The cross-border water business,

promoted under PPP schemes, and their link with multi-service transnational corporations

Since 2012, California is in a serious water crisis due to the region’s historic drought and overexploitation of existing water sources. Water has been one of the key factors in California’s economic growth, which is considered as the sixth global economy (it is estimated that its GDP is twice that of Mexico’s) and in turn constitutes one of the most transformed landscapes in the world by human activity. This condition has been made possible through the extensive development of agroindustry in its valleys, the establishment of various industries in its territory, the explosive urban growth of its main cities, mining activities, tourism, the boosting of the oil and gas industry (with the increase in the use of fracking) and the construction of large infrastructures of transport based on the automobile. All these activities consume a significant volume of water.

Even though a few months ago the heavy rains somewhat contained the drought, the situation is still on alert and the government has implemented mitigation measures and has undertaken the search for alternative water sources to guarantee water security in the region. One of those possible sources is Mexico, specifically, Baja California.

The neutralizing function of Baja California with respect to the crises in California can be clearly exemplified when considering the installation of energy infrastructures and power generation plants in Baja California territory after the 2000-2001 California energy crisis (projected by the same transnational energy companies). Since then, gas pipelines, thermoelectric plants, wind farms, a liquefied natural gas regasification plant and cross-border transmission lines have been built in the state; whose production has as its main destination the Californian electric market. Currently, more than 40% of the electricity generated in Baja California is exported to California and is controlled by several multinational energy companies. Now, with the Californian water crisis, Baja California again fulfills its countervailing function, this time, with water.

However, before constructing and operating the water infrastructure in Baja California to export water to California and seek to mitigate its crisis, the legal basis had to be created to carry out these plans. Apart from the PPP Act, which allowed private companies to build and privatize infrastructures, it was necessary to be able to privatize the water service as a whole.

The State Water Law was approved at early hours of December 20, 2016, in the historic session in which the Congress and the State Executive offered Baja California to the private sector. The law called for the privatization of the state’s potable water, drainage and sewer service. It also established an initial 20% increase in water consumption tariffs and the subsequent liberalization of the same in 2018, as well as the possibility of a cut in supply after 90 days of default. It also eliminated state commissions from public services and replaced them with two operators: Costa Zone, for the municipalities of Tecate, Tijuana, Playas de Rosarito and Ensenada; and that of the Valle Zone, for Mexicali. The state administration’s argument to promote the law was the severe drought and water shortage that is experienced in Baja California, but in contrary, in turn, propelled the Mexicali Valley to build a beer production plant for Constellation Brands, which would export 10 million hectoliters per year to the United States, and the construction of an aqueduct with public money to deliver water to the plant.

The massive mobilizations of January 2017 in Mexicali and in other municipalities forced Governor Francisco Vega to send the Congress a repeal initiative, which was unanimously voted on January 19, just one month after its approval. The people of Baja California succeeded in bringing down the privatization plans for the water service, but not the privatization of the production and transportation of the liquid infrastructures. It was possible to remove one foot to the privatizing plans of the government, but the other one stays: The APPs

Here, the analysis on the territorial aspects of the projects related to the cross-border water business, promoted under PPP schemes, and their link with multi-service transnational corporations:

Rosarito desalination plant
One of the major projects approved in judgment 62 (ratified with the decree 57), is the desalination plant of Playas de Rosarito, which will be.... Continue reading article here

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