1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Green Growth Challenges and the Need for an Energy Reform in Mexico

As Mexico seeks to boost economic growth, pressures on its natural resources and environmental outcomes may intensify, jeopardizing the sustainability of that growth and the well-being of the population. Costs of environmental degradation were estimated at approximately 5% of GDP in 2011, primarily from the health impact of air pollution, while overexploitation of natural resources – such as water – threatens their sustainability. Subsidies and prices do not reflect environmental externalities or cost of providing natural resources, including scarcity costs. They result in poor environmental outcomes, represent a heavy burden on the government budget and, contrary to their original objective, have not efficiently tackled poverty and inequality. Such subsidies should be gradually removed. In the energy sector, reforms are needed in order to allow the state-owned oil company PEMEX to become more efficient operationally and environmentally, and to better provide fiscal revenues.

English

Keywords: climate change, green growth, Mexico, water sustainability, energy
JEL: Q4: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy; O44: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Environment and Growth; Q5: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics; H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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