Academic journal article The Journal of Social, Political, and Economic Studies

Protecting the Water Supply: The Philippine Experience

Academic journal article The Journal of Social, Political, and Economic Studies

Protecting the Water Supply: The Philippine Experience

Article excerpt

Water plays an important function in life's sustenance, but the sources of water globally are constantly under siege from naturally occurring events, from continuing population growth and from economic development. As a result of the rapid increase in both global population and industrialization, there are increasing and conflicting demands for water for domestic, agricultural and industrial purposes. Supply and access to water has become one of the most critical challenges confronting humanity today.

The Philippines, a comparatively water-rich country, is not immune from the threat to its water resources. Unfortunately, it faces the same problem of water shortage due to decades of population increase, destruction of tropical rainforest and catchment areas, water pollution, excessive extraction of groundwater, general water misuse, and poor resource management. The government has attempted to establish market-based mechanisms based on a socially-conscious system of water tariffs. Despite all the regulatory efforts, little has been achieved in the way of ensuring long-term conservation of the nation's water and other natural resources.

The aim of this document is to present the Philippine experience in terms of the institutional factors surrounding water delivery and pricing and their implications for achieving sustainable water resources. The document is structured in five sections: (i) international water pricing mechanisms; (ii) Philippine water laws and policies; (iii) existing raw-water pricing schemes in the Philippines; (iv) market-based mechanisms' experience in the Philippines in the case of payments for ecosystem services (PES); and (v) current challenges. The paper concludes with a call for an effective pricing mechanism as a means of protection.

I. International Water Pricing Mechanisms

Currently, international water pricing mechanisms evolve around the concept of sustainable financing. Water pricing can be a very powerful instrument in pursuing the different water policy objectives. Water pricing is often promoted by economists for its incentive effects. This will have two positive consequences: it will lead to resource efficiency and it will also lead to allocative efficiency. Thus, water pricing can simultaneously promote economic growth and environmental sustainability objectives (EU Water Initiative, 2012).

Water allocation systems range from government-controlled to market-led systems, and combinations of the two. The prevailing institutional frameworks and the water resources infrastructure (Dinar, Rosegrant and Meinzen-Dick, 1997) influence the precise nature of allocation systems. However, they commonly fall into one of only a small number of categories: public allocation, market-based allocation and user-based allocation.

In government-controlled systems, allocation of water is determined by the state. It is used for intersectoral allocation of water, as the state usually is the only institution that has jurisdiction over all sectors of the economy and because allocation of water is considered too important to leave to the mercy the market. The state may control allocation within sectors through, for example, granting permits for water abstraction (Dinar, Rosegrant and Meinzen-Dick, 1997).

User-]based allocation of water is undertaken through the collective management of water sources, supplying water for either collective or individual use. User-]based allocation requires established rights to water use and an appropriate institutional framework that has the capacity to effectively determine and regulate use. Its effectiveness is determined by the characteristics of the community and its institutions, and by the extent to which social norms influence water use. However, effective allocation is dependent on the existence of a strong and transparent institutional framework, which is not always present (Dinar, Rosegrant and Meinzen-Dick, 1997).

Market-based allocation is determined by transactions in water use, at prices determined by supply and demand. …

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