3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN – 165

Chapter 3

Fostering an integrated approach to territorial development in Morelos

This chapter examines the territorial development dimension of the state of Morelos. It provides a glance into urban policies, including spatial planning, mobility and environment, followed by rural policies, accessibility and connectivity and finally tourism and natural amenities. Each policy domain is evaluated in order to support the state government of Morelos in building on its key strengths and areas of opportunity in order to enhance the region’s economic development and well-being. This assessment draws on examples and best practices from across the OECD.

OECD TERRITORIAL REVIEWS: MORELOS, © OECD 2017 166 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

3.1 Introduction

Chapter 2 focused on the importance of adopting a holistic approach to human capital and innovation to lift productivity growth in the region over the medium and long term, but also to attain inclusive growth. The recently-created Council for Human Capital of the State of Morelos has a central role to play towards the achievement of those goals. However, equally important is to ensure the region is sustainable in its development path, taking into account the environmental dimension while benefiting from its growth potential. In this respect, urban and regional policies need to be well designed and integrated. Furthermore, Morelos registers important pockets of poverty that are concentrated in several municipalities, giving rise to unequal access to services and limited economic opportunities. Infrastructure and rural policies can help improve the situation of local communities by enhancing connectivity to markets, increasing the productivity of the primary sector and generating opportunities in the non-farming sector. These policies will need to be synchronised and implemented in parallel with the initiatives of the Council for Human Capital. The adoption of an integrated approach for regional growth in Morelos is paramount and supported by recent OECD analysis identifying several key drivers of growth that are common to all OECD regions. These drivers, also called “framework conditions”, are largely endogenous to the region and include agglomeration effects, sectoral specialisation, human capital, accessibility and infrastructure, innovation and institutional factors. To strengthen its regional economy, Morelos will need to leverage its diverse set of assets and comparative advantages by adopting a territorial, comprehensive approach to different challenges. This chapter is organised as follows. It starts with a section on urban and regional development through which metropolitan governance, mobility, spatial planning and environmental policies are reviewed. The next section examines rural policies focusing on the agricultural sector and non-farming opportunities. The chapter then reviews infrastructure policies designed to enhance accessibility and connectivity. The last point of focus is on the tourism sector taking account of the natural amenities that are present in the state of Morelos.

3.2 Urban and regional development

Over the past few decades there has been growth in metropolitan forms of governance across the OECD. Metro regions across the OECD tend to have higher GDP per capita than their respective national averages, higher labour productivity and faster growth rates. Such agglomeration economies offer both highly-specialised and diverse value-added activities, tend to have strong human and physical capital endowments and are attractive to international businesses and investments. Despite these strengths, urban agglomerations are also home to large and persistent pockets of unemployment and have some of the highest rates of social-spatial exclusion and poverty. Furthermore, such factors as the congestion costs faced by larger agglomerations (e.g. traffic, air and water pollution, noise levels and degradation of green areas) ultimately detract from quality of life and well-being. These trends are apparent across OECD regions. Urban development is important to Morelos: the share of the population living in predominantly urban regions in the state is 74%, significantly higher than the national and OECD averages. The largest city in Morelos is , home to 365 000 residents, followed by Cuautla (175 000), (162 000) and Temixco (108 000). The combined population in these four largest cities is roughly 800 000 inhabitants representing around

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 167

half of the state’s population. This suggests that the remaining half of the state’s population lives in medium and small-sized cities no larger than 100 000, and rural areas.

The largest metropolitan areas in Morelos account for over half of the state's population The state has two metropolitan areas, Cuernavaca and Cuautla, which in 2014 were home to 49.24% and 24.66% of the region's total population, respectively. The growth of the metropolitan area of Cuernavaca prompted the expansion of construction activities around the city of Cuautla (only 44.5 km from Cuernavaca) and peripheral municipalities such as Ayala, Atlatlahucan, Yautepec, Tlayacapan and Yecapixtla, which nowadays encompass the metropolitan area of Cuautla (Gobierno de Morelos, 2016a). In twenty years (1990-2010), the metropolitan area of Cuautla’s population increased 55.22%; or more precisely by 16.63% from 2000 to 2010 and by 9.51% from 2010 to 2015 (INEGI, 2012).

Table 3.1. Morelos’ Metropolitan Areas

Metropolitan Area of Cuernavaca Metropolitan Area of Cuautla Cuernavaca Atlatlahucan Emiliano Zapata Ayala Jiutepec Cuautla Temixco Tlayacapan Huitzilac Yautepec Tepoztlán Yecapixtla Xochitepec Tlaltizapán Source: Gobierno de Morelos (2016a), Administrative registries.

A third metropolitan area has been recognised by the state government of Morelos, despite not meeting INEGI's criteria that determine metropolitan areas in Mexico. This third metropolitan area is that of Jojutla and encompasses the municipalities of Zacatepec, Jojutla and , which represents 6.73% of the population in Morelos. As such, as perceived by the state authorities, the three metropolitan areas account for more than 80% of the population in Morelos, encompassing 16 municipalities out of the 33 present in the state of Morelos. In Mexico, metropolitan areas are defined as a combination of two or more municipalities, or territorial areas in which a city of more than 50 000 inhabitants is located, and of which the urban area, functions and activities exceeds the limit of the municipality or demarcation that originally contained it (Gobierno de Morelos, 2016a). A metropolitan zone is predominantly urban and reliant on the influence of several municipalities in close proximity to each other and that experience a high level of socio- economic integration (Gobierno de Morelos, 2016a). Metropolitan forms of governance are very common across the OECD – more than two-thirds of metropolitan areas have such bodies (OECD, 2015a). However, their policy focus, scope and composition can differ greatly. While metropolitan areas face many common challenges, such as how to promote collaboration amidst diverse and sometimes conflicting interests; ultimately, metropolitan institutional solutions will be unique – reflecting local cultures, ways of working and historically embedded relationships. Metropolitan-wide planning can be achieved by either formal or informal institutions or a mix thereof depending on how sectoral competencies are divided. The effectiveness

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 168 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

of either institutional approach depends to a large extent on the types of issues that a territory faces, the relationships among the actors, the resources at their disposal and, in general, the capacity to implement a common agenda. The policies of upper level governments, i.e. regional or national, have a major impact on the adoption of inter-municipal or metropolitan planning frameworks. In countries with consensus-oriented politics and high capacity at the local level, soft co- ordination mechanisms are likely to work well. In other cases, such as the case of Mexico and Morelos, more stringent co-ordination mechanisms at the metropolitan level may be more effective. Metropolitan wide planning approaches raise questions about the appropriate scale to tackle land use issues; the democratic legitimacy of decisions that take place outside of formal governmental institutions; and the ability to secure stable forms of funding and achieve long-term goals. The governance of metropolitan areas in the state of Morelos relies on a large number of governmental actors from the federal, state and municipal level, as shown in Table 3.1 (Gobierno de Morelos, 2016a). However, an important player remains missing: the Ministry for Mobility and Transport. The involvement of a governmental entity responsible for transportation and mobility issues is critical to ensure that policies tackle metropolitan-wide challenges in a harmonised way, for transport policies are of great relevance to environmental and spatial planning objectives. Likewise, urban development and transport infrastructure should be jointly planned for new projects to fully correspond to accessibility needs. In the current configuration of metropolitan areas in Morelos, there is a risk that every sector still conducts its planning in a strictly vertical way, setting its objectives, goals, programmes, projects and actions exclusively based on the national and the states’ development plans (OECD, 2015b). Effective governance is essential to reduce fragmentation which pulls down the productivity of cities. OECD work shows that metropolitan cities in OECD countries with a higher level of governmental fragmentation experienced lower growth of gross domestic product (GDP) per capita over the last decade. Similarly, analysis of the impact of horizontal fragmentation in metropolitan areas reveals lower productivity levels in cities with fragmented governance structures. For a given population size, a metropolitan area with twice the number of municipalities is associated with around 6% lower productivity. Negative effects on economic efficiency are mitigated by almost half when a governance body at the metropolitan level exists.

Table 3.2. Entities involved in metropolitan co-ordination, Morelos

State Federal Municipal Ministry for the Environment and State Governor Natural Resources Ministry for Agrarian, Territorial and Office of the Governor Urban Development Ministry of Finance Ministry for Social Development All municipalities belonging to the metropolitan areas Ministry for Sustainable Development Ministry for Public Works State Commission on Water IDEFOMM Commission for Metropolitan Development and Zones of Source: Gobierno de Morelos (2016a), Administrative registries.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 169

A central governance tool for metropolitan areas is the Metropolitan Fund (Fundo Metropolitano). In Mexico and in Morelos, funding for metropolitan areas is channelled from the federal government through this fund and is part of the national budget devoted to subsidising state and municipal action on urban development. The operational rules for the Metropolitan Fund require the creation of a Metropolitan Development Council (Consejo para el Desarrollo Metropolitano, CDM) in order to receive funds (OECD, 2015b). The Metropolitan Fund has been created to promote: sustainability, economic competitiveness, strengthening productive capacities, the reduction of vulnerability to, or risk of, natural and environmental deterioration fostered by demographic and economic dynamics phenomena, urban consolidation, as well as an optimal use of the competitive advantages of regional, urban and economic operation of territorial space in metropolitan areas (Gobierno de Morelos, 2016a). The resources of the Metropolitan Fund are allocated to programmes, projects, activities, infrastructure and equipment for urban development, land use planning, provision of public services, and environmental equipment. To decide which projects will be financed with resources from the fund, every local government proposes its priority projects to the Metropolitan Development Council (OECD, 2015b). The use of the fund's resources is therefore not tied to a comprehensive urban development plan for metropolitan areas in Morelos. This bears the risk that some of the fund's resources benefit the interests of a specific municipality in a determined area/sector, rather than being used for projects that would have a metropolitan-wide impact and advance a more integrated solution to cross-sectoral challenges in metropolitan areas.

Morelos can leverage agglomeration benefits An effective system of governance and co-ordination amongst the administrations of Morelos' three metropolitan areas can significantly reduce public policy fragmentation as well as provide the right conditions to take advantage of agglomeration effects. ''Economies of agglomeration” is the term used to describe how firms like to locate close to other firms and to densely populated areas due to lower transportation costs, proximity to markets and wider availability of labour supply. People also tend to be attracted to densely populated areas for the wider availability of job opportunities, goods and services. These mutually reinforcing forces yield important economic advantages for both consumers and firms: economies of scale, a better matching and functioning of labour markets, spillover effects and more technological intensity. It is no surprise that productivity, and therefore wages, tend to be higher in densely populated areas. These benefits however, must be weighed against the costs of densely-populated areas such as congestion, negative social effects of possible oversupply of labour, higher land prices, rising inequality and environmental pressures. The net impact varies from one urban area to another (OECD, 2015d). In the case of Morelos, two important considerations stand out: • Its largest metropolitan area, Cuernavaca, with over 900 000 inhabitants, is close to the biggest metropolitan area in Mexico, Greater , home to more than 20 million inhabitants and Mexico’s largest market. The metropolitan area of Cuernavaca can therefore benefit from this proximity, for as recent OECD research suggests: cities can also “borrow” agglomeration from neighbouring cities. For a doubling of the population living – at a given distance – in urban

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 170 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

areas within a 300 km radius, the productivity of the city in the centre increases by between 1% and 1.5% (OECD, 2015d). • While the agglomeration benefits are driven by market forces, policy responses can help mitigate the negative effects of agglomerations including pollution, congestion, crime and inequality. On this front, it is important to increase urban mobility in Morelos in co-ordination with spatial planning initiatives. Better integrating these two domains through governance arrangements is critical. Furthermore, as previously mentioned, governance can also reduce fragmentation which is a drag on the productivity of cities.

Environmental conservation is at the heart of urban development practices in Morelos The environmental dimension is of great importance to Morelos whose natural capital has been deteriorating over the past decades. The state of Morelos must carefully manage its transition to a sustainable growth pattern by focusing on improving urban mobility, while also reducing pollution and protecting natural amenities which are key assets to the region. Metropolitan areas in Morelos are missing a comprehensive urban development programme that would not only serve to address metropolitan-specific challenges, such as the high levels of pollution and congestion within its major cities, but also to enhance synergies across the work of different state and local agencies. In relation to protecting Morelos' ecosystem, the existence of an integrated development programme could result in strengthening regional environmental preservation programmes and measures at the local level. This is of utmost importance in a context in which municipalities hold significant authority in managing land use. One of Morelos central programmes for ecological land management is the Regional Ecological Land Management Programme (Programa de Ordenamiento Ecológico Regional, POEREM). The POEREM was designed as a planning and evaluation tool to guide land use, ecological criteria and productive activities. It was established to ensure the preservation and protection of the environment as well as to ensure the sustainable exploitation of natural resources. The POEREM uses a combination of strategies, actions and regulations to promote sustainable activities and protect natural resources. The POEREM is also the consequence of the collaboration of the state government, municipal governments, social groups and academic experts in the field. Compliance with this programme is mandatory at the state and municipal level. To be most successful, it is essential that the Morelos' environmental agenda be pursued across levels of government and government agencies. It should also feed into specific metropolitan-wide solutions particularly in the areas of transportation, economic development and spatial planning.

Mobility inside cities Transportation is a key factor for urban development. Cities benefit from larger labour markets; when urban mobility is poor, these benefits are lost. Urban accessibility and mobility are also critical in order for residents to be able to access goods and services, and can also help alleviate poverty in concentrated areas of a city. Transportation investments are intimately linked to spatial development and land use planning. Such investments shape the physical development of cities, opening up new areas for investment, or conversely, limiting their growth. As a policy area, transportation is unique

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 171

in that traffic congestion and pressures on the transportation system grow alongside economic growth. The transportation sector also has wide-ranging impact on human health and environmental outcomes. Transportation networks can be designed to encourage sustainable forms of transportation which are better for human health and the environment. On the flip side, if poorly designed they can limit biking and walking, limit public transportation options or exacerbate a reliance on automobiles along with the attendant air pollutants harmful to human health. For all of these reasons, improving mobility in Morelos – and especially its capital city of Cuernavaca – is critical to the region’s economic development, and individual well-being. Air pollution is a particular challenge in the state, especially in the larger cities, and sustainable transportation investments are an important strategy to reduce these pollutants. In recognition of this, over the past few years, the state government has aimed to modernise public transportation in order to provide efficient and high quality services that generate less harm to the environment. It will be important to assess the impacts of these investments on air quality outcomes and mobility patterns. Presently, there is a lack of data on air quality indicators in Morelos, which is one of the air pollutants that imposes the greatest risks to human health (Salcedo et al., 2012). There is a real time air quality index in Cuernavaca, but other areas of the state have limited coverage.1 A recent initiative to solve the capital's severe pollution and congestion issues is the installation of a (BRT) system, called the “Morebus”. The “Morebus” is conceived to cross the city of Cuernavaca towards Jiutepec, thereby encompassing strategic points between the Autonomous University of Morelos State to La Joya, Jiutepec with a total length of 20 kilometres. BRT have grown in prominence worldwide as a cost effective alternative to urban rail investments. In order to be successful, it is critical that BRT systems be leveraged along with transit-oriented development patterns – in other words, that spatial and land use planning practices are aligned with public transportation investments to make the most of these systems. Concentrating urban growth along high-capacity transit corridors and establishing transit nodes is increasingly being recognised as a way to moderate climate change and increase the mobility of low- income residents (Cervero and Dai, 2014). While a promising project, the “Morebus” has been difficult to execute due to a strong opposition from concession dealers of service routes operating in the metropolitan area of Cuernavaca. In this, Cuernavaca is not alone. It is a common challenge for many cities in the southern hemisphere to be historically dominated by a quasi-informal network of privately-owned transport operators that are resistant to new public operators (Flores Dewey, 2013). For example, both Mexico City and Santiago, followed similar strategies of introducing state monitoring and management of private bus services when they established their BRT systems. Public-private collaboration has been found to be critical to the success of these efforts (Flores Dewey, 2013). In addition to the Morebus, a number of other projects and control measures have been planned by the state government of Morelos (Comision Ambiental de la Megalopolis, 2015). Some of those which directly relate to the improvement of mobility not only in Cuernavaca but across the entire region are captured in the table below. A regional strategy has also been designed for the introduction of ultra-low sulphur diesel (Estrategia Regional de Introducción de Diesel Ultra Bajo Azufre), which is aimed at vehicles (public transport vehicles essentially) in high use and of high impact in the megalopolis (Comision Ambiental de la Megalopolis, 2015).

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 172 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Table 3.3. New transport measures and targets for the state of Morelos

Measure Characteristic 2016 2018 2020 2025 2030 Government entity Implementation of 4 Public transport corridors with a length 1 2 4 7 10 State corridors of 20km each (40km in both directions) As a percentage of the Use of biodiesel 1.5% 5.0% 10.0% 20.0% Federal consumption of diesel Bioethanol production Use of bioethanol 17.7 18.7 19.7 55.2 150.1 Federal together with gasoline Taxis 1 500 4 500 7500 15 000 16 075 Hybrid vehicles Private vehicles 103 1571 4 787 20 996 53 103 State/Federal Light trucks 21 315 959 4 188 9914 Electric vehicles Vehicles in operation 1 000 3 000 5 000 10 000 15 000 State/Federal Source: USAID (2014), Actualización del Programa Estatal Morelense de Acción ante el Cambio Climático, Tetra Tech ES Inc., United States.

Despite positive, yet fragmented attempts (e.g. Morebus) to bring changes to the current system of transportation, the state government of Morelos is presently missing an infrastructure and transport services policy embedded in a territorial development plan. An integrated territorial approach to the development of those policy areas would require that different elements be taken into account, such as the alignment of spatial and land use planning with transportation objectives and investments and environmental strategies. For example, the development of a BRT network is promising, yet too often remains divorced from broader urban planning efforts. To conclude, the state of Morelos has a number of tools and assets through which it can push forward an agenda for sustainable urban and regional development. The use of the Metropolitan Fund could be improved to serve metropolitan-wide challenges and advance cross-sectoral, integrated solutions to them, from transportation to environmental and spatial planning issues. Effective governance at the metropolitan level can reduce policy fragmentation and raise the productivity of cities. It can also provide the right conditions to take advantage of agglomeration effects from its proximity to Mexico City.

Spatial planning and land use The way in which land is used affects a wide range of factors – – from day-to-day quality of life factors such as the availability of food and clean water and the length of daily commutes, to the long-term sustainability of urban and rural communities, including the possibility for climate change adaptation and mitigation. How governments regulate land use and address public and private investment, how competencies are allocated across levels of government, and how land use is taxed, is critical. The fractioning of cities and the installation of new facilities and infrastructure such as large shopping malls, wide roads and modern transports systems, together with an increased perception of greater business opportunities tend to create more employment and higher income levels. However, when the concentration in cities has reached a certain level, negative externalities such as pollution, cost of land, cost of labour and travel time, among others, tend to increase and affect their competitiveness. The urbanisation process then continues to spillover to nearby places where the cost of land is more accessible, replicating the process of saturation again.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 173

Sustainable land use practices have arisen as a key priority for the state. The state of Morelos has put environmental sustainability at the heart of decision making. As a result, it is aiming to balance urban growth with the preservation of a rich ecological system. The execution of co-ordinated and sound spatial planning policies with increased accountability around them is essential to meet this objective.

Spatial planning policy In Mexico, as is common across the OECD, there is a nested hierarchy of plans.2 Each state, Mexico City, and their respective municipalities and delegations have local statutes that regulate planning, covering use of land, zoning and construction. Regional plans focus on priorities for sustainable land and resource management while municipal plans establish key areas for growth and infrastructure investments, and provide detailed planning requirements for specific plots of land. Detailed planning rules, based on urban development laws and regulations, are contained in urban development programmes. Land use policy in Mexico is legally based on two spatial approaches, urban and ecological (General Law on Human Settlements and General Law of Ecological Balance and Environmental Protection) and three administrative orders: federal (general), state (regional) and municipal (local). However, the terms territorial and regulation have been used only in the urban perspective; the ecological approach is relatively new. In the absence of government regulation, negative externalities erase all positive ones, inflicting huge social costs (lack of public services, criminality, deviation of public interest towards private gains). This situation therefore led the current state administration to define a spatial planning and land use strategy based on Morelos’ natural capital, so as to ensure its sustainable development. In this respect, plans must have clear policies to protect natural (green) infrastructure. As a result of years in which the state government abandoned its regulatory functions, the current state administration set an institutional and legal arrangement that propitiates that public and private projects pertaining to the use and exploitation of natural resources (land, water, forest goods) as well as the better practices in water, waste and energy, are founded in considering the state's natural capital conservation and enhancement as the basis for decision making. For the implementation of land policy, Spatial Planning Programmes (Urban Development Programmes and Ecological Land Management Programmes) are created and implemented. These are linked with governance instruments: Land Management Councils (CEOT, urban) and Ecological Management Committees (COET, ecological), where the authorities of the three branches of Mexican government meet sectoral representatives, academics and citizens to ensure compliance with the programmes. In the state of Morelos, the regional legal framework derived from the general or national laws for land use are listed below. At the local level, there are police and good governance decrees, and corresponding municipal regulations. • State Planning Law • Law of Land Management and Sustainable Urban Development of the State of Morelos (LOTDUSEM) • Law of Ecological Balance and Environmental Protection of the State of Morelos (LEEPAEM) and corresponding regulations.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 174 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

With respect to legal framework applications for spatial planning and land use at the national, regional and local level, the above mentioned laws indicate the creation of plans and programmes for compliance, as showed in the following Table 3.4.

Table 3.4. Legal framework for land use planning

Administrative level Planning* Urban Development** Environment** Approval and decree mechanism Federal or national National National Programme National Programme Development Plan for Urban of Environment and Public consultation; Development and Natural Resources; Federal Government; Land Management. General Land Use Presidential decree. Planning Programme. State or regional State Development State Programme for Regional Ecological Plan Sustainable Land Land Management Public consultation Management and Programme of the Ministry of Urban Development State of Morelos Sustainable (PEOTYDUSEM); (POEREM). Development (State Management Government) Programmes; Governor decree Metropolitan Area Sectoral Programme. Municipal or local Municipal Municipal Urban Local Ecological Development Plan Development Program Zoning Programme Public consultation (PMDU); (POEL). Ministry of Population Center Sustainable Urban Development Development (State Programme Government) (PMDUCP); Council agreement Partial Urban and decree Development Programme (PPDU). Ecological: Federal Government (SEMARNAT) when Federal Protected Natural Area intersects municipal territory Note: * with spatial zoning; ** without spatial zoning. Source: Ministry for Sustainable Development (2016a), Administrative registries.

For the approval stage, the Municipal Urban Development Programmes should be audited in line with legal higher order Programmes (Federal and State). This work is legally assigned to the State Ministry for Sustainable Development, together with verifying the consistency of Local Ecological Zoning Programmes that are reviewed by the State Ministry and its federal counterpart (Ministry for the Environment and Natural Resources, SEMARNAT). The legally binding nature of these programmes is the responsibility of the three administrative levels of government (federal, state and municipal). However, the responsibility for licences or binding permits is that of the issuing of authority that controls such a programme, i.e. the state government for regional programmes and municipalities for municipal programmes. • State or regional programmes define the primary zoning land use, i.e. the territory division in areas that can be used for anthropogenic sustainable activities (human settlements are divided into housing, equipment and industry; and agriculture, livestock and mining) and those dedicated to conservation (the productive

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 175

activities in rural areas included). At this level of spatial planning, growing areas or territorial reserves to be used in the future are defined. • Municipal programmes define the secondary zoning land use, specifying the compatible and incompatible activities in each part of the territory, with certain additional standards and ecological criteria of environmental regulation.

Box 3.1. Legal framework of spatial planning

In the state of Morelos, similarly to the situation at national level, land ownership hinders the ordered growth of cities. This challenge goes back to the Mexican Constitution, the agrarian legislation (Legislacion Agraria) and the federal institutions that handle the transfer of social land into private land. Those include the Federal Commission for the Regularisation of Land Ownership (Comision para la Regularizacion de la Tenencia de la Tierra, CORETT), the SEDATU) and the Agrarian General Office (Proceduria Agraria). While urban development plans are being certified, the challenge for territorial ordering in Morelos lies in the execution of those plans. The execution of urban development plans is compromised by a difficult relationship that municipalities, communities and the ejidos' authorities have to endure with the federal government to ensure the effective implementation of those plans.

Poor enforcement of the legal framework The legal framework for land use planning and sustainable urban development is developed in the Law on Land Management and Sustainable Urban Development of the State of Morelos. The Law has a sectoral policy approach and defines the state system for urban and regional planning as the main policy tool. The policy is carried out through various programmes that address the issue of spatial planning at different levels: that of the state, that of , interstate and inter-metropolitan areas, municipal areas, population centres and modalities of regional, partial and sectoral level. The quantity of regulations and statutory provisions developed under the Act indicates that urban system and planning issues are abundantly addressed. The terms of the law reflect the standards which real estate developers must adhere to and the regulations and procedures around the implementation of the provisions of the Act. However, the sanctions that may be applied in cases of violation of legal provisions contained in the Act are insufficient to prevent irregularities. The process of identifying and punishing irregularities is not very clear due to the excessive number of actors and territorial scale involved in the procedures that need to be followed to comply with established standards aiming for sustainable territorial and urban state development.

Regional spatial planning – a focus on environmental sustainability Regional planning plays an important role in setting strategic directions for development and co-ordinating across fragmented jurisdictions. In the state of Morelos, regional planning is the responsibility of the Ministry for Sustainable Development – a state body focused on ecological and urban land use planning. Protecting and preserving the natural assets of the territory is a key regional priority. The Ministry for Sustainable Development conducts and sanctions land management plans and designs and co- ordinates institutional actions at federal, state and municipal level. The Ministry’s mandate is thus essential to ensure sustainable territorial planning and development in the state of Morelos. However, it requires the availability of collaborating state agencies

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 176 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

which tend to set priorities according to their own sectoral targets, in misalignment with what could be an overarching multi-sectoral vision. Spatial planning policies in the state of Morelos are developed in accordance with the regional development strategy. The strategy seeks to maintain equilibrium between the preservation of protected natural areas, a control of urban expansion, the consolidation of industrial areas and strengthening of tourism activities while ensuring that incentives are built for agricultural and agro-industry activities. As such, the Regional Ecological Land Management Plan (Programa de Ordenamiento Ecológico Regional, POEREM), a legally binding document that defines uses based on land attributes and has five different general policies (protection, preservation, restoration, protected areas, and exploitation), is at the core of the state system for urban and regional planning (Periodico Oficial, 2014). The plan aims to support economic development through clear rules and regulations that ensure environmental services such as water provision, without diminishing the capacity of future generations to enjoy economic growth and a high quality of life. The Regional Ecological Land Management Plan is operated through the State Biodiversity Commission, which gives it relative independence from main government structures. Strategic regional economic plans are the responsibility of the Committee on Development and Infrastructure of the State of Morelos (CODI) which provides technical support to government agencies over specific projects concerning territorial and urban planning across the territory, such as the Ecozone project for example. The CODI is an administrative body reporting to the Office of the State Governor that enjoys technical and managerial autonomy. The CODI identifies, plans, implements, manages and co- ordinates inter-agency priority projects of high impact for the economic development of the state. Inter-agency collaboration is sought to respond to the limitations faced by the CODI related to budgeting and programming functions. The government of Morelos has a strong vision aimed at the promotion of economic and urban development outside of the metropolitan area of Cuernavaca. The state’s two key projects are related to the Industrial Corridor and Logistics Platform of the Metropolitan Area of Cuautla in the East Zone, and the public-private Sante Fe Biosphere and Health City (Ciudad Salud), both private investments in the services sector, as urban development projects in the south of the region and based on the services sector, mostly medical services, higher education and S&T research, developed to take advantage of the state government's construction of a S&T park and a Centre of Congress and Conventions. In addition, public and private finances are supporting the consolidation of tourism and recreational attractions such as Lake Tequesquitengo and concert venue, the Zacatepec football stadium and the Gardens of Mexico (Jardines de México) with public investment reaching MEX 32 million against MEX 50 million of private investment. For the execution of high-impact projects, co-ordination is also sought with regional authorities and municipalities who possess important responsibilities over land planning and urban development, such as granting authorisations for the use of land and granting construction permits. This co-ordination ensures that economic growth is promoted through the region’s municipal development agendas and with respect to environmental preservation and social cohesion across the territory. The state government of Morelos possesses limited resources to implement the strategic projects identified by the CODI. As a result, in order to execute projects, the

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 177

state government is most often led to ask for the support of sectoral federal agencies. This requires that certain federal criteria be met, which do not often coincide with local government criteria. Moreover, federal government support is conditioned on the availability of public resources. Likewise, support from the National Development Bank (Banobras) is conditioned, but on the ability to pay of the state government and of any municipal entity involved in a high-impact project. Following this scenario, projects that require the involvement of various entities and that have gathered public resources from some sectoral federal agencies but not others, may be run in a very difficult and most likely untimely manner. As such, projects of high territorial impact may experience significant delays in their implementation and spillover the next administration's term, thus incurring the risk that the new political team will discontinue the project. Programmes suffering from insufficient resources can include conurbations programmes, interstate metropolitan areas and inter-municipal areas. In the state of Morelos, a total of 1229.97 km2 are recognised as Natural Protected Areas under federal government protection, while another 89.573 km2 are recognised as Natural Protected Areas under the state government's protection (Ministry for Sustainable Development, 2016b). Figure 3.1 below shows federal, state and municipal natural protected areas.

Figure 3.1. Natural protected areas

Source: Ministry of Finance of the State of Morelos (2016), Administrative registries.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 178 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Figure 3.2. Ecological zoning model of Morelos

Source: Ministry of Finance of the State of Morelos (2016), Administrative registries.

The challenge of rapid urbanisation Set against the rapid growth of Mexico City, Morelos has defined itself as a good place to live, work and start a business. Its vision for development emphasises relatively affordable land, low labour costs and proximity to other central regions in Mexico. The state's precarious rural economy has also contributed to this vision – it has motivated a great number of farmers, mainly from the ejidos, to sell their agricultural land to real estate developers. As a result, in the past decades Morelos has been undergoing a rapid and uncontrolled process of urbanisation with little regard for the wealth of its natural resources. This presents a great threat to the region’s future development: it undermines its natural amenities and makes it more difficult and costly to for governments to provide services and infrastructure to residents. In facing these issues, Morelos is not alone. Sprawling development is an issue faced by urban agglomerations across Mexico (Box 3.2). The rapid urbanisation in the state of Morelos may have had two origins. The first would be the economic motivation of the real estate industry to benefit from low land, water and labour costs. The second would be the growing disinterest of rural inhabitants to use their land for agricultural production and the economic opportunity for them that selling agricultural plots to real estate developers represents in places where there are neither services nor jobs. State legislation over the past decades has not only proved insufficient to control it, but it has also been undermined, to a certain extent, by the regularisation of illegal constructions that have been carried out by the CORETT.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 179

Box 3.2. The challenge of in Mexico

Urban sprawl has consequences for mobility, contributing to rising motorisation rates and making the provision of efficient, quality public transport alternatives more challenging and costly; this is an issue that cities across Mexico face. According to data in the Registro Único de Vivienda (RUV)1, in 46 of Mexico’s 59 metropolitan zones, more than 70% of homes registered in the new housing registry between 2006 and 2013 were built either in the outskirts or the periphery. Moreover, roughly 90% of the housing stock consists of individual homes, which continue to make up the majority of all new development (INEGI, 2010). On the other hand, many other factors have contributed to sprawl: rising income levels and lower transport costs; a fiscal and regulatory bias toward single family, owner-occupied homes; the prevalence of irregular settlements, hampering effective urban growth management; municipal capacity gaps and ineffective local land use controls for urban development; and a high level of municipal fragmentation within metropolitan areas, making co- ordinated land-use and transport planning across neighbouring jurisdictions a challenge. Poor land-use planning and permitting practices – as well as the absence of adequate land available to low-income populations – results in the location of many settlements in risk-prone areas, such as river banks and unstable hills, with devastating social and economic costs when disaster strikes. These challenges are all the more relevant given that, globally, Mexico is one of the areas with the most frequent occurrence of severe earthquakes and tropical storms (OECD, 2013a). There has been a four-fold increase over the past 40 years in the average annual occurrence of disasters (OECD, 2013b). In late 2013, for instance, Hurricane Manuel left over 10 000 households in severe crisis in , where many developments had been approved by local governments in flood zones. Socio-economic segregation – in terms of income and education levels, as well as access to basic services like electricity, water and drainage – is also present, albeit different, across metro zones. In some cities, low-income groups tend to be located on the outskirts, a trend that is fostered by lower land prices in peripheral areas. In other cases, there is a clear geographical divide (north/south; east/west) within the metro zone. Source: OECD (2015a), OECD Urban Policy Reviews: Mexico 2015: Transforming Urban Policy and Housing Finance, http://dx.doi.org/10.1787/9789264227293-en; OECD (2013a), OECD Reviews of Risk Management Policies: Mexico 2013: Review of the Mexican National Civil Protection System, http://dx.doi.org/10.1787/9789264192294-en; OECD (2013b), OECD Environmental Performance Reviews: Mexico 2013, http://dx.doi.org/10.1787/9789264180109-en.

Challenges to achieving harmonised territorial and urban development The Ministry for Sustainable Development of Morelos promotes municipalities' urban development programmes that have been elaborated with respect to the state's vision for urban development and ecological preservation principles. However, their execution can encounter significant difficulties related to the institutional and legal frameworks controlled by the federal government. Box 3.3 provides a glance into a number of challenges pertaining to those realms and as valid to the state of Morelos as in the rest of Mexico. In addition, municipalities have a level of authority with regard to territorial and urban planning that, at times, may run counter to environmentally-friendly policies outlined in the state government’s agenda. In particular, municipalities have been found to show a high degree of flexibility in granting land use authorisations. The decisions of municipal authorities that are incompatible with state planning may find several roots.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 180 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

One of them would be the reluctance for municipalities to accept state planning criteria that disregard the urban development interests of the municipality. The economic returns for municipalities and their mayors of delivering land use authorisations may also be identified as a reason for municipalities to grant permits that are undesirable from a state territorial planning perspective. A final political aspect may also be envisaged; that of the mayor who, after three non-renewable years in office, would take advantage of his authority to facilitate projects that may put him in a better position in a political party or group. Likewise, in Morelos like in the rest of Mexico, the system of social property presents characteristics that limit state decision making with respect to the execution of state zoning and urban development plans. Ejidos make up 75% of the urban territory of the state of Morelos (Gobierno de Morelos, 2016a).

Box 3.3. Mexico urban planning complexities related to the ejidos

Land tenure arrangements and the process by which agricultural land is converted to urbanised land in Mexico have left a complex legacy for modern-day housing and urban development. Three types of property exist in Mexico: private property, which accounts for around one-third of the country’s land area; social property, which makes up more than half of the country’s territory; and public/federal property, approximately 10% of the total, which includes national parks and waterways. Social property is comprised of both ejidos (around 90% of all social property) and comunidades agrarias (the remaining 10%). Ejidal land tenure, established following the Mexican Revolution, granted peasants perpetual rights to land for agricultural purposes without the possibility of selling, renting or mortgaging the land. A 1992 legislative reform modifying Article 27 of the Mexican Constitution altered the tenure status of ejido land. The reform authorised community landowners (ejidatarios) to sell, rent or mortgage the land, including to non-ejidal members, and to establish joint-venture contracts with private companies, essentially allowing for the privatisation of ejidal land. One of the ambitions of the reform was to give greater legal certainty to ejidatarios and to establish a legal framework that could result in increased land supply available for formal housing. Approximately 3 million households benefited from land regularisation following the 1992 ejido reform. Nevertheless, the 1992 reform seems to have been drafted “largely in ignorance of its potential urban impacts” (Jones and Ward, 1998). Moreover, the reform was drafted in a broader context of decentralisation that transferred increasing competences to municipalities, yet without a strong federal counterweight to guide policies aimed at incorporating ejidal land into urban areas. With ejidal land comprising just over 40% of all land in Mexico, most land available for urbanisation continues to be comprised of ejidal land on the urban periphery and beyond. Yet the process to privatise and, by extension, urbanise ejidal land is cumbersome, requiring: i) the measurement and allocation of parcels to each ejidatario; ii) the conversion of parcel rights into private property rights, requiring the approval of a majority of the ejidatarios; iii) confirmation that nobody with a legal right of preference (e.g. family member of an ejidatario) objects to the transfer or wishes to purchase the land; and iv) sale of land. Given the extent of ejido land in Mexico, the complexities of its urbanisation process represent a significant obstacle to legal and well-planned private development, encouraging circumvention of the law; these complexities have also made the process vulnerable to corruption. Source: OECD (2015a), OECD Urban Policy Reviews: Mexico 2015: Transforming Urban Policy and Housing Finance, http://dx.doi.org/10.1787/9789264227293-en.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 181

Ejidos are defined as communal land which cannot be sold; however, ownership titles can change hands if allowed by the Assembly of Ejidos. This has permitted the appropriation of land by real estate developers and the illegal construction of housing in land that may not be suitable for construction. It has also brought numerous issues related to cases whereby one person buys the titles for a piece of land, after being granted approval by the current Assembly of Ejidos, but the future leaders and administrators of the next Assembly of Ejidos may choose not to recognise the authorisation and, given the lack of officially-recorded evidence, a person is forced to pay for the same plot of land several times without ever gaining official recognition. This has also created situations in which a same plot of land belongs to several people and, due to the fact that the transfer is unrecorded, after some time people lose track of who the land belongs to. In Mexico, the Ejidos are reported as a political client enjoying a special type of relationship with the federal government, the only entity bearing the genuine authority and necessary resources to carry out significant projects impacting them. As such, during mission trips stakeholders reported the relative ease with which constructions could be undertaken on ejido soil based on the relationship of the ejidatarios with municipal authorities, often with limited compliance with urban norms. Unchecked construction has contributed to chaotic urban sprawl and invaded agricultural production areas and forests. The distribution of public services has thus been affected and areas with environmental value damaged and agricultural land reduced. Inappropriate management of the legal aspects of selling land has led to cases where houses are constructed but no one eventually occupies them due to a lack of public services and/or jobs in their vicinity and rampant insecurity. The quality of housing and appropriate transport connections to urban centres and jobs can be taken as an indicator of population well-being. An OECD well-being case study of Morelos has highlighted that even recent housing lacked basic infrastructure such as access to water and a drainage system, for example (Ministry of Sustainable Development, 2016; OECD, 2014b). Water and drainage are two of the most common problems associated with illegal construction on unsuitable land. Yet, the majority of these unsafe dwellings were ordered and/or signed off by federal government institutions. The number of abandoned houses in Morelos totals approximately 5 000, according to recent reports from the state government. Moreover, many were built in protected sites (Ministry of Sustainable Development, 2016). The state government is currently taking action and ordering they be torn down whenever possible. While a large swath of the population, predominantly low wage earners, is lacking social housing that meets state norms. Stakeholders in Morelos have also reported that the federal government has invested a disproportionate amount of money in contributing to the regularisation of non-permitted housing constructions on social property instead of providing more funds to the state government of Morelos to build new social housing. As a result, a new model may need to be designed to meet the housing demand of the low income population and enable them to find housing in specific areas that will not exacerbate urban sprawl. This model would consider a mix of land usage in the metropolitan area so that cities can densify and people can find legal and safe housing. Another issue has been the irregular construction of federal highways on ejido land, which the federal government has not regularised and which, as a result, the

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 182 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

ejidos continue to demand payment for. Such constructions have increased the value of the land, at the benefit of the ejidos, and represent a long-term bottleneck for federal and state authorities. They also reflect important issues surrounding the regularisation of land and governments’ investment towards it. State resources have been reported by stakeholders as insufficient for such matters. The influence of state authorities is thus reported to be weak in the face of such challenges.

Building more accountability into the spatial planning system

Resolving the above-mentioned challenges related to land ownership and territorial development may require a better legal management of land and agreements with municipalities towards ensuring a greater respect for ecological and urban state development plans. In such a context, the state government should increase transparency in dealing with those issues, rather than exerting discretionary power as it currently tends to do. However, because some of the bottlenecks to executing sound spatial development plans are tied to federal institutions, important policy measures should be taken to create more accountability at that level too. While it becomes clear that more policy co-ordination amongst agencies and levels of government should be exerted, the state government of Morelos should strengthen its control over the urbanisation process in the region, and seek to continue collaborating more closely with municipalities in an attempt to answer the issue of poor quality of social housing for low-income inhabitants. This would ensure that future constructions be undertaken with respect for Morelos’ State Program for Territorial Planning and Development, and in areas where infrastructures, services and employment expectations could be met. In line with this ambition, innovative private financing schemes should also be sought. An additional challenge is related to the institutions responsible for developing planning activities in Mexico. Together with insufficient funding, the impact of the activities carried out by those institutions may be hindered by the possibility that the next state administration dismantles them. To ensure the continuity of high-impact territorial and urban development programmes, a potential alternative would be to create a Citizens’ Council with technical and academic representation that would serve as a monitor for the development of those institutions’ activities throughout the different state administrations. This would ensure that more accountability be fostered for ongoing projects and the future continuation of already agreed projects. Lastly, an OECD national review of urban development in Mexico highlighted two ways in which the state governments may incentivise municipalities to plan urban development (OECD, 2015a). • Offering technical and, in some cases, financial assistance to produce an urban development plan. A number of municipalities lack the technical expertise to elaborate an urban development plan which may be the reason why they do not do it. Thus, state or federal authorities through SEDATU and/or an academic institution could provide technical assistance to municipal authorities on how to prepare an urban development plan. The co-ordination covenants between SEDATU and some municipalities are a good example of this and they should be extended to more municipalities. Local governments may sign similar covenants with the poorer municipalities. SEDATU should keep a record of those municipalities with an updated urban development plan and those that have a

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 183

dated plan or no plan at all. Mexican authorities could even introduce a certification programme of urban municipal plans managed by SEDATU in co- ordination with state urban development authorities. One of the criteria for granting the certification could be to require municipalities to hire professional urban planners to develop the urban development plan. Some municipalities may require financial assistance to elaborate their urban development plan, for which SEDATU, in co-ordination with the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público, SHCP), could explore ways to support them. • Enabling municipalities that have an urban development plan to apply for grants and assistance for specific projects could motivate municipal authorities to prepare an urban development plan. Only those municipalities that have a certified urban development plan would be able to apply for special grants to finance municipal investment projects. They could also be used to condition the participation of state and federal authorities in co-financing mechanisms for local investment projects. The national government could oblige municipalities to have an urban development plan when providing investment funds or have access to the resources of the Metropolitan Fund (Fondo Metropolitano).

Environment The environment is one of the main pillars of well-being. The sustainable use of natural resources, such as water, green areas, and maintaining air quality are crucial for sustainable development and achieving a high quality of life in the region. In the state of Morelos, the abundance of natural amenities is moreover a source of competitive advantage for the tourism sector and the economy of rural areas. The ecological capital of Morelos, 52.5% of natural areas, should be protected and strengthened to ensure environmental quality and economic opportunities in the future. Some of the environmental issues are even more pressing in an urban context. For instance, public and private transport generates not only congestion but also air pollution, heavily contributing to greenhouse gas (GHG) emissions. Waste and water management are crucial for creating healthy living conditions in cities, where an efficient system of waste collection and disposal is one the main functions for which municipalities and metropolitan areas are responsible. Although environmental policies need a national or international dimension in order to deal with the many spillovers generated by polluting activities, the role of regional governments in the implementation of policies and co-ordination of local actions is important too. The state of Morelos is engaged in a number of programmes and initiatives to mitigate climate change. It is important to also be aware of the role states and cities have to play now in the fight against climate change, given Mexico’s ratification of the agreement for environmental protection (COP21). The country must also fulfil its National Determined Contributions (NDCs). Morelos' rapid urbanisation phenomenon has led to the deterioration of 50% of the state’s natural wealth and high pollution levels, particularly in metropolitan areas, as observed in Morelos' Ecological Land Management Plan (Ministry of Sustainable Development, 2016). The quality of the air in Morelos is within the average of Mexican states, but improvements to reduce the impact of CO2 emissions should be put in place to prevent

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 184 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

them from increasing about 80% in the next 25 years (see Chapter 1). These actions should also be co-ordinated and encompass waste management and the quality of water, which affects the quality of the soil and aquifers in addition to GHG emissions. For instance, in terms of GHG emissions, Table 3.5 shows that the biggest contributor is energy sources. In 2010, energy contributed to 63% of all GHG emission in Morelos. Among the sources of pollution, energy transport is the main contributor, with 66.4%, industrial production comes second with 22.2%, while residential energy contributes only 8.66% of the total energy GHG emissions. Transport policies therefore should not only look at the impact on congestion and accessibility but also trying to limit the impact on GHG emissions. This is an important element of urban policies, as addressing mobility issues within metropolitan areas is crucial to take advantage of agglomeration benefits.

Table 3.5. Greenhouse gas emissions by source

Baseline scenario 2010, 2030, values are expressed in terms of Megatons of CO2 equivalent

Variation 2010 Percentage 2030 Percentage 2010-30

Energy 3846 63% 7347.3 67% 91% Transport 2 553.9 5 025.9 Industry 852.6 1414.6 Residential 333.2 585.8 Services 52.8 94.8 Agribusiness 53.5 63.6 Electricity production 0 162.7 Industrial process (production of concrete) 893 15% 975 9% 9% Agriculture forestry and other land uses 1106.1 18% 1258.5 11% 14% Ranching 266.5 286 Agriculture 417.4 550.3 Forestry 422.2 422.2 Waste 272.7 4% 1429.5 13% 424% Solid waste 97.1 1213.4 Water treatment 175.6 216.1 Total 6 117.8 100% 1 1010.3 100% 80% Indirect emission for electricity consumption 1358.6 1939.7 43% Total (including indirect emissions) 7 476.3 12 787.3 71% Source: USAID (2014), Actualizacion del Programa Estatal Morelense de Accion Ante el Cambio Climatico.

In order to address some of these issues, Morelos has engaged with national and international programmes. Programmes including: • The state administration has signed an agreement with USAID to help Morelos identify the main challenges related to GHG emissions and the Mexico Low Emissions Development Program (MLED), which, in co-operation with USAID, represents an important vehicle through which several policies can be implemented. • At the national level, the Ministry for the Environment and Natural Resources (Secretaria del Medio Ambiente y de Recursos Naturales, SEMARNAT) and six

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 185

Mexican state governments have been working together to achieve a new urban order within the context of the Environmental Commission of the Megalopolis (Comision Ambiental de la Megalopolis, CAME). Participating states include the , the Federal District, , , Tlaxcala and Morelos. • Environmental issues are also embedded into urban and regional development plans. The state of Morelos’ vision for urban development is to control the urban expansion process and to have dense and compact cities, with distinct uses of land, and in which the use of vehicles is reduced and public transport services are in order. In its metropolitan areas and the state capital, Cuernavaca, the government is aiming to increase the number of public spaces and decrease the production of emissions to the atmosphere. This model is used for the Ecozone project (LEZ) of Cuernavaca’s historic centre led by CODI and for which the state government, municipal authorities and a citizens' council composed of representatives from the business sector, research centres, universities and professional associations are working together. The citizen council represents Cuernavaca’s businessmen, research centres, universities and professional associations. The investment for the Ecozone project averages MEX 200 million (USD 10 million) and includes national and international technical assistance from organisations such as GIZ, USAID and the Mario Molina Centre. • At the local level the state of Morelos is dealing with some of these issues with specific programmes. The ecological land management programme (POEREM) although mainly focused on land use it introduces environmental criteria that should be taken into account by the state and local administration when they decide the different uses of land. The state administration is also promoting a programme for climate action in municipalities (Programas de Acción Climática Municipal, PACMUNE), with the aim of improving the knowledge of local actors about the environmental issues in their territory. These programmes and initiatives are important for reducing the impact of climate change in Morelos, and should be fostered and strengthened. There is however a lack of an overarching strategy for environmental conservation in Morelos. For instance, issues related to waste management, GHG emissions, and land use are addressed in different programmes. However, their effects are interlinked; for instance the treatment of solid waste would affect GHG emissions and the quality of water, as well as the stewardship of natural landscape. Another example is transport policy which affects both mobility and GHG emissions. An example of successful co-operation between state and national authorities is the transformation of taxis from fossil fuel to natural gas in the city of Queretaro. A similar programme could benefit the metropolitan areas of Morelos, which can exploit the availability of natural gas assured by the newly constructed gas pipeline. The region should foster the connection to international programmes and organisations, like the recent agreement with USAID, which can improve monitoring and capacity to implement effective policies. For instance, the main cities in Morelos could be better connected to the initiatives of the Climate and Clean Air Coalition (CCAC), which aim at sharing best practices from cities around the world on waste management, brick production, cook stoves, agriculture, fossil fuels, and many other environmental concerns. Finally, environmental protection could benefit from linking the natural protected areas in Morelos to the National Natural Protected Areas programme developed by the

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 186 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

NPA technical commission. This could result not only in more financial resources but also in better management of the natural sites. It is important to also be aware of the role states and cities have to play now in the fight against climate change, given the ratification of Mexico to the Paris agreement of the COP21; in particular to the country´s National Determined Contributions (NDC´s). Morelos' rapid urbanisation phenomenon has led to the deterioration of 50% of the state’s natural wealth and high pollution levels, particularly in metropolitan areas, as observed in Morelos' Ecological Land Management Plan (Ministry of Sustainable Development, 2016). As a result, the success of Morelos in achieving sustainable economic growth will rely on its ability to conserve the natural capital with which it was gifted while also increasing accountability into the spatial planning system, especially vis-à-vis municipalities. One way to incentivise municipalities to plan urban development would be to make funding for specific projects conditional on a municipal urban development plan. This would tighten controls and limit the damage that unpermitted constructions can cause to the environment and to the population's well-being. With regard to environmental conservation, the state government has taken positive actions to reverse a situation of natural wealth deterioration, putting environmental concerns at the heart of decision making. Morelos should therefore continue in this vein, and could consider joining significant national initiatives to further advance on environmental priorities.

3.3 Rural policy

Agriculture is important in the state of Morelos for social and economic reasons. It is where the main slogan of the agrarian revolution, “land and liberty”, emerged early in the first decade of the twentieth century. As a result, the understanding of what is rural has long been intertwined with a focus on the agricultural sector, yet there is more to rurality. Even though Morelos remains predominantly rural, in the past decades the state has experienced a process of urbanisation, which has resulted in the deterioration of its natural environment and fewer resources, including workers. This has led to a smaller contribution of agriculture to the state economy. For agriculture to reach its potential what is now needed is an increase in productivity both in farming and in other rural industries that will increase competitiveness, foster inclusive economic growth and improve the well-being of rural inhabitants. Developing a new vision of rural policy in Morelos may be necessary to allow for a diversification of the rural economy. Looking beyond the agricultural sector economic opportunities for local communities can be unlocked. Diversification will be important because small-scale farming is dominant in the state, making it difficult for farms to benefit from the economies of scale needed to be profitable full-time enterprises.

Rural policy priorities and challenges in Morelos At the federal level, the Ministry for Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA, Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación) is responsible for rural policy, while at the state level the responsibility goes to the Morelos Ministry for Agriculture and Livestock. In its Sectoral Development Plan, the state of Morelos has elaborated medium- and long-term strategic objectives defined in four areas that align with federal priorities

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 187

(Gobierno de Morelos, 2013a): guaranteeing agro-food security; increasing the modernisation of rural businesses; improving mechanisms to build linkages among rural stakeholders; and expanding economic opportunities among supply/value chains in the primary sector. The state of Morelos is thus seeking to support agricultural production and producers to boost the competitiveness of the sector, which is now bogged down by high labour costs and a low mechanisation of production processes. • Guaranteeing agro-food security: increasing the production quality of food, increasing the competitiveness of food products, enabling better access to sources of funding and insurance, improving training services, technical assistance and technology transfer. • Increasing the modernisation of rural economic units: implementing programmes for investment in infrastructure and equipment, implementing programmes for the improvement of the quality of food products, promoting agro-industrial integration. • Improving mechanisms to build linkages between all organisations and stakeholders operating in the rural sector. • Expanding the economic opportunities of productive chains in the primary sector through the development and consolidation of system-products, integration in its value chains and the provision of technical and economic resources to priority systems. These priorities have been designed to address some of the region’s most pressing challenges for rural development. Resolving them will hinge on making improvements in two essential areas – technology transfer and human capital. Technology transfer is a crucial factor to the challenge of agricultural economic development and relates to modernising farms through the adoption of available technologies to increase revenues, expand and ultimately stabilise production, reduce costs and improve farmers’ incomes. Supporting a greater professionalisation of producers through technical assistance and skills training will also be fundamental to ensure they are able to make the best use of technology. Financing this transition will be necessary. Several state institutions currently provide agricultural credit to local farmers for the development of rural areas through programmes focused on the promotion of technology transfer and support for training and technical assistance. Some of these institutions are: the Trust for Morelos Agricultural Fields (Fideicomiso para el Campo Morelense), the Trust for Shared Risk (Fideicomiso de Riesgo Compartido), Trusts dedicated to Agriculture (National Fideicomisos Instituidos en Relación con la Agricultura) and the National Finance (Financiera Nacional). However, despite the existence of these programmes, there is a concern that borrowing costs tend to be too high for individual producers, while the absence of strong producer associations does not allow joint borrowing to take place (Gobierno de Morelos, 2013a). In addition, crop storage facilities are insufficient and this has begun to attract the attention of the government of Morelos. Greater storage capacity would allow crops to be marketed at different times of the year, which would improve farmers’ revenue. A problem for all forms of agricultural investment is that most of the land in the state is ejidos which means that these farmers have no formal land ownership, and this blocks their ability to obtain loans for modernisation, including building crop storage facilities.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 188 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

In Morelos, the rural population, which is mainly engaged in small-scale farming, tends to be mired in poverty. Most farms are semi-subsistence in nature and have limited connections to markets. Low farm incomes are contributing to young people leaving rural areas in part because they see no future in farming. While 22% of the population in Morelos resided in rural areas in 2010, inter-census data shows it fell to 16% in 2015 (INEGI, 2015a). Migrating to urban centres offers prospects of employment in the service and manufacturing sectors. However, despite youth outmigration, rural areas in Morelos receive migrating population from surrounding states, such as , as people seek employment in agricultural activities. Currently, employment in the primary sector occupies 10% of Morelos’ population, against 22% for the secondary sector and 68% for the tertiary sector (INEGI, 2015a). The challenges related to rural development do not only relate to improving access to technology but also to convincing farmers to adopt these new methods. In the rural areas, there seems to be limited understanding that investing to improve production practices will lead to higher revenues that more than cover the costs and will get their production to market instead of self-consumption. Another significant barrier to investments are weak marketing channels that make it difficult for producers to find buyers for their output and arrange transport to markets. In addition, to help producers better understand the benefits of innovation and learn how to seize the opportunities that technology uptake can generate, there may be a need for the government of Morelos to introduce social education initiatives in communities. Such initiatives could help to raise local awareness of the importance of ensuring production quality standards, increasing value, and improving access to markets therefore improving the livelihoods of local producers. Social education initiatives could also promote greater co-operation amongst producers, which could facilitate the approval of credit requests, prompt producers to learn from each other, allow groups of small farmers to market their output together to get a better price, and also introduce a more entrepreneurial vision linked to rural activities. Currently, skills training and entrepreneurship are supported by the National Employment Service (Servicio Nacional del Empleo [SNE]) in Morelos. The SNE provides training to job seekers who have an interest in working in the agricultural field or have a strategic project that they want to carry out (Servicio Nacional del Empleo, 2016). During missions to Morelos, stakeholders also underlined the existence of a traditional paternalistic vision of the government towards producers. This vision has resulted in the payment of government subsidies to support local producers with only limited accountability over how the funds are being utilised. Currently, the government of Morelos is aiming to progressively move from the patronage approach, which characterised previous farming policies, to one of greater empowerment of producers. This aims to not only increase their productive potential with skills training and technical assistance in the adoption of technology, but also seeks their involvement in the post- production marketing process. The objective in Morelos is to increasingly support and engage producers in the marketing of their products as a way to better connect them to opportunities to increase outputs and profit. However, although a repositioning of local producers is being sought, because of the way institutional programmes are designed, the approach taken by the state of Morelos remains one of assistance with some commodities being heavily subsidised (e.g. the sugar cane industry). Programmes to support farmers now prioritise those who live in: marginalised areas, indigenous areas and municipalities considered in the Programme against Hunger which

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 189

the Ministry of Social Development (SEDESOL) is responsible for. Agricultural programmes thus embrace a strong social assistance component that is focused on supporting the economic agents that reside in the different territories, rather than adopting a territorial approach to address the multiple dimensions of the challenges facing rural areas. Last but not least, the accelerated process of urbanisation in the state of Morelos has also posed challenges to rural areas. Urban sprawl in Morelos has destroyed approximately 50% of the land, and hindered production. The region is deemed to have a weak rural economic development capacity not only related to technology and human capital challenges, but also because the potential for expansion of agricultural areas is, due to the region’s small size, very limited.

Breaking from an agrarian vision to better explore a diversification of the rural economy An agrarian vision of rural policy has prevailed in Morelos for decades. This agrarian vision is characterised by an opposition between the rural and the urban areas, as well as a unidirectional or sectoral approach to rural areas through agricultural policy. Such a vision is however not suitable to a strategy attempting diversification of the rural economy. It would be worth developing a new public policy vision for the development of rural areas of the state of Morelos. That is, a strategy that encapsulates the many challenges, but also opportunities that remain to be exploited in the rural territory, thereby making the territorial development the main object of planning, rather than just the agricultural sector. A rural development strategy for the state of Morelos could better exploit opportunities for job creation in areas where the growth of traditional agriculture is becoming limited. A comprehensive strategy would also encompass improvements in service delivery and seek to build linkages with relevant sectors, such as renewable energy or tourism. A shift of paradigm in agricultural policy would involve addressing multiple challenges, such as adapting to modern marketing channels that are dominated by large competitive food chains in an open market, but also taking into account evolving production technologies (i.e. genetic engineering and biotechnology, among others), and better connecting farming to local society in terms of environmental effects, tourism amenities and opportunities for local and traditional foods. Because a large share of farms are small and thus limited in the volume of production they can generate, it will be crucial to improve off-farm employment opportunities as a way to increase farm household income. An effective strategy to regenerate rural areas and diversify rural activities requires that an important recognition be made between the different types of rural areas that exist in the state of Morelos. In Mexico, the National Institute of Geography and Statistics (INEGI) identifies rural towns as those that have less than 2 500 inhabitants, except when such a town is adjacent to a large municipal centre (capital cities), in which case they are considered as part of its urban zone (INEGI, 2015a). The OECD has carried out work in this domain that may support Morelos in developing a more coherent and better integrated framework for rural policy development. This work puts an emphasis on the importance of better defining rural areas as a means to better understand rural-urban linkages (see Box 3.4).

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 190 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Box 3.4. Better defining rural areas

Recent definitions recognise that there are many kinds of rural regions. These definitions are important because they provide the basis for understanding different opportunities and challenges facing rural areas, and provide a common basis for organising policy responses to them. While the OECD has developed a specific definition that is useful for its work, individual member countries continue to explore alternative definitions that can better suit their particular needs. There is no internationally recognised definition of a rural area and there are ongoing debates about how best to define the concept. But, it is generally recognised that “rurality” is a multidimensional concept, which can embody different meanings for different purposes. For example, as a geographical/spatial concept, a socio-economic or socio-cultural descriptor, a functional concept related to, for instance, labour market flows, or simply as “not urban”. One way to understand rural is through identifying differences in rural and urban linkages as a function of the distance of a rural place from an urban agglomeration.

Figure 3.3. Urban-rural functional linkages

Source: OECD (2016a), OECD Regional Outlook 2016: Productive Regions for Inclusive Societies, http://dx.doi.org/10.1787/9789264260245-en.

As indicated in Box 3.4, urban and rural territories are interconnected through different types of linkages that often cross traditional administrative boundaries. These interactions can involve demographic, labour market, public service and environmental considerations. It is for this reason that the OECD approach defines three types of ''rural''. Those are i) rural regions within a metropolitan area; ii) rural regions close to a metropolitan area; and iii) remote rural regions. Better defining the different types of rural regions in Morelos should help in developing appropriate policy responses to each of their most distinct challenges.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 191

Table 3.6. Challenges by type of region

Type Challenges Opportunities Rural inside metropolitan area - Loss of control of future - More stable future - Activities concentrate in core - Potential to capture benefits of urban, - Loss of rural identity and avoid negatives Rural outside, but in close proximity to - Conflicts between new residents and - Potential to attract high income metropolitan area locals households seeking a high quality of - May be too far away for some firms, life but too close for others - Relatively easy access to advanced services and urban culture - Good access to transport

Rural remote - Highly specialised economies subject - Absolute advantage in production of to booms and busts natural resource-based outputs - Limited connectivity and large - Attractive for firms that need access distances between settlements to an urban area, but not on a daily - High per capita costs of services basis - Can offer unique environments that can be attractive to firms and individuals Source: OECD (2016a), OECD Regional Outlook 2016: Productive Regions for Inclusive Societies, http://dx.doi.org/10.1787/9789264260245-en.

From a sectoral approach towards a multi-dimensional territorial approach In the state of Morelos and throughout Mexico, rural policy is largely defined as a sectoral policy domain. Development programmes and institutional support are channelled to promote agricultural production and, where appropriate, support producers. However, an integrated perspective on the complex process of more broadly defined development of rural areas is missing. The sectoral vision is focused on the agricultural sector rather than on the rural territory. The lack of reference to specific regions and territories implies a missing link between agricultural policies and territorial development. A sub-regional perspective in rural policy is recognised in budgetary planning, but a similar recognition does not serve urban-rural project developments. One reason for the sectoral approach at the state level is that federal resources to support state and municipal governments are defined according to sectoral objectives, rather than in a way that could contribute to consolidating strategic development projects in specific rural areas. Consequently, states tend to define their policies to be consistent with the national government approach. To address this issue, the role of a body such as the State Council for Sustainable Rural Development (Consejo Estatal para el Desarollo Rural Sustentable, CEDERS) should be strengthened, for its mission is to facilitate cross-agency co-ordination and the participation of productive agents (e.g. farmers) in the definition of state priorities. Moreover, it is worth noting that an obligation to develop a more territorial approach is required in the Law for Ecological Equilibrium and the Protection of the Environment of the State of Morelos (Ley del Equilibrio Ecológico y Protección al Ambiente) (Consejeria Juridica, 2016). The Regional Programme of Ecological Land Management reflects this well (Programa de Ordenamiento Ecologico Regional). The Regional Programme of Ecological Management has become the main instrument for managing land use in the state. It was established to ensure the protection of the environment and to develop a more sustainable use of natural resources. This instrument uses a combination of strategies, actions and regulations to promote sustainable activities, and is a result of

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 192 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

collaboration among the state government, municipal governments, social groups and academic experts. Compliance with this programme in Morelos is mandatory at the state and municipal level. Nevertheless, a sectoral vision predominates in public policy, and especially in agricultural policy. Agricultural policy in Morelos has been driven by the implementation of strategic actions, the promotion and consolidation of Product Systems and the integration of supply chains that can become clusters. Product Systems are an administrative tool managed by the Federal Department of Agriculture (SAGARPA) and are composed of: a set of elements and agents involved in the agricultural production processes for a specific commodity, including suppliers of equipment, and supplies and services for: primary production, gathering, processing, distribution and marketing. Product Systems operate through committees, such as, planning mechanisms, and through formal and informal communication and co-operation among economic agents who are part of the supply chains. National Committees for each commodity are built up from the regional committees and then state committees (Sustainable Rural Development Act). Committee members represent non-governmental actors and government officials connected to each specific commodity. Stakeholders in Morelos reported that this administrative mechanism has had mixed results, due, among other factors, to problems of representation of those who run the committee on the side of non-governmental actors, but also because producers receive direct funding support from the central government, which motivates them to join the Product System without committing to the ultimate goal for which it was created (carrying out the actions generated in the master plans of each system). Moreover, in some cases these committees have taken on a more political than technical character. The state of Morelos has a wide range of Product Systems, about as many as there are commodities cultivated in the state. Regions within Morelos are identified by areas having a significant production of a particular crop or commodity. Relatively new products in Morelos include: Jatropha seeds from which biodiesel can be produced from its inedible oil; fruit such as figs; grains such as triticale (hybrid of wheat and rye) used for the production of animal feed; cucumbers; fine herbs for food consumption; and plants with special health properties, such as stevia and neem. These may be produced as the primary crop on a farm or may be produced as a supplementary source of income. Aquaculture is another activity that is being supported and shows favourable prospects for export. In addition to supporting Product Systems, the state of Morelos is also committing to knowledge promotion around various production processes in rural areas by providing sustained support from public resources for learning better farm management practices and supporting schools offering basic education classes. The state is also supporting small farmers by offering “unsecured credit” that allows them to overcome challenges related to access to credit, although not all demands can be met. This range of initiatives has had positive effects on the agricultural sector, but it should be noted that all these efforts have a focus on farm output and largely provide support for producers, either individually or in groups. As such, these efforts are not integrated into any type of territorial development project through which different, yet complementary, initiatives from other government entities could also be incorporated. To do this would require identifying a comprehensive strategic territorial development plan and defining the role to be played by the agricultural sector, as well as other sectors in a

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 193

way that is co-ordinated to achieve common goals for territorial development in the state of Morelos. By contrast the OECD’s Rural Policy 3.0 brings a new perspective on rural policy development that considers well-being across multiple dimensions of the economy, society and the environment, and takes the distinctions of different rural areas into account. The Rural Policy 3.0 may inspire the state of Morelos in the formulation of a more integrated approach to rural development (see Box 3.5).

Box 3.5. The evolution towards the Rural Policy 3.0

In 2015, the Rural Policy 3.0 was endorsed by delegates of the 10th OECD Rural Conference, “National Prosperity through Modern Rural Policy”, held in Memphis, Tennessee (19-21 May 2015). Almost a decade on from the adoption of the New Rural Paradigm, the time was ripe to revisit the framework. Its elaboration has been informed in part by the OECD Rural Policy programme and 12 National Rural Policy Reviews which cover a wide spectrum of national conditions and rural regions. Given that each review was conducted with the New Rural Paradigm as a metric, they contain valuable information on the degree of adoption of this paradigm by member countries. In addition, a number of rural thematic reviews has also provided a fresh perspective on the changing nature of rural economies and the opportunities and constraints facing rural development. Thematic reviews are also tools that can facilitate international policy dialogue and mutual learning. The most recent thematic rural reviews focus on: • interactions between urban and rural regions (Rural-Urban Partnerships, OECD 2013c) • key factors and bottlenecks for economic growth (How Regions Grow, OECD 2009; Promoting Growth in all Regions, OECD 2012a) • delivery of services in rural areas (Strategies to Improve Rural Service Delivery, OECD 2010) • links between renewable energy deployment and rural development (Linking Renewable Energy to Rural Development, OECD 2012b). Source: OECD (2015c), “National prosperity through modern rural policy”, 10th OECD Rural Development Conference, 19–21 May 2015, www.oecd.org/rural/rural-development-conference/ (accessed 1 June 2016); OECD (2013c), Rural-Urban Partnerships: An Integrated Approach to Economic Development, http://dx.doi.org/10.1787/9789264204812-en; OECD (2009), How Regions Grow: Trends and Analysis, http://dx.doi.org/10.1787/9789264039469-en; OECD (2012a), Promoting Growth in All Regions, http://dx.doi.org/10.1787/9789264174634-en; OECD (2010), Strategies to Improve Rural Service Delivery, http://dx.doi.org/10.1787/9789264083967-en; OECD (2012b), Linking Renewable Energy to Rural Development, http://dx.doi.org/10.1787/9789264180444-en.

To conclude, rural policy in the state of Morelos is sectoral and tied to the agricultural sector. Yet, a sectoral approach is limiting the range of opportunities that can be seized in the rural territory. Because most farms are small – and thus limited in the volume of production they can generate – it will be crucial to improve off-farm employment opportunities as a way to increase farm household income. To improve the competitiveness of rural areas, Morelos should adopt a multi-dimensional territorial approach that would facilitate the consolidation of strategic development projects in specific rural areas.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 194 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

3.4 Accessibility and connectivity

OECD analysis of the determinants of growth at the regional level identifies infrastructure as one of the critical drivers along with human capital, innovation and agglomeration (OECD, 2009; OECD, 2012a). Infrastructure does not appear to be the binding constraint for the vast majority of regions. Thus, polices targeting infrastructure are not usually the most effective tools for strengthening growth in underdeveloped regions. Yet, gains from improvements in infrastructure are higher (at the margin), which makes them important instruments if co-ordinated with other policies. This means that improvements in infrastructure at the regional level do not automatically lead to higher growth. Such investments need to be combined with improvements in education and innovation. This suggests that it could be useful to co-ordinate policies for building human capital, enhancing innovation and providing physical infrastructure.

Infrastructure developments in Morelos Infrastructure projects in Morelos are critical to ensure it capitalises on its favourable geographic location and reaches its potential. The state is privileged by its proximity to Mexico City, Mexico’s main internal market, home to around 15% of the national population, thereby providing a critical mass of consumers. Proximity to Mexico City has also brought important spillover effects to the region attracting a large number of firms due to Morelos’ lower costs in providing services, lower rental and land-use costs as well as good connections to Mexico City. In addition, given its favourable weather conditions, and environmental amenities, the state has attracted many research centres and second home residents. In the past, its proximity to Mexico City also represented a comparative advantage for industries under the import substitution model. With the arrival of NAFTA and the end of the import substitution model, regions located close to the United States border have the main locational advantage as the main market shifted toward the north. Notwithstanding this fact, the close proximity to Mexico City still remains an important asset to the region. In Morelos, important infrastructure projects carried out in the past 10 years with funding support from the federal government include several water treatment and distribution facilities, the hydroelectric plant in Huexca, the natural gas pipeline, the Science and Technology Park (INNOVACyT), the Coordination, Command, Control, Communications and Computer Centre (C5) of Morelos and the Logistics and Industrial Platform in the east of the state. With respect to road infrastructure, the state of Morelos benefits from strategic federal roadways connecting it to the state of Mexico via the Cuautla- highway and to Mexico City and the state of Guerrero through the Autopista del Sol. The road network also connects Morelos with Puebla. These routes are also commonly used for transportation of passengers and private vehicles. Within the state, the capital cities of Morelos' two largest metropolitan areas, Cuernavaca and Cuautla, are connected through the La Pera-Cuautla highway. To address problems of road saturation, Morelos is expanding the Autopista del Sol and the La Pera- Cuautla artery. Other highway projects also underway include the Highway Century XXI and the expressway of Cuernavaca. The total road kilometres in Morelos from federal, state and rural roads and enhanced pathways amounted to 3 021 kilometres in 2014. In relation to its population, this amounts to roughly 1.8 kilometres per 1 000 inhabitants, which is significantly lower than

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 195

the national average (3.6) and only higher than Mexico City, the state of Mexico and Nuevo Leon (Figure 3.5).

Figure 3.4. Total kilometres of road per inhabitant in 2014, Mexico TL2 regions

11 10 9 8 7 6 5 Mexico average 4 3 2 1 0

Source: Instituto Nacional de Estadística y Geografía, (INEGI) (2015b), Anuario estadístico y geográfico por entidad federativa 2015 / Instituto Nacional de Estadística y Geografía.

The total amount of roads available in the state in relation to its surface area in 2014 amounted to 617 kilometres; in other words, around six times more than the national average and only surpassed by Tlaxcala and the State of Mexico. This suggests that the total amount of roads in the state is above the national average in relation to its size.

Figure 3.5. Total kilometres of road per square kilometre in 2014, Mexico TL2 regions

750 700 650 600 550 500 450 400 350 Mexico average 300 250 200 150 100 50 0

Source: INEGI (2015b), Anuario estadístico y geográfico por entidad federativa 2015 / Instituto Nacional de Estadística y Geografía.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 196 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

A breakdown by types of road reveals less kilometres of rural roads per inhabitant and per square kilometre than the national average, against the higher value observed of federal roads and enhanced pathways relative to its size. In other words, the total amount of rural roads in Morelos is lagging with respect to national standards taking into account its population and surface area. Notwithstanding this fact, the state of Morelos has put in place a number of initiatives targeting better rural roads in recent years. These include 109 projects during the years 2013-15. Given the concentration of poverty and deprivation in some municipalities, improving the accessibility of these municipalities through better rural roads to international and external markets is a necessary but not sufficient condition to promote development. Other critical enabling factors will also need to target the level of skills and capacity of local governments. Furthermore, given the wide range of natural amenities that are present in the region, improving accessibility to rural roads could open new business opportunities in smaller communities around tourism and agro-food tourism.

Figure 3.6. Kilometre density by type of road in Morelos, 2014 Kilometres of road to population Kilometres of road to surface area (km2)

Morelos National average Morelos National average

Total roads Total roads

Enhanced Enhanced Federal roads Federal roads pathways pathways

Rural roads State roads Rural roads State roads

Source: INEGI (2015b), Anuario estadístico y geográfico por entidad federativa 2015 / Instituto Nacional de Estadística y Geografía.Instituto Nacional de Estadística y Geografía, INEGI (2015), Anuario estadístico y geográfico por entidad federativa 2015 / Instituto Nacional de Estadística y Geografía.

The state of Morelos is also engaging in major development projects that rely on both public and private finance and target the southern part of the region. Among those are the Santa Fe Biosphere and Health City (Ciudad Salud), both private investments in the services sector have been set up to take advantage of the state government's construction of an S&T park and a convention centre. In addition, public and private finances are supporting the consolidation of tourism and recreational attractions such as Lake Tequesquitengo and its concert venue, the Zacatepec football stadium and the Gardens of Mexico (Jardines de México) with public investment reaching MEX 700 million against MEX 1 000 million of private investment. The development of such projects can significantly boost Morelos' regional economic development by delivering high-quality services and by triggering a new form of tourism or destinations related to medical services and the organisation of international events, which would boost Morelos’ competitiveness versus Mexico City. However, developing policy measures will be necessary to ensure that inclusive development is being pursued.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 197

A risk worth highlighting is that the access to those new infrastructures and services (especially in the educational and medical areas) almost exclusively benefit the higher social classes, which would hinder regional economic growth and further deepen inequality in the state by systematically leaving large segments of the population behind.

Engaging in regional collaboration to improve industrial competitiveness Good infrastructures, access to roads and connections to and from a region should allow local firms to supply goods and services to surrounding areas at attractive transport costs. MNCs should be able to reach important markets from their production base and clusters of firms should enjoy appropriate conditions to develop around supply chains. Since NAFTA, the state of Morelos lost its absolute advantage of proximity to major markets and is now struggling to keep its position. Industrial development prospects in Morelos are mainly focused on the automotive and the auto-parts industry with as the largest employer. The case study of Nissan is detailed below for illustrating the complexity and implications of accessibility and connectivity policies in relation to Morelos and regional economic growth.

Box 3.6. The case of Nissan in Morelos

The Nissan plant in Morelos was set up in 1966 and was the first plant of the company outside Japan. Together with other auto plants established in the state of Mexico and Puebla, the Nissan plant was built in the CIVAC industrial park and operated from there until the 1980s with a relatively high degree of national integration in the supply of inputs. Most of Nissan’s suppliers were located in the northern part of Greater Mexico City (AMCM). Its production was directed solely to the domestic market and strongly concentrated in the AMCM itself. As such, in this period the location of the plant was fully functional with respect to its operating model. However, after the North American Free Trade Agreement (NAFTA) came into force, some new assembly plants relocated to northern states (, , Sonora) but most went to the west ( and ) and north central ( and San Luis Potosi) regions. A new supplier base in the automotive industry in Mexico was developing in the vicinity of the new assembly plants and the degree of national integration of the automotive industry started decreasing considerably. Assembly plants are currently operating with a high proportion of imported inputs from the United States, in the case of American companies, and inputs from Japanese or other Asian countries for Japanese or Korean companies and Europe in the case of Volkswagen. Nowadays, most production is shipped to the United States and Canada and, more marginally, to other international markets. Nissan installed a second plant in Aguascalientes in 2013. At the start of its operations, the company evaluated the possibility of closing its plant in Morelos, but the proactive attitude of the state government influenced the decision to maintain it and locate its production of NV200 minivans to be marketed as taxi vehicles in . With the support of the Federal Government, the state government of Morelos, engaged in investment projects in infrastructure and connectivity, such as the enlargement to ten lanes of the Cuernavaca beltway, the expansion to four lanes of a section of the highway connecting Cuautla to Mexico City, as well as the construction of a thermoelectric plant designed to promote industrial development in the eastern part of the state. This effort was grounded in the idea that a local supplier base could be established in this area to supply both the Nissan plant in CIVAC and those of VW and Audi in Puebla.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 198 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Box 3.6. The case of Nissan in Morelos (continued)

Aguascalientes is also ideally located to receive the Asian inputs used by the company. It has the road and rail infrastructure needed to distribute the company’s products to other regional markets in the United States. In addition, it is relatively close to the assembly plants of other companies that, altogether, form a strong supplier base in the west and north central regions of Mexico. In contrast, the CIVAC plant in Morelos presents characteristics that are less competitive for several reasons: i) it is being absorbed by urban growth; ii) it is at full capacity and its surroundings are occupied by companies that are not specialised in the automotive industry and iii) it cannot expand beyond its current location. Moreover, direct shipping services from Asia to Mexico can be conducted from different ports or "hubs" of Asia to Manzanillo and/or Lazaro Cardenas. However, these direct services would be difficult to replicate in the short term, on the assumption that the state government of Morelos seeks to establish new ports in the Pacific to enhance the competitiveness of the CIVAC plant. The distance to the Pacific ports and border ports is not the main issue. It is the Metropolitan Area of Mexico City and the considerable bottleneck that it represents for the transport of inputs and finished goods. Furthermore, for the distribution of vehicles to United States regional markets, the CIVAC plant currently relies on road transport as a primary mode of transportation when railway transportation would be the most desirable. While it may be that CIVAC uses the KCSM’s terminal in Mexico City, the new FERROMEX service from Cuautla could simplify these operations. However, FERROMEX would need to use KSCM tracks. Obtaining their permission, or control over the tracks appears to be the best alternative to export vehicles to the eastern markets of the United States and to Europe via .

Although the traditional priority areas for Morelos in terms of infrastructure investments have focused on enhancing linkages to Mexico City, better connections with neighbouring states and international markets will improve the accessibility of the state: • In this context, new highway Century XXI, will better connect Morelos with Puebla and with international markets – both via the Pacific in Acapulco and the Gulf of Mexico via Veracruz. Its construction started in 2014, but it is worth noting that, at present, there is no commercial port in Acapulco and that the economic viability of this port for large cargo movements to and from Asia is difficult to conceptualise. This is another reason why the state of Morelos may not seek to promote the creation of a commercial port in Acapulco, but rather establish a more direct relationship between its main industrial zones and the port of Lazaro Cardenas. This road connection between the Gulf and the Pacific would allow for cost and time savings for passing through Morelos and, more specifically, the Balsas river basin area. This will represent an important improvement to access international markets and strengthen commercial links with Puebla. • As Morelos’ integration in the south and south-east region moves forward, a link between Puebla and the port of Lazaro Cardenas through Morelos would be a crucial project and could take the form of a joint initiative with the state governments of Morelos, Puebla and Guerrero. Likewise, a project focused on tourist circuits in the southern state would take advantage of tourist attractions located in northern Guerrero and south-western Puebla. For Guerrero, such a road would have a significant impact on the development prospects of its northern region, comprising the northern Sierra de Guerrero slope and cities belonging to the so-called Tierra Caliente such as , Arcelia, Ciudad Altamirano. These

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 199

cities could also benefit from a significant improvement in accessibility and connectivity to the port of Lazaro Cardenas. • In relation to railway connections, important initiatives have been undertaken in recent years with the revival of Cuautla’s railway station and the multimodal station. The state has rehabilitated the railroad to enhance the logistics platform in the eastern part of the state. It will also encourage the economic recovery in this region by providing rail freight services. In addition, two connection options through Morelos may be envisaged. One of them would be a road that runs through Cuernavaca, reaches Zacatepec and continues up until Iguala, for which there is a rehabilitation project undertaken by the federal government. The second would be a new road going from Zacatepec to Cuautla. However, such projects may be substantially hindered by railway companies.

Figure 3.7. Communication infrastructures

Source: Ministry of Finance of the State of Morelos (2016), Administrative registries.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 200 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

A short to medium-term solution to railway connectivity issues in relation to the CIVAC plant could be found should Nissan and other automotive companies locate to Bajio. They could negotiate an agreement with railway companies to achieve conditions that suit the specific requirements and parameters of the automotive industry. This agreement would require the support of relevant state governments and the federal government. Requirements can be met using the existing railway network, but railway companies, and the legal framework in which they operate, could stand in the way. The state of Morelos, along with the governments of other states such as Aguascalientes, Jalisco and Guanajuato may thus see value in engaging in a joint negotiations with Japanese automakers (Nissan, Honda and Mazda) as well as the two main railway companies (Ferromex and KCSM) in order to achieve a suitable agreement over the conditions necessary for those automakers to run their services and activities. Building partnerships and presenting a common front may be the most effective mechanism to generate results that are not only profitable to improve one situation, but that of multiple stakeholders. Natural gas The state of Morelos has engaged in the construction of a gas pipeline which, passing through the state of Puebla, will provide the region with natural gas and supply energy power plants with a combined cycle of 620 megawatts each (USAID, 2014). This should meet the needs of the region's expanding population and is expected to reduce energy costs and increase the competitiveness of several firms in Morelos, particularly those located in the CIVAC industrial park. The state's provision in natural gas contributes to the state's move towards sustainable, clean energy. The construction of the gas pipeline started in 2015, but until present it has been unclear when the gas pipeline could be used for industrial purposes. It has significant market implications for local businesses, for a transition towards green growth, and has the potential to attract new investors. In sum, the region should continue to improve accessibility to the main markets, including Mexico City, neighbouring states and export routes. These initiatives will lower transportation costs of firms in Morelos and by extension its competitiveness. At the same time, it is paramount for the region to improve inclusive growth by bettering its internal connectivity, particularly in municipalities and locations with poor accessibility and high rates of deprivation. Better connections in these remote locations can improve the delivery of services and bring new opportunities to the communities.

3.5 Tourism and natural amenities

Archaeological, cultural and gastronomic attractions all contribute to the touristic wealth of Morelos. The tourism sector is relatively well-developed and has always been perceived as a critical asset of the region. However, opportunities to diversify and strengthen it remain numerous. Fostering policy complementarities across sectors and policy areas can unlock significant new economic opportunities. Rural tourism, in particular, has the potential to revitalise rural areas and to generate employment for local communities in areas (e.g. agro-tourism and eco-tourism) with untapped potential. Tourism can be pursued in accordance with environmental conservation objectives and can help mobilise stakeholders to support environmental sustainability while also diversifying the rural economy. However, before Morelos can

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 201

seize all the benefits that tourism may bring to inclusive economic growth, the state will have to adopt a more integrated approach to tourism policy and improve basic infrastructure and services. Tourism policy and its challenges in the state of Morelos Tourism policy in the state of Morelos is developed in accordance with federal guidelines and is co-ordinated by the Ministry for Tourism of the state government. The potential of tourism to generate high socio-economic returns for local populations is well- understood. To exploit this potential, competitive projects are promoted across states and are supported by the federal government. Mexico’s National Development Plan (PND 2013-2018) with regard to tourism aims to consolidate tourist destinations, create jobs, develop markets for SMEs, and generate new sources of income for the local populations by enhancing investments and financing for tourism, while also promoting sustainability (Gobierno de la Republica, 2013a). The Plan puts emphasis on the importance of adopting a cross-disciplinary and programme-based approach to government actions, while at the same time considering tourism policy objectives. This is illustrated with tourism objectives being considered in the country’s National Infrastructure Plan 2013- 18. The Plan focuses on balanced regional development, urban development and connectivity logistics (Gobierno de la Republica, 2013b). Greater co-ordination among state agencies may well help get several pending projects off the ground. The above-mentioned PND objectives, while desirable, are in practice still to be implemented. The PND is also missing a more integrated tourism strategy conceived around the development of specific areas as tourism priority economic hubs, allowing for tourism opportunities to be exploited in co-ordination with other policy areas and sectors. Rural areas would lend themselves particularly well to such a strategy, drawing on their connection to the agricultural sector. Yet, the inclusion of rural communities is not perceived as an objective of tourism policy, despite the high potential that exists in making rural communities direct beneficiaries of major tourism attractions around the country. Mexico’s national tourism policy has a strong influence on the design of public policy at the state level. As such, to reinforce federal directives, the state government of Morelos emphasises the importance of conducting tourism policy initiatives that better harness regional competitive advantages. Among others, the state recognises a strong potential to strengthen cultural attractions, such as, nature, spas and water parks, in which it already has a long history. There is also a strong potential to enter new niche tourism markets, such as, business tourism (e.g. through group activities), family activities (e.g. weddings), cultural tourism (e.g. indigenous communities and traditions) and to promote schools, which also have a long tradition of being in the region, but that have never been promoted as an attractive tourism attraction. Morelos’ tourism policy focuses on improving training for tourism workers, infrastructure and equipment, and on introducing a new form of intergovernmental co- ordination across levels of government. It also promotes a greater interaction between the budgetary plans and the programmes of various state agencies in order to ensure that interests converge towards common tourism development goals. However, Morelos’ tourism policy is being implemented through the use of instruments that are common to all Mexican states in their relationship with the federal government. These include agreements with the Tourism Promotion Council of Mexico (marketing) and its counterpart at the state level, but also agreements and reallocation of resources from the Ministry of Tourism of Morelos with its national counterpart (SECTUR). In addition, the

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 202 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

state co-ordinates with the National Tourism Fund for the development of plans, programmes and strategic studies of interest to the government of Morelos on tourist destinations, products, routes and/or brokers, under the Programme of Assistance to Mexican states and municipalities.

Tourism is a relatively well-developed sector in Morelos The centre of the country is a region with long-standing cultural values offering strong potential as a tourist destination due to the diversity and complementarity of the attractions it offers. Spreading and promoting more effectively information on the strong tourism assets that exist in many areas of the state should be a central concern to Morelos’ destination development policy. The state of Morelos currently has more than 11 000 companies engaged in different activities related to the tourism industry. Employment in the tourism sector in Morelos benefits 66 000 people, representing 8.1% of the economically active population (Ministry for Tourism, 2016a). The state is host to approximately 361 hotels, which are ranked 23rd in a national ranking. If compared only to Mexican states that are beach destinations, Morelos ranks 10th in the national ranking for its number of hotels (Gobierno de Morelos, 2016b). While hotels continue to be built, the numbers of visitors to the state of Morelos has never exceeded the record 1 576 143 visitors 2006. In 2014, the state of Morelos received 1 201 835 visitors. Most visitors tend to stay in Cuernavaca (42.4%) and most of them are residents of Mexico (89%) (Ministry for Tourism, 2016b). The state benefits from a central position in the country and is accessible by various modes of transportation. As such, it presents numerous opportunities for short duration, one or two-day trips from Mexico City, whether organised by business organisations or families looking for recreational time in a greener environment. While access to the region may not be a primary issue, connectivity and accessibility within the region remains a major challenge. With respect to domestic market competition, the state of Morelos mainly competes against six other states located in the Central Region of the country. Those are the state of Mexico, the state of Hidalgo, the state of Tlaxcala, the state of Queretaro, the state of Puebla and Mexico City (Ministry for Tourism, 2013). Historical and cultural monuments and nature are their main attractions. The state of Morelos’ greatest advantage may be its year-round good climate and infrastructure for water attractions. The core touristic wealth of Morelos lies in its archaeological sites, national monuments, national parks, biodiversity, crafts, folklore and ethnic communities. Destination management and development programmes have been supported by FONATUR through its programme for tourism product development and integrally planned resorts. In 2014, the President of Mexico re-launched the Magical Towns Programme which brings together federal, state and municipal resources for the sustainability and long-term development of communities. Morelos has two eligible places: the Magical Towns of Tepoztlan and Tlayacapan (Ministry for Tourism, 2016c). Other strategic projects have included: the historical centre of Cuernavaca, the historical centre of Cuautla, the Route of the 16th Century Convents, the Zapata route and Lake Tequesquitengo. To this list, the Metropolitan Area of Cuernavaca, Zona Altos de Morelos, Downtown area, South Zone, West Zone and South East area have specifically been defined as core tourist regions based on criteria such as natural conditions, traditions, culture and attractions of exotic fruit, among others (Ministry for Tourism, 2016c).

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 203

Figure 3.8. Tourist sites in Morelos

Source: Ministry of Finance of the State of Morelos (2016), Administrative registries.

Different federal and state institutions have developed tourism programmes in rural areas in Morelos (Gobierno de Morelos, 2016a; Ministry for Tourism, 2016c). These are: • the Conservation Programme for a Sustainable Development (Programa de Conservacion para el Desarrollo Sostenible), by the National Commission for Natural Protected Areas (Comision Nacional de Areas Naturales Protegidas) • the Forest Development Programme (Programa de Desarrollo Forestal), by the National Commission for Forests (Comision Nacional Forestal) • the Programme of Attention to Nature Tourism (Programa de Atencion al Turismo de Naturaleza) which focuses on eco-tourism, adventure tourism and rural tourism.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 204 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Food plays an important role in the development of tourism services (often 30% or more of tourist expenditure) (OECD, 2012c). Thus, integrating food experiences into sustainable tourism development in rural and outlying areas can help ease poverty. There is a growing shift in the economy from easily reproduced goods and services to more unique experiences, especially those based on local or traditional foods. Tourism can also play a major role in developing food exports, both by creating demand abroad and by stimulating tourism expenditure on food at home. Developing food and tourism as an economic strategy can (OECD, 2012c):

• diversify rural economies with few development alternatives • be labour intensive and create jobs • contribute to regional attractiveness, thereby strengthening all aspects of the economy • sustain the local environment and cultural heritage • strengthen local identities and sense of community • be investment-light (except for setting up branding and marketing strategies) • create backward linkages, stimulate agriculture and the local food production industry.

Local employment activities in rural areas may also include: tour operators, hotels and other accommodation, restaurants and catering, transport services, general services and digital information services. Rural tourism can foster employment across various occupational domains and create demand for different skills profiles, including the lower and highly skilled. These new employment paths may represent important opportunities for many to get out of a spiral of weak attachment to the formal economy and poverty. The professionalisation of the sector will be essential to its future prosperity. To date, despite the large number of hotels in Morelos’ territory, only a handful have staff speaking conversational English. Because SMEs represent the largest number of companies active in the tourism sector and are those that generate the most employment, specific attention should also be put on the training of workers in those businesses as a means to strengthen the value chain in this sector. Delivering services and activities in rural contexts may at first be largely dependent on public financial support to get the initiatives going and train the inhabitants of rural areas for the new sources of employment. The Ministry of Tourism of the State of Morelos has established a Programme to Assist Nature Tourism, serving eco-tourism, adventure tourism and rural tourism, for which it works in collaboration with the state Ministry for Sustainable Development, the National Commission for the Development of Indigenous People, the National Forestry Commission and relevant municipal governments (Ministry for Tourism, 2016c). The programme includes field visits for diagnosis and technical assistance, as well as the management of resources for the development of community tourism enterprises. It also provides management assistance and training for enterprises and service providers. Educational institutions in collaboration with business stakeholders will be key in ensuring the design and provision of appropriate training courses that meet future employment needs. Morelos’

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 205

Council for Human Capital may be instrumental in bringing those initiatives, and partnerships, about.

Box 3.7. Better Skills, Best Tourism in Portugal

The “Better Skills, Best Tourism” study focused on identifying skill needs and strategies for tourism professions, as well as mapping relationships between qualifications and jobs in hotels, restaurants and other tourism activities. Flexible working hours, high staff turnover, a share of low-skilled workers and the need for functional versatility are characteristics of the tourism labour market in Portugal. The study proposed four key values to guide the human resources development agenda: service culture, market orientation, ICT and professionalism. The importance of soft skills is particularly underlined, as is the need to build capacity in tourism SMEs, by developing a training strategy for entrepreneurs and managers. The report notes that bringing new workers into the sector will not, on its own, enhance the skills profile in the sector – there is also a need to up-skill existing workers in the sector. This is a major challenge for the vocational training system in Portugal. A sectoral approach, which helps to recover investment in training and to meet the needs of human resources qualification and career management, should consider i) the possibility of developing a richer skills certification framework by defining industry certification related with specific pathways and valuing experience, and the interface between these, and ii) the usefulness of a more effective intervention to promote the capacity of training entities and thereby improve the quality of training. A stronger leadership role for Tourism of Portugal and of the Portuguese Confederation of Tourism is recommended, as well as the improvement of the Sectoral Council for Qualification of Tourism in order to involve more businesses and training operators. Source: Stacey, J. (2015), “Supporting Quality Jobs in Tourism”, OECD Tourism Papers, No. 2015/02, http://dx.doi.org/10.1787/5js4rv0g7szr-en.

To ensure that local communities seize the benefits of tourism activities in rural areas they must not only contribute to the delivery of those activities, but also be involved in shaping them. Local communities need to be empowered as primary agents of a changing rural economy. The state of Morelos has an important role to play in supporting the development of local tourism development plans and promoting partnerships among different municipalities that are based on coherent, common project plans. Building a network of consumers and suppliers and promoting the development of an ecosystem of agents involved in rural tourism, and linking local producers to local restaurants and tourism organisations is essential to achieve success. Likewise, well- developed branding and marketing strategies for local products and local places are paramount in reaching out to a wider set of consumers and in building a national and international profile as a tourist destination. Tourism at the regional level is about developing your own brand and creating a certain position for it. As such, entrepreneurial activities that can carry a strong local brand should be incentivised, for only they can contribute to enhancing tourism and the region’s attractiveness. With the Orgullo Morelos programme in support of micro firms and SMEs, the government of Morelos is pushing for the Morelos brand to grow.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 206 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Box 3.8. Orgullo Morelos

Orgullo Morelos (Morelos Pride) is a government programme that aims to increase internal consumption, generating employment, formalise micro-entrepreneurs and strengthen micro and small enterprises. It uses the tools that the state Ministry of Economy provides to improve entrepreneurs’ operational and commercial processes, help access finance and implement effective promotion in order to achieve social and economic development for the state of Morelos. The Ministry of Economy supports enterprises through the formalisation process which includes: federal taxpayer registration, trade mark, nutrition facts table, barcodes, labels, packaging, and merchandising. At the present time Orgullo Morelos products are available at different stores state wide: Walmart, Oxxo, Super Six, Orgullo Morelos Shop (all of them supermarkets), hotels and restaurants in Morelos, attending local and domestic expos and at the Orgullo Morelos catalogue. In terms of training, through Orgullo Morelos entrepreneurs have access to a Diploma in Business Development, monthly personal sessions with the Mexican Institute of Industrial Property (IMPI), sessions with GS1 (bar-codes), monthly free workshops from the National Autonomous University of Mexico Foundation and daily free advice regarding costs, labels, packaging, etc., with personnel from the Ministry of Economy. The Achievements of Orgullo Morelos in 2014 were: • legal formalisation of 250 business people • there are 400 business people in the process of formalisation • entry to hotels and restaurants of Morelos • entry to Liverpool (department store) • assistance provision to more than 700 business people • attendance at the Second Expo Orgullo Morelos at Galerías Cuernavaca (mall) • second participation at the Expo Antad 2014 (National Association of Supermarkets and Department Stores).

Source: Gobierno de Morelos (2016b), Tercer Informe del Gobierno 2013-2018, http://morelos.gob.mx/sites/default/files/PDFs/tercer-informe-de-gobierno.pdf (accessed 5 August 2016).

The use of media and digital platforms is also paramount in the effective advertising of rural municipalities’ services. It is through social networks that national and local stakeholders often communicate and promote tourism. Technology development and technology-based start-ups and businesses, in addition to traditional communications and marketing agencies, have a central part to play in supporting the development of tourism and tourism policy in the region. Yet, rural tourism is, so far, under explored in Morelos and is missing an integrated strategy that would tackle the different dimensions necessary for its success.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 207

Box 3.9. Entrepreneurship tourism in Portugal

Turismo de Portugal has also developed a training programme – Training Entrepreneurship Tourism – to encourage economic activity at local level to support regional development. The programme includes the following measures: • develop a training plan in the area of entrepreneurship, aimed at the creation of regional based products • guide the training plan to the unemployed in the tourism sector or other sectors of activity (professional training for tourism) • enhance regional products and assist in their distribution, marketing and consumption • facilitate obtaining future employment by improving soft skills in areas such as languages, attitude and behaviour, stimulating business and entrepreneurship. In this field, Turismo de Portugal has organised conferences on “Tourism Entrepreneurship: Create Your Business”, aiming to increase business opportunities, providing participants with useful knowledge on financing instruments, licensing and regulation legislation, among others skills. There were around 1 000 participants in these events. Lack of financing and access to credit as well as increased taxes and other costs are currently a major challenge for tourism SMEs. Turismo de Portugal manages a set of financing programmes focused on financial consolidation. It also recently signed a protocol with Business Angels which is especially designed for young entrepreneurs. Source: Stacey, J. (2015), “Supporting Quality Jobs in Tourism”, OECD Tourism Papers, No. 2015/02, http://dx.doi.org/10.1787/5js4rv0g7szr-en.

Tourism opportunities can be pursued with respect to environmental conservation objectives At present in Morelos, nature conservation through tourism occurs thanks to community tourist enterprises that are located in federal and state protected areas and which ensure that environmental regulations are observed. As a result, projects under construction use eco-techniques to minimise possible impact on the environment. Municipal governments contribute to these developments by providing facilities for the implementation and development of such projects. The state government manages the resources for the construction of those eco-tourism centres and provides technical advice as necessary. If well managed, compatibility can be found between tourism and the protection of natural resources. Agro-tourism and eco-tourism, for example, attract tourists who want to learn more about local culture and economic activities, thus providing a stimulus for farming and forestry and other environmentally-friendly activities. The experience of the Weissensee region in Austria is a good illustration of this compatibility. Likewise, a recent OECD review of Costa Rica highlighted the country’s development of a strong eco-tourism industry with wise management of natural resources and high positive impact on the incomes of local communities in rural areas.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 208 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Box 3.10. Financing landscape conservation in Austria through tourism

The community of Weissensee is located in the Alps in the south of Austria. Weissensee is one of Austria’s most tourist-oriented communities in which agriculture is closely connected to the tourist industry. The agricultural landscape represents an important input factor for the production of tourist services. In order to protect the rural landscape a landscape preservation programme has been set up and a private organisation, called the Landscape Conservation Organisation. This organisation has set up comprehensive production and landscape guidelines to be followed by farmers seeking monetary compensation for non-commodity outputs. Based on a set of criteria, the objective degree of difficulty in cultivation at the farm level is determined and this is translated into a points system. The payment of an individual farmer depends on the multiplication of his score with the number of square kilometres under cultivation. In order to be entitled to payments, a farmer has to respect several conditions with respect to livestock density, not using chemical fertilisers etc. All 26 farmers in Weissensee participate in the programme. The average monetary compensation per farmer was EUR 1 677. The landscape preservation programme is financed by payments of tourists spending their vacation in the areas. Around 5% of the local tourist tax is directly transferred to the Landscape Conservation Organisation for compensating landscape cultivation. In 2001 this amounted to EUR 25 500. The organisation received additional revenues of EUR 18 100 from the community budget. Source: OECD (2011), OECD Territorial Reviews: Switzerland 2011, http://dx.doi.org/10.1787/9789264092723-en.

Adopting a more territorial approach to tourism policy development Morelos’ tourism policy is also characterised by a clear sectoral focus through which it is intended to strengthen wealth generation by promoting the supply of thematic products that provide a competitive advantage for the state compared to other Mexican states. As a result, Morelos’ state policy for tourism has a very weak territorial development component. Two initiatives may be highlighted as exceptions: “Pact for Development of Altos de Morelos” and the Tourism Development Program of Southern Region of the State of Morelos (Gobierno de Morelos, 2013b). The “Pact for Development of Altos de Morelos” is an agreement between the state government of Morelos and the councils of involved municipalities making tourism and agribusiness the pillars of their tourism policy. The Tourism Development Programme of Southern Regions of the State of Morelos involves six municipalities in the development of a comprehensive sustainable tourism system across three interconnected sub-regions of which the competitiveness is based on the spa industry. While existing initiatives present interesting attempts toward the adoption of a more territorial approach to the tourism sector, the traditional sectoral approach remains widely dominant across tourism policy. At present, its implementation is still insufficient for it to be considered an established vision. The state of Morelos would benefit from developing an integrated territorial framework and work agenda that would set a long-term vision for the sector and define legal provisions ensuring the participation of different state agencies, both in programming and budgeting. A territorial development approach to tourism policy would help Morelos better exploit the diverse, yet complementary wealth of existing tourist attractions. Those assets include exploiting Morelos’ cultural traditions,

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 209

gastronomy and local products and natural diversity. Maximising eco-tourism, medical tourism and the conference market may also generate strong tourism demand. To this aim, and in collaboration with municipalities, the state government could develop a strategy whereby tourism is the focal point of the economic development of sub-regions. This would result in territorial development projects being designed and implemented based on the tourism potential and characteristics presented by each sub- region. Moreover, the development of sub-regional projects and strategies should count on the participation of other relevant government agencies to create the necessary conditions for the economic and social development of sub-regions as well as to ensure the environmental conservation. Bringing the municipalities of several areas together to provide diversified, yet complementary, tourism attractions could, as such, reinforce the tourism potential of different areas in a harmonised way.

Box 3.11. Creative tourism to support regional development in Thailand

The Thai government has developed a creative economy approach to development which involves a significant tourism component. At the regional level, creative tourism programmes are being implemented by the Designated Areas for Sustainable Tourism Administration, which is working with local communities to develop creative experiences. Ten provinces have also been selected as “creative city prototypes” under the “Creative Thailand” policy, including Chiang Mai (fine handicrafts theme), Lop Buri (renewable energy innovation), Lampang (creative ceramics) and Ang Thong (drum-making). One of the emerging ideas from the Tourism Authority of Thailand is to link the creative economy to “Thai-ness”, which includes Thai experience, way of life and culture. This link between the way of life of a country or region and creativity is an interesting example of how intangible resources can be used creatively to develop new tourism products. Research indicates that creative tourists in Thailand are generally female (59%), aged between 25 and 34 (57%) with a degree or postgraduate education (75%) and with relatively high incomes. Source: OECD (2014a), Tourism and the Creative Economy, OECD Studies on Tourism, http://dx.doi.org/10.1787/9789264207875-en.

While tourism policy is said to be aiming at the promotion of different regions as attractive centres for tourism, no specific area is being identified. Yet, there would be potential for Morelos to work in partnership with neighbouring states to develop a more cohesive tourism offer, on that looks beyond territorial boundaries and benefits several states at once. Tourism policy in Morelos could lead to the development of regional projects involving two or more nearby states around a strategic portfolio of projects in their sub-regions with common employment objectives for the local populations. A territorial strategic project would be one that contributes to achieving the development goals of a specific territory. It would, for example, be composed of a set of sub-projects in the same value chain and touching upon different sectors, which would altogether contribute to the main tourism project by providing the socio-economic and environmental conditions necessary to its success. This would also imply that state governments engage in joint strategies and services to ensure physical security, financial security and food security in the areas being developed. Tourism policy based on the promotion of roads, routes or corridors with an emphasis on single or niche concepts may need to be reviewed in light of successful experiences

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 210 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

where diversity and complementarity enhance the attractiveness of a place or attraction. This would expand the attractiveness of different areas of the regions to different types of visitors. A coalition of state governments may be necessary to bring those changes about to the federal government.

Consolidating basic services and infrastructure The state of Morelos faces strong connectivity challenges, which relate to all forms of transportation and affect both incoming tourism and travel within the region. The state has made the opening of its international airport a priority, but other modes of transportation in Morelos will also require strong improvements and modernisation before the region can fully exploit its tourism capacity. Issues in Morelos include poor public transport throughout the region and, particularly, the urban mass transport system within the metropolitan area of Cuernavaca, which produces high pollution levels. Another major challenge lies in the poor physical condition of the road system and a non- existent network of passenger rail services. Accessible tourist routes also need to be well- indicated and easy to navigate, with new transport links being made available to allow for private and collective tourism to flourish. There is a pressing need in Morelos to recognise the importance of tourism interests as a way to influence policy across other sectors, such as, infrastructure and transport planning. Poor tourism service quality, the under-development of specific territories as tourism destinations and limited financing for tourism development add to the aforementioned challenges. Likewise, poor sanitary facilities in touristic venues and a strong perception of insecurity by both visitors and residents who wish to open new businesses also constitute impediments to tourism attraction and development. Adding to its own deficiencies, in the past decade, Morelos’ tourism sector has been impacted by the global economic crisis, which has translated into fewer numbers of people traveling and coming to visit the region: national and international visitors alike. The state government may want to consider how it can realise policy complementarities by concentrating service delivery in rural areas. Concentrating service delivery often includes administrative services, healthcare, shopping and so on, in specific places with transport networks organised so as to make them as accessible as possible to the rural population of the surrounding areas. Often these arrangements are referred to as “one-stop shops”, as is the case for a programme in France (Box 3.12). They can vary in scale: some are quite basic and limited to essential functions, while others, where population and resources permit, come to act as local centres of innovation, playing a role in supporting efforts to bridge primary, secondary and tertiary activities in rural areas and in promoting renewable energy generation. In some communities, the proximity of these services can help them be more integrated with one another, as practitioners have more opportunities to interact and learn about each other’s work – including across levels of government (OECD, 2016a). If rural communities are to play their full role in strengthening national economies, it is important that the correct set of services be in place. The challenges associated with delivering public services vary across different regions and countries. However, certain policy strategies already used in OECD countries to overcome the challenges illustrated in Box 3.12 can be considered as “good-enough” (if not necessarily “the best”) practices that can provide ideas to governments facing similar problems. These practices often emphasise “innovation” (alternative methods to achieve the result) and “inclusiveness” (co-design and co-delivery) which are important for a holistic approach. For instance,

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 211

because end users at the community level are an integral part of the process, there are far better odds of providing services that are useful in the community and of providing them in a cost-effective way (OECD, 2016a).

Box 3.12. “Good-enough’’ practices in the provision of services to rural areas

• Consolidation, co-location and the merger of similar services. Consolidation involves concentrating customers on a smaller number of service locations. It increases effective demand by increasing the size of the service territory for each remaining location. One example would be the merging of several weak local newspapers to create a single regional paper that has more viability. Co-location is another approach that seeks to build demand. Basic overhead costs – energy, security and administrative expenses – can be pooled, generating economies of scope. If post office services are consolidated with a shop, people can obtain their mail and purchase food in one trip. Finally, service merger takes similar or substitute services and combines them into a single entity. • Alternative delivery mechanisms. Where the demand for services is widely dispersed, it may be more efficient to bring the service to the user. For example, adopting mobile service delivery approaches – bookmobiles that bring library services to communities that are too small to have a physical library or mobile dental clinics. The Internet offers the possibility to provide services in rural areas and for providers in rural areas to offer services outside their immediate territory. Telemedicine allows x-rays and other diagnostic services conducted in rural areas to be processed and analysed elsewhere. • Community-based solutions for different types of providers. Some rural communities have volunteer fire departments. Others have fire departments that are operated by local governments. In some communities there are for-profit village shops, in some villages there are community owned shops that provide equivalent access to services, but which operate as social enterprises. • Improve quality and marketing. Technology can help rural residents provide and access information about service quality and about alternative providers. Geolocation facilitates matching between the supply of and demand for services. • Alternative energy sources. Renewable energy can reduce “fuel poverty” that can be a common feature of remote regions, by allowing isolated communities to produce their own energy instead of importing expensive conventional fuels. Increasing the use of affordable and reliable energy in remote rural communities can improve their capacity to deliver goods and services. For instance, the availability of reliable electricity is essential for a local restaurant that needs a refrigerator. • Innovate – create a new service to achieve better outcomes. In rural areas there is often insufficient business to support a full range of services provided through independent firms. A region may not be able to support a full-fledged home repair business, but could make use of the services of a travelling handyman that operates out of a fully-equipped vehicle. Mobile entrepreneur are important in these types of areas (Bryden and Munro, 2000; Markeson and Deller, 2012).

Source: OECD (2016a), OECD Regional Outlook 2016: Productive Regions for Inclusive Societies, http://dx.doi.org/10.1787/9789264260245-en.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 212 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Water resources A previous OECD report identifies water scarcity and the distribution of clean water as a major challenge in Morelos. To address the difficult issues related to water, the state government has designed a comprehensive water project that aims at providing high quality water for human consumption, and includes infrastructure work such as building and managing sewer systems linked to water treatment plants and contributing to a more efficient irrigation infrastructure. The project also addresses some of the factors affecting access to drinking water for the population, the low or complete lack of coverage in some areas, the lack of protection of supply sources and water losses in distribution systems, with a particular focus on vulnerable communities and urban areas of high population density. The situation in rivers and ravines used to be severe with sewage directly discharged into basins, causing diseases among the population, environmental degradation, and ground water pollution. The Ministry for Sustainable Development of the State of Morelos has designed a strategy for the integrated management of wastewater treatment and solid waste (Estrategia de Gestión Integral de Residuos Sólidos, GIRSEM) through which it put in place wastewater treatment policies. By building new water systems, by expanding the network and modernising infrastructure, the quality of life of the population in the past few years has significantly improved. Some of the outcomes from those measures are: • Increased access to basic water services with over 167 000 inhabitants benefiting from clean water, which represents an increase of 9% of the state's population (Comisión Estatal del Agua de Morelos, 2016). • Drinking water coverage elevated to 94%, thus benefiting 278 000 inhabitants, against 86% in 2010 (INEGI, 2015c). • Construction and expansion of sewer networks to recover wastewater flows and direct them to appropriate sites for water treatment and disposal, thereby contributing to the protecting human health and ecosystems. Over 133 000 additional people now benefit from sanitary sewerage services, which represents a sewerage system covering 96% of the state's total population (INEGI, 2015c). • In 2012, there were only 22 Sewage Treatment Plants (WWTP). Currently there are 43 in working condition. The State Water Commission (CEA) is responsible for the operation of 19 wastewater treatment plants, with a total water treatment capacity of more than 34 million litres per day. Thus, the quality of water flowing in the ravines of Cuernavaca and the Cuautla River, has been improved dramatically with the installation of drainage that flows into the water treatment plant (Comisión Estatal del Agua de Morelos, 2016). In order to improve farm products, the state government has also modernised irrigation infrastructure which increases efficiency in extraction, transmission, distribution and application of irrigation water. • Renovation of 36 kilometres of irrigation canals that benefit 7 500 square kilometres for agricultural use (Comisión Estatal del Agua de Morelos, 2016). • Modernisation of 25 wells and installation of 200 kilometres of pipeline, thus increasing overall efficiency from 36% to 55% (Comisión Estatal del Agua de Morelos, 2016).

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 213

To conclude, tourism plays an important role in Morelos' economic development and presents a potential in the rural areas that is currently under-exploited. It would be beneficial for the state of Morelos to develop an integrated strategy for tourism that supports communities from different areas of the region in developing the assets that are specific to their territory. Adopting a territorial approach to tourism could generate additional sources of non-farm income for the local population and new business opportunities. The protection and effective management of Morelos' natural amenities will be crucial not only for tourism, but also to ensure the well-being of the population. The state has been making headway in protecting its environment and should continue to do so.

3.6 Concluding remarks

Urban and regional development The preservation of the environment is one of the main pillars of well-being. The sustainable use of natural resources, such as water, green areas, air quality, are crucial for a sustainable development path. The success of Morelos in achieving sustainable economic growth will rely on its ability to conserve the natural capital with which it was gifted while also increasing accountability into the spatial planning system, especially vis-à-vis municipalities. One way to incentivise municipalities to plan urban development would be to make funding for specific projects conditional on a municipal urban development plan. This would tighten controls and limit the damage that unpermitted constructions can cause to the environment and to the population's well-being. Morelos should also: • Design and implement a comprehensive plan for environmental protection, which includes greenhouse gas emissions, waste management, and quality of water. • Foster the connection of state programs to national and international environmental programs, such as the Climate and Clean Air Coalition (CCAC). • Promote the substitution of fossil combustion with gas for public transportation, exploiting the newly constructed gas pipeline and national programs fostered by SEMARNAT.

Rural and tourism policy Rural policy must go beyond agriculture and develop further synergies with the tourism sector. In the state of Morelos, rural policy is currently sectoral and tied to the agricultural sector. To improve the competitiveness of rural areas, Morelos should adopt a multi-dimensional territorial approach that would facilitate the consolidation of strategic development projects in specific rural areas. Morelos thus should: • Adopt a multi-dimensional territorial approach to rural areas, which goes beyond the agricultural sector and looks at opportunities for other sectors of the rural economy to develop and contribute to growth. For instance, the natural and agricultural landscape can be integrated in agro-tourism activities. It is important that the policy content is open to the contribution of all involved stakeholders, avoiding a top-down type of approach. Finally financial resource should be channelled towards productive investment projects rather than compensate for lost income.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 214 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

• Develop tourism policies in accordance to environmental preservation, but first and foremost complementary to other policy areas. • Elaborate and deliver appropriate training to upskill workers in the tourism sector. Develop support to tourism entrepreneurship.

Accessibility and connectivity The state of Morelos has engaged in important infrastructure works in the past few years. In a similar vein, Morelos should: • Continue to invest in railroad and road networks to improve the accessibility of the region to Mexico City, neighbouring states of Puebla, State of Mexico and Guerrero and to external markets in the Pacific and Atlantic coasts. • Improve urban mobility while taking into account the environmental dimension. Strengthen internal connectivity by better connecting marginalised municipalities. These initiatives should be integrated and aligned with policies improving education and capacity at the municipal level.

Notes

1 See Estación de Monitoreo Cuernavaca Centro, Morelos Air Pollution: Real-time Air Quality Index (AQI), http://aqicn.org/city/mexico/morelos/estacion-de-monitoreo- cuernavaca-centro/ 2 There is also a National Development Plan and National Urban Development Programme – these set the general directions for development, but not spatial policy per se.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 215

Bibliography

Cervero, R. and D. Dai (2014), “BRT TOD: Leveraging transit oriented development with bus rapid transit investments”, Transport Policy, Vol. 36, pp.127-138. Comisión Ambiental de la Megalopolis (2015), Diagnóstico PM2.5 en la Megalópolis, Comisión Ambiental de la Megalopolis. Comisión Estatal del Agua de Morelos (2016), Administrative registries. CONEVAL (2010), Medición de la pobreza, www.coneval.org.mx/Medicion/MP/Paginas/AE_pobreza_2014.aspx (accessed 13 October 2016). Consejeria Juridica (2016), Ley del Equilibrio Eoclógico y Protección al Ambiente del Estado de Morelos, http://marcojuridico.morelos.gob.mx/archivos/leyes/pdf/LAMBIENTEM.pdf (accessed 12 October 2016). Flores Dewey, O.A., (2013), Expanding transportation planning capacity in cities of the global South: public-private collaboration and conflict in Chile and Mexico, Doctoral dissertation, Massachusetts Institute of Technology. Gobierno de la Republica (2013a), Plan Nacional de Desarrollo 2013-2018, Programa Sectorial de Turismo. Gobierno de la Republica (2013b), Programa Nacional de Infraestructura 2013-2018, www.gob.mx/presidencia/acciones-y-programas/programa-nacional-de- infraestructura-2014-2018 (accessed 21 September 2016). Gobierno de la Republica (2013c), Plan Nacional de Desarrollo 2013-2018, http://pnd.gob.mx/ (accessed 5 August 2016). Gobierno de Morelos (2016a), Administrative registries. Gobierno de Morelos (2016b), Tercer Informe del Gobierno 2013-2018, http://morelos.gob.mx/sites/default/files/PDFs/tercer-informe-de-gobierno.pdf (accessed 5 August 2016). Gobierno de Morelos (2013a), Programa Sectorial Agropecuario y Acuícola de Morelos 2013-2018, www.transparenciamorelos.mx/sites/default/files/18_PROGRAMA%20DE%20DESA RROLLO%20AGROPECUARIO_0.pdf (accessed 5 August 2016). Gobierno de Morelos (2013b), Programa Sectorial de Turismo de Morelos 2013-2018, www.transparenciamorelos.mx/sites/default/files/PROGRAMA%20ESTATAL%20T URISMO%20DEL%20ESTADO%20DE%20MORELOS%202013%202018_0.pdf (accessed 5 August 2016). INEGI (2015b), Anuario estadístico y geográfico por entidad federativa 2015 / Instituto Nacional de Estadística y Geografía.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 216 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

INEGI (2015c), Principales resultados de la Encuesta Intercensal 2015: Morelos /Instituto Nacional de Estadística y Geografía. INEGI (2012), Delimitación de las Zonas Metropolitanas de México 2010, www.conapo.gob.mx/es/CONAPO/Zonas_metropolitanas_2010 (accessed 9 November 2016). INEGI (2010), Censos de Poblation y Vivienda, Instituto Nacional de Estatistica y Geografía, Mexico. Instituto Nacional de Estadística y Geografía, INEGI (2015a), Encuesta Nacional de Ocupación y Empleo, www.beta.inegi.org.mx/proyectos/enchogares/regulares/enoe/ (accessed 13 October 2016). Ministry for Sustainable Development (2016a), Administrative registries. Ministry for Sustainable Development (2016b), Estrategia de Gestion Integral de Residuos Sólidos del Estado de Morelos, https://issuu.com/cachorro85/docs/estrategia__girsem__en_documento (accessed 21 October 2016). Ministry for Tourism (2016a), Sección del Comité Técnico Especializado de Estadísticas Económicas del Sector Turismo, www.datatur.sectur.gob.mx/SitePages/ComEstadSecTur.aspx (accessed October 2016). Ministry for Tourism (2016b), Información Turística por Entidad Federativa, www.datatur.sectur.gob.mx/ITxEF/ITxEF_MOR.aspx (accessed 13 October 2016). Ministry for Tourism (2016c), Acciones y Programas, www.gob.mx/sectur/archivo/acciones_y_programas (accessed 13 October 2016). Ministry for Tourism (2013), Estudio de competitividad turística del destino Cuernavaca, Morelos, www.sectur.gob.mx/wp-content/uploads/2015/02/PDF-Cuernavaca.pdf (accessed 13 October 2016). Ministry of Finance of the State of Morelos (2016), Administrative registries. OECD (2016a), OECD Regional Outlook 2016: Productive Regions for Inclusive Societies, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264260245-en. OECD (2016b), OECD Territorial Reviews: Peru 2016, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264262904-en. OECD (2015a), OECD Urban Policy Reviews: Mexico 2015: Transforming Urban Policy and Housing Finance, OECD Publishing. http://dx.doi.org/10.1787/9789264227293-en. OECD (2015b), OECD Territorial Reviews: Valle de México, Mexico, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264245174-en. OECD (2015c), “National prosperity through modern rural policy”, 10th OECD Rural Development Conference, 19–21 May 2015, Memphis, United States, www.oecd.org/rural/rural-development-conference/ (accessed 1 June 2016). OECD (2015d), The Metropolitan Century: Understanding Urbanisation and its Consequences, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264228733-en. OECD (2014a), Tourism and the Creative Economy, OECD Studies on Tourism, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264207875-en.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS – 217

OECD (2014b), Using well-being indicators for policy making: State of Morelos, Mexico, OECD Publishing, Paris, www.oecd.org/regional/regional-policy/MORELOS-CASE- STUDY.pdf (accessed August 2016). OECD (2013a), OECD Reviews of Risk Management Policies: Mexico 2013: Review of the Mexican National Civil Protection System, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264192294-en. OECD (2013b), OECD Environmental Performance Reviews: Mexico 2013, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264180109-en. OECD (2013c), Rural-Urban Partnerships: An Integrated Approach to Economic Development, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264204812-en. OECD (2012a), Promoting Growth in All Regions, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264174634-en. OECD (2012b), Linking Renewable Energy to Rural Development, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264180444-en. OECD (2012c), Food and the Tourism Experience: The OECD-Korea Workshop, OECD Studies on Tourism, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264171923-en. OECD (2012d), OECD Territorial Reviews: Skåne, Sweden 2012, OECD Publishing, http://dx.doi.org/10.1787/9789264177741-en. OECD (2009), How Regions Grow: Trends and Analysis, OECD Publishing, http://dx.doi.org/10.1787/9789264039469-en. OECD (2011), OECD Territorial Reviews: Switzerland 2011, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264092723-en. OECD (2010), Strategies to Improve Rural Service Delivery, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264083967-en. OECD (2009), How Regions Grow: Trends and Analysis, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264039469-en. Periódico Oficial “Tierra y Libertad” (2014), Programa de Ordenamiento Ecológico Regional del Estado de Morelos, No. 5220, http://periodico.morelos.gob.mx/periodicos/2014/5220.pdf (accessed 19 October 2016). Salcedo, D., T. Castro, L.G. Ruiz-Suárez, A. García-Reynoso, R. Torres-Jardón, A. Torres-Jaramillo, B.E. Mar-Morales, A. Salcido, A.T. Celada, S. Carreón-Sierra and A.P. Martínez (2012), “Study of the regional air quality south of Mexico City (Morelos State)”, Science of the Total Environment, 414, pp.417-432. Servicio Nacional del Empleo, SNE (2016a), Movilidad Laboral Interna Sector Agricola, http://sne.morelos.gob.mx/subprogramas-pae/mlisa (accessed 19 October 2016). Stacey, J. (2015), “Supporting Quality Jobs in Tourism”, OECD Tourism Papers, No. 2015/02, OECD Publishing, Paris, http://dx.doi.org/10.1787/5js4rv0g7szr-en. USAID (2014), Actualización del Programa Estatal Morelense de Acción ante el Cambio Climático, Tetra Tech ES Inc., United States. Valderrama Blanco M.B. and B. Sánchez Roldán (no date), Jatropha en Morelos: Un ejercicio de sustentabilidad, Editorial MaPorrua.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 218 – 3. FOSTERING AN INTEGRATED APPROACH TO TERRITORIAL DEVELOPMENT IN MORELOS

Annex 3.A1

Table 3.A1.1. Rural Policy 3.0

Old Paradigm New Rural Paradigm (2006) Rural Policy 3.0 –Implementing the New Rural Paradigm

Well-being considering multiple Objectives Equalisation Competiveness dimensions of i) the economy ii) society and iii) the environment

Support for a single Support for multiple sectors based on Low density economies Policy focus dominant resource sector their competitiveness differentiated by type of rural

Integrated rural development Investments in qualified firms and approach – spectrum of support Tools Subsidies for firms communities to public sector, firms and third sector Involvement of i) public sector – multi-level governance, ii) private Key actors Farm organisations and All levels of government and all relevant sector – for-profit firms and and national governments departments plus local stakeholders social enterprise, and iii) third stakeholders sector – non-governmental organisations and civil society

Policy Uniformly applied top down Integrated approach with Bottom-up policy, local strategies approach policy multiple policy domains

Three types of rural: i) embedded in metropolitan Rural Rural as a variety of distinct types of Not urban region, ii) adjacent to definition place metropolitan region, and iii) far from metropolitan regions Source: OECD (2016), OECD Regional Outlook 2016: Productive Regions for Inclusive Societies, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264260245-en.

OECD TERRITORIAL REVIEWS: MORELOS, MEXICO © OECD 2017 From: OECD Territorial Reviews: Morelos, Mexico

Access the complete publication at: https://doi.org/10.1787/9789264267817-en

Please cite this chapter as:

OECD (2017), “Fostering an integrated approach to territorial development in Morelos”, in OECD Territorial Reviews: Morelos, Mexico, OECD Publishing, Paris.

DOI: https://doi.org/10.1787/9789264267817-6-en

This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected].