Across OECD countries, globalisation is increasingly testing the capacity of regional economies to adapt and exploit their competitive advantages, while also offering new opportunities for regional development. This is leading national and regional authorities to rethink their development strategies. As a result of decentralisation, central governments no longer have the sole responsibility for development policies, and different levels of government have to work effectively together to improve public service delivery. Metropolitan areas, because of their critical economic and environmental importance, are receiving particular attention. Metropolitan regions are the engines of social, economic and cultural development, and their dynamism - or lack thereof – has an impact on the overall national economic development agenda.

The Metropolitan Zone of the Valle de México (Zona Metropolitana del Valle de México, ZMVM) is the economic, financial, political and cultural centre of Mexico and thus has profound impacts on national performance. It is home to 17% of the national population and contributes almost a fourth (23%) of national GDP.

The 2015 OECD Urban Policy Review of Mexico concluded that, as a highly urbanised nation, Mexico’s performance is closely tied to the functioning of its major cities and thereby to the quality of their governance. This study of the Valle de México also concludes that there is a need for major reform of metropolitan governance, to address the challenges in planning and urban development faced by the country’s largest metropolitan area.

This chapter provides an overview of characteristics of the Metropolitan Zone of the Valle de México. It begins by outlining the extent of the metropolitan zone, which includes the Federal District and municipalities of the State of Mexico and the state of Hidalgo and the administrations involved in its governance. It then focuses on the metropolitan area’s demographic and economic development and discusses the social and distributional characteristics. In line with the focus of this study, two sections consider housing and transport and environmental aspects in depth.

This chapter assesses the most pressing housing and urban development challenges in the Valle de México: rapid urban expansion, infrastructure gaps, limited affordable housing in the centre and a large quantity of abandoned housing in peripheral areas. It then proposes two strategies to improve housing and urban development in the metropolitan zone. The first strategy is to improve quality of life and well-being in existing neighbourhoods through integrated urban regeneration strategies. The second is to guide future housing and urban development through a more co-ordinated metropolitan approach. Such an approach could include: 1) facilitating development in the city centre; 2) placing a stronger emphasis on rental housing to relieve affordable housing pressures; and 3) planning for – rather than restricting – growth in strategic peripheral areas.

This chapter looks at the major elements of the Valle de México’s mobility policies. It begins with an exploration of the current progress towards inclusive and sustainable mobility, looking at the metropolitan framework for air quality, transport policies aimed at improving residents’ well-being and recent steps towards prioritising public and non-motorised transport users. This is followed by an examination of the obstacles to improving mobility in the metropolitan zone, such as limited planning and institutional capacity weaknesses. A major section focuses on proposed actions to achieve a high-quality mobility system through improved metropolitan co-ordination, policy coherence, long-term mobility planning, and ensuring robust financial capacity. It ends with an analysis of the two major federal transport projects: a train line and the New Mexico City International Airport. Overall, the chapter emphasises the links between mobility and urban development policies and the benefits of addressing them in tandem.

This chapter looks at the key environmental challenges of the Valle de México. It begins with an overview of the water, air, solid waste and land conservation problems that threaten the sustainability of the metropolitan zone. This is followed by an exploration of the governance obstacles that authorities face in addressing environmental challenges. It next considers the lack of a metropolitan vision, weak institutional arrangements, multiplicity of actors, sub-national governments’ limited capacity and citizens’ lack of awareness as the main barriers to environmental policy success. The main section considers some alternatives for tackling environmental concerns, as well as the need to use urban planning and a metropolitan resilience strategy to ensure policy coherence. It ends by making some recommendations for overcoming the governance obstacles to facilitate policy implementation and promote green growth.

This chapter looks at the major features of metropolitan governance in the Valle de México. It begins with an exploration of the institutional framework and co-ordination mechanisms, looking at the politico-administrative system as it affects the metropolitan governance dynamics. It then looks at the fiscal system operating in the metropolitan zone, proposing some changes to the Metropolitan Fund as an instrument for metropolitan co-operation. A major section focuses on options to bridge co-ordination gaps for urban development where the political reform of the Federal District, inter-municipal arrangements and the construction of the New Mexico City International Airport could help improve governance. It ends with some recommendations to encourage institutional capacity at the sub-national level of government. Overall, the chapter emphasises that the governance problem is not the lack of institutions, but how they work. A shift to metropolitan governance is a precondition for comprehensive policy responses.