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Water Privatization in Metro Manila: Assessing the State of Equitable Water Provision

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Water Privatization in Metro Manila: Assessing the State of Equitable Water Provision WATER PRIVATIZATION IN METRO MANILA: ASSESSING THE STATE OF EQUITABLE WATER PROVISION by PHILAMER CARLOS TORIO B.Sc., University of the Philippines, 1979 M.Sc., University of the Philippines, 1983 M.M., Asian Institute of Management, 1990 M.P.A, Harvard University, 2001 M.A., The University of British Columbia, 2011 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE AND POSTDOCTORAL STUDIES (Resource Management and Environmental Studies) THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) April 2016 © Philamer Carlos Torio, 2016 Abstract This dissertation extensively examines the Metro Manila water privatization, one of the largest and longest-running privatization programs in the world for a water utility. Regular performance assessments show significantly improved privatized water services since 1997, citing increased area coverage, with 24-hour supply of high pressure, good quality water. The dissertation takes performance assessment a step further by determining whether or not such services have been experienced by all consumers, particularly the urban poor. Scenarios where urban poor communities have not been able to benefit from improved water provision are identified through extensive analysis that foregrounds equity as a key parameter worthy of careful evaluation. Evidence-based equity metrics show that access and affordability remain critical issues for impoverished communities, despite considerable improvements shown by traditional metrics. Connected urban poor households enjoy improved water services, but affordability is a major concern requiring a review of existing water tariff structures. With limited supply options and low bargaining power, unconnected urban poor households in southern peri-urban areas pay high prices for monthly water consumption that is below the minimum World Health Organization standard, posing health risks to individuals and communities alike. Informal settlements (squatter communities) in networked areas that are unable to get direct water service connections because of property rights issues, highly depend on community-based operators (supplied by the private concessionaires) to provide the last phase of water delivery. This research offers key insights to better ensure that privatization programs benefit all households, regardless of socio-economic status. For Metro Manila, policies that may address ii access and affordability concerns include water tariff reform, conversion guidelines for community water systems, service coverage formula revision, multilateral grants for new service connections of poor households, temporary distribution facilities for informal settlements, as well as new water sources and distribution systems for southern peri-urban communities. While performance assessments based on efficiency metrics offer a sense of the privatization program’s achievements, assessments based on equity metrics presented in this dissertation provide a fuller appreciation of the degree to which all consumers benefit from improved water services. iii Preface For this research, I was responsible for identifying the goals and parameters of the study as well as designing the methodology to achieve these goals. I also performed the necessary research activities, inclusive of data gathering, personal interviews, and site visits, during my 7- month field work in Metro Manila, Philippines. Moreover, I handled the processing and analysis of research data obtained from actual field work and other relevant sources. This research was conducted in accordance with the standards set by the UBC Behavioural Research Ethics Board, Certificate No. H12-03555. iv Table of Contents Abstract .......................................................................................................................................... ii Preface ........................................................................................................................................... iv Table of Contents .......................................................................................................................... v List of Tables ................................................................................................................................ ix List of Figures ................................................................................................................................ x List of Abbreviations .................................................................................................................. xii Acknowledgements .................................................................................................................... xiv Dedication ................................................................................................................................... xvi Chapter 1: Introduction ............................................................................................................... 1 1.1 Lessons in Public Infrastructure Development: From Practice to Theory ............................ 1 1.2 Structure of the Dissertation .................................................................................................. 3 Chapter 2: Rethinking Metro Manila Water ............................................................................. 7 2.1 Introduction ........................................................................................................................... 7 2.2 Water Privatization: An Alternative Mode of Water Provision for Developing Countries .. 8 2.2.1 Still a Thirsty World ....................................................................................................... 8 2.2.2 The Privatization Option ................................................................................................ 9 2.2.3 Global Water Privatization Experience ........................................................................ 11 2.2.4 Track Records: Efficiency and Equity .......................................................................... 13 2.2.5 Water Privatization as a Development Policy Option .................................................. 15 2.3 Understanding the Metro Manila Water Privatization ........................................................ 17 2.3.1 A Tale of Two Concessionaires .................................................................................... 18 2.3.2 Insights on the Political Economy of Metro Manila ..................................................... 29 2.3.3 A History of Water Governance in Metro Manila ........................................................ 38 2.4 Rethinking Metro Manila’s Water Privatization ................................................................. 45 2.4.1 Towards a Political-Economic Perspective .................................................................. 45 2.4.2 Towards a Water Governance Perspective ................................................................... 49 2.5 Conclusion ........................................................................................................................... 54 Chapter 3: Methodology - Assessing the State of Equitable Water Provision in Metro Manila .......................................................................................................................................... 56 3.1 Introduction ......................................................................................................................... 56 3.2 Social-Hydrological Systems .............................................................................................. 56 v 3.3 Balancing Efficiency and Equity Concerns ........................................................................ 62 3.4 SHS Framework for Assessing Equitable Water Provision in Metro Manila ..................... 63 3.5 Consumer Survey ................................................................................................................ 69 3.6 Indicators ............................................................................................................................. 71 3.6.1 Access to Water Connection ......................................................................................... 72 3.6.2 Water Pressure .............................................................................................................. 72 3.6.3 Water Supply Availability ............................................................................................ 74 3.6.4 Water Quality ............................................................................................................... 74 3.6.5 Affordability ................................................................................................................. 75 3.7 Socio-Economic Classification Used for the Consumer Survey ......................................... 76 3.8 Field Research ..................................................................................................................... 78 3.8.1 Interviews ..................................................................................................................... 78 3.8.2 Review of Primary Documents..................................................................................... 80 3.8.3 Site Visits ...................................................................................................................... 81 3.9 Literature Review ...............................................................................................................
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