Expecting Future Growth

The Growth of Tourism in Los Cabos

The dramatic growth of the Los Cabos region on the southern tip of Baja California portends the potential for future growth along the entire peninsula, including the La Paz region. Three decades ago, the Los Cabos region consisted of several small fishing communities. The cape region is now home to more than 100,000 people, and is visited by 500,000 tourists each year.

The economic, cultural and social changes that have occurred there are undeniable; Los Cabos has been transformed from a traditional Baja Californian community to an archetypal tourist resort, with recent affluence and employment opportunities side by side with the informal housing and sprawl associated with rapid urbanization.

Large hotels and resorts dominate the shore line in the Los Cabos region.

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Diminishing Obstacles to Growth

The principal three impediments to growth in Baja – access, water and property ownership – are being overcome rapidly. Los Cabos now has non-stop flights from over a dozen cities in North America. Changes in the legal framework for property ownership now allow foreigners to own land in Baja California. The creation of land trusts enables land buyers to circumvent the constitutional ban on foreign land ownership in Mexico. Another change was the 1993 reform of the national Ejido laws that allows communal landowners to now divide and sell their property, potentially opening up most of the land in Baja for sale and foreign investment. In addition, development in Baja has been limited to areas that can readily tap into groundwater resources. However, the steep decline in the cost of desalinization is rapidly eliminating this constraint on otherwise developable land along the coast.

Frequent flights to Baja California Sur make visiting there easy and more affordable.	The sale of property and houses to North Americans has surged in the past several years.	The cost of desalination has dropped with technological advances.

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Anticipating Future Growth

La Paz has a well-diversified economy, supported by commerce, services, real estate, tourism, education, agriculture, industry, and government services. Yet it remains a relatively remote location within Mexico. For most Mexicans there are many areas closer to home that have similar attractions to Baja California. This limits the economic linkages between southern Baja California and the mainland. The peninsula has a stronger attraction for North Americans seeking the tranquility and beauty of Baja California Sur.
The prospects for future growth in the La Paz region appear to be good. However, the impetus for growth is likely to come from a very few sectors. Industry and agriculture will continue to contribute to the future economy, but do not appear poised to grow significantly in the coming years; these sectors will not easily overcome the competitive disadvantages stemming from Baja’s low population density and geographic location. Commerce and services will maintain their position as key contributors to the economy. Yet the performance of these sectors reflects the level of activity in the overall economy and will not provide a strong independent source of growth. We do not anticipate substantial growth in the government – another important part of the local economy. If La Paz is to grow rapidly in the coming decades, one must look to external sources of growth. In particular, tourism and real estate markets stand out as catalysts for future growth. Land sales have been increasing throughout the peninsula. North Americans looking for affordable vacation and retirement homes, and potential gains on real estate investments, form a great majority of recent purchases.

An intriguing, alternate source of future growth could be in the research, information and knowledge-based sectors of the economy that do not suffer from the competitive disadvantages associated with the geography of Baja California Sur.

Private housing developments will contribute to an increase in density in the urban areas.	New settlements will continue to push out into previously undeveloped areas.	Large tracks of publically-subsidied housing help to meet housing demand.
Multi-family housing will play an important role in the suppp;y of housing.	The expansion of commerce and Increasing traffic are natural by-products of growth.	Plot lines laid out in expectation of future growth.

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Growing Challenges for the Region of La Paz

As the population and economy of La Paz grow over the next decades, decision-makers will face a number of major challenges such as providing adequate drinking water, ensuring public access to beaches and marine areas, safeguarding the aesthetics of the city and surrounding areas, and protecting fragile marine and terrestrial systems. At the same time, the city is faced with reducing poverty while managing in-migration, maintaining the economic health of the city’s historic core, enhancing tourism, and managing development for the benefit of current and future residents.

The visual and environmental impact of future growth must be incorporated into planning.	The costs and risks of natural disasters increase with the number of residents.
The growth of low-income residents can put a strain on public services and exacerbate social problems.	Providing adequate safe drinking water will become increasingly difficult with higher population levels.

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Water Scarcity

Supplying water in sufficient quantity and quality to its residents has been a challenge for La Paz since its inception. The city now relies upon one aquifer for all of its water, with 23 deep wells drawing out more than 30 million cubic meters of water per year. This water is shared between agricultural and urban uses. In 2003, piped water reached 90% of the population while the remainder relied upon trucks to bring in water. However, only 60% of users could count on water 24 hours a day – the remaining 40% receive water 12 hours a day or less. Improving this situation will be difficult for underfunded water agency (Sistema de Agua Potable y Alcantarillado, or SAPA), as it spends too much of its time trying to patch together aging infrastructure and catch up with prior growth. There are approximately 1,400 significant leaks per month and only 44% of the almost 60,000 water users have a meter. The solvency of the water system depends upon the successful collection of water fees. However, SAPA collects revenue for only about two thirds of the water that is pumped. Meanwhile, SAPA spends $20 million pesos per month in electricity alone. These high electricity costs stem from the inefficiency of the existing groundwater pumps.

While groundwater is in principle a renewable resource, over-exploitation will lead to its depletion. In the La Paz region, the losses and overuse of water in this arid environment are putting unnecessary pressure on the limited supplies of groundwater. The net result is a deficit of approximately 10 million cubic meters of water per year. This means that more water is being pumped out than is being returned, such that each year La Paz has less fresh water available from the aquifer. There is another serious problem in La Paz’ aquifer. Water from the ocean has started to flow into the aquifer as water is pumped out, contaminating the fresh water of the aquifer with salt water.

Figure 8. The dynamics of water extraction from the aquifer.

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Management of Wastewater and Solid Waste

Treating household, commercial and industrial wastewater is another critical challenge for regional water system managers. The failure to do so results in water pollution, a decline in the health of marine ecosystems, and the spread of disease. Evidence of these problems were apparent in the lagoon of La Paz in the 1980’s and early 1990’s when dangerously high levels of coliform were reported, indicating the presence of untreated human waste. The installation of a sewage treatment plant that began operation in 1996 has improved the situation markedly. The plant disposes of 25 tons of sludge every day and pumps treated wastewater to El Centerario where it is used for irrigation. City water managers estimate that an additional 1150 liters per second of sewage treatment capacity will be required by the year 2020. Unless additional sewage treatment can be installed, the levels of water pollution are likely to rise again with the demands of increasing population and water use, thereby putting human health and economic productivity at risk.

Solid waste disposal is another unresolved issue for the region. La Paz generates over 300 tons of solid waste per day. At one time La Paz had two landfills. The closing of one landfill and the imminent closing the second will soon leave La Paz without any sanitary landfill. The growing piles of refuse dumped indiscriminately across the landscape are a threat to public health and degrade the character of the city. Furthermore, La Paz does not have a hazardous waste collection and final disposal system, threatening public health.

Growing population will increase the demand for water treatment facilities.	Inadequate waste management presents public health problems and damages the visual landscape.
Water quality has improved dramatically with the new wastewater treatment plant.	The current dump does not meet modern standards. Trash does not always make it to the dump.

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