Water, Industry, and Investment: What Companies Need to Know About Mexico

For decades, water was treated as just another operational variable: an available, relatively low-cost input that was generally considered reliable. Today, that perception is evolving as companies incorporate water more explicitly into long-term planning and risk management.

As part of our ongoing analysis of structural factors shaping investment decisions in Mexico, Prodensa’s experts attended the panel “Water at the Crossroads” during STS Forum LATAM 2025. Based on the insights shared in that discussion, we are publishing this blog to help business leaders and investors better understand how water availability, quality, and governance are becoming increasingly relevant considerations for companies looking to operate, expand, or relocate in Mexico.

During the panel, speakers emphasized that water is emerging as a structural variable that influences economic growth, social stability, and the long-term viability of productive projects across Mexico and North America.

Rather than an environmental debate alone, the conversation focused on three closely linked dimensions that directly affect companies and investors: water, energy, and food production, all under growing pressure from demographic trends, climate variability, and rising industrial demand. For decision-makers evaluating plant locations, operational expansions, or supply chain relocation, water considerations are becoming an important part of strategic planning.

An Unprecedented Challenge—Because of Its Scale

Francisco Núñez-Escudero, a water specialist at Mexico’s Ministry of Economy and moderator of the panel, noted that while humanity has faced water-related challenges before, the current situation stands out for its scale, complexity, and simultaneity. Population growth, increased food production, higher energy consumption, and greater reliance on water-intensive infrastructure are placing new demands on existing systems.

Today, additional energy is often required to extract water from deeper sources, transport it over longer distances, make it potable, and treat it after use. As a result, water has become more closely linked to cost structures, operational efficiency, and continuity planning. For industry, this highlights the importance of anticipating potential disruptions, regulatory requirements, and stakeholder expectations.

Samuel Sandoval Solís, professor at the University of California, Davis, emphasized that the core challenge is not the absolute absence of water, but the need to improve allocation, efficiency, and management practices.

Mexico, like many countries, faces the task of balancing water availability across competing uses within existing governance frameworks. This makes prioritization an essential policy and planning exercise. Sandoval stressed that ensuring access to water and sanitation as a human right must remain a central objective, alongside economic and industrial development.

Gaps in implementation, the absence of clear operational rules in certain strategic basins (such as the Rio Grande), and limited enforcement mechanisms can introduce uncertainty. Addressing these governance aspects represents an opportunity to strengthen long-term planning and institutional coordination rather than a purely technical constraint.

Agriculture, Water, and the Cost of Inefficient Practices

One of the panel’s key messages addressed the need to reassess certain industrial agriculture practices. Sandoval noted that intensive fertilizer use, high water consumption, and soil degradation can generate broader costs if not properly managed.

Issues such as water contamination, algal blooms, and aquifer depletion translate into higher treatment requirements, public health considerations, productivity impacts, and social tensions. When addressed proactively, however, these challenges can be mitigated through better practices, regulation, and innovation—supporting regional competitiveness and operational stability.

For executives and investors, agricultural and food supply chains therefore represent an important area for water efficiency and sustainability assessments, comparable to other strategic inputs.

The Visible and Invisible Gaps in the Water System

Enrique Lomnitz, founder of Isla Urbana, discussed the importance of addressing gaps in reliable water access. While Mexico has achieved close to 95% coverage in domestic water services, the remaining gap highlights areas where targeted solutions can support inclusive regional development.

Beyond the social dimension, improving water access has direct implications for health, education, productivity, and economic integration. Strengthening water systems contributes to regional viability and supports long-term industrial and manufacturing development.

Lomnitz emphasized that solutions do not rely exclusively on large-scale infrastructure. In many cases, decentralized, modular, and resilient approaches—such as rainwater harvesting systems—can complement existing networks. When combined with training and community participation, these solutions can significantly improve water availability and reliability.

Urban experience also offers valuable lessons for industry. In densely populated areas such as Iztapalapa, Ecatepec, or Xochimilco, connection to the water network does not always translate into consistent service. Addressing intermittency and quality challenges through complementary systems can enhance overall resilience.

Decentralized systems do not replace centralized infrastructure, Lomnitz explained, but rather strengthen it by adding flexibility. Following the 2017 earthquake in Xochimilco, for example, homes equipped with rainwater harvesting systems played an important role in maintaining access during network disruptions.

For industrial parks, manufacturing plants, and new developments, this approach is increasingly relevant. Water resilience is becoming a key factor in ensuring operational continuity.

Water Quality and Microbiology

Patricia Valdespino Castillo, scientist at Lawrence Berkeley National Laboratory, addressed water quality and the microbiological processes that can affect it.

Processes such as eutrophication—linked to excess nutrients from fertilizers—can reduce the usability of reservoirs and lakes if left unmanaged. Rising temperatures can further accelerate microbial activity, particularly in warmer regions.

From an operational standpoint, this underscores that ensuring water availability also requires attention to quality. Effective monitoring, treatment, and preventive measures can help manage costs and reduce supply risks, making water quality an increasingly important differentiator for industrial and urban users.

Valdespino also highlighted the value of applied science and international collaboration. Mexico’s participation in Antarctic research contributes to understanding glacier dynamics, sea-level changes, and broader climate patterns—knowledge that supports better anticipation of local impacts, especially in coastal and industrial regions.

One data point illustrates the importance of forward-looking climate planning: Mexico has gone from having 28 glaciers fifty years ago to one today, located on Pico de Orizaba. Understanding these trends is essential for long-term considerations related to aquifer recharge, agricultural planning, and community resilience.

For companies with long-term operations, these dynamics reinforce the importance of incorporating climate and water scenarios into territorial planning, site selection, and resource management.

What the Productive Sector Should Take Into Account

The panel’s conclusion emphasized that water will be an increasingly relevant factor in economic development across Mexico and North America—not only in terms of availability, but also in how it is managed, protected, and integrated into planning.

For executives and investors, this perspective supports a more informed approach to key decisions:

• Where to invest

• How to design more resilient operations

• How to evaluate supply chain sustainability

• How to anticipate regulatory and social considerations in the medium term

Water Resilience:

The ability of a region, city, or industrial operation to maintain reliable water access under stress conditions such as climate variability, infrastructure disruption, or regulatory constraints. For companies, water resilience is increasingly tied to operational continuity and risk management.

Water Governance:

The institutional frameworks, regulations, and decision-making processes that determine how water is allocated, managed, and enforced across users. Strong water governance provides predictability and reduces uncertainty for long-term investment.

Decentralized Water Systems:

Localized solutions such as rainwater harvesting, on-site storage, and reuse systems that complement centralized water infrastructure. These systems enhance flexibility and resilience for industrial parks and manufacturing facilities.

Water Quality Risk:

Operational and regulatory risks associated not only with water availability, but with its chemical and microbiological condition. Poor water quality can increase treatment costs, disrupt production, and affect compliance.

Should water availability be a deciding factor in site selection in Mexico?

Increasingly, yes. While water challenges are manageable, companies must evaluate local availability, infrastructure, governance, and resilience strategies as part of site selection and expansion planning.

Are water-related risks uniform across Mexico?

No. Water conditions vary significantly by region. Local basin management, infrastructure investment, and state-level planning play a major role in determining risk profiles.

Can water risks be mitigated for industrial projects?

Yes. Through a combination of efficient design, decentralized solutions, reuse technologies, and early engagement with local stakeholders, companies can significantly reduce exposure.

• Water is no longer a peripheral operational input; it is a strategic planning variable for manufacturing and investment decisions.

• Mexico offers strong industrial fundamentals, but successful projects increasingly depend on understanding local water conditions and governance.

• Companies that integrate water analysis early gain advantages in resilience, permitting, and community alignment.

• Turning water considerations into part of upfront project design allows investors to reduce risk while strengthening long-term competitiveness.