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Pricing for Groundwater Use of Industries in Metro Manila, Philippines

Author

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  • Maria Corazon Ebarvia

    (School of Economics, University of the Philippines, Diliman)

Abstract

The rapid growth, urbanization and migration in Metro Manila has increased water demand which has outpaced the capacity of the water agency, The Metropolitan Waterworks and Sewerage System (MWSS), to expand supply. Unserved sectors have resorted to well construction while others have resorted to tapping illegal connections to MWSS pipes. Considering that only 65% of the population in the study area is served by the MWSS, and groundwater accounts for only 3% of the MWSS water supply sources, there is a need to focus attention on the private extraction and utilization of groundwater resources in Metro Manila. Average annual groundwater withdrawal for the period 1982-1990 was estimated to be about 235.01 million cubic meters (MCM) while the average annual recharge for the same period was only 206.16 MCM (IDRC-UP-NHRC, 1993). Thus, the rate of mining during this period is 28.84 MCM, resulting in the lowering of the water table by 2.5 meters annually. For the period 1990-96, groundwater level declined at an estimated rate of 6-12m per year. Groundwater resources are, therefore, being threatened by salt water intrusion, contamination, and eventual depletion. This implies that current extraction and utilization of a unit of those resources involve an opportunity cost which is the value that can be gained in the future. Economists would define over-exploitation as any pumping rate in excess of that which yields the maximum present value of net benefits (Young, 1991). This approach would call for the utilization of groundwater stocks if demand so requires, but scale back extraction rates as the aquifer becomes depleted and the "full costs" become higher. The main coverage of the study is the National Capital Region or Metro Manila which consists of eight cities and nine municipalities. The jurisdiction of MWSS includes the National Capital Region (NCR), Rizal province, and parts of Cavite province in Region IV. Its land area is about 2,125-sq. km., with a population of 9.37 million. The NCR and Region IV are the most urbanized and economically developed areas in the country. Aside from being the seat of the National Government, the NCR accounts for 30 percent of the country's Gross Domestic Product.

Suggested Citation

  • Maria Corazon Ebarvia, 1997. "Pricing for Groundwater Use of Industries in Metro Manila, Philippines," EEPSEA Research Report rr1997111, Economy and Environment Program for Southeast Asia (EEPSEA), revised Nov 1997.
    • Handle: RePEc:eep:report:rr1997111
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    File URL: http://www.eepsea.org/pub/rr/10536132990ACF4D.pdf
    File Function: First version, 1997
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    References listed on IDEAS

    as
    1. Young, Robert A. & Haveman, Robert H., 1985. "Economics of water resources: a survey," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 2, chapter 11, pages 465-529, Elsevier.
    2. Jeremy J. Warford, 1994. "Marginal Opportunity Cost Pricing for Municipal Water Supply," EEPSEA Special and Technical Paper sp199401t1, Economy and Environment Program for Southeast Asia (EEPSEA), revised Jan 1994.
    3. R. Bruce Billings & Donald E. Agthe, 1980. "Price Elasticities for Water: A Case of Increasing Block Rates," Land Economics, University of Wisconsin Press, vol. 56(1), pages 73-84.
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    Cited by:

    1. Nguyen Van Song & Nguyen Van Hanh, 2016. "Electricity Pricing for North Vietnam," EEPSEA Research Report rr2016035, Economy and Environment Program for Southeast Asia (EEPSEA), revised Mar 2016.
    2. Nguyen Van Song & Nguyen Van Hanh, 2016. "Electricity Pricing for North Vietnam," EEPSEA Research Report rr2016058, Economy and Environment Program for Southeast Asia (EEPSEA), revised Apr 2016.

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