Tuesday, August 01, 2006

Mexico City Chatter on Things Mexican, Governance & Water Reform

Abstract: Current events, bold research from the distant past, and my summer vacation.

The World Planning Congress was held in Mexico City last month. I presented a progress report on my ongoing work on U.S. housing consumption trends over the past 20 years using the American Housing Survey, though I couldn't quite get the just released 2005 survey into shape for the talk, so that only went to 2003. There were unexpectedly a couple of housing economist ringers in the audience so I did get good feedback on problems with my data.

I served as peer reviewer for a great session on decentralization issues, with papers by Victoria Beard (collective action vs. social capital vs. social movements), Amrita Daniere & Lois Takahashi (Thailand), Chris Silver (Indonesia), and Paul Smoke (Cambodia). Too bad we had to change time slots; this wasn't conveyed to our target audience successfully, losing us market share, but we had a good discussion among ourselves just the same.

Random current events
We have family in the DF as my wife is a chilanga, born and raised before migrating to MIT for the SPURS program (her ill-fated plan was to return to Mexico to work for the ill-fated Donaldo Colosio, not marry, to her family's great embarassment, an estadounidense). That same family was very concerned that we would be staying downtown for a few days. While a beautiful venue and in many respects a terrific planning environment, it was the petty crime rate that worried them. As recently as the early 1990s, the city was as safe as Cairo or Tokyo but the ravages of the economy since have undone that to the point where many in the middle class are now afraid to walk the streets in the urban core, especially after dark. A pity to be sure.

Lots happening politics-wise during July. We first drove to Oaxaca on a wonderful toll road (a private initiative that went bankrupt and has been repossessed by the government) for a few days. (Oaxaca is highly recommended for a long list of right reasons. For example, do you like to eat well? Enjoy art or culture? Archeology?) These days there is a substantial teachers' strike going on. Perhaps tens of thousands were occupying the main square in the historic district, demanding a doubling of salaries and the resignation of the governor. The larger context and agenda are less clear to me, though my 18 year-old niece and future lawyer and then president of Mexico spent quite some time trying to get to the bottom of things. The governor sent the police to clear them out in late June but the effort was half-hearted and the teachers returned within a couple of hours, where quite a number remain active.

You may be more familiar with the presidential election, still ongoing as well. The president can serve for 1 term of 6 years. The PRI, a coalition party when formed early in the last century, dominated both national and local politics until they lost the last presidential election to the PAN (to the right of the PRI, but probably to the left of our own Democratic party). In the meantime, a splinter part of the PRI formed to its left known as the PRD. (Actually, I believe all opposition parties are splinters of the PRI.) Got that? PRD - PRI - PAN, left to right. Mexico City has only had elected mayors since the late 1990s, and they have all been PRD.

Polls before the election showed a convincing lead by the PRD candidate, the former mayor of Mexico City (Mr. Obrador, here on the left). In what most foreign observers have called the cleanest election in modern times, the elections commission announced the day of the election, July 2, that the PAN candidate (Mr. Calderón, on the right) was ahead by about 400,000 votes. The next day they announced the PRD candidate had pulled ahead. The day after that they declared the PAN candidate the victor, by some 240,000 of 41 million cast. (The PRI candidate was a distant third.) To date, the PRD candidate has organized at least 3 massive demonstrations to protest this outcome in the Valley of Mexico (where a 5th of the country lives), demanding a recount based mainly on some anectdotal stories of fraud, and a large number of his supporters are occupying the main square. (See here for several sympathetic takes on the PRD actions, and here for an unsympathetic view.) An independent judicial tribunal, formed exclusively to deal with elections, has until September 6 to rule on the election. (August 5 update: The election tribunal has rejected a full recount in favor of a partial one but has yet to rule on the fraud allegations.) They could validate the results as they stand, announce a new result, or call for another election.

It will be very interesting and people are quite on edge. In part it is a test of the democratic system of open elections, still quite new to Mexico.

Planning research
1. Goverance reform: As a boy I was a Fulbright professor at the Colegio de México in 1989/90, studying Mexican intergovernmental reform & fiscal federalism, a burning issue still. While nearly as decentralized on paper as the U.S., the center still generates the money and spends it, with relatively little local fiscal autonomy. Tijuana (said by Krusty the Clown to be the the happiest place on earth), and some other municipalities that went PAN some years ago have shown considerable entrepreurial ability to go their own way, spending and revenue wise, but this is severly limited by the one 3-year term limit for mayors and the tight fiscal reins of the state and center.

Later, I drafted a paper while a research fellow at the UCSD Center for U.S.-Mexican Studies titled, "City planning as nation building: The case of Mexico," which mainly had a terrific abstract. At the time, many leading political scientists studying Mexico claimed that the PRI had a lock on the country's leadership, especially after their candidate (now Yale professor) Zedillo unexpectedly won a very clean election in 1994; indeed, given its broad public support at the time, the PRI was widely referred to as the "perfect dictatorship." By contrast, my paper (or powerpoint presentation, really) argued that opposition party leaders couldn't get elected to national office in part simply because their parties had little experience in actual governing.

I argued that municipal responsiveness to pressing planning issues would likely change this, however. As political competition at the local level became the norm, as it did in the mid 1990s, candidates would compete over municipal issues, such as as planning conflicts. Reform-oriented parties such as the PAN would get elected mayor and then governor if they could deliver on those issues. (I interviewed the mayor of Tijuana at the time, Hector Osuna -- now Senator Osuna -- and he had a healthy line of neighborhood groups waiting to see him about a long list of conventional planning problems. His attention to their concerns said more to me than anything in our formal interview. He was PAN but mayoral elections continue to be extremely contested on such issues. The current mayor is PRI, for example, though his immense wealth, ~$500 million from indeterminate sources, and associated out-sized life and personality do not fit my narrative very well.) Once the party had governing experience, citizens would consider them for national office. My interviews in Tijuana and the growing success of opposition candidates in state and local elections seemed to bear this out and, as the paper predicted 5 years earlier, a PAN candidate, Vicente Fox, was elected president in 2000.

It was a good idea for a paper but I never had faith I understood the situation or the country well enough to wrap it up. (My Mexican family has a saying that "Mexican politics is hard to understand, especially for Mexicans.") Still, all these issues of how government is structured and might be expected to reform at the local and intergovernmental levels are very timely.

2. Mexico City Water: Next I was part of a binational team studying water in the Valley of Mexico, also a continuing set of challenges, now even more politicized than before. As the only planner on the committee, along with a number of engineers, lawyers, and public health professionals, my one contribution was to keep repeating that the price system was all messed up. (Talk about the difficulties of multidisciplinary research: One colleague admitted early on that the demand and fiscal sides were important but wondered aloud why, in a book, we needed to spend more than a page on that. I ended up negotiating a full chapter but it was not easy.) The City alone was running a US$ 1 billion deficit in its water sector in the early 1990s, water bills were not being paid or collected, the leakage rate was somewhere around 50%, land subsidance from dropping water tables was substantial, water shortages were rampant, and the new arriving immigrants in the Valley were not getting reliable water service. A substantial share of water is imported from 100 kilometers away, up over the mountains at great expense.

On the one hand water was terribly scarce; on the other it was wasted. There was no money for either repairs or extending service to the millions of new residents, so the underserved bought it from trucks at some large multiple of what piped water would be.

In the end, fixing the revenue problem to both signal scarcity to users and to provide funds for system upgrades was a major recommendation of our study. But this was an academic study with no captive audience in government, and the water department in particular didn't seem to get why the solution wasn't just to go find some more water in another river valley somewhere and pipe it in.

Then the government started a privatization experiment that seemed sort of novel in some respects. For Mexico City only (roughly a third of the valley's population), they awarded 4 separate management contracts (no sale of assets) to 4 consortiums of private water companies (each partnered with a Mexican firm), one for each quadrant of the city. These were something like 7 year contracts, so at the contract end you would have 4 experienced companies bidding against each other for renewals.

That was the plan. I have no idea what happened next other than no one can give me a straight answer and that around this time the mayor of Mexico City became an elected official (he was previously a presidential appointee) and a member of the opposition party on the left. Very pro public ownership. I am told the contracts were cancelled at some point but the water shortages are worse than ever. (I brought back a recent book on Mexico City water that appears to cover things up to 2002 or so, but it unfortunately seems to be in a foreign language. This translation of an interview with one of the authors has some highlights, where the experiment seems to be a complex mix of improvements and political dramas, until the google translator gets tired and gives up. I know the feeling.)

3. Tijuana Water: A bit later I was PI on a project with El Colegio de la Frontera Norte investigating water access in Tijuana. We surveyed households and water truck operators in periferal areas. People without piped water buy it from trucks at some mark-up, store it in possibly contaminated barrels, and consume so little in many cases that one should worry about their family's health. (Too little water can well leads to poor sanitation which leads to a high incidence of infant death from simple diarreal problems.) My student Alberto Pombo wrote a fine dissertation with these data.

¿Si como no?
Mexico is interesting and important for all these reasons and more. The DF is one of the largest conurbations in the world. The governance situation is a fast moving blur. As reported by The Economist 2 years ago, the Fox government initiated an incredible housing construction boom in recent years via a reformed mortgage finance system. Planning problems associated with both poverty and rapid urban growth abound. It shares a seriously contested border with a much wealthier country. (Which isn't to say that many thousands don't legally commute in both directions each day.)

The language is tricky though. I used to get pretty far just guessing at the right word but then got overconfident and asked a cab driver for a receta.

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