Cost and water availability in the production of the Mexican brewing industry

Abstract

The objective is to analyze the production of beer based on water concessions and water price in the period 2013-2020. To this end, a model of beer production was estimated as a function of water concessions given by the Comisión Nacional del Agua (Conagua) and labor productivity, as well, another model considered water concession as a function of water tariffs per cubic meter according to zones of ​​water availability. The results show that water concessions have a positive and statistically significant effect on beer production, with an elasticity equal to 1.327. On the other hand, water concession was positive but inelastic to price changes in the four hydric zones. In terms of public policy, this implies that the instrument to regulate industrial water consumption should be through the granting of water concessions and not through price tariffs, as is currently the case.