Mexico Water Crisis Could Cost Up to 5% of GDP, Experts Warn

Mexico's water crisis could cost the country's economy between four to five percentage points of GDP, according to experts. This economic impact surpasses the global average impact of 2 to 10 percent of GDP that nations are experiencing due to water deterioration and scarcity. The Water Advisory Council (CCA) estimates that one percent of GDP is equivalent to around 350 billion pesos (US$20.5 billion) annually, which would need to be sustained for at least a decade to address the crisis effectively.

Currently, Mexico's investment in water is far below the recommended level, which is 1.3 percent of GDP per year. President Claudia Sheinbaum's government has allocated 186 billion pesos (US$10.9 billion) for water investment through 2030, but this falls short of the necessary investment, as acknowledged by the CCA. Agriculture accounts for approximately 76 percent of water usage in Mexico, and experts warn that curbs on agricultural production, rising costs, and supply-chain disruptions could result from the crisis.

Insufficient water treatment and discharges in 2023 already caused losses of over 66 billion pesos (US$3.87 billion), with losses including aquifer depletion anticipated to exceed 102 billion pesos (US$5.99 billion). This annual loss is approximately half of what a serious investment program would cost, meaning that Mexico is already paying for the problem without addressing its root causes.