Economics of water pricing in Calamba City, Laguna

Date

4-2014

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Zenaida M. Sumalde

Abstract

This study aimed to determine the marginal opportunity cost (MOC) price of water supplied by the Calamba Water District (CWD) to households in Calamba. In the field of natural resource economics, the MOC price is believed to be the efficient pricing mechanism for water. The framework employed in estimating the efficient price of water revolved around Warford?s (1994) theoretical framework in calculating for the MOC, which has three components: the Marginal Private Cost, Marginal User Cost and Marginal External Cost. The computed MOC price of water was PhP 31 per cubic meters (m3) which is a much higher price than the prevailing water rate of PhP 20.26, on the average, charged to household concessionaires. This result conforms to standard economic theory which encourages for fullcost pricing of water to reflect its true value as a resource. The finding suggests that the current water pricing in Calamba is inefficient for it does not account for user cost and other externalities associated with producing an additional cubic meter of water. Results of the demand analysis showed that if MOC price is implemented, demand for water by households will decrease by as much as 15% or approximately 37 million m3 over a 13-year projection period. This implies that MOC pricing would induce efficient water use and conservation.

Language

English

Location

UPLB Main Library Special Collections Section (USCS)

Call Number

LG 993.5 2014 E2 B37

Document Type

Thesis

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