POTABLE WATER SUPPLY EXPANSION: THE MANILA SOUTH WATER DISTRIBUTION PROJECT

This paper evaluates a water distribution project using an integrated financial- economic-distributive approach. The economic analysis evaluates the true value of the project’s outputs and inputs, adjusting the financial values for any distortions such as taxes, subsidies, or foreign exchange premium, which cause financial prices to differ from true resource values. The results of the economic analysis indicate that the project, with a positive economic NPV of 2,878 million pesos, could make a very positive economic contribution to the Philippines. Furthermore, since the appraisal did not include the economic value of preventing groundwater salinization in the region, nor any additional value to society (beyond that represented by the consumer’s willingness to pay) of health improvements among the region’s residents, the economic NPV generated by the analysis is actually conservative, understanding the project’s value to the country.