Sustainable Water Management in Ciudad Juarez

Water resources in many parts of the world are subject to increasing stress because of (a) the growth in demand caused by population increase and economic development, (b) threats to supply caused by climate and land cover change, and (c) a heightened awareness of the importance of maintaining water supplies to other parts of the ecosystem. An additional factor is the quality of water management. The United States-Mexican border provides an example of poor water management combined with increasing demand for water resources that are both scarce and uncertain. This dissertation focuses on the problem of water management in the border city of Ciudad Juarez, Chihuahua. The city has attracted foreign investment during the last few decades, largely due to relatively low environmental and labor costs, and to a range of tax incentives and concessions. This has led to economic and population growth, but also to higher demand for public services such as water which leads to congestion and scarcity. In particular, as water resources have become scarce, the cost of water supply has increased. The dissertation analyzes the conditions that allow for the efficient use of water resources at sustainable levels of economic activity—i.e., employment and investment. In particular, it analyzes the water management strategies that lead to an efficient and sustainable use of water when the source of water is either an aquifer, or there is conjunctive use of ground and imported water. The first part of the dissertation constructs a model of the interactive effects of water supply, wage rates, inward migration of labor and inward investment of capital. It shows how growing water scarcity affects population growth through the impact it has ii on real wage rates, and how this erodes the comparative advantage of Ciudad Juarez— low wages—to the point where foreign investment stops. This reveals the very close connection between water management and the level of economic activity in Ciuda