For decades, untreated sewage flowing from Tijuana into the U.S. has closed beaches, threatened public health, damaged the environment, and disrupted military training. Both the U.S. and Mexico have spent heavily trying to contain the crisis, yet Tijuana’s wastewater system has not kept pace with rapid industrial and population growth.
The problem is not simply that too little money has been spent. It is that a reliable system for financing the infrastructure required by the economic development encouraged by the North American Free Trade Agreement and its successor, the United States-Mexico-Canada Agreement (USMCA), has never been created.
That opportunity is available in the current USMCA review.
The next version of the agreement should establish a North American Industrial Infrastructure Impact Fee paid by major businesses operating within the Tijuana River watershed. The proceeds would go into a jointly governed U.S.-Mexico trust and be used exclusively for wastewater collection, treatment, expansion, maintenance and environmental restoration.
This would be a better long-term solution than asking San Diego County consumers to pay a half-cent sales-tax increase under the proposed Protect San Diego County’s Health and Safety Act.
That measure would provide additional money for mitigating the sewage crisis, but the tax is intended to finance a broad range of county health and safety programs. Only part of its proceeds would be dedicated to cross-border pollution. The remainder could support healthcare, public safety and other county priorities.
Residents could be asked to approve a substantial new tax largely because of public concern over sewage while most of the money would be spent elsewhere.
An Industrial Infrastructure Impact Fee would be different. Every dollar collected for the Tijuana River watershed would remain dedicated to that purpose.
There is also a basic question of fairness. A sales tax would be paid by families, retirees, workers, and small businesses throughout San Diego County. They did not create Tijuana’s infrastructure deficit, yet they already bear its consequences through beach closures, environmental degradation, health risks, lost tourism, and interference with Navy SEAL and other military training.
Why should those bearing the consequences also shoulder most of the cost?
A better principle is familiar throughout American development policy: growth should help pay for growth. The concept is neither radical nor punitive. Communities throughout the United States routinely require developers to pay impact fees for roads, schools, water systems, and sewer facilities.
Tijuana’s over 600 export-oriented factories, which employ more than 230,000 workers, create substantial economic benefits for companies headquartered in the United States, Mexico, Canada and elsewhere. They also encourage residential development and increased demand for water, sewer, and other infrastructure.
Industries benefiting from North American economic integration should therefore help maintain the infrastructure supporting it.
A dedicated Industrial Infrastructure Impact Fee would apply those familiar principles to cross-border trade.
The fee could be based on objective factors such as employment, payroll, facility size, water consumption, wastewater volume, and pollutant loading. Small businesses could be exempted or pay reduced assessments, while larger employers and heavier users of water and wastewater systems would contribute more.
Revenue should be placed in a trust jointly overseen by the US and Mexico. Annual audits and public reporting should be mandatory. Funds could be used only for projects directly benefiting the watershed: sewer interceptors, pump stations, treatment-plant expansion, emergency storage, industrial pretreatment, stormwater capture, monitoring, and river restoration.
Projects should be evaluated against measurable results: How much sewage will they prevent from reaching the United States? How much treatment capacity will they add? Will they reduce bypasses and beach closures? What does each improvement cost?
The trust would complement government investment. Indeed, current U.S.-Mexico agreements are already financing significant projects, including expansion and rehabilitation of wastewater facilities.
Mexico would gain better public health, environmental quality, and infrastructure supporting future investment. The U.S. would gain cleaner beaches, reduced health risks, and less need for repeated emergency appropriations. Industry would gain more reliable wastewater service and a sustainable foundation for continued manufacturing growth.
The idea of an Industrial Infrastructure Impact Fee builds on proposals emerging from organizations concerned about the Tijuana River. In its July 7 letter to the U.S. trade representative, the Tijuana River Coalition calls for enforceable pollution-reduction standards, penalties for violations, transparent monitoring, construction, and maintenance of wastewater infrastructure, and $100 million in annual U.S.-Mexican appropriations for border water projects.
These are important proposals, but annual binational appropriations provide no assurance that funding will continue as political leadership, budget priorities, and economic conditions change. A dedicated impact fee on the industries profiting from manufacturing plants in Tijuana would instead create a durable, predictable revenue stream tied directly to the industrial activity contributing to the region’s population growth and wastewater burden.
Tijuana’s export-oriented plants produce from $35 to $40 billion of exported goods annually. A .25 percent infrastructure fee would produce from $88 to $100 million annually, which is close to the coalition’s proposed annual appropriation. Further, as evidenced by the fact that Tijuana’s annual exports have grown from about $21.7 billion in 2021, the fee would increase in unison with the expanded growth in Tijuana’s exports and the associated increase in the demands on its infrastructure.
Modern trade policy must address more than tariffs and market access. It must also address the physical and environmental systems that make cross-border commerce sustainable and provide a durable means of maintaining the infrastructure on which trade depends.
The next USMCA should create an equally integrated system for paying for the infrastructure that sustains it.
Editor’s note: John Tato graduated from Coronado High School in 1965. He retired from the U.S. Department of State in 2005.
