Multinational Corporations Are Sucking Mexico Dry

In Mexico, water has been transformed from a public resource into a commodity to be sold for profit. It means that corporations can consume water in high quantities while people lack basic access to drinking water.

Residents line up to collect clean water from a pipa northwest of Monterrey, Nuevo León, June 8, 2022. (JULIO CESAR AGUILAR/AFP via Getty Images)

Imagine a city of 5 million people where temperatures routinely top a hundred degrees. Now imagine that city without water. Two of the city’s reservoirs have run dry, schools have cut class hours, and supermarket shelves are emptied of bottled water in fits of panic buying. Lines of cars snake through the streets to buy whatever water they can, while residents from the hardest-hit areas roam from one neighborhood to another looking for a tank, a spigot, anything that will allow them to fill the empty containers they’ve lugged along. Lines stretch for hours on end.

This is not an exercise in dystopian imagination or some Mad Max spin-off: this is Monterrey, Mexico, today.

Not the Drought but the Plunder

This industrial hub and capital of the state of Nuevo León, barely two and a half hours from the Texas border along Route 85, is not just the epicenter of a burgeoning water crisis — it is a case study of the inequities that have produced it. In between untimely trips abroad and furious outbursts about the lack of support he is supposedly receiving from other states, the governor — frivolous social media influencer Samuel García — blames climate change for the record drought. And while global warming is undoubtedly an important and ever-increasing factor, there is much more to this story.

Monterrey is also home to the nation’s soft-drink and beer industry, whose factories — much to the anger of local residents — have not ceased pumping millions of gallons of water throughout the crisis. In fact, fifteen of the largest water hogs (including the steel giant Ternium and two subsidiaries of Coca-Cola) are based in the city and account, alone, for 11.8 billion gallons annually — more than forty times the amount assigned for domestic use.

In the nearby countryside, luxury ranches boast of private dams and artificial lakes filled with water deviated from nearby rivers. And while Governor García engages in quixotic attempts to seed clouds for rain, he also found time to attend the kickoff ceremony of another deep well for Heineken, another top water hog, which bought out Mexico’s emblematic Cuauhtémoc beer company in 2010. All of this goes a long way toward explaining why local activists have adopted the following slogan on the source of the crisis: No es sequía, es saqueo (It’s not drought, it’s plunder).

Savage Inequalities

Although Monterrey is just the most glaring — and grotesque — example, Mexico’s water crisis is national. In a country where 40 percent of the territory is arid or semiarid to begin with, over half is currently experiencing moderate to severe drought. With water shortages in certain cities dating back years if not decades, many citizens are already accustomed to a regular ritual of buying water for general use from private water trucks known as pipas.

And as water from the tap — when it comes — is undrinkable, nearly everyone is forced to buy private drinking water in the form of five-gallon containers known as garrafones: a lucrative business in which multinationals such as Bonafont, owned by Danone, have an ever-stronger foothold.

With public water fountains virtually nonexistent, and with six out of ten rivers suffering from serious levels of contamination, the stark fact in Mexico is that, if you don’t have money for a garrafón or fuel to boil your water, what you wind up drinking will almost certainly be unsafe. It should surprise no one, then, that Mexicans are the largest consumers of bottled water in the world. (And of soft drinks as well, fueling a raging diabetes epidemic.)

None of this is due, as one may think, to lack of supply. Quite the contrary, in fact: Mexico is ranked number four in the world in terms of the amount of water extracted from the ground. The problem lies in the savage inequalities of its distribution. Of this water, barely 1 percent goes to domestic use; the other 99 percent goes to feed the voracious maw of the nation’s agro industry and mining sector, together with other large-scale industries like processed foods, real estate, chemicals, pharmaceuticals, and auto parts. Fully a fifth of the nation’s water is in the hands of a reduced group of 3,304 licensees, which are drawing water from 99 of its 115 exploitable aquifers.

The culprit for such a dire state of affairs is not hard to trace: the National Water Law (Ley de aguas nacionales), passed by the Salinas de Gortari administration in the run-up to NAFTA in 1992. Like so much else passed in the Gortari years, the law was designed to transfer public resources into corporate hands. This it did with a vengeance: according to Elena Burns Stuck, the subdirector for water administration for the federal agency CONAGUA, 75 percernt of all water licenses have been issued since the law was passed, due to the pressure from courts.

The system, she notes, was designed to create water markets, and artificial ones at that: once the aquifers were legally determined, some 250,000 licenses were handed out on the spot in order to inflate their prices. Thus began a system of over-licensing which has only become worse as the agency is required to hand more and more permits out the door. Across the country, Burns Stuck explains, “an industry of lawyers has emerged that obtain licenses for their clients, filing claims against the agency for not issuing the licenses within sixty days, as the current law requires.” For years, then, licenses have been churned out without limit, without field inspections, and without controlling whether they were used for their original purposes or — as regularly happens — sold and resold.

The Water Millionaires

Thus were born the “water millionaires,” a select group of elite families and companies that have accumulated vast water rights to their very lucrative advantage. This includes mining mogul Germán Larrea, Mexico’s second-richest man, and TV magnate Ricardo Salinas Pliego, the nation’s third-richest; the Robinson Bours family, owner of the Bachoco food company; Alonso Ancira Elizondo, owner of the steel company Altos Hornos de México, who recently agreed to pay $216 million in fines for selling a junk fertilizer plant to the state oil company PEMEX during the government of Enrique Peña Nieto; and luxury resort developers Daniel Chávez Morán and Miguel Quintana Pali, founder of the Xcaret theme parks on the Yucatán Peninsula.

Together, these elites control an estimated 26.6 billion cubic feet of water. Meanwhile, Coca-Cola, Pepsi, Danone, Nestlé, Bimbo, and Aga suck another 133 billion liters (35 billion gallons) a year out of the ground. While over a third of Mexican households lack daily, basic piped water in their homes, these and other companies are literally sucking water from under their feet in order to sell it back to them in bottles, cans, and cartons.

Keenly aware of the massive market potential of water scarcity, Mexico’s banks — nearly all foreign-owned — have gotten in on the act. Santander has thirty-five licenses; HSBC twenty-five, and BBVA ten. Two of these licenses alone, in Nayarit and the Lerma-Santiago Basin, allow it to exploit over 130 million cubic gallons of water a year. All of this while banks in Mexico are making record profits and as water is now being traded as a commodity on stock markets such as the Chicago Mercantile Exchange.

Given this state of affairs, it is not surprising that people have begun taking matters into their own hands. In Querétaro, residents have marched and blocked streets in protest against a new state government law allowing the privatization of water services. In Chiapas, citizens have mobilized against Coca-Cola wells in the region. In Puebla, activist organizations have protested against their own privatized water services, which date back nearly a decade. And in the town of Juan. C Bonilla, Puebla, residents went one better, occupying a Bonafont bottling plant for nearly a year before being evicted in February. According to the mayor, the plant will only be allowed to operate as a distribution center in the future, with no access to the town’s aquifers.

A Matter of National Security

Although water is primarily managed at a state and local level in Mexico, the Monterrey crisis — and Governor García’s cartoonish mismanagement of it — has nudged the federal government into action. After years of insisting that it is powerless to revoke licenses, CONAGUA, at AMLO’s urging, has cajoled industry leaders in Nuevo León to cede a third of their water to the local grid for the duration of the crisis.

While this is a necessary first step, the agreement is not only temporary but, as these corporations routinely hold rights to more water than they actually need or use, only amounts to a voluntary returning of the excess they should never have had in the first place.

In Mexico, water is not just a legal right but, in theory, a constitutional one as well. While Article 27 establishes that water is primordially owned by the nation, Article 4 is very clear to the effect that “every person has the right of access, provision and drainage of water for personal and domestic consumption in a sufficient, healthy, acceptable and affordable manner.”

As things stand, this provision is a dead letter. While AMLO has been clear in defining energy and food sovereignty as matters of national security, he has not made the same argument for water, where it is all the more applicable.

His administration should immediately move to revoke the National Water Law, replacing it with one that respects the Constitution by recognizing public and community rights to the resource, together with clear and binding provisions for its conservation. It should also, as it has done in other areas, review all contracts and licenses, revoking those that are abusive or were issued or acquired through corruption and fraud.

As the future habitability of large swaths of the country hangs in the balance, there is little that is more urgent.

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Kurt Hackbarth is a writer, playwright, freelance journalist, and the cofounder of the independent media project “MexElects.” He is currently coauthoring a book on the 2018 Mexican election.

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