Valuation Study

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Value of Raw Water

Attributes

Medium: Water

Country: Philippines

Analytical Framework(s): Contingent Valuation

Unit(s): Mean WTP

Study Date: 2002

Publication Date: 2003

Major Result(s)

Resource/Environmental Good PHP, per m3
(2002)
PHP, per m3
(2014)1
USD, per m3
(2014)2
Mean WTP for raw water 3.31 5.26 0.12

About the Inflation Adjustment: Prices in Philippines (PHP) changed by 58.95% from 2002 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.59 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2022) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.

Study Note: This study makes suggestions for controlling the excessive abstraction of groundwater in Cagayan de Oro, Philippines. It finds strong evidence that the area's aquifers are being overexploited. It also finds a strong willingness to pay for water supply among the area's businesses. It advises that a tradable permit system for water abstraction would be an effective way to conserve groundwater. This approach could also generate money for conserving water catchment areas. However, the report also finds that major reforms in the national water monitoring and licensing authority would be necessary to ensure the success of any such scheme.

Study Details

Reference: Rosalina Palanca Tan, Germelino M. Bautista. 2003. Metering and A Water Permits Scheme for Groundwater Use in Cagayan de Oro. EEPSEA Research Report, No. 2003-RR8.

Summary: With its fast growing population and booming economy, Cagayan de Oro (CDO) has started to mine its stock of groundwater. This is manifested by the drop in static and pumping water levels of the water district's production wells in recent years. This research project examines the prospects of metering groundwater withdrawals, and of instituting a water permits scheme for groundwater abstraction. With this scheme, the sustainability of groundwater resources can be assured by limiting the amount of permits to the aquifer recharge rate or safe yield. The auction of permits allocates water according to willingness to pay (WTP) and generates revenues for system implementation and watershed protection.The acceptability of the proposed scheme is determined from the survey of groundwater abstractors in CDO. The survey results indicate some WTP for raw water of about PHP 3.31 (USD 0.06) per m3.Estimates show that the initial capital outlays for meters and the recurring monitoring costs can be easily covered by proceeds from the auction of permits. The more crucial aspect of the proposed scheme, however, is the establishment of the institutional infrastructure necessary for its successful implementation. This entails major reforms in the National Water Resources Board (NWRB), the water monitoring and licensing authority in the country. NWRB must establish an effective presence in CDO, enhance its enforcement capacity, as well as institute an implementing structure and arrangement for the watershed protection and rehabilitation projects for which proceeds of the proposed scheme are earmarked.

Site Characteristics: CDO is a city consisting of a central poblacion (city center) and 40 village settlements (barangays), of which 23 are rural. The rural barangays include 10 coastal barangays with elevations of 2 to 6 meters above sea level (masl). The rest of the villages are located in lowland areas with slightly higher elevations of up to 10 masl. Much of the 48,885-ha land within the boundaries of CDO is rolling to hilly with about 60% of the land having a slope steeper than 8%. The flat to gently sloping, if not undulating, lands are found only in the narrow coastal plains, the floodwaters of two rivers (Cagayan and Iponan) and the upland terraces. Despite its hilly terrain, CDO hardly has primary or secondary forests. The natural forests in its vicinity are found in the mountainous areas of the neighboring provinces of Bukidnon and Lanao del Norte. More specifically, the residual and old-growth forests are situated within Mount Kitanglad Natural Park and Kalatungan Mountains which have elevations of at least 1,000 masl.

Comments: It is ironic that despite the numerous bodies of water within and around CDO, the city has no surface source of potable water. Existing surface water sources serve other purposes. Iponan River, for instance, is being used for irrigation by the National Irrigation Administration (NIA). Two communal irrigation systems servicing San Simon, Pagatpat, Canitoan, Opo and Iponan also draw water from the river while farmers direct the river water to their farms using the principle of gravity. In the upstream of Bubunaon River, the NIA has just completed the construction of a dam for the irrigation requirements of some Bukidnon towns while a private electric company has started work on the construction of a hydroelectric power dam.

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