With water in Mexico becoming veryscarce spatially and over time, it is now a factor thatlimits economic activity and social well-being in severalregions. The identification of priorities and trade-offs inrelation to water allocation requires careful and timelyattention to address an ever-growing range of complicationsarising from the impact of various interlinkedconsiderations, such as sustainability of water resources,fairness, pollution, environment, basic services,development, competition, and globalization. Nationalpolicies, both within the water sector and for the overalleconomy, need to accommodate these issues. The studyreported in this note is part of a broader analysis of thesector. Its intent is to promote a stakeholders consultationprocess, development of a specific set of background papersto address the most pressing issues in water policy in thecountry. Finally, the study included the development ofanalytical models to assess the linkages and impacts ofvarious policy instruments on the water sector and theeconomy with a focus on one river basin case study - Rio Bravo.