IMPROVING COASTAL WATER QUALITY IN MEXICO

A STUDY CONDUCTED BY CORINA WARFIELD, JUANITO RUS, IAN HART, AND JOSH BODE

GOLDMAN SCHOOL OF PUBLIC POLICY UNIVERSITY OF CALIFORNIA, BERKELEY

JUNE 1, 2004

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TABLE OF CONTENTS

RECOMMENDATIONS AND ABSTRACT............................................................................................................3 RECOMMENDATIONS .................................................................................................................................................3

Near-term.............................................................................................................................................................3 Mid-term ..............................................................................................................................................................3 Long-term.............................................................................................................................................................3

THE PROBLEM OF COASTAL WATER POLLUTION.......................................................................................................3 CHALLENGES AND PROPOSED POLICY OPTIONS ........................................................................................................4

Structural Challenges and Reforms .....................................................................................................................4 Municipal-level Policy Options ...........................................................................................................................4 Education and Information Strategies .................................................................................................................4

MOVING FORWARD ...................................................................................................................................................4 INTRODUCTION: BEACH POLLUTION IS A PROBLEM ................................................................................5

Mexico at a Glance ..............................................................................................................................................5 WHY ARE MEXICO’S BEACHES POLLUTED? ..............................................................................................................5

The Wastewater Treatment Infrastructure Lag....................................................................................................5 Figure 1: Population connected to public wastewater treatment facilities, 2001 ...............................................6 The Impact of Rapid Tourist Development ..........................................................................................................6 Agricultural and Industrial Pollutants.................................................................................................................7

HEALTH AND ECONOMIC EFFECTS OF COASTAL WATER POLLUTION ........................................................................7 THE INFORMATION GAP.............................................................................................................................................8 CURRENT EFFORTS TO REDUCE POLLUTION ..............................................................................................................8

Operating Agencies or “Organismos Operadores” ............................................................................................8 Federal Infrastructure Development Funding .....................................................................................................9 Regulation of Federal Waters ..............................................................................................................................9 Beach Community Pollution Control Committees ...............................................................................................9 Current Legal Reform Initiatives .........................................................................................................................9 SEMARNAT Study of Determinants of Municipal Treatment Investment............................................................9

CONSIDERATIONS FOR JUDGING POLICY ALTERNATIVES ...................................................................10 INTERVENTION POINTS ............................................................................................................................................10 KEY CONSIDERATIONS ............................................................................................................................................10

Sustainability......................................................................................................................................................10 Political Viability ...............................................................................................................................................11 Implementation Obstacles..................................................................................................................................11

POLICY OPTIONS OVERVIEW ...................................................................................................................................11 STRUCTURAL CHALLENGES AND REFORMS ..............................................................................................12

STRUCTURAL CHALLENGES.....................................................................................................................................12 Municipal Control of Water and Waste .............................................................................................................12 Inter-Municipal Planning/Dialogue ..................................................................................................................13 Insufficient Local Technical Proficiency ...........................................................................................................13 Legal Challenges ...............................................................................................................................................13

PROPOSALS FOR STRUCTURAL REFORM ..................................................................................................................14 Create Autonomous Water Districts ..................................................................................................................14 Legal Reforms ....................................................................................................................................................15 Empower Collection of Sanctions on Municipalities .........................................................................................15 Create Collective Legal Standing ......................................................................................................................15

MUNICIPAL LEVEL POLICY ALTERNATIVES ..............................................................................................17 Rehabilitate Existing Wastewater Treatment Facilities and Build New Ones ...................................................17 Implement a Matching Grant Program to Fund Plant Operation.....................................................................17

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Implement Fees and Rebates for Municipal Waste............................................................................................18 Reduce Excess Water Use ..................................................................................................................................19 Build and/or Modify Submarine Outfall Infrastructure .....................................................................................20 Set-up a System of Tradable Water Pollution Rights.........................................................................................21

EDUCATION AND INFORMATION STRATEGIES..........................................................................................22 Introduce Education Programs..........................................................................................................................22 Develop a Process to Select the Most Appropriate Treatment Facility .............................................................23 Provide Increased Technical Assistance............................................................................................................23 Publicly Rate Wastewater Treatment Compliance.............................................................................................23

AREAS FOR FURTHER STUDY ...........................................................................................................................25 Promote Studies to Quantify the Economic Impact of Coastal Water Pollution ...............................................25 Conduct a Local Public Official Survey.............................................................................................................25

CONCLUSION AND KEY RECOMMENDATIONS...........................................................................................26 Near-term Recommendations.............................................................................................................................26 Medium-term Recommendations........................................................................................................................27 Long-term Recommendations ............................................................................................................................27

REFERENCES ..........................................................................................................................................................28

APPENDICES............................................................................................................................................................31 APPENDIX A: MEXICO’S BEACHES MONITORED FOR SANITARY CONDITIONS .........................................................31 APPENDIX B: OPTIONS FOR SECONDARY SEWAGE TREATMENT ..............................................................................32 APPENDIX C: DECISION TREE SELECTING WASTEWATER TECHNOLOGY .................................................................33 APPENDIX D: WHO “GUIDELINE VALUES FOR MICROBIAL QUALITY OF RECREATIONAL WATERS” ......................34 APPENDIX E: SELECTED SECTIONS OF CALIFORNIA PUBLIC UTILITIES CODE RELATING TO WATER DISTRICTS .....35 APPENDIX F: SEMARNAT SURVEY OF MUNICIPAL WATER OFFICERS (WITH SUGGESTED ADDITIONS) .................39 APPENDIX G: ADJUSTABLE IMPLEMENTATION FEATURES OF FEES AND REBATES...................................................41 APPENDIX H: TRADABLE POLLUTION PERMITS & INDUSTRIAL WASTEWATER........................................................43 APPENDIX I: PUBLIC RATINGS SYSTEMS IN PRACTICE .............................................................................................44 APPENDIX J: POLLUTION SOURCES AND INTERVENTION POINTS..............................................................................46

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Recommendations and Abstract In this paper, we consider a variety of options to improve coastal water quality along Mexico’s tourist beaches. We evaluate policy alternatives at the federal, municipal, and individual level according to their political feasibility, ability to reduce pollution, cost-effectiveness, and long-term sustainability.

Recommendations

Near-term Introduce education programs aimed at creating and maintaining awareness among

government officials and citizens regarding their dual roles as polluters and beneficiaries of wastewater management.

Develop a process to select the most appropriate treatment facility recognizing the varying resources local communities have to manage the operation and maintenance of these facilities

Provide increased technical assistance to those who are in positions to make decisions about waste treatment.

Publicly rate wastewater treatment compliance at the watershed level in order to provide information that enables citizens to apply pressure on their public officials.

Mid-term Rehabilitate existing wastewater treatment facilities and build new ones. Implement matching grant program to fund plant operation to ensure that existing facilities

are maintained and operated at their intended capacity. Empower the collection of sanctions on municipalities in order to make existing federal rules

effective and improve the feasibility of future pollution reducing policy options. Implement fees and rebates for municipal waste to provide incentives to reduce pollution in a

cost-effective manner considering differing local circumstances.

Long-term Create autonomous water districts to improve inter-municipal wastewater policy

coordination and to ensure that targeted money is spent on wastewater treatment. Create collective legal standing to allow the victims of pollution to sue industries or

municipalities who are out of compliance.

The Problem of Coastal Water Pollution In 2002, nearly one quarter of Mexico’s tested beaches failed to meet the World Health Organization minimum quality standards. Mexico’s Ministry of the Environment (SEMARNAT) suspects that untreated municipal wastewater is responsible for a significant portion of coastal water pollution. Many municipalities fail to treat, or under-treat, wastewater before discharging it into Mexico’s inland and coastal waters. The tourism boom in Mexico’s coastal regions is benefiting coastal economies while harming coastal ecology. Coastal tourism development is outpacing both sewer infrastructure and wastewater treatment. The increase in visitors and construction is exacerbating point and non-point source pollution. In addition to harming bathers, coastal water pollution negatively impacts

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commercial fisheries, coral reefs, aquatic ecosystems, quality of diving, and other forms of tourism.

Challenges and Proposed Policy Options The problem of beach pollution in Mexico is complicated by the fact that there are many sources of this pollution, and each of these sources is subject to economic, technical, and political constraints that will determine the effectiveness of any particular intervention. The ability of programs and policies to endure over the long-term depends on their cost-effectiveness, funding sources, and the structure or relation to other entities. In addition, proposals must be able to accumulate enough political support to overcome opposition and be enacted. Structural Challenges and Reforms Because the problems with Mexico’s political and legal structures regulating water and pollution are so central to the pollution at Mexico’s beaches, we believe that any solution to this issue must include elements of structural reform or innovation. While many of the investment-related proposals contained in this document include structural elements (such as the distribution methods of matching grants and fee-and-rebate systems), we also introduce several macro-level structural reforms – not tied to any specific fix – that will help to solve the larger issues of Mexican beach pollution. Municipal-level Policy Options Several municipal-level policy alternatives have the potential to greatly decrease coastal water pollution. Our municipal-level policy options focus on building, improving, and maintaining water infrastructure along with creating market-based incentives for municipalities to reduce pollution

Education and Information Strategies In addition to structural reforms and municipal level actions, education and information strategies have the potential to greatly decrease coastal water pollution. Education and information strategies focus on informing individuals, both citizens and government officials, regarding their role in waste creation and disposal. Furthermore, we recommend providing increased levels of technical assistance to municipalities for the selection, operation, and maintenance of their wastewater treatment infrastructures.

Moving Forward The general lack of information and data regarding wastewater treatment in Mexico presents a significant challenge to selecting and implementing the policy options outlined in this paper. In order to effectively prioritize the options and gauge public support for them, additional information needs to be gathered. Wastewater treatment and coastal pollution abatement are complicated and multifaceted. As such, we expect that any viable solution to this problem will also be complicated and multifaceted. For the purpose of prioritizing, and by virtue of the fact that some fixes must be in place for others to be effective, we conclude this analysis by grouping our recommendations into those to be pursued in the near-term, medium-term, and long-term.

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Introduction: Beach Pollution Is a Problem Tourism accounts for more than 6% of Mexico’s Gross Domestic Product (GDP). Forty-five percent of the country’s 7 million domestic and foreign tourists visit the coast, and there are approximately 60 beaches regarded as major tourist destinations.1

In 2002, Mexico’s Ministry of the Environment (SEMARNAT) measured and rated coastal water quality for the first time. Nearly one quarter of the tested beaches failed to meet the World Health Organization (WHO) minimum quality standards. SEMARNAT classified the beaches as presenting a health hazard for tourists and publicized the test results on their website.2 Protest from the coastal communities and the tourism industry led the Ministry of Tourism (SECTUR) to lobby the government to shut down the rating system for a year, to challenge its methodology and to argue that the ratings should not be publicized without their consent.

Politics aside, the science is sound enough to suggest the problem: Many of Mexico’s tourist beach’s waters are polluted at an unhealthy level, according to WHO standards.

In this paper, we consider a variety of options to improve coastal water quality along Mexico’s tourist beaches. We evaluate several policy alternatives according to their political feasibility, ability to reduce pollution, cost-effectiveness, and long-term sustainability. First, we discuss the physical, cultural, and political causes of the coastal water pollution in Mexico.

Why are Mexico’s Beaches Polluted?

As in many countries, Mexico’s beaches suffer from both point-source and non-point source pollution. SEMARNAT suspects that untreated municipal wastewater is responsible for a significant portion of coastal water pollution.3 Often municipalities fail to treat, or under-treat, wastewater before discharging it into Mexico’s inland and coastal waters.

The Wastewater Treatment Infrastructure Lag Part of the pollution equation is Mexico’s water treatment infrastructure, which lags significantly behind other nations in the Organization for Economic Co-operation and Development (OECD) (see Figure 1), as well as other countries in Latin-America. In addition, at least 20% of the existing treatment facilities in Mexico are completely non-operational and a significant 1 Rivera-Arriaga, Evelia and Guillermo Villalobos. “The Coast of Mexico: approaches for its management.” Ocean and Coastal Management 44 (2001): 735-736. 2 The English language version of SEMARNAT’s website can be found at http://carpetas.semarnat.gob.mx/dgeia/web_ingles/what_is_semarnat.shtml . In addition, Appendix A illustrates which Mexican beaches are monitored for sanitary conditions. 3 UNEP defines municipal wastewater as “a mixture of domestic wastewater, effluents from commercial and industrial establishments, and urban runoff.” Source: “Recommendations for Decision-making on Municipal Wastewater .” UNEP/GPA Clearing-House Mechanism Document Library. 10 Nov. 2000.

Mexico at a Glance Population: 100.8 million Surface area: 2 million sq. km Population per sq. km: 50 Population growth: 1.4% Life expectancy: 73.6 years GNI per capita: US$ 5,920 GDP: US$ 637.2 billion Source: World Development Indicators 2003

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percentage of those in operation are performing below designed capacity.4 Clearly, opportunities to treat wastewater are being missed. Figure 1: Population connected to public wastewater treatment facilities, 20015

While over 76% of the Mexican population is connected to sewer systems, only 26% of the population is connected to wastewater treatment.6 The growing number of water bodies with poor water quality may reflect the fact that sewer connections have increased far more rapidly than wastewater treatment facilities. The infrastructure to carry waste away from residential and tourist areas often exists, but the untreated wastewater is then discharged directly into the ocean or inland waterways. The Impact of Rapid Tourist Development The tourism boom in Mexico’s coastal regions is benefiting coastal economies while harming coastal ecology. Coastal tourism development is outpacing both sewer infrastructure and wastewater treatment. The increase in visitors and construction is exacerbating point and non-point source pollution.7

Coastal waters are the ultimate recipient of all wastewater generated in coastal watersheds. The proportion of municipal wastewater pollution originating from upstream as compared to coastal communities varies across Mexico. However, the Mexican Institute of Water Technology believes that a significant portion of untreated municipal wastewater does in fact originate in coastal communities themselves. The negative environmental impacts of untreated wastewater

4 “The operating performance of both municipal and industrial wastewater treatment plants often does not meet design specifications. No formal evaluation studies are available for municipal plants.” OECD Environmental Performance Reviews: Mexico. Chapter 3: Water Management. 2003: 15 5 Ibid OECD. 6 Ibid OECD: 66. 7 Ibid Rivera-Arriaga et. al.:735-736.

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discharge are particularly apparent in and around the coastal tourist cities of Acapulco, Ensenada, Veracruz, and Xihuatanejo.8 In cities such as these, largely uncontrolled coastal tourism development has put enormous pressure on nature’s ability to absorb increased municipal waste levels. Agricultural and Industrial Pollutants Non-point source pollution from agriculture is also responsible for organic and inorganic pollution in Mexico’s waterways. Manure, fertilizer, pesticides, and sediment are washed into rivers and streams in the form of runoff, or leach into the groundwater, and often find their way into coastal waters. Finally, small industries legally discharge their wastewater into municipal sewer systems, contributing inorganic pollution and complicating treatment. 9

Health and Economic Effects of Coastal Water Pollution In Mexico, sewage-polluted waters directly threaten bathers, and indirectly threaten coastal communities’ economies. Exposure to polluted waters is a health risk, and exposure to microorganisms and infectious diseases can result in illnesses including gastroenteritis, acute febrile respiratory infection, and hepatitis. Children, the elderly, and individuals with compromised immune systems are particularly vulnerable, and even with treatment some of these diseases can be fatal.11

The specific economic impact of Mexico’s water pollution, as measured by lost tourist revenue, is not fully understood. However, in other tourist destinations facing pollution warnings or closings, analysts have attempted to quantify the impact.12 Less formally, qualitative evidence suggests that word-of-mouth is impacting tourism and encouraging Mexicans to select tourism destinations that do not have reputations for being polluted.13

In addition to harming bathers, coastal water pollution negatively impacts commercial fisheries, coral reefs, aquatic ecosystems, and quality of diving and other forms of tourism.14

8 Email communication with Teresa Leal Ascencio, Subcoordinadora de Calidad del Agua. Instituto Mexicano de Tecnología del Agua. Tuesday, March 30, 2004. 9 Interview with Carlos Muñoz-Pineda of SEMARNAT. 3 Mar. 2004. 10 Ibid, UNEP. 11 The organism enterococci is currently measured and publicly reported at Mexico’s most popular tourist beaches. Enterococci pollution results from untreated human and animal excrement, and infection from the pathogen is very serious, with symptoms including urinary tract infections, bacteremia, intra-abdominal infections, and endocarditis. The pathogen is resistant to many forms of antibiotics, making it a particularly problematic pollutant. Exposure to antibiotic-resistant strains can lead to extended hospital stays or even death. Hancock, Lynn E. and Michael S. Gilmore, “Pathogenicity of Enterococci.” Enterococcus Research Site. 11 Feb. 2000. http://www.enterococcus.ouhsc.edu/lynn_revirew.asp. 12 A study of beach closings due to E. coli contamination at Indiana’s Lake Michigan beaches has predicted that closings will cost local businesses $1,710,907 in expenditures in 2004. McGrath, Daniel. “Technical Memorandum to the Indiana Interagency Task Force on E. coli.” 27 Feb. 2001: 8. 13 Interview with Carlos Muñoz-Pineda of SEMARNAT. 3 Mar. 2004. 14 Watersheds and Healthy Reefs: Making the connection. The Coral Reef Alliance: San Francisco (2003).

The United Nations Environmental Programme (UNEP) regards coastal wastewater discharge as “one of the most significant threats to human health and to sustainable coastal developments worldwide.”10

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The Information Gap Residents of Mexico’s coastal areas are aware of marine pollution and degradation. Domestic tourists who visit the beaches are known to select away from polluted beaches.15 However, many Mexicans misattribute the source of the pollution. One study found that residents of Holbox Island in Quintana Roo attributed water pollution to insufficient garbage management and a lack of environmental education among residents and tourists. Only 15% of residents attributed to the pollution in part to a lack of wastewater treatment or septic systems.16

Despite the scandal it caused in 2002, SEMARNAT still publishes beach pollution standards on its website. April 2003 marked the beginning of the National System of Information on the Quality of Water at Mexican Beaches (SNICAPM). This program combines the efforts of SEMARNAT, Ministry of Tourism (SECTUR), and the Mexican Navy. It measures coastal water quality against World Health Organization standards, and results are posted on the SEMARNAT website. The information currently posted on-line is now updated regularly, but it is far less-detailed than prior on-line reporting.17 The English-language web page “Choose Your Tourism Destination” now presents an attractive – if somewhat misleading – view of Mexico’s “natural, virgin” beaches.18

In addition to scaled-down reporting on the SEMARNAT website, the local governments that administer the tests have an incentive to underreport pollution levels. The federal government does randomly audit the local measurements, but there is no penalty for failing an audit.19

Current Efforts to Reduce Pollution Both SEMARNAT and many beach communities that failed the initial assessment of coastal water quality have undertaken projects to mitigate water pollution. Below we briefly discuss some of these current efforts. Operating Agencies or “Organismos Operadores” Running large volume waste treatment infrastructures is difficult. Recognizing this, municipal, regional, and state governments have contracted with third party experts to run these municipal services. Called “organismos operadores,” these agencies bring technical know-how to the process of designing and maintaining wastewater infrastructures, and are often better able to make informed decisions than the contracting governments. Each organismo operador receives funding from the government that contracts for its services. The agencies are subject to political and fiscal constraints imposed by their contracting governments.

15 Interview with Carlos Muñoz-Pineda of SEMARNAT. 3 Mar. 2004. 16 Kim Chi Tran, Jorge Euan, and Maria Luisa Isla. “Public perception of development issues: impact of water pollution on a small coastal community.” Ocean and Coastal Management 45 (2002): 413. 17 For example, instead of a more graded rating system, SEMARNAT’s website now only rates beaches as being a sanitary risk if they’ve achieved the World Health Organization equivalent of a “D” rating. 18 “Choose Your Tourism Destination.” SEMARNAT. http://www.semarnat.gob.mx/wps/portal/.cmd/cs/.ce/155/.s/4453/_s.155/4450, 14 Apr. 2004. 19 Interview with Carlos Muñoz-Pineda of SEMARNAT. 3 Mar. 2004.

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Federal Infrastructure Development Funding Federal and state governments have provided significant funding to local municipalities interested in constructing sewer systems or wastewater treatment facilities in recent years. This funding has resulted in a significant increase in the number and percentage of the Mexican population that has access to these services. Unfortunately, it has not had as beneficial an effect on pollution levels as the central government had projected due to the problem of insufficient local expenditures on operation and maintenance of the facilities. Because of this shortfall, the National Water Commission (CNA) is now in the process of shifting its focus from infrastructure development to the provision of federal funds for ongoing operation of these facilities. To date this operational funding has not been widely available and has been difficult to administer. Regulation of Federal Waters While it has had little luck regulating municipal water systems, SEMARNAT, CNA and other regulatory bodies have encountered increasing success with large volume industrial polluters whose waste flows into federal waterways. These agencies have direct jurisdiction over facilities on federal waters, have been able to enforce fines for exceeding pollution targets, and have begun shutting down the worst offenders. These efforts have had measurable effects on large polluters, but watershed pollution levels are still difficult to control because of the lack of direct control over municipal pollution sources. Beach Community Pollution Control Committees After the publication of SEMARNAT’s beach pollution study in 2002, beach communities’ political actors began their own initiatives to reduce pollution revealed by ongoing monitoring. In several communities, the municipal government set up local committees on pollution problems in order to design local approaches to these problems. In several large tourist beach cities, local efforts have met with great success, and a significant portion of the direct discharges to coastal waters have been diverted to new treatment facilities. In smaller communities, local committees have also had some success in improving infrastructure, limiting direct discharges, and bringing more attention to the problem of waste generated within these communities. Current Legal Reform Initiatives As part of its current efforts, SEMARNAT has also proposed several changes to Mexican law – both to improve the ability of the federal government to impose fees, and to make the legal system more responsive to environmental issues. Its current efforts include an initiative designed to allow municipal governments to bring suit against each other (a tool not available under the current political structure) for damages caused by the neighboring communities’ pollution. SEMARNAT Study of Determinants of Municipal Treatment Investment Finally, recognizing that there are vast discrepancies between waste treatment infrastructures and funding between Mexican municipalities, SEMARNAT is in the process of conducting a study to determine what factors lead to these differences. When completed, this study should provide valuable insights into the reasons for the national shortage of adequate wastewater treatment.

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Considerations for Judging Policy Alternatives

Intervention Points Coastal water pollution is not exclusively generated by coastal communities. Waste and pollutants wash down sewer systems, and, often untreated, flow into rivers and bays, increasing coastal pollution. Fertilizers, pesticides, and waste from agricultural areas – and mud and silt from deforested areas – flow into waterways and are carried to the ocean. Because the pollution sources are multiple, we explored multiple intervention points.20

Key Considerations The problem of beach pollution in Mexico is complicated by the fact that there are many sources of this pollution, and each source is subject to economic, technical, and political constraints that determine the effectiveness of any particular intervention. We recommend that SEMARNAT weigh its policy options with the following criteria in mind. Sustainability Politically viable policies are of little value if they are easily reversed, eliminated, or curtailed. Political turnover has led to inconsistent wastewater treatment policies. The ability of programs and policies to endure over the long term depends on their cost-effectiveness, funding sources, and the structure or relation to other entities.21 Cost-Effectiveness of Pollution Reduction: Is the cost of pollution reduction reasonable? Given limited funding, pollution reduction policies should reduce as much pollution possible per peso spent. Ineffective or expensive solutions are unlikely to remain in place for long. It is important to provide decision-makers the resources, expertise, and incentives to adopt and implement cost-effective pollution reduction policies and technologies. Availability and Stability of Funds: Policies should match costs with institutions that are willing and able to pay them. Past policy solutions have encountered problems when they have not been attached to a reliable funding source. Funding has also been reduced or eliminated when the individuals and organization paying the fees or taxes have not seen the benefits received.

20 An illustration of our initial assessment of pollution sources and intervention points can be found in Appendix J. 21 SEMARNAT coordinates pollution monitoring in each of its 17 coastal states, providing base and ongoing data on pollution levels. Tests currently measure Enterococci levels, and a beach falls into the category of “riesgo sanitario” (sanitary risk) when it has an Enterococci level of 501 MPN/100ml or greater (a “D” rating by WHO standards). Enterococci levels below 501 MPN/100ml may not be considered a sanitary risk by this definition, but can still pose health problems at lower levels. The United States Environmental Protection Agency considers coastal waters unfit for swimming above 104 MPN/100ml. Prior to April, 2004, even Mexican beaches with Enterococci levels between 200 and 500 MPN/100ml received a yellow “caution” flag on SEMARNAT’s website). “Abatement” should not be defined too simply as either “riesgo sanitario” (sanitary risk or “no riesgo sanitario” (no sanitary risk). Administrators and program evaluators should recognize that substantial pollution abatement gains can be made below 501MPN/100ml, and consider abatement a decrease in average Enterococci levels for a given beach or watershed. For more information on this topic, see Appendix D: “Guideline Values for Microbial Quality of Recreational Waters.”

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Political Viability The political viability of each policy proposal is critical. Proposals must be able to accumulate enough support to overcome opposition and be enacted. Political feasibility turns on who bears the costs and who reaps the benefits, but it also depends on which interest groups are roused into action, how active they become, and the resources they expend. Past water pollution policies failed or lost effectiveness because they galvanized more opposition than support. Enforcement focused on punishment not rewards. It is important to assess local, state, and federal political cultures, and anticipate the extent to which interest groups will oppose or support the policy proposals. Implementation Obstacles The fewer the implementation hurdles, the better. A careful assessment of the resources and environment required for implementation needs to be weighed in deciding which policies to adopt. Certain policies require greater administrative resources, installation of technologies, or pre-existing infrastructure. We attempt to point out those implementation hurdles and in so doing clarify areas that require a more detailed assessment.

Policy Options Overview The policy alternatives discussed in the remainder of this paper are grouped according to their targeted impact area. We begin by discussing the government wide structural challenges and potential reforms that impact water pollution abatement. Next, at the municipal level, we discuss several policy alternatives that can be implemented by both coastal and upstream communities. Lastly, we explore education and information alternatives that can be put in place at a variety of levels in communities throughout Mexico.

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Structural Challenges and Reforms The problem of pollution at Mexico’s beaches is one that must ultimately be dealt with through the development of waste treatment infrastructure both at coastal and upstream communities. However, the legal and political structures in which water sanitation management decisions are made create serious impediments to effective national reform. Efforts by SEMARNAT and other federal agencies to regulate municipal water pollution have been stymied by an inability to collect fines levied on municipal governments.22 Federal infrastructure development grants have led to the construction of many treatment facilities that become non-operational due to insufficient funding of maintenance and operation. There are few forums for inter-municipal dialogue or coordination of wastewater treatment policies. The Mexican legal system provides little recourse for those harmed by pollution to seek remuneration from polluters. While the National Water Commission (CNA) operates a technical assistance program, there is insufficient local technical knowledge to make informed decisions regarding waste treatment options or to maintain complex treatment systems. We believe that these structural challenges are central to the pollution problems at Mexico’s beaches. Therefore, proposals designed to mitigate this pollution problem must be based on a comprehensive understanding of the incentives faced by the political actors who will have to implement these proposals, and should include structural reforms to insure these actors’ compliance with the goals of any pollution abatement initiative.

Structural Challenges Mexico’s wastewater treatment infrastructures are plagued by structural problems that make it difficult for the federal government to control the extent of untreated discharges into the watershed. These problems fall into four general categories: Municipal Control of Water and Waste SEMARNAT has met with some success regulating large industrial polluters, who pump waste directly into federal waters. However, neither SEMARNAT nor any other federal agency has been able to achieve the same results with small industries that discharge into municipal waters. Under the Mexican Constitution, municipalities are charged with the maintenance of their water systems, and are largely autonomous from state and federal authorities.23 Therefore, attempts to regulate municipal pollution have been largely ineffective, as the government has little enforcement power to collect fines from municipalities who exceed federal pollution limits, and no power to directly fine those who pump their waste into these municipally controlled waters. The federal government and several large international non-governmental organizations have had some success investing in infrastructure development, including the construction of sewers and treatment facilities. However, strong provisions guaranteeing municipal autonomy prohibit these authorities from earmarking the funding for ongoing maintenance and upkeep of these investments. This means that in communities with little money and many needs, funding of waste treatment services is often a low priority. Together, these two aspects of municipal water 22 Chavez, Isidro, Condonan deuda de agua a municipios, Novedades, 23 Aug. 2002. 23 Constitucion Nacional de Mexico, Ley De Aguas Nacionales D.O.F. 01-Xii-1992.

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control have resulted in a breakdown of many recent environmental initiatives, and provide a serious structural barrier to effective reform. Inter-Municipal Planning/Dialogue A second structural flaw that makes it difficult to achieve a comprehensive solution is the fact that municipalities don’t currently have any forums for coordinating waste treatment activities within the same watershed, or for entering into dialogue regarding pollution that may have broader-than-municipal effects.24 As described in earlier sections, many of the problems created by pollution occur in communities further down the watershed, especially those on the coast. This is a structural problem that leads to insufficient investment in upstream communities with respect to the effects of their actual sewage on the national economy and public health. These problems are exacerbated by the sheer number of municipal governments, and the clear cross-border effects of pollution between communities sharing the same watershed. Insufficient Local Technical Proficiency Local municipal governments are also plagued by a shortage of individuals with sufficient technical know-how to create and maintain complex wastewater treatment networks. While many state and municipal governments have turned to outside contractors to run their wastewater treatment operations (organismos operadores), major sanitation-related decisions are often still made directly by municipal officers. This means that these decisions are often made for political considerations that have little to do with the actual long-term water sanitation needs of a community. Communities who use state, federal, and non-governmental development funds are available for infrastructure development may not consider the year-to-year costs of this infrastructure – and invest in technology that doesn’t make long-term economic sense. Alternatively, political actors may not know enough about wastewater and pollution to be able to adequately judge their effects both on public health and the local economies. This often leads to political decisions that don’t adequately account for the full returns that such investments make. Legal Challenges In addition to structural challenges, Mexico’s problems are compounded by a weak judiciary, and few avenues for enforcing environmental laws. Unlike judicial systems in many developed countries, Mexico does not allow individuals, firms, or groups (classes) to file civil suit against other bodies based on damage caused by pollution. Therefore, it is extremely difficult for those with diffuse interests (such as all of those whose health may be damaged from unclean water) to directly impact the actions of entities with strong economic and political interests (such as those who gain enormous economic benefits by not having to treat their waste). Furthermore, this judicial structure gives little recourse against municipal authorities, making the collection of fines levied on municipal governments, or direct legal actions against these authorities, virtually impossible.25 While there are current efforts to change some of these legal issues, such as SEMARNAT’s current effort to introduce the ability for municipal governments to sue (granting them standing to bring action) other municipalities for effects caused by their decisions – in this case for pollution which harms the plaintiff municipality – these efforts are

24 Interview with Carlos Muñoz-Pineda of SEMARNAT. 3 Mar. 2004. 25 Ibid.

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insufficient to completely deal with the structural weaknesses in the judicial system for environmental action.

Proposals for Structural Reform Because the problems with Mexico’s political and legal structures regulating water and pollution are so central to the pollution at Mexico’s beaches, we believe that any solution to this issue must include elements of structural reform or innovation. While many of our investment-related proposals include structural elements (such as the distribution methods of matching grants and fee-and-rebate systems), we believe there are also several macro-structural reforms – not tied to any specific fix – that will help to solve the larger issues of Mexican beach pollution. Create Autonomous Water Districts Many of the structural challenges faced by SEMARNAT authorities are similar to those faced by other countries over the past century, including Mexico’s neighbor to the north, the United States. It is instructive therefore to examine how these countries dealt with these same structural problems to see if there are lessons to be learned. Perhaps the single largest water treatment reform in the United States was the creation of special legal and political entities specifically dedicated to water treatment, and autonomous from the local and municipal governments whose territories they share.26 We believe that the introduction of similar structures in Mexico could mitigate many of the structural challenges detailed above. A suggested design would be to create independent wastewater districts consisting of representatives of municipalities coterminous with the wastewater district. Despite this link to municipal governments, the water district itself should be a separate legal and political entity with the exclusive charge of managing water treatment operations. By removing decisions regarding water treatment from the normal political structures of local municipal governments, it would help ensure that state and federal money targeted for this treatment would only be spent on this purpose (the water district would have no reason to shift money from sanitation to schools for example). Those involved in the leadership of these special districts would also accumulate experience and technical knowledge regarding water treatment services that would allow them to make more informed choices regarding appropriate investment and maintenance expenses. Furthermore, as the district would cover multiple municipalities in the same watershed, it would allow decisions regarding water treatment to be made in the best interests of the entire system, helping to eliminate some of the problems caused by the upstream-downstream dilemma. Implementing this proposal may require a change in the federal constitution and could lead to some feeling of disenfranchisement among local municipal governments who currently have direct control over their own water treatment facilities. However, these difficulties are not insurmountable. Many municipalities are not currently staying directly involved in these decisions as it is (either because they have contracted with an organismo operador or are not currently paying for water treatment services). Furthermore, this problem has been faced by governments undergoing similar structural transformations in earlier times, and the demonstrable effectiveness of the structural change could be a powerful incentive for municipal and federal

26 Interview with David Jenkins, Professor of Environmental Engineering, UC Berkeley. 5 Apr. 2004.

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authorities to carefully consider this option. We recommend that such districts be created by the municipal governments, or the residents of these municipalities, themselves. In this way, district creation is a voluntary municipal reform and therefore far more politically feasible.27 Legal Reforms We believe that SEMARNAT should continue current efforts to include the Mexican judiciary in the enforcement of environmental laws. However, we believe that some changes in the current structure of the Mexican legal system could provide powerful additional sources of leverage both to improve water quality generally, and to guarantee municipal investment in waste treatment infrastructure and operations. These legal reforms fall into two general categories: those designed to make current regulation more effective, and those designed to bring additional interest groups into the regulation of waste treatment. Empower Collection of Sanctions on Municipalities The main structural weakness of SEMARNAT’s current efforts to regulate municipal waste treatment efforts is the lack of mechanisms by which federal authorities can collect fines assessed on these local governments. When fines are assessed, municipal governments have little reason to pay them. And, as Mexico’s Congress has periodically forgiven municipal debts, federal regulations are regularly ignored.28 In order to make federal rules effective, the Mexican constitution must be amended to make municipal debts collectable. Intense political opposition to any such measure from municipal authorities makes it unlikely that there will be a general law of this type passed. However, we believe that there may be room for more limited versions targeted at environmental regulations if these are tied to a plan that clearly demonstrates that money collected will be redistributed to municipal governments in some way. Therefore, there should be some support for this type of reform if introduced with the fee-and-rebate structures discussed further in the next section. Create Collective Legal Standing While direct regulation of polluters and municipalities is an important source of leverage, it creates a dynamic in which polluters are opposed only by federal bureaucrats, not by those harmed by pollution. An important tool to change this dynamic – to allow the victims of pollution to directly confront those who are causing harm – is to create legal standing for groups to sue industries or municipalities who are out of compliance, i.e., to allow a system of class-action civil law suits.29 The granting of class status is important because it is difficult to demonstrate direct causal relationships between emissions and individual health and economic effects. Groups however can demonstrate more easily that the incidence of pollution from a particular source has harmed the group through statistical analysis. In the absence of such reform, it seems that the political structure will always favor those with powerful economic interests in maintaining the status quo with regard to environmental regulations over the multitude of people who are harmed both physically and economically by current high levels of pollution.

27 For selected sections of the California Public Utilities Code establishing special utility districts and outlining their principle duties, see Appendix E. 28 Interview with Carlos Muñoz-Pineda of SEMARNAT. 3 Mar. 2004. 29 Interview with David Zilberman, Professor of Agriculture & Resource Economics, UC Berkeley. 17 Mar. 2004.

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SEMARNAT should consider the plusses and minuses associated with utilizing an adversarial tool of environmental management. Using the United States as an example, we can see several plusses to the use of litigation: precedent setting; correcting weak or vague regulation; solving problems outside of the legislature; and connecting harmers to victims. However, there are several negative aspects of using litigation to settle environmental disputes: it is a confrontational process that can stymie future collaboration; it can limit compromise and creative solutions; it can be expensive; it does not guarantee full disclosure of facts; it is not a preventative approach; and it can often involve a difficult burden of proof.30

30 Kubasek, Nancy, J.D. and Gary S. Silverman, D. Env. Environmental Law: Fourth Edition. Prentice Hall. (2002) Chapter 2.

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Municipal Level Policy Alternatives In addition to the structural reforms described in the previous section, several municipal-level policy alternatives have the potential to greatly decrease coastal water pollution. Our municipal-level policy options focus on building, improving, and maintaining water infrastructure along with creating market-based incentives for municipalities to reduce pollution. These municipal-level alternatives can be applied throughout Mexico to varying degrees and include:

Rehabilitate existing wastewater treatment facilities and build new ones; Implement a matching grant program to fund plant operation; Implement fees and rebates for municipal waste; Reduce excess water use; Build and/or modify submarine outfall infrastructure; and Set-up a system of tradable water pollution rights.

Rehabilitate Existing Wastewater Treatment Facilities and Build New Ones The government of Mexico must recognize wastewater treatment as a priority and allocate significantly more money towards the building of additional wastewater treatment facilities. Furthermore, in many cases facilities that currently exist need to be rehabilitated in order to operate at expected capacity levels. Financing investment in sewer systems and wastewater treatment facilities is currently done with a mix of federal, state, and local sources. In addition, some funding comes through loans from various development banks. Public investment in sewer systems and sewage treatment has fallen drastically since the early 1990s and in 2001 it was the lowest it had been for 11 years. In order to significantly improve the quality of coastal water, Mexico’s government must focus on building and rehabilitating the country’s water infrastructure. Implement a Matching Grant Program to Fund Plant Operation Many of Mexico’s wastewater treatment facilities do not operate at full capacity because local governments under-fund operating and maintenance expenses. A large amount of water pollution can be reduced by operating the treatment facilities already in existence at full capacity. Since the federal government does not have the legal power to earmark funds for specific purposes, a simple increase in grant funding from the federal level to municipalities is unlikely to produce the desired increase in funding of treatment facility operation. We therefore propose a system of matching grants whereby the federal government matches each Peso spent by municipal governments on waste treatment operations. The exact match rate for the grant may vary by municipality and SEMARNAT will need to assess the political feasibility of implementing such a system. We believe that this matching grant system could be funded with contributions from a general fund and/or federal taxes on coastal tourist communities that benefit significantly from clean 31 Ibid. OECD: 76.

In its 2003 Environmental Performance Review of Mexico, the OECD recognized that the “central water management issue in Mexico concerns the need to increase investment in building and rehabilitating communal water infrastructure.”31

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water in the watershed. Funding matching grants is expensive, and funding them without additional revenue could endanger the long-term sustainability of the program. We recommend that these funds be collected from coastal tourist communities through taxes on tourists, with revenues targeted to water treatment. Taxes on hotels, entertainment, dining, and rental cars have proven politically popular municipal revenue generators in many United States cities. Some Mexican municipalities already have tourist taxes, although those revenues are not directed to clean water programs. SEMARNAT will need to work with the coastal tourist industry to assess the political feasibility of implementing such a tax.32 Implement Fees and Rebates for Municipal Waste Mexico’s current difficulties in enforcing fines on municipalities present hurdles to a system or rebates and fees. Nonetheless, a fee-and-rebate system provides promise as well as risk. A thorough study of Mexico’s pollution measurement resources and of the future ability to collect fees is needed prior to implementation. A system of fees and rebates provides incentives to reduce pollution in a cost-effective manner and provides local control. It contains both reward and punishment incentives and can serve to break municipal opposition to regulation of wastewater pollution. The system provides incentives for each municipality to reduce pollution in the least-cost manner in order to avoid the penalty and collect as much of the rebate as possible.33 It also accommodates different costs of reducing pollution and different levels of pollution.

In order for the fee-and-rebate system to be viable, the government must make a credible commitment to pay rebates and implement penalties over a long period of time.34 Without a credible commitment, municipalities will not have the rebate incentive to invest in infrastructure, maintenance, and operations. The need for accurate and reliable measures of pollutants can impose additional administrative costs. The National Commission of Water (CNA) already measures municipal water pollution emissions for most large municipalities, but these may require additional refining and investment before they are suitable to be used as determinants of fees and/or rebates. In addition, under a fee-and-rebate system the costs of pollution are not revealed by the market, but set by a central structure. When fees and rebates are set too low, the polluters don’t face the full costs of pollution, and may continue to pollute above the optimal levels. When fees and rebates are set too high, pollution reduction might move beyond the point where the benefits

32 Interview with Carlos Muñoz-Pineda, Jaime Sainz, and Mariana Becerra of SEMARNAT. 30 Apr. 2004. 33 Each city will continue to reduce pollution as long as the costs of reducing a unit of pollution are lower than the local benefit of reducing the pollution plus the rebate. Friedman, Lee, The Microeconomics of Public Policy Analysis, Princeton University Press, Princeton, New Jersey, 2002. 34 Interview with Lee Friedman, Professor of Public Policy, UC Berkeley. 12 Apr. 2004.

How the fee-and-rebate system works: In a fee-and-rebate system, the government sets a threshold for pollution level by municipality or industrial plant. Municipalities that are under the threshold receive a rebate for each unit below the threshold. Municipalities over the threshold pay a penalty of fee (replacing the fine) for each unit above the threshold. The penalties can be used to pay for the rebates. In essence, municipalities choosing to pollute forego the rebate opportunity, and thus face a higher cost of polluting.

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outweigh the costs. Nevertheless, the fee-and-rebate system provides municipalities flexibility and encourages them to exceed standards when possible. Because of prior difficulties in collecting fines from municipalities, we are concerned about the fee aspect. SEMARNAT’s ability to collect fines in the future is open to question. A fee-and-rebate system could turn solely into a rebate system, which would retain incentives but undermine long-term sustainability. The current refusal by municipalities to pay fines is due in part to the perception that money is sapped away but not returned. The introduction of reward incentives and clear payoffs may well make the payment of fees more palatable. Thus, municipalities will be less likely to lobby against fee-and-rebate regulations as a block because fees are clearly being transferred directly to other municipalities and not to the federal government. A fee-and-rebate system also provides wide latitude in implementation. There is room to decide the size and features of the municipalities in the program, the threshold or target level of pollution, and the size of the rebates and fees.35 Reduce Excess Water Use Reducing water consumption is an effective way to reduce sewage volume and make treatment less expensive.36 The less water is consumed, the less water drains into the sewage for treatment, and the less money needs to be invested into additional water treatment infrastructure. However, the waste is more concentrated. As the WHO and UNEP noted, “Domestic waste production per capita is fairly constant but the concentration of contaminants varies with the amount of tap water consumed.”37 The effectiveness of this policy option varies based on local water supplies and only applies to municipalities with existing wastewater treatment infrastructure. Consumers tend to face water prices that are far below the true cost of water extraction and delivery, and, as a result, tend to overuse water. In addition, as municipalities in Mexico urbanize, their citizens tend to use more water, requiring the expansion of wastewater treatment infrastructure.38 Several strategies can be employed to reduce the amount of water consumption. The two main methods are education programs and a fee-and-rebate system applied to the end-users of water. Education methods are aimed at managing demand for water use. In South Korea, for example, they proposed to expand water sewage treatment from 120 to 250 liters per capita per day based on the projected growth of tap water consumption. When the costs of the infrastructure expansion appeared too high, they invested in promoting water savings in households and managed to reduce the need for infrastructure expansion by half.39 They promoted water saving technologies in households and the reuse of water to toilet flushing. Education campaigns and

35 For a more detailed discussion about adjustable implementation features see Appendix G. 36 Ibid, UNEP. 37 Veenstra, S., G.J. Alaerts, and M Bijlsma. “Technology Selection.” Water Pollution Control – A Guide for Use Water Quality Management, WHO/UNEP, 1997. 38 Ibid, Veenstra. 39 Ibid, UNEP.

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promotion of water saving technologies should be tested and adjusted for local and regional differences. Like the application to municipal wastewater, the fee-and-rebate system is a highly cost-effective means of reducing water over consumption and is easy to replicate. But there are three crucial differences which make implementation easier. First, water fees are already collected. Second, the infrastructure to measure water use and bill customers is more developed and is, overall, highly reliable. Third, a long-term credible commitment is not needed because most consumers are not investing money to reduce water consumption. Build and/or Modify Submarine Outfall Infrastructure Marine sewage outfalls allow raw or pretreated wastewater to be discharged in coastal waters. If properly constructed, marine outfalls offer a low-cost option to alleviating coastal water pollution.40 In low- and middle-income countries, solutions proposed for wastewater treatment and disposal must meet public environmental demands and obey proper legal regulations, but must also take into account the availability of funds for new investments and operation of existing systems. UNEP does not recommend that outfalls be used as a long-term solution for the disposal of raw sewage. In the past, it was often assumed that the ocean could easily dilute wastewater; but environmental assessments have more recently shown that only organic, oxygen-consuming substances can benefit to some extent from such dilution. “Most other pollutants, such as pathogens, nutrients, and toxic materials remain in local and even global food chains, and can affect human health, disrupt ecosystems, and damage the economy and nature.”41 Despite these recognized limitations, marine outfalls continue to be used in countries around the world. The State of Rio de Janeiro in Brazil has monitored its Ipanema Submarine Outfall since 1974, and maintains that there have been no adverse ecological impacts on the marine ecosystem in the area.42 In contrast, the Australian government installed a submarine outfall for the disposal of primary treated wastewater in the Sydney area and later found substantial adverse environmental impacts. The Sydney Water Board was then forced to fund secondary treatment facilities at a substantially greater cost than if they had been constructed 30 years prior.43 Despite the potential shortcomings of marine outflows, we must recognize their potential in Mexico. When attempting to reduce coastal water pollution in tourist areas, a short-term, relatively low cost solution would be to install submarine outfalls and/or lengthen current outfalls so that the wastewater is discharged sufficiently far from the beach communities. If secondary treatment facilities are not already in place, they should be installed as soon as the funding is available.

40 Interview with David Jenkins, Professor of Environmental Engineering, UC Berkeley. 5 Apr. 2004. 41 Ibid, UNEP. 42 Jordao, Eduardo P.; Leitao, Jorge R. “Sewage and solids disposal. Are processes such as ocean disposal proper? The case of Rio De Janeiro (Brazil).” Water Science and Technology v 22 n 12 1990. p 33-43. 43 Beder, Sharon. “Getting into Deep Water: Sydney’s Extended Ocean Sewage Outfalls.” http://www.uow.edu.au/arts/sts/sbeder/sewage/elephants.html, 12 Apr. 2004.

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Set-up a System of Tradable Water Pollution Rights A system of tradable pollution permits has limited application and faces many implementation hurdles. However it is not currently viable within Mexico’s municipalities.44 We include further discussion of this option to provide for the possibility that the conditions for successful implementation outlined below are met in the future. In order for pollution trading permits to be effective, the government must be able to enforce pollution regulations and accurately measure water pollutant emissions from the source. Mexico’s enforcement of pollution regulations on municipalities has been ineffective. Without effective enforcement, municipalities can pollute with little or no worry about penalties, and have no incentive to buy permits. Without a market for permits, there is no incentive to reduce pollution. In addition, a thorough analysis of the government’s ability to accurately measure pollution levels in municipalities needs to be conducted prior to implementation. It also matters where the pollution is discharged. Pollution trading permits allow for high concentrations of pollution in specific areas.45 While the aggregate level of pollution in a watershed affects coastal areas, water pollution also has an immediate effect where it is discharged. The possibility of high concentrations of pollutants in small areas (hotspots) should cause pause due to the health effects. Therefore, even if pollution permits are permitted, maximum levels need to be set according to how quickly the pollutant diffuses in water.

44 Trading shows some promise for industrial wastewater, see Appendix H. 45 Kraemer, R. Andreas, “The Role of Tradable Permits in Water Pollution Control.” Institute for International and European Environmental Policy. http://www.ecologic.de/download/projekte/1850-1899/1872-03/1872-03_tradable_permits.PDF, 17 May 2004.

How pollution trading permits work: Pollution trading permits harness market power, provide local control, and provide incentives to reduce pollution. In this system, the federal government sets the allowable level of pollution for the country, a region, or in this case, a watershed, issues permits to pollute, and allows designated entities to trade the permits among themselves. For each unit of pollution generated the polluter has to have a pollution permit. By polluting they forego the opportunity to sell the pollution permit. Cities with high costs of pollution reduction buy permits, and cities with lower costs of pollution reduction sell the permits. Thus, the market sets the price of pollution permits and adjusts it to changes in demand and technology.

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Education and Information Strategies In addition to the structural reforms and municipal level actions described in previous sections, education and information strategies have the potential to greatly decrease coastal water pollution. Education and information strategies focus on informing individuals, both citizens and government officials, regarding their role in waste creation and disposal. Furthermore, we recommend providing increased levels of technical assistance to municipalities for the selection, operation, and maintenance of their wastewater treatment infrastructures. Introduce Education Programs SEMARNAT should introduce education programs aimed at creating and maintaining awareness among government officials and citizens regarding their dual roles as polluters and beneficiaries of wastewater management. Pilot education campaigns can be directed at three main sectors: public officials, small businesses, and local citizens. Public Officials: Educating public officials about the costs of water pollution and availability of federal funds alters decisions related to water pollution. Clear and concise information about the local costs of pollution affects the cost-benefit calculus of municipal public officials and will somewhat affect the decisions on efforts to treat or reduce wastewater pollution. Education campaigns should complement the information about the costs of pollution with guides on the resources available to municipalities for making decision about treatment/reduction options and for funding them. However, mayors and other public officials will encounter difficulty in funding wastewater treatment infrastructure without public support or understanding. Citizens: Educating citizens about the tangible hazards of water pollution can boost local political demand for pollution reduction, or at least help them accept decisions to fund treatment and waste reduction options. Local citizens of coastal communities should also understand the link between water pollution, the potential impact on the tourist industry in their coastal community, and the direct impact on their health and economic livelihood. Public interest in environmental quality will raise the pressure on polluters to comply with regulations and will increase the demand for wastewater treatment facilities. Small Businesses: Additional education campaigns should be aimed at smaller businesses which discharge inorganic pollutants directly into municipal sewer systems. These chemicals are not currently treated by wastewater treatment facilities and simple steps could stop the waste from entering waterways. Oil, chemicals, and other types of waste could be separated and collected by local government rather then being allowed to flow into the sewer system and ultimately into waterways. The results of education programs vary based on their content, the locale, and delivery. Because of the lack of data about their effectiveness in Mexico, pilot programs should be implemented with multiple measurements, and a comparison group. Once the effectiveness of the each education program is assessed, decisions about whether or not to expand the scope of the program can be made.

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Develop a Process to Select the Most Appropriate Treatment Facility There is no single approach to address the problems associated with municipal wastewater. Local circumstances define the best possible technology and implementation strategy. In particular, when deciding what type of treatment facility to put in place, careful attention must be paid to understand what resources local communities have to manage the operation and maintenance of these facilities. We recommend, as part of the education programs proposed earlier in this document, that SEMARNAT develop an education program to assist municipalities in the selection of the most appropriate wastewater treatment option.46 Such an education program could potentially include materials such as the decision tree for the selection of wastewater technology shown Appendix C. Many upstream municipalities simply do not have the funds to build and maintain wastewater treatment facilities. However, even when municipalities do have some funding available for wastewater treatment, government officials in charge of the funds do not know how to choose the most appropriate wastewater treatment option for their community. There are a large variety of conventional and less-conventional municipal wastewater treatment technologies available. Large treatment facilities consume a lot of energy, generate large quantities of excess sludge that must be disposed of or used and require relatively sophisticated equipment that requires highly skilled labor. Alternatively, more cost effective technologies such as lagoons, treatment wetlands, anaerobic treatment, and reuse schemes offer potentially more sustainable wastewater treatment options. Lagoons and stabilization ponds are inexpensive, common biological treatment options with low operational costs.47 Educating municipal decision makers regarding the various conventional and non-conventional wastewater treatment options will enable them to choose the most appropriate facility for their community. Provide Increased Technical Assistance Finally, while the National Water Commission (CNA) currently counts on a technical assistance group to help municipalities choose water treatment options, more attention should be paid to providing technical assistance to those who are in positions to make decisions about waste treatment, or to advertising the availability of these technical services. It is clear that many municipal governments have not made smart sustainable choices about wastewater treatment infrastructure (as demonstrated by the large percentage of treatment facilities that are non-operational). While many of these poor decisions may have been brought about by political choices to capitalize on state, federal, and non-governmental development money, it is likely that at least some portion of these inefficient practices were due to poor technical assessments of needs or a clear plan of action to deal with wastewater, both of which could be improved with more widely available technical assistance and sufficient advertisement of this assistance that municipal governments making choices about water treatment will know that such consultation is available. Publicly Rate Wastewater Treatment Compliance Decisions about whether or not to invest in reducing pollution are political, and rest in large part on the degree of local demand for reduction in water pollution and how well that demand is communicated to the local politicians. 46 See Appendix B for a comparison of secondary treatment options suitable to developing countries. 47 Ibid, UNEP:40.

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Grading municipalities for their level of compliance with water pollution standards and publicizing the information in an accessible fashion harnesses the power of public opinion and provides ammunition for local citizens to apply pressure on their local public officials. It also taps into inherent competitiveness among municipalities. Public rating systems tried in Indonesia, the Philippines, Canada, and Colombia have proven effective at reducing pollution where fine-and-enforcement methods failed or were more expensive.48 Introducing a public rating system that applies to all of Mexico’s larger municipalities serves to diffuse opposition to the current beach pollution rating system. Rating upstream communities allows coastal municipalities to identify the sources of pollution and apply political pressure on polluters. The effectiveness of the public rating system rests on how well results are publicized. This mechanism helps local citizens and downstream communities identify sources of pollution and direct action and/or expertise to help reduce it. For publicity, the rating may work best if SEMARNAT and Ministry of Health (SALUD) publish the municipal ratings once a year with rankings and a media campaign about the health and economic impacts of water pollution.50

48 See Appendix I for examples of public rating systems for pollution currently in practice. 49 World Bank NIPR, “Persuasion & Incentives: New Ways to Achieve a Cleaner World” Environmental Matters, Winter/Spring 1997. Also available at www.wordbank.org/nipr/envmat/index.htm on Feb 29, 2004 50 Ratings may take multiple factors into account or focus on a specific measure. These factors may include pollutions levels in municipal waterways, per capita treatment, infrastructure investment, etc.

“Armed with government certified performance ratings…environment agencies can reduce expensive legal enforcement procedures by bringing community and market pressure to bear on polluters.” - World Bank49

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Areas for Further Study The general lack of information and data regarding wastewater treatment in Mexico presents a significant challenge to selecting and implementing the policy options outlined in this paper. In order to effectively prioritize the options and gauge public support for them, additional information will need to be gathered. Promote Studies to Quantify the Economic Impact of Coastal Water Pollution We recommend that SEMARNAT attempt to quantify the economic impact of coastal water pollution. Researchers should include examination of actual and potential health costs, lost tourism revenue, and impacts to fisheries. This information could then be used to provide solid facts for educational programs put in place in coastal and upstream communities. The information will also assist other government agencies in targeting wastewater infrastructure investments to communities where they expect, or are experiencing, a high degree of economic and health impacts from polluted coastal water. Conduct a Local Public Official Survey As mentioned in the “current efforts” section, SEMARNAT is currently conducting a survey of local public officials as part of a larger econometric study of the determinants of water treatment infrastructure and operations funding. This study should give decision-makers at SEMARNAT important insights into current municipal funding decisions, but we believe that it could be improved with the inclusion of additional questions designed to investigate the municipal politics of water treatment investment. We believe that a carefully designed set of questions could piggyback on this study and, by investigating attitudes of municipal officials (whether they believe pollution originates in their municipality or some other, whether they would be willing to participate in various incentive structures, etc.) could give invaluable insights into the political feasibility of current policy proposals. Additionally, we believe this tool could be used to gauge the political feasibility at the municipal level of the policy recommendations contained in this study.51

51 For a list of current and proposed questions for the survey, please see Appendix F.

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Conclusion and Key Recommendations No country has a perfect wastewater management system. However, Mexico is not any country – it is one that is dependent on its beaches, as a source of tourism revenue and taxes – now and tomorrow. Wastewater treatment and coastal pollution abatement are complicated and multifaceted. As such, we expect that any viable solution to this problem is going to be complicated and multifaceted. We thus suggest a variety steps and policy options that we believe SEMARNAT should consider. For the purpose of prioritizing, and by virtue of the fact that some fixes must be in place for others to be effective, we group our recommendations into those to be pursued in the near-term, medium-term, and long-term. Near-term Recommendations In the near-term, we recommend that SEMARNAT pursue education campaigns and information leveraging techniques. SEMARNAT needs more political support for its wastewater policies. To get that support, it needs a populace that understands the connection between wastewater treatment, water pollution, and physical and economic health. Education campaigns can help create those connections. Furthermore, the fishing and tourism industries need to understand that water pollution will damage their long-term economic health. SEMARNAT can facilitate that understanding in the near-term. Municipalities need options and technical assistance to choose the proper wastewater treatment technology. There are a variety of technologies, and no one-size-fits-all solution. Some technologies, such as treatment plants, are better for municipalities with little land-mass and a commitment to long-term funding. Others, such as lagoons or artificial wetlands, are better for municipalities with more land and less-assured long-term funding. Many plants are either out of operation or suffering from insufficient maintenance because the wrong technology was implemented. In the near-term, SEMARNAT can do a better job of helping mayors and other decision makers choose the technology that best fits their municipality. Matching the appropriate technology to a municipality requires more than information – it requires sufficient funds. The federal government can help bring down purchase and maintenance costs through the use of matching grants. We therefore propose a system of grants whereby the federal government matches each Peso spent by municipal governments on waste treatment operations. This exchange invests municipalities in the costs of their facilities, brings the cost down, and ensures that federal monies are spent on their intended purposes. Finally, the public needs to know where the pollution is coming from. In addition to continuing transparent beach monitoring, SEMARNAT should monitor and rate municipalities based on the quality of their water discharges. The public, particularly the downstream public, needs to understand the sources of water pollution. If that information is available, it can be translated into political power at the local, state, and national levels. The sooner this information is understood and available, the sooner SEMARNAT will have the political clout needed to pursue more politically-charged policies.

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Medium-term Recommendations Despite the past difficulties in collecting fines, there are two main problems with fining polluting municipalities: fines don’t encourage innovation beyond a baseline, and they garner widespread opposition. If education campaigns and other information tools are able to effectively build support for increased wastewater treatment, then we recommend SEMARNAT pursue the implementation of a fee-and-rebate system at the watershed level. Such a system of incentives and punishments can encourage municipalities to reduce waste beyond a minimum level of pollution, and garner wider-political support from the potential winners. To institute such a system, research into sustainable watershed pollution loads must be better understood, and laws will need to be changed to make it possible for SEMARNAT (or an agent on its behalf) to collect the fees from overly polluting municipalities. But if that proves doable, and if baselines for pollution are properly set, fee-and-rebates can be a popular and effective tool for pollution abatement. Long-term Recommendations We expect that the structural changes that we recommend below will take longer than either of the above recommendations, and require increased understanding of the problem and political support. Like many nations, watersheds suffer from a lack of coordinated planning between the municipalities in the watershed. We recommend formalizing such planning by implementing autonomous wastewater districts consisting of representatives of municipalities. Such a system removes water treatment from the normal political structures of municipal governments and ensures that federal and state moneys targeted to treatment is spent on treatment.52 We believe it will take some time, but we encourage SEMARNAT’s work toward involving the courts more in environmental management. A few cases withstanding, SEMARNAT is currently the only legal opposition to polluters. If legal standing can be broadened to include all parties affected by polluters’ neglect, as it has been in the United States and other countries, we believe that it will empower these individuals and provide SEMARNAT with much-needed allies. Additionally, an increased threat of legal action will encourage polluters to clean up in advance. Furthermore, the balance of power in Mexico favors this approach, as the effected tourism industry has a wealth advantage over many of the polluters, and will thus garner greater access to the courts. In sum, SEMARNAT’s pollution abatement challenge is a challenge to all of Mexico. To overcome this challenge, SEMARNAT needs to change the game. Increasing understanding among citizens and leaders as to the causes and effects of pollution, establishing communication networks between watershed players, creating incentives as well as penalties for polluters, and involving more individuals in the legal process shifts the game in the favor of environmental health. And in Mexico, a healthy environment promotes a healthy economy.

52 A further benefit of such a system is that its scope can be expanded to address water pollution sources not discussed in this paper, such as pollution from deforested areas, agriculture pollution, and industrial pollution.

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and Sanitation Cluster, 3 United Nations Plaza. Hancock, Lynn E. and Gilmore, Michael S. “Pathogenicity of Enterococci.” Enterococcus Research Site. 11 Feb.

2000. http://www.enterococcus.ouhsc.edu/lynn_revirew.asp 14 Apr. 2004. Hanrahan, David “Persuasion and Incentives: New ways to Achieve a Cleaner World” in Environment Matters,

Winter-Spring 1997. Hernandez, Linda “Solving Water Pollution Along the US-Mexico Border,” Environment and Development

Economics: 7: 715–732 © 2002 Cambridge University Press. Hernandez, Linda “Trade’s Dynamic Solutions to Transboundary Pollution” Journal of Environmental Economics

and Management, Vol 43, pgs 286-411. Hondale, George, How Context Matters: Linking Environmental Policy to People and Place, Kumarian Press, Inc.,

West Hartford, Conneticut, 1999. Jordao, Eduardo P.; Leitao, Jorge R. “Sewage and solids disposal. Are processes such as ocean disposal proper?

The case of Rio De Janeiro (Brazil).” Water Science and Technology v 22 n 12. 1990. Kieser, Mark S., and Andy Buchsbaum. “Will EPA’s new trading policy improve water quality?” The Adviser.

Great Lakes Commission des Grand Lacs. (March-April 2003). Konar, S., M. Cohen. “Information as Regulation: The Effect of Right to Know Laws on Toxic Emissions,” Journal

of Environmental Economics and Management, March, 1996. Kraemer, R. Andreas, “The Role of Tradable Permits in Water Pollution Control.” Institute for International and

European Environmental Policy. http://www.ecologic.de/download/projekte/1850-1899/1872-03/1872-03_tradable_permits.PDF.

Kubasek, Nancy, J.D. and Gary S. Silverman, D. Environmental Law Fourth Edition. Prentice Hall, 2002.

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McGrath, Daniel T., Ph.D. “Economic Impact Analysis of Indiana Lake Michigan Beach Closures/Advisories due to E. coli Contamination Events.” The Indiana Interagency Task Force on E. coli. (February 27, 2001).

Min, Kris “Wastewater Pollution in China” available at http://darwin.bio.uci.edu/~sustain/suscoasts/krismin.htm on 2/29/04.

NRDC. “Testing the Waters, a Guide to Water Quality at Vacation Beaches: California.” Natural Resources Defense Council. (August 2003).

OECD. Environmental Performance Reviews: Mexico. Chapter 3: Water Management. 2003. Parr, Jeremy, Michael Smith and Rod Shaw. “Wastewater Treatment Options.” Water and Environmental Health at

London and Loughborough. http://www.lboro.ac.uk/well. Pendleton, Linwood, Nicole Martin, and D.G. Webster. “Public Perceptions of Environmental Quality: A Survey

Study of Beach Use and Perceptions in Los Angeles County.” Marine Pollution Bulletin. Vol. 42, No. 11, 2001. Rhodes, R. A. W., “The new governance: Governing without government” Political Studies, Vol. 44, 1996. Rich, Jan Galbreath “Environment and development in Mexico: recommendations for reconciliation”, Washington,

D.C: Center for Strategic and International Studies, c2003. Rivera-Arriaga, Evelia and Villalobos, Guillermo. “The Coast of Mexico: approaches for its management.” Ocean

and Coastal Management Vol. 44, 2001. Sudipto Mundle, U. Shankar, Shekhar Mehta. “Incentives and regulation for pollution abatement with an

application to waste water treatment,” Asian Development Bank, Economics and Development Resource Center Report Series. Manila, Philippines, 1995.

Surfrider Foundation. “State of the Beach 2003.” The Surfrider Foundation. http://www.beach.com/stateofthebeach.

Tortajada, Cecilia “Policy Failures Prevent Water Quality Progress in Mexico” Waster & Waste Water International, Vol. 18, No.3, May 2003.

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Veenstra, S., G.J. Alaerts, and M Bijlsma “Technology Selection” in Water Pollution Control – A Guide for Use Water Quality Management, WHO/UNEP, 1997.

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Internal SEMARNAT Documents Instituto Nacional de Ecologia (2004). “Programa Integral Playas Limpias (PROPLAYAS)” (Comprehensive

program for Clean Beaches). Instituto Nacional de Ecologia (2000). “Estrategia ambiental para la gestion integrada de la Zona Costera de

Mexico” (Environmental Strategy for Comprehensive Action in Mexico’s Coastal Zone. Instituto Nacional de Ecologia (2000). “Medio Ambiente y Turismo” (The Environment & Tourism). National Inventory of Municipal Waste Water Treatment Plants (2001) (Inventario Nacional de Plantas de

Tratamiento de Aguas Residuales Municipales). All Of Us Working Together Towards A Common Objective: The Sustainable Development Of Mexico National

Program Of Environment And Natural Resources 2001 – 2006 First Edition 2001. Mexican Laws

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Ley Federal Del Equilibrio Ecológico Y La Protección Al Ambiente. D.O.F. 28-I-1988 Y Sus Últimas Modificaciones Del 7-I-2000.

Ley De Aguas Nacionales D.O.F. 01-Xii-1992. Reglamento De La Ley Federal Del Equilibrio Ecológico Y La Protección Al Ambiente En Materia De Evaluación

Del Impacto D.O.F. 30-V-2000. Reglamento Interior de la Secretaría de Medio Ambiente y Recursos Naturales.D.O.F. 04-VI-2001. Reglamento de la Ley de Aguas Nacionales D.O.F. 12-I-94.

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Appendices

Appendix A: Mexico’s Beaches Monitored for Sanitary Conditions53

53 Source: http://Carpetas.Semarnat.Gob.Mx/Playas/Ver_Ingles/Mapa_Playas.Shtml.

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Appendix B: Options for Secondary Sewage Treatment54

54 Parr, Jeremy, Michael Smith and Rod Shaw. “Wastewater Treatment Options.” Water and Environmental Health at London and Loughborough. http://www.lboro.ac.uk/well.

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Appendix C: Decision Tree Selecting Wastewater Technology55

55 Ibid, UNEP.

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Appendix D: WHO “Guideline Values for Microbial Quality of Recreational Waters”56

56 Guidelines for safe recreational water environments. Volume 1, Coastal and fresh waters. World Health Organization. 2003.

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Appendix E: Selected Sections of California Public Utilities Code Relating To Water Districts SELECTED SECTIONS RE: SURRENDER OF MUNICIPAL CONTROL OF PUBLIC UTILITIES 2901. Any municipal corporation may retain or surrender to the commission the powers of control vested in it to supervise and regulate the relationship between any one or more classes of public utilities, and their present or prospective customers, consumers, or patrons, and, if it has retained such powers over any class of public utilities, may thereafter surrender such powers to the commission. 2902. This chapter shall not be construed to authorize any municipal corporation to surrender to the commission its powers of control to supervise and regulate the relationship between a public utility and the general public in matters affecting the health, convenience, and safety of the general public, including matters such as the use and repair of public streets by any public utility, the location of the poles, wires, mains, or conduits of any public utility, on, under, or above any public streets, and the speed of common carriers operating within the limits of the municipal corporation. 2903. Unless the context otherwise requires, the definitions and general provisions set forth in this article govern the construction of this chapter. 2904. "Municipal corporation" means a city and county or incorporated city. 2905. "Legislative body" means the board of supervisors, municipal council, commission, or other legislative or governing body of a municipal corporation. 2906. "Powers of control" means all powers of control vested in a municipal corporation to supervise and regulate (a) the relationship between public utilities and their present or prospective customers, consumers, or patrons. The term does not include the powers of control vested in any municipal corporation to supervise and regulate the relationship between such public utilities and the general public in matters affecting the health, convenience, and safety of the general public, including matters such as the use and repair of public streets by any public utility, the location of the poles, wires, mains, or conduits of any public utility, on, under, or above any public streets, and (b) the speed of common carriers operating within the limits of the municipal corporation. 2931. The question whether any municipal corporation shall retain its powers of control respecting one or more classes of public utilities may be submitted to the qualified electors of the municipal corporation, as provided in this chapter, either at a general municipal election or at a special election. The question may be submitted, either (a) in pursuance of an ordinance of intention adopted by a vote of three-fifths of all the members of the legislative body of the municipal corporation, declaring that the public interest requires the submission of, and that it is the intention of the legislative body to submit the question to a vote of the qualified electors of the municipal corporation or (b) in pursuance of a petition of qualified electors of the municipal corporation. 2961. Upon the adoption of an ordinance of intention, or the presentation of a petition, as provided in Article 2 (commencing with Section 2931), the

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legislative body of the municipal corporation shall, by ordinance, order the holding of a special election for the purpose of submitting to the qualified electors of the municipal corporation the propositions set forth in the ordinance of intention or in the petition, as the case may be, or the legislative body shall, by ordinance, order the submission of the propositions at a general municipal election. 2965. The ballots to be used at any general municipal election or at any special election, at which is submitted the question whether a municipal corporation shall retain its powers of control respecting public utilities shall have printed thereon, in addition to the other matters required by law, such of the following propositions as are specified in the ordinance of intention or the petition: "Proposition No. 8. Shall ____ (name of municipal corporation) retain its powers of control over water corporations?" Opposite each such proposition to be voted upon, and to the right thereof, the words "Yes" and "No" shall be printed on separate lines, with voting squares. Any voter desiring to vote in favor of the retention of the powers of control of the municipal corporation respecting any particular class of public utility, shall stamp a cross (X) in the voting square after the printed word "Yes" opposite the proposition as to such class, and any voter desiring to vote against the retention of such powers of the municipal corporation respecting any particular class of public utility, shall stamp a cross (5 ) in the voting square after the printed word "No" opposite such proposition. 2968. If it appears from the result of the election, as so declared, that a majority of the qualified electors of the municipal corporation have voted to retain the powers of control of the municipal corporation respecting any particular class of public utility, the municipal corporation is deemed to have elected to retain the powers of control respecting such class of public utility, and such powers shall be exercised by the municipal corporation until they are surrendered. 2969. If it appears from the result of the election, as so declared, that a majority of the qualified electors voted not to retain the powers of control respecting any class of public utility, the municipal corporation is deemed to have elected not to retain the powers of control, and the powers of control shall thereafter vest in and be exercised by the commission. SELECTED SECTIONS RE: CREATION & DUTIES OF UTILITY DISTRICTS 11501. This division may be cited as the "Municipal Utility District Act." 11502. Unless the context otherwise requires, the provisions of this article govern the construction of this division. 11503. "District" means a municipal utility district formed under this division or under Chapter 218 of the Statutes of 1921, as originally enacted or subsequently amended; "special district" means a special district for sewage disposal or solid waste resource recovery purposes created under this division or under Chapter 218 of the Statutes of 1921, as originally enacted or subsequently amended; and "board" means the board of directors of a district. 11504. "Public agency" includes a city, county water district, county sanitation district, or sanitary district. 11505. "Voter" means any elector who is registered under the Elections Code.

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11506. "Sewage disposal" means the acquisition, construction, enlargement, operation, and maintenance of intercepting sewers, sewage treatment works, pumping plants, outfall sewers, and appurtenances. 11507. "Percent of the total vote cast," when used with reference to the requirements of any petition or nomination paper, means percent of the total vote cast, exclusive of absent voter ballots, within the proposed district, district, proposed special district, special district, or territory proposed to be annexed to a district, as the case may be at the last general state election. 11508. "Solid Waste Resource Recovery" means the acquisition, construction, enlargement, operation, and maintenance of facilities for the purpose of collecting, reducing, separating, recovering, converting, and recycling solid waste, and for the purpose of disposing of solid waste residues. 11531. A municipal utility district may be created as provided in this division and when so created may exercise the powers herein granted. 11532. All persons who, at the time this division goes into effect, hold offices under Chapter 218 of the Statutes of 1921, as originally enacted or subsequently amended, continue to hold them according to their former tenure. 11533. Except as otherwise provided in this division elections shall be held and conducted and the result ascertained, determined, and declared in all respects as nearly as practicable in conformity with the general election laws of the State. 11534. Except as otherwise provided in this division all ordinances and notices which are required to be published shall be published once a week for two successive weeks (two publications) in a newspaper of general circulation published within the district. 11561. Any public agency together with unincorporated territory, or two or re public agencies, with or without unincorporated territory, may organize and incorporate as a municipal utility district. Public agencies and unincorporated territory included within a district may be in the same or separate counties and need not be contiguous. No public agency shall be divided in the formation of a district. 11562. A request for the formation of a district may be made by resolution or by petition as set out in this chapter. 11801. The government of every district is vested in a board of five directors, one from each ward, together with the other officers mentioned in this division. The directors shall be residents and voters of the respective wards from which they are nominated. 12721. A district may make contracts and enter into stipulations of any nature whatsoever, either in connection with eminent domain proceedings or otherwise, including, without limiting the generality of the foregoing, contracts and stipulations to indemnify and save harmless, to employ labor, and to do all acts necessary and convenient for the full exercise of the powers granted in this division. 12722. Neither the general manager nor any director of the district shall in any manner be interested, directly or indirectly, in any contract awarded or to be awarded by the board, or in the profits to be derived therefrom. Any violation of this provision is a misdemeanor, and conviction shall work a forfeiture of office. This section has no application to contracts awarded to

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corporations in which such officer owns less than 1 percent of the entire capital stock. 13456. The board may initiate proceedings for the creation of a special district for sewage disposal or solid waste resource recovery purposes within the area of the district by passing a resolution declaring that the public interest or necessity demands the creation of a special district for sewage disposal or solid waste resource recovery purposes, and describing its boundaries, which shall include all or any part of two or more public agencies. A public agency to be included may be described by name. No certified copy of the resolution need be filed with the secretary of the district.

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Appendix F: SEMARNAT Survey of Municipal Water Officers (with suggested additions)

Entidad:_______________________________________________ Municipio:______________________________________________ AGUA (al 31 de diciembre de 2003)

1. Categoría jurídica del organismo operador (tiempo con ésta) 2. Nivel de gobierno del cual depende el organismo operador 3. Existe capital extranjero en el capital social del organismo operador –porcentaje- 4. Cobertura del organismo operador (estatal, municipio, cabecera municipal, localidades, intermunicipal, interestatal). 5. Personal dependiente y no dependiente del organismo operador –número de trabajadores- 6. Gastos administrativos (remuneraciones, consumo de bienes y servicios y gastos no derivados de la actividad) 7. Ingresos por suministro de bienes y servicios (recaudación total por consumo de agua por tipo de toma y venta de

pipas y, recaudación total por derechos de conexión y alcantarillado) 8. Ingresos no derivados de la actividad 9. Valor de la producción (agua facturada y facturación por tipo de toma y distribución en pipas –volumen y precio-) 10. Cobro en bloque (número de escalones, número de medidores, tarifas) 11. Agua producida, desinfectada y suministrada –volumen- 12. Origen del agua (superficiales, subterráneas y agua en bloque –número y volumen-) 13. Destino del agua (doméstica, comercial, industrial y servicios públicos –número de tomas de agua con y sin medidor, y

conexiones al alacantarillado-) 14. Aguas residuales -número de descargas con y sin medidor, y volumen de descargas- 15. Plantas potabilizadoras (en operación, fuera de operación y en construcción –número de plantas y capacidad

instalada-) 16. Plantas de tratamiento (en operación, fuera de operación y en construcción –número de plantas y capacidad instalada-

) 17. Infraestructura de agua potable(líneas de conducción, red primaria, red secundaria –kms-) 18. Infraestructura de alcantarillado (colectores y emisores –kms-) 19. Infraestructura de tratamiento (red de distribución –kms-) 20. Tipo de área de prestación de servicios de agua y alcantarillado (urbano y rural) SUGGESTED ADDITIONAL QUESTIONS 21. Pecent of industrial wastewater that is pre-treated 22. Number of days per year in which the wastewater flow exceed the treatment capacity (rains and floods) 23. Amount of wastewater treated 24. Pollution levels of wastewater post-treatment 25. Population of area covered by the “organismo operador” 26. Percent of population connected to sewage system

LIMPIA PÚBLICA Y DISPOSICIÓN DE RESIDUOS SÓLIDOS (al 31 de diciembre de 2003)

27. Categoría jurídica del organismo operador 28. Nivel de gobierno del cual depende el organismo operador 29. Existe capital extranjero en el capital social del organismo operador –porcentaje- 30. Cobertura del organismo operador (estatal, municipio, cabecera municipal, localidades, intermunicipal, interestatal).

INSTITUTO NACIONAL DE ECOLOGÍA Proyecto: Base de datos de infraestructura y política de precios ambiental municipal Fecha de la encuesta:______/_________/ 2004 Folio:_____________ Encuestador:_____________________________________________________

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31. Personal dependiente y no dependiente del organismo operador –número de trabajadores- 32. Gastos administrativos (remuneraciones, consumo de bienes y servicios y gastos no derivados de la actividad) 33. Ingresos por suministro de bienes y servicios (recaudación total por recolección de basura, contribuciones adicionales) 34. Ingresos no derivados de la actividad 35. Cobertura del servicio de limpia pública en el municipio 36. Tipo de área de prestación de servicio de limpia pública (urbano y rural) 37. Características del tiradero de basura (tipo, distancia con respecto a la cabecera municipal, tipo de terreno en el que

su ubica, vida útil, cobertura, recuperación de biogas) 38. Tipo de basura que más recolectan/disponen 39. Infraestructura de limpia pública (número de camiones de recolección, centros de acopio, estaciones de recolección) ADMINISTRACIÓN LOCAL Y CARACTERÍSTICAS DEL MUNICIPIO 40. Año en que entró en funciones 41. Filiación partidista 42. Alternancia 43. Crecimiento de la población 44. Estructura de la PEA 45. Ingreso medio 46. Escolaridad 47. Endeudamiento por concepto de inversión en infraestructura de agua y alcantarillado y limpia pública SUGGESTED ADDITIONAL QUESTIONS 48. Location of Municipality (Coast/Inland) 49. Tourism (# Tourists/Tourism Revenue) 50. Has municipality applied for funding to expand wastewater infrastructure within the past two years? 51. Has municipality conducted any assessments of the costs or benefits of treatment plant expansion? 52. Number of Sanitary Engineers per 10,000 residents.

SUGGESTED ADDITIONAL POLITICAL/PERCEPTUAL QUESTIONS 53. Is municipal water polluted? 54. Is water pollution a concern of municipal residents? 55. Does water pollution observed in your municipality mostly originate in your municipality or neighboring municipalities? 56. What is the main source of locally produced water pollution (residential, agricultural, industrial, solid waste disposal)? 57. Would you be willing to pay water pollution fines if fine revenue was earmarked for municipal governments. 58. Do municipal governments receive sufficient technical assistance from federal government 59. Would municipality spend more on treatment if expenditures were matched by federal funds?

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Appendix G: Adjustable Implementation Features of Fees and Rebates A fee-and-rebate system for municipal waste provides wide latitude in implementation. There is room to decide the size and features of the municipalities in the program, the threshold or target level of pollution, and the size of the rebates and fees. In addition, innovative programs have started to integrate fee and rebate systems with tradable pollution permits (see Appendix H for more detail). Which Cities to Include A fee-and-rebate system does not have to include every municipality. Given that most municipal waste stems from urban areas, and that wide gaps in financial resources exist between urban and rural zones, it is more practical to focus a fee-and-rebate system on larger cities. The population threshold can and should be set by SEMARNAT. Excluding rural areas should be politically viable particularly because Mexico already has different water infrastructure policies for rural and urban areas. The same distinctions can be retained in the implementation of a fee-and-rebate system. Setting Pollution Thresholds Threshold limits for pollution – where rebates switch to fees – have to be set. The three primary methods for setting thresholds are based on the prior history of pollution, the population of the city, and on the basis of health or environmental guides. Basing threshold levels on prior history requires every city, regardless of their past history of pollution, to exert additional effort to meet the threshold. This method favors cities who have not introduced any pollution abatement methods. These municipalities will usually be able to take advantage of more lower-cost technologies than cities that were reducing water pollution before the implementation of fees and rebates. Basing allowable pollution levels on a municipality’s population provides room for adjustment, and rewards cities who have already made an effort to reduce and/or treat water pollution. This second option may be more politically viable. Allowing time for municipalities to update their wastewater infrastructure capacity prior to implementation, however, increases the political viability of the fee and rebate structure. Basing threshold levels on environmental health standards places the main focus on safeguarding the local environment (as opposed to aggregate watershed pollution). Standards have frequently been set in the form of Total Maximum Daily Loads – maximum pollution levels on waterways where the wastewater is discharged. This method places a heavier burden on large cities and does little to reduce the pollution per capita in smaller cities and cities that discharge wastewater into larger waterways. The population of the city and the size of the receiving water body affect the overall pollution levels in waterways. Large cities can reduce waste water pollution per capita, but have few options to reduce the overall city population. Setting Fees and Rebates

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When it comes to municipal water pollution, the commitment to a fee-and-rebate system has to be credible and long-term. Cities will make decisions about whether or not to invest in wastewater treatment infrastructure based on expected future returns. Year-to-year uncertainty about the size of the rebates and fees complicates local decisions about investment in water pollution infrastructure, and may deter investment. Nonetheless, this does not mean fees and rebates must remain fixed. It does, however, require advanced warning regarding upcoming changes to the structure of the fee and rebate system. A five year timetable of fee-and-rebate changes is recommended so that municipalities can calculate the costs and benefits of their investments in wastewater infrastructure. Although the fee changes require some advance notice, the penalties and rebates themselves do not have to be fixed in a given year. Penalties and rebates can be graded. SEMARNAT can assess smaller fees per-pollution-unit to municipalities that exceed the threshold by only a little and larger fees per-pollution-unit for those that exceed threshold levels by a lot. For example, penalties on the first 25% above the threshold level may be set lower than for pollution discharges that exceed the threshold by 25 to 50%, and so forth.

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Appendix H: Tradable Pollution Permits & Industrial Wastewater Several experiments in tradable pollution permits have been applied to industrial wastewater. Most of those programs where aimed a either nutrient or chemical pollutants.57 While most have produced few trades and require further investigation and evaluation, the practice shows promise. Pollution trading permits for industrial wastewater may be viable in Mexico because of the greater success in enforcing fines on industrial polluters. However, creating a functional permit trading market for water pollution remains a challenge. Pollution concentration matters and appropriate measures must be taken to ensure pollutants do not concentrate in small areas, “hot spots.” Allowing trading of pollution permits across watersheds allows for the disposal of larger amounts of pollution in small areas and increases the risk of “hot spots.” Thus, it is better to limit the trading to watersheds and set maximums for the number of permits a plant is allowed to own. However, sometimes watersheds house few industrial plants mandated to pre-treat their wastewater, leading to few trades in the watershed. Perhaps one of the more innovative approaches at limiting pollution is a combination of tradable permits and a fee-and-rebate system set up for selenium emissions in the San Luis & Delta-Mendota Water Authority in California.58 In this case, pollution permit trading allows irrigation and drainage districts to lower or expand their allowable threshold level. The fee-and-rebate system provides incentives for each of the districts to reduce pollution levels even when the market for tradable permits is weak. The system has not been evaluated in full, but it shows some promise for reducing industrial wastewater pollution. The effectiveness of such programs depends largely on the level of enforcement and pollution measurement accuracy. Mexico needs to assess the strength of their industrial wastewater enforcement and quantify the administrative and financial burden posed by such systems prior to implementation.

57 Environomics, “A Summary of U.S. Effluent and Offset Projects” prepared for the U.S. Environmental Protection Agency, Office of Water, November 1999. 58 Ibid, Environomics 1999.

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Appendix I: Public Ratings Systems in Practice For years, public rating systems have been used for various purposes, but have only recently been applied to pollution. Indonesia led the way in implementing a public rating system for pollution after it encountered difficulty in assessing fines to industrial polluters. Their system proved to be very successful and several other countries replicated it, including the Philippines, Canada, and Colombia. However, many of the applications of information are to new areas, and more time is needed to see whether the reduction in pollution arising from public rating systems will be sustained. Nevertheless, public rating systems provide a relatively cost-effective alternative to traditional enforcement of fines, and are worthy of further consideration in Mexico. Our examples focus on Indonesia and Canada because their results have been quantified and each case is similar to circumstances faced by Mexico. In Indonesia the government was faced high costs of enforcement and recalcitrant polluters. In Canada, the rating system was applied to industrial wastewater. Indonesia In 1995, faced with a 10% yearly growth in manufacturing and weak regulatory enforcement, Indonesia designed and implemented the PROPER PROKASIH program for publicly rating and disclosing the environmental performance of Indonesian factories.59 The program assigned color ratings to factories based on the government’s evaluation of environmental performance. They rated factories by whether they complied with the national standards, exceeded them, made efforts but fell short of standards, or failed to make any efforts whatsoever. The impact was immediate. Facilities were privately notified of their rating and given six months to improve their performance before public disclosure.60 The number of factories in compliance jumped from 43.7% to 52.6% in the initial two years, even as the number of rated plants grew.61 Indonesia managed to end an impasse in their ability to enforce environmental standards by using rating and media to bring pressure from local communities and the market to bear on polluters. Canada Canada applied a public rating system to wastewater pollution arising from pulp and paper plants. Regulations – in the form or fines – were already in place and, for the most part, enforced. What is unusual about the Canadian example is that it was studied by a team from the World Bank to assess whether or not public rating programs could create incentives in addition to the incentives already in place through enforcement of fines and penalties. 59 Ibid, World Bank NIPR (1997). 60 Wheeler, D., Shakeb Afsah. “Going Public on Polluters in Indonesia,” East Asian Executive Reports. International Executive Reports, Washington, DC: May 1996. Also available at http://www.worldbank.org/nipr/work_paper/proper, 14 May 2004. 61 BAPEDAL, “Summary of the March 1997 PROPER PROKASIH Evaluation,” July 1997.

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The results of the study suggested that public rating disclosure had a larger impact on both emission levels and compliance status than orders, fines, and penalties traditionally imposed by the Ministry of the Environment and the courts.62 Prior studies had concluded that public disclosure does improve environmental performance of polluters, but they had not analyzed how public disclosure fared when combined with other enforcement mechanisms.63

62 IBID Foulon, et. al. 63 Shameek Konar and Mark Cohen published a study on the role of information as regulation in 1996. Though their focus was on disclosure of the use of toxic chemicals in the US, they outlined the causal mechanisms as to how information serves as a form of quasi-regulator. Konar, S., and M. Cohen. “Information as Regulation: The Effect of Right to Know Laws on Toxic Emissions,” Journal of Environmental Economics and Management. March 1996.

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Appendix J: Pollution Sources and Intervention Points The diagram below illustrates our initial assessment of the sources of pollution that effect Mexico’s beaches, as well as the location and types of possible intervention points.