity, or one different from agriculture, could be of interest to them. · Relationship between real and nominal users. It is important to know the proportion of producers registered in the concession entitlement list, the proportion of users registered in the entitlement but who do not farm, and those who farm and are not registered. This gives an idea of how well updated the list of users is and the scope of irregularities in water rights registries. Since it is a requirement for the WRAP to present the rights purchased and their corresponding records, this point is very important. 22Source: World Bank staff estimates based on ENIGH, using SEDSOL poverty lines to measure income. 23See Annex VI. 34 LCR Sustainable Development Working Paper No. 24 · Type of producers and productive units. Insofar as the WRAP proposes to exchange water volume with economic incentives aimed at productive and water use efficiency, it is important to understand the problems faced by different types of producers and their units with the crop patterns they use. Based on this, much more specific lines of support can be defined, aimed at resolving the concrete problems of each type of producer and unit. · Financial status of producers. An important indicator for understanding the productive status of farmers is bad debt and existing debt portfolios. In the case of Caborca, recognizing the existence of these debts the GoS is proposing negotiations with banks so that part of the economic support from the WRAP is allocated to restructure the debts of producers. · Identification of various forms of organization for agricultural production. Due to the emergence of highly diverse forms of organizing agricultural production through contracts and rental of land and water, it would be important to understand the most significant forms that operate in the districts and the amount of land area, production, and population involved. This would make it possible to identify the productive, financial, and commercial actors who lead the economic and productive trend of the district and to interact with them in the implementation of government programs. · Identification of different interest groups and of manifest and latent conflicts surrounding the WRAP. It is important to understand the positions of each group identified with regard to the program, their expectations and their ability to understand the program, with the objective of identifying the limits in each sector, the prevalent conflicts or those that may arise, and their weight on the district's population. This would make it possible to define strategies for generating consensus, with proper understanding and management of the manifest and latent conflicts surrounding the program. e. Benchmarking Parameters Independent from the indicators specified in the WRAP's Rules of Operation (see Annex 1), which refer to the program's administrative progress, other parameters should also be estimated in order to evaluate in greater detail the real effects of the WRAP and its efficiency and effectiveness in terms of the sustainability of water resources and production systems, and in such case propose timely corrective actions. Likewise, these benchmarking parameters would allow comparisons among the different regions where the project is being executed or has been carried out. The benchmarking parameters that are proposed to be evaluated before, during, and after WRAP execution in a certain region are shown in Table 13. Mexico: Water Resources Management 35 The Role of the WRAP in Water Sustainability and Rural Development Box 3. Gross and Net Water Extraction for Irrigation and the Concept of Real Savings These graphs illustrate comparative monitoring on test farms which, as part of the Water Conservation Project, are being carried out in China's northern plains. In Graph (a) net extraction is 255 = 465 (gross extraction) ­ 155 (infiltration of principal canal) ­ 55 (on-farm infiltration). The evaporation of the canal and of the free surface of water in the soil is not beneficial and only the evapotranspiration that produces biomass may be considered beneficial. Thus, the real water saving is that which can be achieved when non-beneficial evaporation or losses from infiltration that feed saline groundwater are reduced, but not the reduction that could have recharged the aquifer. Graph (b) illustrates the frequent confusion of considering that any reduction in gross water extraction caused by technical improvements in irrigation represents water savings, when in reality it only represents energy savings because less water has to be pumped. Thus, effective water saving should be measured in terms of the difference between net extraction with traditional and advanced irrigation methods. With regard to graphs (a) and (b), it should be noted that CNA's initial negotiations with users is based on keeping unchanged the volume of water delivered to crop roots, which would be the same as keeping the same volume of beneficial crop evapotranspiration. This does not invalidate the previous argument, although water savings might be relatively smaller. CNA's and SAGARPA's programs for the efficient use of water, energy, and ferti-irrigation reduce total extraction. However, to reduce net extraction and thus reduce the overexploitation of the aquifer, it is necessary to reduce water rights and enforce these adjustments so that users, even if they utilize less water per hectare and per crop, do not increase net extraction by increasing the area under irrigation or plant double crops. Therefore it is necessary to integrate technical and water administration measures to reduce overexploitation. In the case of agricultural irrigation, the objectives should be to increase water productivity and reduce net extraction so that it is equal to or less than annual water availability. This is very different from only improving the irrigation system and requires not only technological innovations but also agronomic and management measures, and thus implies a close collaboration between the agricultural and water sectors and intense user participation. In the case of urban areas, real water savings may be achieved by reducing leakages in distribution and sewer networks, but only when the leakages generate discharges into bodies of saline or unusable water or create drainage problems, but not when they recharge the aquifer. 36 LCR Sustainable Development Working Paper No. 24 Sources: Olson D. 2004 and Foster S. et al 2003. Table 13. Benchmarking Parameters Proposed for the WRAP GROUP PARAMETER AND VARIABLES FORMULA intensity of volume purchased (%) VAD Volume purchased from users WRAP'S MVOL = (VAD / VEX) * 100 VEX Total volume extracted OVERALL intensity of area recovered (%) SRE Annual recovered surface area EFFECTIVENESS MSUP = (SRE / SRG) * 100 SRG Annual irrigated surface area efficiency of water delivery (%) VEN Volume delivered on farms EA = (VEN / VEX ) * 100 SYSTEM Efficiency of water consumption NVEX Net volume extracted ­ extraction minus return flow OPERATION EC = ( NVEX / NVEX ) * 100 efficiency in water metering (%) NM Number of wells in operation with meter EM = (NM / NO) * 100 installed and functioning NO Number of wells in operation annual rate of lowering of static level of Lowering groundwater (%) year TAB = [(Ai + 1/ Ai) ­ 1] * 100 ENVIRONMENT annual rate of deterioration of water quality (%) CL Chlorine TCL = [(PPMi + 1/ PPMi) ­ 1] * 100 PPM parts per million annual salt balance (%) SINC Salts incorporated in soil (ton/year) BS = (SINC / SOUT ) * 100 SOUT Salts draining outside system (ton/year) business performance (%) PPR Total annual value of production in the system DNG =PPR / COMAP * 100 COMAP Total annual costs of operation, maintenance, administration and production (not including cost of AGRICULTURAL money or depreciation) ACTIVITY SEEN operational efficiency of business (%) COP Costs of system operation EOP = (COP / PPR) * 100 AS BUSINESS efficiency of use of resources for physical COP Costs of system maintenance maintenance of business (%) EMT = (CMT / PPR) * 100 annual unit cost of staff employed (persons/m3) CPER Cost of staff employed EPX = (CPER / VEX) EPN = (CPER / VEN) gross productivity of land ($/ha) PPR Gross value of production ECONOMIC PTB = PPR / SSM SSM Surface area planted ASPECTS net productivity of land ($/ha) CPR Costs of production PTN = (PPR ­ CPR) / SSM gross productivity of water ($/'000 m3) PAB = PPR / VEX net productivity of water ($/'000 m3) PAN = (PPR ­ CPR) / VEX FINANCIAL recovery of annual costs (%) TCAAnnual amount of tariffs charged ASPECTS RCA = (TCA/COMA) * 100 COMA Annual costs of operation, maintenance and administration 2. Regional Economy and Water Valuation24 In contrast to the previous subchapter which dealt with national aspects, this subchapter is focused on regional aspects in order to establish a framework to allow an understanding of the dynamics of the population and economy, and their relationship to water. The Caborca region analyzed includes the municipalities of Altar, Pitiquito, Caborca, and Trincheras, which overlap the aquifer where the WRAP is being implemented. 24See Annex VII. Mexico: Water Resources Management 37 The Role of the WRAP in Water Sustainability and Rural Development a. Demographic Aspects and Sectoral Valuation of Water According to the last population census, in the year 2000, 87,716 people resided in the Caborca region, 79 percent of whom resided in the municipality of the same name. Within the state setting, the region's demographic weight is secondary, since the Caborca municipality is the state's eighth largest in terms of number of inhabitants. Between 1990 and 2000, the Caborca region increased by 1.5 percent per year, lower than the state's rate (2 percent per year) and the national rate (1.8 percent). In this same period, the demographic dynamics of Sonora's municipalities with over 50,000 inhabitants may be classified in three groups. The first, consisting of the state capital and three border points, with population growth rates of over 2.5 percent per year; the second, encompassing Caborca, Cajeme, and Navojoa, with rates between 1.4 percent and 1.7 percent, lower than the national performance. The third group of municipalities, headed by Empalme, grew demographically by less than 1 percent per year. The paradox in this classification is that although Caborca is 150 kilometers from the border with the United States, it is excluded from the momentum of contiguous border points. In other words, its demographic performance is similar to that of the municipalities of Cajeme and Navojoa, as traditional and eminently agricultural zones, despite being located in the extreme north of the state, near the United States. Graph 9. Population Employed by Sector in the Caborca Region, Sonora and Mexico (2000) 60% 55.0% 53.1% 50% 44.4% 40% 38.1% 29.6% 30% 28.2% 20% 17.3% 16.8% 17.5% 10% 3.5% 3.6% 3.1% 0% Primario Secundario Terciario No especificado Región de Caborca Sonora México Fuente: Estimado con base en INEGI Note: according to the convention utilized in Mexico and other countries, the sectors of the economy are designated primary: agricultural, secondary: industry, and tertiary: services. With regard to urban expansion, between 1990 and 2000 Caborca grew at a rate of 1.7 percent, lower than that of the State of Sonora (2.7 percent per year) and of the country as a whole (2.4 percent). In 2000, 27.6 percent of inhabitants of the Caborca region lived in rural areas (localities with fewer than 2,500 inhabitants), while in semirural areas (localities with 2,500 to 15,000 inhabitants) the population was 15.6 percent. The remaining 56.9 percent resided in Caborca, a regional locality with over 15,000 inhabitants. In the State of Sonora, of the 1,593,000 inhabitants recorded in the 2000 census, 71.8 percent resided in localities with over 15,000 inhabitants, while the population residing in communities with fewer than 2,500 inhabitants was 16.9 percent. It is evident that at state level the Caborca region has a comparatively smaller urban weight. 38 LCR Sustainable Development Working Paper No. 24 In 2000, the employed population totaled 32,884 in the Caborca region, 38.1 percent of whom worked in the primary sector, as shown in Graph 9 which together with Table 14 shows the strength and dynamism of the primary sector in comparison to the secondary and tertiary sectors. Table 14. Dynamics of Population Employed by Sector in the Caborca Region, Sonora and Mexico (1990-2000) Total Primary Secondary Tertiary Caborca Region 3.5% 2.6% 2.8% 4.5% Sonora 3.4% -0.6% 4.9% 4.2% Mexico 3.4% -1.1% 3.6% 5.2% _____ Source: Estimate based on INEGI Table 15 shows the value added generated by the most relevant economic activities in the primary and secondary sectors, based on the most recent information, corresponding to 1998, and considering the unit consumption of water of each activity, water productivity was estimated. The information contained in the above graph and tables shows the lower economic weight as well as the region's incipient industrial development which is not associated with agricultural production. From this perspective, the Caborca region is geared toward meeting a demand mostly for perennial crops in the foreign market, as well as shrinkage in industrial grape production. Thus, Caborca is characterized as being a niche economy for the export of products, with a conspicuous absence of ulterior value-added linkages for manufacturing or prior processing, with regard to the absence of local production of inputs to supply its own economy. Mexico: Water Resources Management 39 The Role of the WRAP in Water Sustainability and Rural Development Table 15. Value Added, Water Consumption and Water Productivity in Selected Sectors of the Caborca Region (1998) Sector: VALUE WATER WATER ADDED CONSUMPTION PRODUCTIVITY (000 pesos)** (000 m3) (pesos/m3) (1) (2) (3)=(1)/(2) AGRICULTURE Total 684,473 629,533 1.09 Perennial Crops 557,167 420,734 1.32 Spring-Summer 74,281 90,199 0.82 Autumn-Winter 53,025 118,600 0.45 BOVINE CATTLE-RAISING Beef 124,122 751 165.28 Dairy 17,080 188 90.85 MINING Non-ferrous metallic minerals 29,078 571 50.94 Rock, sand, and clay 4,396 43 103.01 MANUFACTURING 1. Agroindustry Beef industry 40,495 288 140.43 Beverage industry 38,437 139 276.48 Food packing 16,974 1,856 9.14 Other food products 16,558 419 39.53 Hominy (nixtamal) and tortillas 7,258 370 19.61 Bread-making 2,518 52 47.98 2. Textiles Spinning and weaving of soft fibers 20,728 208 99.54 Clothing 8,060 52 155.94 Leather and furs 9,728 589 16.53 3. Machinery and equipment Metallic structures 4,149 142 29.23 Machinery assembly 1,802 115 15.74 Total and average: 1,025,857 635,316 15.74 _____ * Includes the municipalities of Altar, Caborca, Pitiquito, and Trincheras. ** At December 2003 prices. Source: Estimate based on Banco de México, INEGI, Tate and Scharf, 1995, and US Geological Survey 40 LCR Sustainable Development Working Paper No. 24 b. Valuation of Water in the Agricultural Sector and Agricultural Competitiveness in DR 03725 Graph 10-a shows that the greater effectiveness of water to generate value in DR 037 is among a select group of four types of crops (peaches, artichokes, asparagus, and industrial grapes), followed by vegetables, wheat, and cotton. For its part the group of perennial crops utilizes 79 percent of all water, with grapes using 33 percent. Taking the above into account, and given the district's proximity to the United States, it is worthwhile to analyze technical and economic competitiveness in Graph 10-b in which one can observe that for crops to have an advantage in relation to the United States, they should be placed in the lower right quadrant, in which only artichokes and asparagus are found in this situation. The diagram indicates that in DR 037 there is a wide margin for improving technical efficiency and, stemming from it, price competitiveness. There are preliminary indications that the reduction in overexploitation and/or subsidies may have positive impacts on efficiency, but integrated actions related to financial issues, irrigation technology improvements, and others are just as important.26 Graph 10-a. Value Added of Water for Different Crops in DR 037 (2002) 25In comparison to other localities subject to inclusion in the WRAP, Irrigation District (DR) 037, located in the city of Caborca, Sonora, represents the case/aquifer in which the most effort has been made to date in terms of analyses and negotiations regarding the execution of the WRAP. 26See Annex VII. Mexico: Water Resources Management 41 The Role of the WRAP in Water Sustainability and Rural Development Graph 10-b. Physical Yield and Price Differential with USA (ton/ha and $/ton) in 2002 3. Analysis of Water Rights Market Experiences and Possibilities27 By its nature, the WRAP and water rights markets are closely related public policy instruments, and this relationship is analyzed here. The functioning of both instruments depends on the same legal and institutional arrangements, especially those that affect the definition and security of ownership rights and transaction costs. Two aspects of this focus are worth highlighting: First, the analysis stresses the institutional aspects of water markets--the intention is not to make quantitative analyses. Second, the problem of water markets is not limited to water rights transactions or to the economic analysis of their allocation and reallocation. It also unavoidably includes broader interdisciplinary issues--especially the implications for institutional arrangements that determine the integrated management of water resources. a. Empirical Studies on Water Markets in Mexico Various empirical investigations of water markets in Mexico have been made since the National Water Law (LAN) became effective in 1992. All of these are more or less preliminary analyses, 27See Annex VIII. 42 LCR Sustainable Development Working Paper No. 24 since they were carried out only a few years after the new legislation and need to be updated. Nevertheless, the basic conclusions of the various researchers are quite similar, despite some differences in their viewpoints. (Box 4 summarizes the bibliographic analysis presented in Annex VIII). It appears that CNA has not performed its own studies of these markets, neither in the field nor using REPDA data. All research has been carried out in the northern and central regions of the country and has focused strongly on the agricultural sector, especially on several DRs. Even though several of the studies have mentioned non-agricultural water users, as part of the broader context of local water markets, these users were not the direct subject of the analysis. The performance of CNA, with its strong regulatory power, has been a determining factor in the operation of different local markets. Such a discretionary exercise of this regulatory power, although perhaps justifiable in many cases, has weakened the legal security of water use rights. The legal definition of individual entitlements within Irrigation Districts and within users associations continues to be incomplete or inexact in many cases, for example, with regard to their registration in the REPDA.28 There are important differences in this regard between surface and ground water rights. In several cases it is evident that markets have in fact been quite dynamic and that transactions of rights are common and routine. Nevertheless, the analysis of this activity is complicated due to two related factors. First, many transactions involve the use of water rights that do not correspond to entitlements and/or legal owners. Second, many transactions seem to be explained by non- economic factors or beyond the orthodox economic theory: i.e., for social and political reasons between users and government entities, or price signals affected by the supply and demand of water in the market. From the studies analyzed, several important points stand out regarding the relationship between water markets and the design and implementation of the WRAP. The main driver is that there is a significant gap between what water rights entitlements say and how these rights are used and allocated on the ground. In several ways and in many parts of the country, the actual legal definition and security of water rights continue to be incomplete. b. Recommendations for Future Research For future work, it would be advisable to consider three water market issues that require more empirical and interdisciplinary study as a whole: · The impacts of water rights transactions on the technical efficiency of water use and on the reallocation of resources. · The impacts on social equity, especially in the peasant and ejidatario sector. · The relationships between transactions and integrated management of water resources, especially conflict resolution, coordination of multiple uses, internalization of externalities, and environmental protection. 28Lists of users in irrigation districts were initially recorded in the REPDA when the administration of systems was transferred to users associations. Subsequent changes have not been registered, due to a "legal flaw" (article 67 of the LAN), which was corrected with the modifications to the LAN in 2004. Mexico: Water Resources Management 43 The Role of the WRAP in Water Sustainability and Rural Development In light of the WRAP's focus, for each issue special attention should be given to the relationship between surface and ground water and their joint management; for example, between the exploitation of aquifers and the management of reservoirs. Despite the WRAP's original emphasis on groundwater almost exclusively, for the purposes of these recommendations it is felt that this emphasis cannot be sustained. It is recommended that in future work key emphasis not be placed on transactions within the agricultural sector. Transactions among irrigators or within irrigation districts will continue to be an important issue but should be placed more in intersectoral contexts. (In concrete terms, this will depend on the cases selected for study.) Emphasis should be on the performance and capacity of institutional arrangements to resolve different types of conflicts, and thus improve the definition and security of water rights. The essential link with the WRAP is that this focus should lead to a better understanding of the factors affecting this security--in practical terms beyond formal entitlements. In this way, it will be possible to better design rules and policies to encourage user participation in the implementation and monitoring of water rights adjustments. The research strategy should include the following elements: · Selection of several case studies. The most relevant cases appear to be: Guanajuato and/or Sonora (specific zones to be determined)--due to their obvious importance in the WRAP's original context, with aquifer overexploitation and water systems based on ground and surface water; Valle de Mexico--due to the dynamic nature of intersectoral transactions, the legal and institutional obstacles demonstrated, and the relationship between aquifer overexploitation and long-distance interbasin diversions (with another level of externalities). · Analysis of information in the Public Water Rights Registry (REPDA) for these cases: Describe water rights tenure and the changes in their allocation and use. Analyze the security and transferability of rights in relation to administrative proceedings by the CNA. Describe the role of courts and their relationship to CNA in the definition, registration and modification of rights. · Analysis of the different types of important conflicts for the security and flexibility of rights which will have different institutional mechanisms for their possible resolution. · Interviews with a wide range of stakeholders. 44 LCR Sustainable Development Working Paper No. 24 Box 4. Synthesis of the Bibliographic Analysis of Empirical Studies on Water Markets in Mexico All the research reviewed has been done in the northern and central regions of the country where water is scarcer and demands are high, and has focused strongly on the agricultural sector and on several Irrigation Districts. Even though some of the studies have mentioned non-agricultural water users, as part of the broader context of local water markets, these users were not the direct subject of analysis. This focus probably reflects the country's situation to date with regard to water rights transactions, with a few local exceptions. For example, in the Valle de México there have been many transactions from the agricultural sector to the urban and industrial sectors. Robert Hearne and José Luis Trava, 1996. (DR 026­Bajo Río San Juan, Tamaulipas, together with the city of Monterrey in Nuevo León; DR 017­Comarca Lagunera, Coahuila, and Durango; and DR 014­Río Colorado, Sonora, and Baja California). Of these cases, only DR 014's water market was operational, due to a combination of multiple sources of ground and surface water. In the other cases, Government intervention in one way or another hindered private transactions. In part, this intervention was of a short-term nature due to a drought that reduced water supply for which CNA has broad legal powers. DR 026's water supply from the San Juan River was relatively secure for several decades until water from the river was diverted to meet the urban and industrial demands of Monterrey. Hearne and Trava acknowledge the regional economic benefits of transferring water to Monterrey but, they warn, the precedent that water may be transferred from irrigation systems without full compensation threatens the security of water provision for all irrigators in Mexico. In the case of DR 017, during the 1995-1996 drought CNA allocated all surface water from the canal system to cotton, apparently because this is a crop with a high demand for labor in a zone with much unemployment. As in the case of DR 026, this decision may be reasonable, but it is in opposition to market mechanisms and farmers' private decisions on water management. The article appears to have the sufficient empirical grounds to state that the traditional preference of the Federal Government and of CNA is in favor of centralized control, and therefore the legal security of water rights has been weakened. Andrés Roemer. Roemer shares the general argument of Hearne and Trava: he says that water markets should be freer and more widespread in Mexico and that the LAN takes several steps in this direction, but he criticizes CNA for keeping so much discretionary power that ownership rights and market incentives have been greatly weakened. The book is essentially a theoretical analysis and its empirical contribution is very limited. It has only one concrete case study: DR 011­Alto Río Lerma, Guanajuato, which is quite short and consists of a number of comments on the district's self-management. Wim Kloezen, 1998. Kloezen analyzes water rights transactions in DR 011­Alto Río Lerma, among the district's users associations, not among individual users, i.e., it is a wholesale market. Kloezen asserts that in this DR the LAN has not increased transactions among individuals. With the exception of a few local details, it is supposed that a large part of Kloezen's description of the functioning of this district is applicable to other areas of the country. In general, in the case of surface water, users associations rather than individuals hold concession entitlements (the opposite of what generally occurs with groundwater).29 Moreover, the concessions do not mention fixed volumes. At the beginning of each agricultural year, CNA assigns to each association a proportion of the volume available in the irrigation system's reservoir. With this information, each association makes its own annual irrigation plan and distributes water to its members according to such plan. According to this author, the conditions that have facilitated the functioning of the market in this case are: · the LAN clearly permits transactions, and local users know that water can be traded; · CNA's local office has allowed considerable participation by users associations in the water committee; · transactions among associations in the same district do not have high costs or cause spillover effects for third parties; · both sellers and purchasers benefit from transactions, although it should be clearly understood that these benefits are measured more in social and political terms rather than in terms of economic theory. In a later work, Kloezen gives a more in-depth description of the legal problems of individual users within the DR, due to a lack of clarity regarding their rights, such as: their rights are subject to decisions made by the water committee; none of the DR's users associations had formalized their own internal procedures on how to establish distribution priorities in times of shortage; well water rights are defined more clearly than canal water rights; and in many cases water rights were not recorded in the REPDA.30 29 It should be noted that, unlike most Irrigation Units, concession entitlements for users were only issued in three irrigation districts supplied with groundwater: 048 Ticul, Yucatán; 061 Santo Domingo, Baja California; 084 Guaymas, Sonora. 30 See Note 33. Mexico: Water Resources Management 45 The Role of the WRAP in Water Sustainability and Rural Development Manuel Fortis and Rhodante Ahlers. The authors analyze transactions by individual users in DR 017­Comarca Lagunera, Coahuila, and Durango, and describe an active market, characterized by many temporary transactions, especially in the ejido sector. This leasing practice is part of the overall economic strategy of ejidatarios and other small farmers who have experienced very difficult situations since the 1990s due to the transformation of the agricultural sector and the State's role in Mexico. In addition, in the mid-1990s a strong drought in the area increased pressures on the water system. These researchers concluded that (i) although it is quite dynamic this water market has had significant defects because there have been many small sellers and few large purchasers, and apparently the latter have taken advantage of their political influence; (ii) water rights are uncertain in the medium and long term due to the economic and political instability of the agricultural sector in general more than to the legal framework of water; and (iii) price signals are rather confusing because the Government continues to charge low prices for irrigation water, apart from shortage variations caused by droughts or floods. Some of the problems identified by Ahlers and Fortis reflect the LAN's relative newness in the period of study, and may be corrected with more time and practical experience in its implementation. Ahlers and Rymshaw, 1995-1997. The authors point out that many individual producers in DR 011­Alto Río Lerma, DR 017­Comarca Lagunera, DR 026­Bajo Río San Juan, and DR 025­Río Bravo have little flexibility regarding crop selection or water use. Their decisions on these matters are strongly influenced by national government agencies and programs, either through access (or lack thereof) to credit and subsidies, or decisions on water allocation and distribution taken at modular and district levels. These factors have a strong impact on private decisions to buy, sell, or lease water rights. The authors argue that water markets have not yet fulfilled their economic promises, since they have not resulted in better levels of water use efficiency or in the reallocation of water to higher value uses. 4. Institutional Mapping31 The aim of institutional mapping and analysis is to identify the institutional circumstances, in their broadest sense,32 that may inhibit or facilitate the implementation of the WRAP or of any other program established to contribute to the sustainability of natural resources and of productive systems, by affecting the existing water rights scheme. The specific analysis of Irrigation District 037 shows a key difference in the application of the WRAP in irrigation districts supplied by groundwater and those supplied by water. In the former (the situation in Irrigation District 037), a more complex behavioral situation that hinders the management of a common resource (the aquifer) makes the implementation of the WRAP more complex. a. Institutional Dynamics in Irrigation Districts The process of "transferring irrigation districts," which was started in the early 1990s, was conceived within an institutional dynamic that was incorporated in the National Water Law enacted in 1992 and that calls for a greater self-regulation capacity by users, so that they themselves can manage the resources placed at their disposal in order to carry out their productive activities. Thus, a "decentralized" water rights scheme was established. This conceptual model, implicit in the LAN, is basically associated with irrigation districts whose principal source is surface water, which requires the construction of common infrastructure that, for purposes of transfer to users organized as legal entities called Civil Associations (ACs), is divided into modules with physical boundaries established through control points where the water delivered to each module can be measured. For this reason institutional boundaries are also established to 31See Annex IX. 32The term institution may be defined as "the set of operational rules that are used to determine who may take decisions in a certain setting, what actions are permitted or restricted, what general rules are used, what procedures should be followed, what information should or should not be provided, and what benefits individuals receive in terms of their actions." 46 LCR Sustainable Development Working Paper No. 24 allow government interaction with systems of users who enjoy relative independence with regard to the possibility of transferring their water rights based on collective decisionmaking. This is not the case in Irrigation District 037, whose users act mostly in terms of their individual interests. One of the questions posed by the decentralized water rights schemes, arising from the current legal framework, or rather from the way in which it has been interpreted and applied, is the possibility that the "water market" has become not a mechanism for efficient water allocation but rather one of survival, bolstered by social impacts associated with globalization and liberalization schemes. In a growing trend, it has been estimated that the average values of rent for water and land in the country's irrigation districts reach close to 50 percent. To some extent, and despite the Government's explicitly expressed objective of sustainability, it is difficult to distinguish, in the case of Irrigation District 037, if the WRAP's aim is to rescue the aquifer or the farmers impacted by the crisis currently experienced in Mexico's rural areas. The notion of making use of a common resource through users associations, which would lead them to a rational, joint, and sustainable use of a common asset (water and infrastructure), is questionable in the case of Irrigation District 037. This same questioning may be valid for other irrigation districts whose supply source is an aquifer. In this sense, a more in-depth analysis is recommended, strengthened by a field study, on alternative means of organization and institutional frameworks leading to a true collective effort to manage groundwater. b. User-Authority Relationship The National Water Law sets forth two institutional paths: the user vis-à-vis his peers, which marks the institutional dynamics of users associations, and the user vis-à-vis the water authority. The latter path proposes a dynamic that, in theory, should result in a framework of rights and obligations that encourage fairness in water use. According to the law, the user must meet specific collective and individual obligations so as not to lose his rights. The authority (CNA and now, according to recent modifications to the LAN, the Watershed Agencies) has sufficient powers to oversee whether or not users are meeting their objectives and, when necessary, to impose corrective measures that include the sanctions set forth in the law. To a large extent, the government agencies of users associations are responsible for overseeing compliance by their members. In this regard, users will comply with their obligations as long as CNA establishes a true relationship of authority with users associations, under terms of the law. The confrontation between what is stipulated in the legal instruments that determine the rights and obligations of Irrigation District 037 users and their organizations, and what happens in practice, results in a situation of widespread noncompliance both by users and the authority. An initial hypothesis on the roots of widespread noncompliance is associated with the relative weakness of interlocutors in the user­authority relationship. On the part of the authority, represented locally by the Irrigation District Authority, its capacity to perform its duties or carry out its obligations is limited by the institutional arrangement within CNA, as well as by the budgetary restrictions and under-capitalization that federal agencies have faced. For its part, the weakness of ACs may stem from an absence of the sense of solidarity generated in irrigation districts supplied by surface water which, besides water resources, share a common infrastructure. Under this scheme of institutional weakness, one may reason that users take shelter in the AC ("the concessionaire") in order to avoid complying with their individual obligations, while they use the AC to pressure CNA on issues of their own particular interest but which are presented as "issues of common interest." This is the case of Irrigation District 037, where the AC complies Mexico: Water Resources Management 47 The Role of the WRAP in Water Sustainability and Rural Development with administrative functions and pressures institutions, but at the end of the day users' decisions are made using highly individualistic criteria and beyond the objective of returning sustainability to the common use of the aquifer. Therefore, this is a situation comparable to the "tragedy of the commons." The solution to the "tragedy of the commons" may be viewed in one of four ways. Some proclaim that more State is needed, i.e., that the Government should take charge of water resources management so that the common people do not deplete them in a disadvantageous manner. Others maintain that privatization and private initiative are needed to put an end to excessive exploitation by users (market mechanisms). A third alternative advocates greater participation in water resources management by the actors dealing directly with them. In an alternative view, which in fact has proper backing in the National Water Law, the application of regulatory, economic, and participatory mechanisms is combined (as also insisted in I-4 and III-5) to arrive at viable scenarios of sustainability. c. Institutional Effort in Irrigation Districts According to the decentralization policies backed by the Federal Government, most SAGARPA and CNA programs have been decentralized. This grants the State Government greater capacity for intervention, in accordance with specific Rules of Operation. In order to improve the coordination and effectiveness of government actions in areas under irrigation, CNA programs were integrated with those of Alianza para el Campo, under an agreement signed by CNA and SAGARPA. To coordinate federal and state efforts and resources in support of all these programs, the State Agricultural and Livestock Development trust funds (FOFAE) were created. With some correctible deficiencies, these favor the coordinated action of federal and state government agencies. The design of a renovated WRAP or of any other similar program could be included in the Rules of Operation of decentralized CNA and SAGARPA programs, in order to make use of the potential advantages offered by FOFAE and the close linkage between the federal and state governments. The strengthening of the National Water Commission's Technical Council, envisaged in the recent modifications to the LAN, may certainly reinforce the participation of federal institutions in the implementation of the renovated WRAP, which would include greater participation by the principal actor: the water user. It should be noted that prior to the transfer of irrigation districts and the enactment of the National Water Law, irrigation districts had a Steering Committee that incorporated all federal agencies and entities, including banks, related to agricultural production. Today, in light of a different view of the Government's role, this coordination scheme has been minimized. Of course, the Government has been streamlined and much of the support it provided has been transferred to the private sector or to state governments, but this does not justify the absence, on the current Water Committee, of all public or private production factors. The regulation of the revised National Water Law could possibly be an excellent opportunity to re-propose the Water Committee's structure and operation and channel the collective actions that make it possible to achieve the sustainability objectives proposed by the WRAP. 48 LCR Sustainable Development Working Paper No. 24 d. Stakeholders in DR 037 A useful conceptual framework to identify actors, depending on their degree of involvement and in terms of their particular interests in the management of a collective asset, would consider four categories: directly involved, indirectly involved, with a specific interest, and with a general interest. The identification of all actors involved (directly or indirectly) or who have an interest (specific or general) in the management of the Caborca aquifer, would lay the foundation for analyzing and negotiating the possible degree of participation of each of them in the design and implementation of a management program for the sustainable use of the aquifer. An initial mapping of the actors directly involved stems from a study by IMTA, and from an initial reading of said study, presented in Annex VI. With regard to the actors indirectly involved, their participation could be placed within a COTAS that makes use of the provisions envisaged in the new National Water Law; in it, room could be made for the other groups of stakeholders. The Federal Government clearly still is and probably will be for a long time the most influential actor in the management of national waters, for legal and practical reasons. Especially, it will be the only one able to look out for the general interest. However, its "monopolistic" role is being increasingly reduced and thus the new paradigm, based on the recent changes to the LAN, would be a management model based on the development of leadership, in turn based on the Federal Government's ability to "seek what is right," instead of the traditional model in which the Federal Government "was right." e. Recommendations for Future Work The considerations arising from the analysis made, have focused on a series of questions which, with more "live" information and close contact with actors, would need to be answered so that valid recommendations can be made on the institutional design of a revised WRAP. In the concrete case of Irrigation District 037, as in other cases, there is a lack of clarity regarding an institutional model that can achieve adequate conditions of governability, especially because it has not been possible for a sense of community to take root, as intended in the spirit and letter of the law, or in the political discourse of the institutions involved. The reflections included in Annex IX give rise to the following recommendations: · Develop a "live and participatory" institutional diagnostic of Irrigation District 037, reinforced by a more precise mapping of the federal, state, and local agencies and institutions that should be involved in the implementation of the WRAP; · Analyze the viability of introducing the WRAP or any other alternative scheme, within the Rules of Operation of SAGARPA and CNA programs, in order to take advantage of the potential offered by the operation of trust funds (FOFAE); · Analyze ways to organize users who take part formally or informally in mechanisms of participation in water management, and as a result of this analysis establish the legal support needed for the design of institutional systems that make it possible to: implement the WRAP, or the variations that may be identified, in pilot areas, using a "parallel path" focus; strengthen users organizations (including the institutional support that may be required to comply with the purposes of cultural change and poverty eradication); decentralize water resources management activities with the objective of achieving greater effectiveness and control of river basin and aquifer stabilization programs; Mexico: Water Resources Management 49 The Role of the WRAP in Water Sustainability and Rural Development Make water banks (regulated markets) operational; and Interact with CNA specialists involved in developing the regulation of the revised National Water Law, with the objective of having an effect on any new LAN regulations that may be issued. 5. Proposal to Integrate the WRAP with Other Complementary Measures The following proposal stems from the hypothesis presented at the end of Chapter I-4, i.e., that attempts to adjust the availability of water rights have not had the expected success because they were developed in an isolated manner that produced the following fragmentation: · Between the water resources management instruments envisaged in the National Water Law (LAN) and the Federal Rights Law (LFD): economic order and control regulatory planning participatory In the case of aquifers, Table 16 illustrates the need to integrate measures for each of the instruments mentioned. In addition, it would be worthwhile to integrate the WRAP with other current or future programs, such as those briefly described in Table 17. On the one hand, the mechanism for linking SAGARPA and CNA programs, in existence since 1996, is "Alianza para el Campo" (AC), which is managed through the state trust funds known as "State Agricultural and Livestock Development Funds" (FOFAE). This mechanism not only allows the decentralization of budgetary resources but also the active participation of producers in the application of such resources. However, in a recent evaluation report FAO mentions that in some cases support is uncertain and takes too long, and thus it would be worthwhile to review the mechanisms for the allocation and application of resources in order to streamline their implementation. On the other hand, it is evident that in a water shortage scenario: (i) it is essential to provide legal security, through water rights, to the raw material of projects that require water as an input; (ii) it should be ensured that water savings actually help to recover hydrological balances and make the corresponding adjustments to water rights; and (iii) it is also necessary to provide legal security to the water volumes needed for environmental conservation and thus it is advisable to link the WRAP with all programs shown in Table 16. 50 LCR Sustainable Development Working Paper No. 24 Table 16. Integration of Measures to Achieve Sustainable Aquifer Management sn onsi of ctio TYPE OF MEASURES MEASURE more tra extract nsumptionoc to water er esi location ncession exla er use co re unit wat viti vitiesi act of to aquif in of act first- vei of nte in ents ableit sustainable oni Decrease Allocation prof More product Release Adjustm entitlem Reduct Strengthening of water markets and/or X X SUSTAINABLE ECONOMIC acquisition of rights, but based on net extraction or "consumptive use" (Box 3) Incentives for investments in efficient X use and agricultural conversion, taking into account the concept of "real AQ savings" of water in Box 3 UI Fiscal incentives for reuse of X X FER wastewater MANAG ORDER AND CONTROL Active policy for expiration of X volumes and screening of Public Water Rights Registry (REPDA) EMENT REGULATORY Mandatory use of waste water X Review of zones of availability X X Joint regulation X PLANNING Consider all uses and current and X X potential sources in the aquifer and its surrounding area, balancing analysis by river basin and action by states (federalization) X X X Comprehensive analysis of surface and ground waters in the principal river basins, to understand the consequences of diverse measures from the standpoint of the entire river basin and of all users, not only from the standpoint of irrigation users. MANAGEMENT Measures that, whether in a natural or induced manner, allow the recharge of X aquifers based on the recognition of the issue's complexity and the need for solid scientific and experimental groundwork to assure its feasibility in terms of its cost-effectiveness and that take into account all users of the river basins and aquifers involved. PARTICIPATORY Involvement of Groundwater X X X X X X Technical Committees (COTAS) Source: Adapted from Cantú and Garduño 2003 the ni ntem a and the 51 entm of htiw and for rda quality; tow planning, treat ation lop m regulation gement ve TSN ithw o increase nte institutional stitutionalin and efficiency ct (ii) idersv ern WRAP inform ndwater the ther of De e fo ssociationA izations Mana Proje anajuatuG resources pro grou drafta Rurald ERNME ofe teraw servicesre of Gov entm organ ntem of the service on sersU their an at sew of of to protect consolidat drogeological support) to develop Resources ty GOV St of participation; (iv and Drainage and ility ot the ance us preparati ution (v) ers ter of nte hyfo and teraw overpmi foc nte evol us aquifer; and of Wa STATE nte (iii) Assist easuresm ipatoryc and and Sustainabili ralized ovemrpmi ent,m of sustainab Sonora zed and i)(i of parti Caborca Mexico: Water Decent overnmG (i) asureem e at provemmi coverage plants; financial Technical St decentrali (i) odels;m COTAS; (iii) the transition a capacity in of in of the nte eht teraw WRAPeth recovery stem Aquifers context accelerated for regulations infrastructure increase through ofe the diversification MIR)P( in i)(i and frastructureinfon sy proving cost nagemam and im strengthening of uation of ing plans reedga ghtsri Rol ect irrigation eval Basins halt areas y use of The A ojrP culture sustainable plans; and of objective CN agri consolidatio institutional and tuallum terawfo existing water consolidation nte nte the entm of Drainage icientfef irrigated (iii);sp (iv) (v) selected onitoringm ithw integrated, in develop reduction investm of cro users; Managem A) and resources and to (vi) including, and ion otem ed odernizationm valueh associations; and; (GIC nte pro hig stem gratet water Irrigat (i) to integrated productivity to transferred users sy In Project nagemam aquifers of deterioration participatory sustainability on s, icm of fo tariffa (iii) for (v) with and concerns program onoce Rights of value steps fo tera otionm and use T SALla entalm W key pro resources; S;AT services teraw the of NA ent entm inationm entationm rginalam of (iv) CO ithw environ develop plemi the water Public one regulations fo deter ectsl the as) rket;am and ancelip ils SEMAR Environmcita (ii) and (i) ref of com DAP ngipm rights Counc of concessions m m sectoral water;fo that nte supply (RE right duretaw WRAP ication ograrP Reconciliation ithw particularly: value structure water ovemrpmi teraw tersheda Registry the W verif teraw steaw the to ent fer la nt,e sm m ted ust Program Adj aquihitw plans; which PMIR ste ntem r Capit sy ndeu Relas A and gemanam A M activities, irrigation RP Rights Redesign nageam nte teraw of PROM financing ogram tera rict (i) and SAGA W Dist irrigation abilizationst for vestmnI Pr orts the ion (ii) fo MA soil 17. supp aquifer eligible M odernizationm for P) ion Irrigat (iii) be ot niota Table AAA and (WRA probably regulations; and yam PRO and morP mr Fo Integrated including TSN ERNME GOV STATE ),NA fo that so ingpm wells teraw n or and financial (L pu (i) noitatinaS waL conditions grading irrigation salinity sustainability MA M nda private conservatio and by on, sustainability PRO rehabilitating cted Water of the (URs) y or in service, by provingmi affe A CN dnareta resources to throughs ationz regulation tionalaN plants, soils water irrigation on WgniknirDrof issues, new ngi ntaritemelpm contribute yticirtcelEdnareta land DRs and wells, (URs) Rs)D( Units ingpm Units Districts ent pu tiona on of pm Modernid efficiently the co can of Irrigation teraw an recovering policy in of reom infrastructure, no support (ii) and water under at use r and Irrigation new drainage LAT stem Focused sy demai resources of plans; unicipalitiesm water WfoesUtneiciffE strictsiD Irrig in entm Rehabilitation equip within erutcurtsarfnIlarutlucirgaordyHfoesUlluF irrigated increase area odernizem mumi and of and expand opt Units expand, achinerym farm nt,emelpm Irrigation frastructurein co of rigatiIr ones overpmi Develo purchase arm ent,m wate existing Construct, infrastructure Expansion Create by -FnO intaina M through equip efficient Rehabilitation Use odernizingm technology lack T NA 24 SEMAR No.re Pap Working s m er A syste ansfrt Development RP ablein SAGA Susta LCR 52 productivefogninehtgnertS s chnologyet chain and production- Research Mexico: Water Resources Management 53 The Role of the WRAP in Water Sustainability and Rural Development CONCLUSIONS AND RECOMMENDATIONS This chapter presents a summary of the most important conclusions reached throughout the study. With regard to recommendations, the "what" is basically described here, but the Annexes describe the "why" in greater detail and in some cases preliminary recommendations are proposed to address missing work that would give a basis to these recommendations. From the analysis of the problem that motivated the launching of the WRAP and of prior efforts made to address this problem, it was concluded that: In Mexico's arid and semi-arid zones, a large part of the Irrigation Districts (DRs) and Irrigation Units (URs), supplied both by surface and ground water, face serious problems. In many cases, irrigation areas, in general designed originally to meet the needs of their era and with the hydrological information then available, are now overdesigned due to demographic pressure, urban growth, prolonged droughts, and better hydrological statistics and hydro-geological studies. Added to this is the issue of the overconcession of water use rights. The problem is worse in the case of groundwater because for years the storage of a large number of aquifers has been undermined. The main conclusion drawn from the application of regulatory, order and control, economic and participatory instruments to fight this problem is that although these initiatives, basically from CNA, have achieved significant progress, it has generally not been long lasting. Perhaps one of the reasons is the lack of sufficient integration among the different types of instruments used. The social and economic consequences of the overconcession and overexploitation of water resources are so serious that they require urgent attention. For this reason SAGARPA launched the WRAP in August 2003. This initiative and the valuable lessons learned from its application in the Caborca aquifer in the State of Sonora represent two highly relevant assets that must be taken advantage of. The fact that a ministry of agriculture would lead a program with the objective of promoting the sustainability of productive systems as well as of river basins and aquifers is unusual at international level and represents a most valuable political willingness and a positive initiative with considerable potential to produce a favorable impact in the field. From the legal analysis, consisting of examining the consistency of the WRAP's Rules of Operation (RO) with the recently modified National Water Law (LAN), the implications of its implementation under its current concept, and its eventual reorientation, the following conclusions arose: · The WRAP's RO constitute a secondary regulation in relation to the LAN and do not adhere to the role that the LAN assigns to CNA as the sole federal authority on this matter, in terms of responsibilities for water administration and for the interpretation of this law. · The implementation of the WRAP faces significant legal difficulties because, as stated in its RO, the economic support that would be granted to those who renounce a certain water abstraction entitlement without any additional consideration, could be considered to be an acquisition of rights by the Federation as an alternative to the recovery of rights, which may not have legal basis; or as a cancellation of the right due to renouncement by the entitlement holder, but by granting him an economic compensation, which may exceed the limits of what is legally permissable. In addition, the Caborca experience shows that to resolve the legal difficulties associated with the granting of an economic benefit arising from public resources to users who are not in full compliance with the law, it would be 54 LCR Sustainable Development Working Paper No. 24 worthwhile to introduce modifications to inter-institutional agreements, as well as agreements with users, making it possible to promote, in parallel, strict compliance with the law by users. · The immediate implementation of the WRAP could be feasible if its objective is first reoriented, giving real application to the considerable number of provisions in the Sustainable Rural Development Law (LDRS) which the RO invoke but which do not achieve subsequent development, implying that the WRAP would replace its current role with that of promoter of productive activities, pursuing water savings as part of its final objective. To carry out this option33 it is recommended that: the roles of CNA and SAGARPA be part of a Collaboration Agreement; and the reorientation thus invoked reflects explicit commitments by users to achieve the sustainable management of the aquifer and the monitoring of actions. · Subject to future studies, some of which are described in greater detail in the recommendations in Box 4 and the Annexes, several options are envisaged to achieve the adjustment of rights in the medium term: Integration of the WRAP with a crop conversion fund; and Analysis of institutional and users' capacity to address the water rights adjustment required by the modified National Water Law (LAN), under different schemes such as: o sectoral programs such as WRAP o intersectoral adjustment programs o an integrated offensive, exercising the power granted by the LAN to CNA to intervene in water issues for reasons of public interest or eminent domain. · For any medium-term scheme that is selected, it would be worthwhile to immediately begin the following actions: identify the water-related actions that may be delegated to states and municipalities; make irrigation schemes declared as well-drilling prohibition areas compatible with aquifer boundaries; update the census of users in well-drilling prohibition zones and user lists; and prepare a very general model of the Aquifer Regulation. · Explore the advantages and disadvantages of a collective concession entitlement in irrigation systems supplied by groundwater, taking into account that the individual concession scheme in aquifer exploitation tends to strengthen behavior in users that hinders the implementation of sustainability measures. · Take advantage of the fact that users associations in irrigation districts have a regulation, as prescribed by the LAN, to incorporate mechanisms that facilitate the WRAP's implementation. · Propose content for the regulation of the LAN, resulting from experience in implementing the WRAP and in general from problems expected in the water rights adjustment required by recent modifications to the law, for example on the following issues: From the socioproductive analysis in Caborca, it was concluded that significant changes have taken place in the producer population and in the structure of productive units in Irrigation District 037. First, one can no longer speak only of small farmers as recognized in Article 27 of the Constitution, because what are registered in the data regarding collective private farmers are highly 33In fact, Annex IV presents the sequence of events recommended to carry out this recommendation and includes a proposal to modify the agreements and letters of adherence that were being used in Caborca to implement the WRAP. Mexico: Water Resources Management 55 The Role of the WRAP in Water Sustainability and Rural Development diverse forms of association ranging from units with only one member to those with over 30. In this regard, the WRAP should characterize, insofar as possible and with available information, the types of ejido and private producers and of productive units. For its part, the economic analysis indicated that the Caborca region has a small demographic weight and an incipient regional industrial development that is not associated with agricultural production, but there is a significant potential for the production of high value export crops due to its proximity to the United States. The WRAP's Rules of Operation (RO) were modified, taking into account a number of the World Bank's recommendations, such as · Changing the Program's name from "acquisition" to "adjustment of water use rights," thus making way for the financing of options that are aligned with the law; · Assigning the key role that corresponds to participating state governments; and · Establishing a coordination agreement between SAGARPA and CNA as a basis for the execution of the WRAP. Nevertheless, the modifications did not resolve the most serious problems and the recommendations made to improve the concept, efficiency, and effectiveness of the WRAP remain valid. It is recommended that a working group with representatives of SAGARPA, CNA, and GoS analyze these recommendations together with those made for the WRAP's immediate implementation in Caborca, with the objective of radically realigning the Program. In this regard, it should be recognized that the lessons learned from the WRAP's implementation in Sonora are of great value in proposing improved schemes for the adjustment of water use rights, and that many of the problems observed certainly could not have been anticipated exclusively with a desk study. The application of methodologies to select and prioritize areas under irrigation that are subject to being served by programs such as the WRAP, which for now only include technical and economic aspects, indicates that, under a series of criteria and assumptions which may vary, 394,000 ha of land under groundwater irrigation would need to be earmarked in order to cancel water rights for 3.6 billion cubic meters of water, with an estimated investment of 6.8 billion pesos. For the case of surface water, considering only the Irrigation Districts (DRs) that CNA has analyzed, the area affected would be 143,000 ha in order to cancel rights for 1.5 billion cubic meters per year, with an investment of 2.6 billion pesos. These values are merely indicative but they give an idea of the magnitude of the effort required to adjust water rights to availability, if one takes into account that the total amount of resources would be close to that of CNA's annual budget and that annual overexploitation of groundwater in the country is around 8 billion cubic meters. Irrigation Units (URs) have a very high specific weight in obtaining irrigation zones with groundwater that are subject to being incorporated in the WRAP, but the information on them with regard to location, current physical status, area planted, volumes exploited, etc. is extremely imprecise and thus it is recommended that information on these irrigation zones be considerably improved, because they use more groundwater and have acute poverty conditions. The "Management Indicators utilized in the WRAP's Rules of Operation (RO) consist exclusively of the percentage of requests serviced in relation to the number of requests received and of the percentage of volume supported in relation to the overexploited volume. Therefore, it is recommended that various benchmarking parameters be used, as suggested in the report, to measure the Program's real physical and economic effects on the reduction of overdesign, overconcession and overexploitation. 56 LCR Sustainable Development Working Paper No. 24 It is noteworthy that CNA has apparently not carried out any studies on the performance of the water rights market, if one takes into account that these are permitted since the LAN was enacted in 1992. However, several authors who have basically studied markets in the agricultural irrigation sector in the northern and central parts of the country express the opinion that the performance of CNA, with its strong regulatory power, has been a determining factor in the operation of different local markets. Such a discretionary exercise of this regulatory power, although perhaps justifiable in many cases, has weakened the legal security of private rights, and the legal definition of individual entitlements within Irrigation Districts and users associations remains incomplete or inexact in many cases, for example with regard to their registration in the Public Water Rights Registry (REPDA). The proposal to integrate the WRAP with other complementary measures arises from the need to link water services with water resources management and from an advanced hypothesis to the principle of these conclusions in the sense that attempts to adjust the availability of water rights have not had the expected success because they have been carried out in an isolated manner, producing subsequent fragmentation. Therefore, it is recommended that, within CNA, there be a closer linkage of the technical, economic, legal, and administrative aspects of water use rights with efforts to develop and improve irrigation, water supply and sanitation infrastructure; as well as among CNA programs and those of SAGARPA and state governments, several of which are supported by the World Bank. Finally, more detailed work should be done on the recommendations for future work, as shown in Box 5, which arose from the analysis of each of the issues addressed in the Annexes to this report, with the objective of preparing detailed Terms of Reference. Mexico: Water Resources Management 57 The Role of the WRAP in Water Sustainability and Rural Development Box 5. Recommendations for Possible Future Work OBJECTIVES EXPECTED RESULTS ACTIVITIES LEGAL ANALYSIS Fund for Crop Conversion and Aquifer Sustainability Determine the legal and Drafts of legal documents to - Analysis of background information on enterprises such as institutional viability of an establish the enterprise and of Domecq and participation in it by Caborca and Hermosillo enterprise whose shares are required institutional agreements, producers through capital contributions of water volumes. water rights and in which discussed with relevant actors. - Analysis of viability of transferring water rights to enterprises to producers with current be established in light of new legislation. entitlements are members. - Review of institutional framework for distribution of different subsidies and/or support to rural areas in light of CNA's new regional structure and consistency of support with water policies. - Analysis of possibility of channeling a small component of this support to promote the development or adaptation of certain technologies to alleviate widespread contamination caused by agricultural and livestock activity. This component would operate under the classification of economic incentives as a financial instrument. TECHNICAL CRITERIA FOR SELECTING AND PRIORITIZING AREAS TO BE BENEFITED Formulation of Technical Briefs Have reliable information that Technical briefs for each area - Investigation of actual physical boundaries of sources of water supports the selection of areas selected on a preliminary basis. supply and irrigation zones included in the area under study. subject to being incorporated - Investigation of characteristics of exploitation in the area. in WRAP. - With the above information, identification of areas subject to being unincorporated, and in these areas a crop conversion program and a program to decrease extractions would be proposed. - Based on the investments proposed and the change in crop pattern, new productivity indexes will be proposed, to be achieved in the short and medium terms. WATER RIGHTS MARKETS Analysis of Market Potential to Adjust Water Rights to Actual Availability Study transactions among - Evaluation of: Impacts of water - Selection of several case studies, in principle Guanajuato and irrigators or within irrigation rights transactions on technical Valle districts under an intersectoral efficiency of water use and on - Analysis of information in REPDA for such cases context, with emphasis on reallocation of resources. - Analysis of security and transferability of rights in relation to CNA performance and capacity of - Impacts on social equity administrative proceedings. institutional arrangements to - Relationships between - Description of performance of courts and their relationship with resolve different types of transactions and integrated water CNA. conflicts and thus improve the resources management. - Analysis of different types of conflicts definition and security of - Interviews with a broad range of actors and stakeholders. water rights. 58 LCR Sustainable Development Working Paper No. 24 OBJECTIVES EXPECTED RESULTS ACTIVITIES INSTITUTIONAL DEVELOPMENT IN-SITU (In Sonora) "Live and Participatory" Institutional Diagnostic Understand the real operation Diagnostic jointly agreed with - Study in greater depth the social and productive character of units of DR 037, user-authority stakeholders identified as private collective and individual and ejidos interactions, and the state and - Investigate stakeholders in DR 037, the position of each group, local institutional environ- level of understanding of aquifers, latent and manifest conflicts ment involved in among stakeholders, identification of expectations surrounding implementing WRAP WRAP - Definition of strategies and mechanisms to raise consensus and manage conflicts, to better achieve WRAP objectives. - Carry out a more precise mapping of federal, state, and local agencies and institutions that should be involved in WRAP implementation. Design options for WRAP's institutional arrangements Determine the viability of Drafts of legal documents to - Analyze the viability of introducing WRAP or any other schemes to introduce WRAP establish the enterprise and of alternative scheme within the Rules of Operation of decentralized in existing federal and state required institutional agreements, SAGARPA and CNA programs, in order to take advantage of the institutions. discussed with relevant actors. potential offered by the operation of trust funds (FOFAE); - Analyze ways to organize users who, whether formally or informally, join the mechanisms of participation in water management, and as a result of this analysis, establish legal backing for system design. Mexico: Water Resources Management 59 The Role of the WRAP in Water Sustainability and Rural Development REFERENCES (partial listing) Ahlers, Rhodante and Manuel Fortis. 1999. "Water markets and water scarcity: Shifting attention from supply to demand." 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