Candace WilliamsTutorial Date: Tuesday October 2, 2007Manila’s Water Woes: Arguments for the WaterAid ModelWhat’s the problem?Manila’s water crisis has negative impacts on its development. Lack of access, dangerous qualitylevels, and pollution are the major threats. A report by the Asian Development Bank says that about58% of the city is connected to the water network due to underdeveloped infrastructure. 10 millionresidents (93% of the population) have no access to sewer and waste systems. 2.2 metric tons of organic pollution produced annually contaminates 58% of the groundwater. A 2006 studymonitored illnesses for a five-year period and found that 31% of all illnesses monitored were caused by water-borne sources. In 2006 and 2007, the WHO reported widespread outbreaks of diarrhea,cholera, malaria, and dengue caused by polluted water sources (pollution in water, increasednumbers of mosquitoes lingering around water sources year-round, etc). Taken together, the annualeconomic losses caused by pollution total to USD $1.3 billion per year – this includes costs fromhealth issues, loss of fisheries and ecotourism, and lost productivity.Aside from the issues of economic development, the human right to water is generally understoodto fall under certain articles of the Universal Declaration of Human Rights, the InternationalCovenant on Economic, Social, and Cultural Rights, and other domestic and international humanrights instruments.Manila’s First Go at PrivatizationIn 1997, Manila privatized the Metropolitan Waterworks and Sewage System (MWSS). Thegovernment and international financial advisors viewed this as the right step because of the highdebt of the utility owed to international financial institutions, the fact that a majority of the population was disconnected from the 16-hour per day service, and because the Philippines wastrying to transition into democratic institutions. Proponents of privatization argued that privateowners would react to incentives created by the market and invest in new technologies andinfrastructure development.The government made 25-year concession agreements with Maynilad Water Service, Inc. andManila Water Company. The agreements established benchmarks for water quality, extendingconnections to 100% of the population within 10 years, reduced water loss (from 56% to 32%), andUSD $7.5 billion in capital investments. The MWSS did not meet these goals and there weremultiple emergencies caused by water treatment processes causing poisoning and outbreaks of deadly diseases.Due to a severe financial crisis in MWSS, the government re-acquired the utility and plans to re- privatize it within the next year. The government, along with DMCI-MCPI and the SUEZ Companyare in the process of re-privatization. Economic analysts give a few reasons for the failure of the privatization scheme. First, the government was weak and had no regulatory power. Although theconcession agreement created regulatory boards, these boards were not democratic in nature andthey did not include many public representatives. Secondly, water tariffs reflected the minimumaverage financial costs of treatment and did not take economic costs (example: the opportunity costs presented by competing uses for water). This means that the pricing policies lead to water
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