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"Latin America faces institutional and regulatory challenges that affect decision making"

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  • "Latin America faces institutional and regulatory challenges that affect decision making"

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Foro Economía Agua
Foro de la Economía del Agua is an initiative sponsored by the University of Alcalá (UAH) and aims to promote an independent space for reflection and dialogue on the urban water cycle from the perspective of its management.
Schneider Electric
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Themes

Hugo Contreras, Director of Water Strategy for Latin America, The Nature Conservancy (TNC), was one of the speakers at the 11th Water Economy Forum held on July 2nd in Puebla, Mexico, where he took part in the second session on water security in Latin American cities.

Hugo Contreras has a long career in the sector: he graduated in Economics from the Autonomous Institute of Technology of Mexico (ITAM), has a Master in Environmental and Natural Resource Economics from University College London, as well as degrees in Business Administration, Strategic Management of Public Institutions and Environmental Economics by the Business School of the Pan-American University (IPADE), Berkeley University and the World Bank.  For over 10 years he was the Director of Business Development and Institutional Relations at Bal-Ondeo, owned by Bal Group and Suez Environment, a leading water and sanitation services provider in Mexico. He has also worked as a private consultant for the Mexican firm Thesis Consultores, where he was responsible for the water practice and good governance, and prior to that he was a civil servant at the Mexican Ministry of Environment and Natural Resources (SEMARNAT), where he was Chief of Staff for the Planning Division. Among his major achievements we may note designing and implementing the first tree plantation programme based on auctionable subsidies, the implementation of the Natural Disaster Fund and the first Sustainability Programme of the Federal Government. As well, he was elected Vice-president of the Economy and Environment group of the OECD. 

Since 2013 he is TNC's Director of Water Strategy for Latin America, in charge of designing the water strategy for the region and leading its implementation in the different countries where TNC is present.  

Question: What do you think are the most relevant water security challenges in Latin America?

Answer: Water resources are abundant in Latin America and the Caribbean, since the region has nearly one third of the world's freshwater resources, while it is home to slightly more than 10% of the world's population. This means that on average, water availability would be 22,000 m3 per person per year, versus a little over 6,000 m3 worldwide. Nevertheless, there are several challenges, which include:

  • Uneven spatial distribution. 36% of Latin America's surface area is desert, and in some countries like Argentina, Chile and Mexico, this per cent increases to over 50. On the other hand, 53% of the run-off concentrates in the Amazon.
  • Highly populated areas, where most of the economic activity concentrates, are not necessarily located where water resources are available. Some examples are the Valley of Mexico, South Atlantic and the Río de la Plata basin (River Plate basin), home to 40% of the population, and with only 10% of the water resources. In Peru, 65% of the population lives in areas that only have 2% of the water resources.
  • Water and economic activity are very much correlated. 65% of the electric power is supplied by hydro plants; agriculture accounts on average for 19% of the employment, and uses about 70% of the water resources; in the Caribbean region, tourism, which is very water intensive, represents 25% of the foreign currency income. Several countries in the region, such as Brazil, Argentina and Uruguay, are strategic food suppliers serving worldwide markets.

We may highlight that traditional water resource management has given little importance to managing natural infrastructure

To these challenges we may add some triggers, such as:

  • Population growth. In the past 15 years, urban population has grown by 21% in the region; with 80% of the population living in cities, Latin America is the most urbanised region in the world. There are more than 60 cities in the region with a population of at least one million people. This exerts a huge pressure on water resources, necessary for drinking, food production and energy production, among other uses.
  • Higher income level and therefore higher demand for goods and services. Between 1990 and 2014, the average gross income per person increased fivefold, from about USD 2,000 per person per year to about USD 10,000.
  • Climate change. The impact of climate change has been recently experienced as an increase in precipitations in the south-east of Brazil, the centre and east of Argentina, Uruguay and Paraguay, parts of Bolivia and the north-west of Peru and Ecuador. On the other hand, the region has experienced severe droughts recently, such as, for example, in the Caribbean in 2009-2010, Argentina in 2011, Mexico in 2011-2012, Sao Paulo in 2014-2016 and la Paz in 2017. Recent landslides in Peru and Colombia also show an important impact and damages caused by extreme weather events, such as high precipitations in a short period of time.

Aside from the elements previously identified, the region faces institutional and regulatory challenges that lead to less effective and efficient decision making and make integrated resource management difficult. In general, we observe governance structures that comprise various levels, complicate decision making and inhibit collective action, hindering capacity building and innovation. Some widespread challenges include:

  • Public policy failures, such as fragmentation of roles and responsibilities, which make coordination of policies and agencies difficult;
  • Lack of appropriate accountability mechanisms;
  • Inadequate financing;
  • Information gaps;
  • Inadequate capacity to design and implement policies and projects.

TNC's water security strategy in the region prioritises collective action models that help strengthen water governance and nature-based solutions to complement traditional grey solutions

Finally, we may highlight that traditional water resource management has given little importance to managing natural infrastructure. This is even though scientific evidence increasingly shows that to ensure water security, it is necessary, although not enough, to maintain the integrity of ecosystems or natural areas supplying water to the population, economic activity and the environment. Similarly, they protect from the effects of extreme hydrometeorological events such as droughts and floods. Some examples of this are:

  • The loss of natural ecosystems due to changes in land use becomes apparent in other phenomena such as deforestation. From 2000 to 2005, 64% of deforestation worldwide took place in Latin America;
  • The need to manage our natural wealth. Most of the planet's biological diversity occurs in this region. It has 227 Ramsar sites with more than 35 million hectares; nearly one fourth of all continental fish species live in its water bodies; it has the largest wetland on Earth — the Pantanal — with almost 200,000 square kilometres, contributing to regulate the hydrology of an important portion of the continent.

Q: To this effect, how does The Nature Conservancy contribute to addressing these challenges?

A: TNC's water security strategy in the region prioritises collective action models that help strengthen water governance and nature-based solutions to complement traditional grey solutions. For this purpose, TNC fostered the creation of the Latin American Water Funds Partnership. The Latin American Water Funds Partnership is an agreement created in 2011 between the Inter-American Development Bank (IADB), FEMSA Foundation, the Global Environment Facility (GEF), the International Climate Initiative (IKI), and The Nature Conservancy (TNC) to contribute to water security in Latin America and the Caribbean.

The partnership supports the Water Funds with scientific knowledge to achieve and maintain water security with nature-based solutions; with systematization, management and dissemination of knowledge, capacity building and technical advice; promotion of dialogue among relevant stakeholders in the region in an inclusive manner, promoting collective action; active participation in the design of water governance and the mobilization of resources from public and private sources.

In Mexico, almost 70% of the population lives in an area with only 27% of the water resources.

Water Funds are organisations that design and promote financing and governance mechanisms involving private, public and civil society actors, in order to contribute to water security and sustainable river basin management through nature-based solutions. In this regard, the funds contribute to improving water security in the regions or cities where they are created through six types of actions:

  • Provide scientific evidence that contributes to improving knowledge about water security;
  • Develop a shared and actionable Water Security vision;
  • Convene different stakeholders that through collective action can raise the political will necessary to achieve significant, positive and substantial impacts;
  • Positively influence water governance and decision making processes;
  • Promote and encourage the implementation of natural infrastructure projects and other innovative projects in basins;
  • Offer an attractive way to invest resources cost-efficiently in water sources in basins.

Q: Can you please tell us about water security in Mexico and the measures the country is adopting in the context of climate change.

A: Although in general water security risks in Mexico are similar to those in the rest of Latin America, in this country we can find some aggravating factors:

  • The distribution of water resources is very uneven in Mexico. Almost 70% of the population lives in an area with only 27% of the water resources. Almost 80% of the GDP is produced in that same area.
  • Aquifer depletion, especially in areas with high population density and strong economy activity. 106 of 653 (16%) of the aquifers are overexploited.
  • In 2030, the water demand is expected to exceed the sustainable supply by at least 34%.
  • The country is very vulnerable to the effects of climate change. Most of the country, and particularly large cities, are exposed or are vulnerable to damages due to climate change such as those caused by cyclones, hurricanes and floods. In addition, it is very vulnerable to the loss of biodiversity, particularly coastal zones.
  • Quality deterioration. An important percentage (>50%) of waste water is discharged untreated.
  • The OECD describes water governance as weak. The Water Law shows a certain lag when compared with the legal frameworks in other countries in the region. For more than ten years now there have been discussions about the need for a new water law, and no progress has been made.
  • Institutional weakness linked to a decrease in the budget allocated to the National Water Commission (CONAGUA), as well as a lack of resources by States.  

Q: How did you get involved with the Water Economy Forum?

A: I first became involved with the Forum through the website. I first met Gonzalo Delacámara formally at an event organised by the Association of Latin American Regulatory Entities (ADERASA) in Argentina a couple of years ago.

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