Applicability of a scarcity premium in the absence of supply augmentation: A case analysis of the water market in Metro Manila, Philippines

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

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Date & time

Friday 27 November 2020


Online via Zoom


Albert Lamberte


Ryan Edwards

The risk-adjusted-user-cost (RAUC) reflects the scarcity value of water when storage is at its critical levels. The delay in the construction of Kaliwa Dam has caused water storage problems and it increases the risk to the current water supply in Angat Dam. The study examines if the RAUC can be applied to the current situation in Metro Manila, Philippines. The estimates, however, reveal that RAUC is zero due to (1) net inflows are higher than water consumption, (2) high water elasticities due to presence of alternative sources, and (3) irrigation water can be reallocated for domestic water use.

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