NUEVO LEON PLANNING AHEAD TO AVOID WATER SHORTAGES.

UNCLAS SECTION 01 OF 02 MONTERREY 000198

SIPDIS

E.O. 12958: N/A
TAGS: SENV ECON EINV EAGR MX
SUBJECT: NUEVO LEON PLANNING AHEAD TO AVOID WATER SHORTAGES.

REF: MEXICO 0264

MONTERREY 00000198 001.2 OF 002



1. Summary. The northern border state of Nuevo Leon is
currently only able to guarantee unrestricted access to water
through 2015. Experts predict water shortages in border states
will be brought on by booming population growth and climate
change induced droughts. These shortages will lead to increased
water competition among the northern border states and possibly
limit economic growth in the region. It is possible Nuevo Leon,
especially the Monterrey metropolitan area, will have water
restrictions put in place in the near term such as those seen in
Mexico City this year (See reftel). To avoid this scenario, the
state government is working to expand additional infrastructure
and, led by its state Water Institute, has begun planning for
the long term. End Summary.



Water Availability Predictions




2. The state of Nuevo Leon is currently running a water surplus
but this surplus is expected to disappear within the next few
years. According to statistics provided by the state owned
water utility, Servicios de Agua Y Drenaje de Monterrey (SADM),
unrestricted water supply is only guaranteed until 2015. The
residents of Nuevo Leon receive 60% of their water from three
main water reservoirs on the San Juan River which cuts across
the middle of the state. Most of the remaining 40% of water
needs of the state come from aquifers. The water supply and the
water infrastructure has remained constant and adequate for the
last ten years even as the population has grown over 40%. Jean
Leautaud, the administrative director for SADM, believes the
state can extend capacity with quick pipeline and well upgrades
from 10 m3/sec to 17 m3/sec of water to meet the state's water
needs through 2025. On the sanitation side, 100% of the state's
waste water is already treated for reuse in agricultural or
industrial plants. Nuevo Leon GDP per capita is nearly twice
the Mexican average thus giving it the resources to build a
modern infrastructure. In March 2009, SADM began the first of
these infrastructure upgrades named, Monterrey V, in an effort
to provide additional capacity to outlying regions of the
Monterrey metropolitan area. This US$230 million project was
financed by the Interamerican Development Bank and the Monterrey
based commercial bank Banorte, and is expected to be completed
by the end of 2010.




3. SADM's efficiency is nearly on par with U.S. standards so
there are limited benefits to conservation efforts. According
to Leautaud, only 28% of transported water is lost due to
leakage or theft. This compares to 25% for the United States
and 45% in the Federal District. In terms of the personal
consumption, water usage per household has decreased 20% in the
last 10 years. Leautaud cites the state's active primary
school culture of water educational programs and public outreach
efforts.



Future Water Sources




4. Past the year 2025, Nuevo Leon will need to look outside of
its borders for additional water supplies and the state will
need to change how it uses its water. In addition to expected
population growth of 20% in 15 years, the northern Mexican
region is vulnerable to drought brought on by global warming.
The expected surface and subterranean water supplies will not be
adequate to meet the expected demand. In April 2008, a
interagency water board was created to address long-term water
supply. Led by the Nuevo Leon Water Institute (IANL),the board
also consists of the National Water Commission (CONAGUA),the
Mexican Water Institute, the Autonomous University of Nuevo
Leon, and SADM. Based on a conversation with Dr. Belzahet
Trevino, Director General of IANL, the water board is currently
looking at two proposals to increase the water supply: 1) A
desalinization plant off the coast of the neighboring state of
Tamaulipas, and 2) New water sources from the southern state of
Veracruz. Both proposals are costly but will be necessary to
meet the future demand. Dr. Trevino adds that inevitably the
state will also need to readjust its water usage. Currently 70%
of water in the state is used for agricultural purposes.
Within a matter of years the state will need to begin
discussions on how to reduce water demand by the state's farmers
and ranchers.

MONTERREY 00000198 002.2 OF 002





The Nuevo Leon State Water Institute




5. The IANL is the state's leading water research and
development agency. The institute expects to start the first
ever project to monitor hydroclimatic changes along the border
area. This USD$3 million dollar project will be financed by
Mexico's National Commission of Science and Technology and the
launch of the study will be announced at this year's Border
Governor's Conference in August. The results of the research
will be used to help in the decision making process for public
officials in the border area. In addition to policy
recommendations to increase the supply of water, the IANL hopes
to extend potable water to rural areas and improve management of
sewage water. Potable water is available to 95% of the state's
population, which is better than the 88% national average.
IANL is working to extend the state's water supply to 100% of
the population in a sustainable fashion. IANL is also
investigating the sale of sludge from waste water to local
cement and steel companies which can then convert the sludge
into energy. The institute has advanced past the proof of
concept phase of the project and is seeking a private company to
run the project and provide USD$10 million in financing. The
project anticipates profits not just from the sale of the sludge
to energy consumers but also through the sale of carbon credits
in the international market since the methane producing sludge
will not be sent to a landfill.




6. Comment. Barring a prolonged drought in the region, the
state appears to be on track to meeting its water needs in the
short term. In the long run, Nuevo Leon, along with Coahuila
and Chihuahua, with large populations in desert climates, will
be one of many states looking to the south for additional water
capacity. While a desalinization plant may be an option for the
state, it remains prohibitively expensive given the state's
budget. It was surprising to learn that even though water
issues have been a concern for years the state's water board
only began its work 12 months ago. With water shortages
looming, the competition for water rights will have to be
settled in the next few years to avoid widespread economic and
ecological disruptions. End Comment.
WILLIAMSON