Zulima Leal, Isaura Guzmán, Jairo López, Mauricio Mora
As competition for water intensifies, agriculture has become one of its most consequential forces shaping water availability. Beyond supporting rural economies, food production, and local employment, it is also the world's largest water user. As water resources become limited, polluted and unpredictable, strengthening the agricultural sector is essential to ensure water is managed responsibly and remains available across all sectors and users.
Rather than viewing agriculture in the United States-Mexico (U.S.-MX) border region as an independent sector, we recognize that water is a shared resource linking the two economies and poses challenges for the sector's continuity. This blog looks at agriculture through a water lens, highlighting major agricultural zones along the US-MX border, outlining water-related challenges in the two transboundary basins (Rio Colorado and Rio Grande Basin), and assessing growing risks from the water sector on agriculture.
The agricultural sector withdraws most of the world's water, and the US-MX border region is no exception. In fact, the proportion of water resources allocated to the sector in the region exceeds global and national averages (U.S., 40%, Mexico, 75%), accounting for more than 90% of local water withdrawals, further depleting aquifers and threatening the hydrological integrity of rivers like the Rio Grande and Rio Colorado.
With 64% of the U.S.-Mexico border defined by a river and three transboundary basins, two of which (the Colorado River and the Rio Grande Basins) sustain an agricultural sector dependent on shared waters, the impacts of water use, deforestation, pollution, and weather variability turn local challenges into binational ones.
International agreements govern these transboundary systems. We identified four interconnected agricultural zones that rely on shared waters. Deliveries from the Colorado River have enabled the development of a major agricultural zone spanning Imperial, CA, Yuma, AZ, and Mexicali, MX. This area represents the larger concentration of agricultural water withdrawals along the border (Zone 1, Colorado River Users, see map below).
We have also identified three additional agricultural zones served by the Rio Grande basin. For analytical purposes, we grouped these areas separately, given that local conditions and international water deliveries can affect the availability for the sector, depending on where they are located. For example, Zone 2 encompasses agricultural areas in New Mexico and the region near El Paso, Texas, where the Rio Grande flows southeast before reaching the border. Tributaries of this river that flow north made agriculture possible in Chihuahua, Mexico, and water availability in the area affects water deliveries to the U.S. (Zone 3). As the Rio Grande continues to flow southeast and receives water deliveries from Mexico, it creates an additional agricultural zone at the end of the basin (Zone 4). We recognized the importance of two additional zones in Baja California and Sonora but have excluded them from the analysis because they rely on local aquifers that might be depleted.
As “megadrought” conditions persist, water availability is limited across important reservoirs that sustain major agricultural zones and municipalities along the U.S.-MX border, with many below 30% capacity.
We estimate that total reservoir storage capacity along the Mexican border is 14.8 million acre-feet (MAF) (18,302 million cubic meters (mm3), or roughly half the storage capacity of Lake Mead (Hoover Dam). Many of these smaller dams are essential for agriculture along the Mexico border and serve as sources of water for deliveries that support agriculture in the U.S. Surface water in Mexico is not only currently limited but has declined rapidly over the last few years, as shown below.
Current drought conditions in the Colorado River are reducing storage capacity at Lake Mead (currently at 32% capacity) and Lake Powell (Glen Canyon Dam), which are cornerstones of agricultural production in the region. Because arid conditions and low precipitation have long limited local surface water, water importation and conveyance infrastructure enabled agricultural expansion from Lake Mead to the west of the U.S. (see detailed descriptions of the water infrastructure for the All-American and Yuma Canals and the Gila Gravity Canal).
In Mexico, agriculture has been facilitated by water deliveries from the U.S. that fulfil international water agreements, which, under normal conditions, provide 1.5 million acre-feet of water annually (see below). However, Lake Mead is under stress and has triggered a series of water cuts, directly affecting agriculture along the border.
All this water facilitated the development of 10 irrigation districts along the U.S. side of the border. The largest irrigation district, in Imperial Valley, CA--with 500,000 acres of irrigated land-- and two additional ones in California, are served by these waters. In addition, six irrigation districts in Yuma, AZ, and one in Mexico (#014 Rio Colorado) benefit from the Colorado River (See the map below).
As surface water becomes scarce, groundwater is increasingly being used as a substitute, threatening its availability and the future of economic growth and food production.
Available water from this basin is essential to support agriculture on both sides of the border. Under international agreements, each country is required to deliver water to the other at designated locations over a 5-year cycle, as outlined below:
The reservoir storage capacity on the Mexican side that contributes to water deliveries for the Rio Grande is limited to an estimated 3.86 million acre-feet (4,775mm3), with 60% of that storage capacity available at La Boquilla Dam (Conchos River, Chihuahua) and 18% at Carranza Dam (Salado River, Coahuila). These two major reservoirs are currently under stress, operating below 38% capacity, and are among the most important sources supporting Mexico's water deliveries to the U.S.
With irrigation districts on both sides of the border relying on this river and its tributaries (see map below), responsible practices are critical. The River now ranks fifth among the most engaged rivers in the U.S., driven by prolonged drought and overuse. Strengthening bilateral cooperation and water management strategies will be essential to restoring this water supply.
NADBank is at the forefront of addressing water challenges along the border with its new Water Resilience Fund, a financing tool prioritizing investments in water diversification and conservation. In November, NADBank launched its first call for applications, focusing on supporting the irrigation districts in the Lower Rio Grande Valley in Texas.
Water scarcity along the U.S.-Mexico border poses not only environmental and operational challenges but also risks to the long-term viability of agriculture, municipal water security, and regional economic stability. Key risks include:
Persistent drought, reduced snowpack, and higher evapotranspiration rates constrain surface water supplies and intensify pressure on already stressed aquifers. In many agricultural zones, groundwater pumping has become the default response to surface shortages, creating long-term risks such as land subsidence, salinity intrusion, and irreversible declines in groundwater storage. These conditions threaten irrigated agriculture and the stability of local food systems along the border.
Irrigation infrastructure, built decades ago, shows substantial inefficiencies, including seepage losses, deteriorated canals and limited metering capabilities. As drought intensifies, these vulnerabilities increase the risk of inconsistent water deliveries, crop losses and rising energy costs. Modernizing irrigation systems, improving volumetric measurement and adopting integrated basin management are now essential to maintain operational continuity and sustain productivity of key agricultural zones.
Water volatility and rising groundwater extraction and energy costs compress margins and increase cash-flow uncertainty for producers and irrigation districts. For lenders and public finance institutions, hydrologic uncertainty raises concerns about stranded assets, underperforming infrastructure investments, and repayment capacity, particularly in areas dependent on a single water source.
Excessive reliance on depleted aquifers and worsening surface water quality increases environmental risks, including soil salinization, nutrient runoff, loss of sensitive riparian ecosystems, and further degradation of water quality.
Social risks also emerge as water scarcity strains rural labor markets, intensifies competition between agricultural and urban water users, and elevates economic vulnerability among low-income communities reliant on agricultural employment.
Water at the border should be governed as a strategic risk variable, and be measured, stress-tested, and managed with the same discipline as capital and liquidity. Those who secure water reliability today will secure agricultural viability, fiscal stability, and institutional credibility tomorrow.
Water availability has long challenged agriculture along the U.S.–Mexico border, where major agricultural zones depend on increasingly fragile surface and groundwater systems. As the Colorado River and Rio Grande basins face unprecedented stress from drought, over-allocation, and climate variability, water deliveries, and the long-term viability of binational food production are under stress. Further bilateral cooperation, strengthening water management in the sector, and mitigating rising risks from the linkages between water and agriculture are crucial in the years ahead. NADBank is ready to support the sector's transformation with the new Water Resilience Fund.