Mobilizing Investment for Municipal Water Supply Services

Abstract

Globalization and trade can bear the potential for economic growth, modernization and new technologies for some of the poorest regions of the world. At the same time, they can be a force for harm if not managed effectively, by affecting sensitive ecological areas and by straining water security for local populations. Opening up trade in a previously closed area tends to have a great and diverse impact. As economic activity grows, populations tend to migrate to the new areas of opportunity, and this puts stress on water supply chains. New developments tend to spring up in haphazard fashion as businesses open up and housing is built around the workplace. Generally, infrastructure in place is inadequate to handle the influx of people and the change of socioeconomic dynamics. This chapter discusses the impact of trade on water supply services for the US-Mexican border, as a result of the North American Free Trade Agreement (NAFTA). The chapter shows the roles of local communities, federal governments, international agencies and the private sector to create an environment that is conducive to investments in infrastructure. Globalization and trade have the potential to expose weak water systems and bring them to a crisis point if local economic growth is not coupled with proportionate institutional strengthening of water utilities and the fiscal environment in which they operate. On the other hand, beneficial impacts from globalization and trade can be expected for local communities when water supply systems function well and are well financed.