Water Rates Based on Customers’ Income

Instituto Mexicano de Tecnología del Agua (IMTA), México 

Abstract: The provision of potable water and treatment services in Mexico is under the responsibility of municipal-level governments in keeping with the Mexican Constitution. This legal particularity, however, is at the heart of many unmet challenges in the water-service sector, especially in the areas of financial, technical and quality management because it gives municipalities autonomy over these matters, making it difficult to establish a standardized and efficient national protocol. One of the most overlooked yet vital challenges herein, lies with payment and collections deficiencies which cause water utilities to operate unsustainably and accrue debt. This investigation has the objective of creating a restructured water-rate system for utilities on the basis of certain economic factors such as customer salary, type of home, an adequate customer classification and the types of public services contracted so as to create a new water rate that will allow water utilities to operate in a financially balanced way while still being affordable to the customer. A case study was carried out in the Mexican town of Erongarícuaro, Michoacán to propose different payment alternatives on the basis of the analysis of key economic indexes.