ABSTRACT
São Paulo and Mexico City are the two largest metropolitan areas in Latin America. Both cities have populations around 20 million inhabitants and GDP greater than US $ 400 billion/year. These cities also have recurrent problems of water shortage. Groundwater is a key resource in the two regions, however in Mexico City it is largely used for public water supply (80%), and in São Paulo for private use (more than 12000 wells that withdraw more than 10m3/s). In Mexico City groundwater extraction has caused extensive subsidence. Other problems consist of loss of well efficiency, anthropogenic contamination and water salinization. In São Paulo there are serious problems of contamination in previous and current industrialized areas, localized losses of well efficiency, and a large number of illegal wells (around 60%). On the other hand illegal wells in Mexico City are virtually non-existent. This contrast stems from the existence of the following regulation factors in Mexico: a) the Federal Government Finance Ministry collects fees on groundwater extraction, not the water sector; b) there is an effective market for buying and selling the water right; c) the water value is determined by an active and effective market, and increases yearly due to the strong competition among users; c) the industry or service owner has to obtain the right for extracting water from a legal well in order to have the electricity installation by the government. In both cities the legal regulatory system, governing the use of water resources, is complex and fragmented. Besides the São Paulo system is largely inefficient and the State government, responsible for the groundwater management, has little capacity to enforce the regulation on the groundwater extraction and the planning for the future is almost absent.
