PROJECTS

Water Resource Regulatory Framework, Philippines

The problem

The National Water Resources Board needed to identify efficient and defensible rules for water allocation in the Philippines. Farmers were dissatisfied with how scarce water was being allocated between urban and agricultural uses. The lack of clear allocation rules was also making it difficult to procure new bulk water supply public-private partnership projects as uncertainty made them unbankable.

How we helped

Castalia developed an economic framework for water allocation. Proposing a market for water rights would not have been politically acceptable, so, we used market principles and expected market outcomes to derive allocation rules. These rules could be applied by the National Water Resources Board under the existing legislation to achieve outcomes that were more predictable, generally similar to what could have been expected with a functioning water rights markets, and socially acceptable.

Impact

The economic framework that Castalia developed and principles that were defined have ensured that there is now a more predictable and efficient regime for the management of water scarcity in the Philippines. This more secure basis for privately financed bulk water supply has underpinned successful implementation of a number of large-scale PPPs, such as the Bulacan Bulk Water project.