The Philippine water resources are deteriorating fast with rapid urbanization, says ADB. To manage well these water resources, policymakers are now exploring new approaches, one of these is water pricing. However, this is not as easy as one may think because of the fact that water is perceived as a free or common good.

The Laguna Lake.

To determine water price, study of Briones (UPLB, 2007)1 explored three ways to compute for its price. The first one is the administrative pricing, which is currently employed by LLDA. In this scheme, LLDA signs a memorandum of agreement (MOA) with the consumer to determine the price of raw water. Currently, Laguna Lake’s raw water costs P2.71/m3

The second method is by computing the base resource charge, which refers to the total management cost and annual expenditures divided by water consumption. The computed resource charge varies depending on water usage (e.g., recreation, irrigation, and hydropower). Upon computation, the water costs around P0.006 to P0.02/m3.

The last method is the economic pricing wherein all costs of externalities are computed giving a price of P4.81/m3. However, Briones said that this may either be an over or underestimate since the data used are based on assumptions. If LLDA is to use the economic pricing, there is a need to conduct further studies.

Briones recommends that LLDA should implement a raw water pricing scheme based on resource charge, which can also be its source of revenue. (Ranell Martin M. Dedicatoria, KMU)