The Problems of Mexico City The principal problems now facing Mexico City are its overcrowding and overpopulation, its dangerous environment, its dwindling water supply, and its One of Mexico City's problems is that it has an enormous population that continues to rapidly increase every day. There are many people that move to Mexico City and many people that are born there every year. These factors contribute even more to its overcrowding and overpopulation. Another problem is Mexico City's habitat. It is located in the Valley of Mexico, which is highly vulnerable to volcanic eruptions and earthquakes