Manila Water Company, Inc.
To build the resilience of networked water supply and sanitation infrastructure to future climate change impacts
Metro Manila contains over 16 million people within 17 cities/municipalities. The densely populated metropolis sits on a low-lying isthmus and includes many unplanned slums. It is among Southeast Asia’s most vulnerable areas to climate change, because of its high population density, high risk from climatic hazards, and only moderate adaptive capacity (Yusuf and Francisco, 2009).
The metropolis has made significant progress toward more climate-resilient water supply and sanitation services since 1997. Prior to 1997, a public utility managed these services and was inefficient, overstaffed, and overburdened with debt. This had negative impacts on the quality and availability of these services for the population. To expand and improve these services, the Philippine government privatized them in 1997. It split the metropolis into ‘east’ and ‘west’ zones and awarded each to a different business consortium via build-operate-transfer contracts. These contracts are a form of project financing where a private entity receives a concession from the public sector to finance, design, construct and operate a facility or service, with the public sector retaining asset ownership. The Manila Water Company, Inc. won the east zone and Maynilad Water Services, Inc. won the west zone. This case study focuses on Manila Water in the east zone.
Progress toward resilient services
Manila Water has significantly improved water supply and sanitation service levels and their climate resilience since 1997, distinguishing itself as among the most proactive Philippine companies on climate change.
These service improvements strengthened the company’s financial position, providing opportunities to pilot additional adaptation measures. Manila Water was among the first Philippine companies to develop a climate policy in 2007, updating it in 2013 (Manila Water, 2007, 2013). The policy includes activities on energy and fuel efficiency; vulnerability assessment; climate-resilient assets; disaster risk reduction and management; water source protection and development; and multi-stakeholder partnerships.
The company continuously recalibrates its disaster planning based on actual experience with the climate impacts that affect the country. This includes experience outside Metro Manila when it provided water-related humanitarian assistance (e.g., mobile treatment facilities) after major climatic calamities, including Typhoons Bopha (2012) and Haiyan (2013). Manila Water was an initial convenor of the Philippine Disaster Recovery Foundation – a coalition of businesses that share lessons and coordinate their responses with the government.
Manila Water regularly assesses the vulnerability of its infrastructure and operations to climate hazards. It revised asset standards to retrofit existing facilities and construct new ones to be climate resilient. Two of its facilities that won international awards for their innovative, flood-resistant designs. Medium-term plans include establishing inter-operability protocols among the metropolis’ lifeline utilities (power, communications and fuel supply) and strengthening the resilience of its supply chain, which is a major dependency for restoring disaster-affected operations.
Progress toward a resilient population
There is also evidence that Manila Water’s improved services positively affected the individual resilience of their customers. Doczi (2012) performed an impact evaluation of Manila Water’s services in the east zone compared to Maynilad’s in the west zone from 1997 to 2007.
The study assessed the comparative impact of these water supply and sanitation services on their population’s health, wealth and education, using regression analysis on national survey data. It found a positive impact on the wealth and education of the portion of the population who reported receiving Manila Water’s water supply services compared to those of Maynilad, particularly for poorer groups who reported receiving their water supply in the form of a public standpipe in their community. However, these services provided little health benefit, particularly for standpipes. This may be because Manila Water focused on improving water supply during this ten-year period, making less progress on sanitation until recently. The study also argues that the greater health detriment from standpipes suggests that these are more easily contaminated. This needs to be balanced with the finding that these standpipes may boost wealth and education outcomes – and therefore individual climate resilience – as compared to a lack of service.
Doczi’s study supports Manila Water’s service impact, but suffered important shortcomings. It used a national dataset with significant errors and missing data that affected the analysis. It also assumed that respondents received their services from either Manila Water or Maynilad. However, Cheng (2014) suggests that informal providers still serve significant portions of these zones. Nonetheless, Doczi’s study remains unique in its assessment of Manila Water’s services at the level of impacts, rather than outputs.
Designing and implementing water & sanitation infrastructure and plans to be resilient to different potential climate change impacts
At least four factors drove Manila Water’s progress and offer lessons to other cities: favourable initial conditions, proactive corporate culture, performance-based management systems and strong branding to build public trust (Rivera, 2014; Luz and Paladio-Melosantos, 2012; Wu and Malaluan, 2008). The company received a smaller share of the public utility’s debt in 1997 than Maynilad did, suffering less as a result during the Asian Financial Crisis of 1997-1999. The company was also better able to motivate the staff it inherited from the public utility through decentralised decision-making, target-based systems to promote personal accountability, and institutionalized values of integrity and customer centricity. These in turn promoted climate-resilient service improvements and helped to create a strong brand.
Challenges remain, including Manila Water’s enabling environment, in terms of its relationship with its public regulator. A public agency regulates both Manila Water and Maynilad, and their relationship dynamics have occasionally hindered progress. The agency ensures that the companies deliver on their service obligations while keeping water prices affordable. This involves reviewing the companies’ infrastructure investment plans, for which expenses should be recovered through the water tariff. In times when the desire to temper tariff increases prevails, Manila Water’s investments may be deferred or disallowed by the agency, which places at risk the company’s commitments on adaptation, water availability or environmental compliance. The agency is not immune to political pressure, illustrating the importance of creating regulatory environments that incentivize – rather than hinder – progress.
In conclusion, Manila Water succeeded in rapidly absorbing and revitalising the staff and services of an inefficient and indebted public utility. This drove progress on service improvements that positively affected their customers’ resilience and provided fiscal space to pilot dedicated adaptation initiatives. Challenges remain, including the company’s regulatory environment. The less successful case of Maynilad prior to 2007 also highlights that progress is not guaranteed even within a similar context and that public-private relationships must be carefully considered. Nonetheless, Manila Water’s case offers learning about how business can – in certain circumstances – drive progress toward delivering resilient urban water supply and sanitation services.
Water & sanitation, adaptation, infrastructure, Philippines, floods
COUNTRIES OR REGIONS INVOLVED
Metro Manila, Philippines
Manila Water Company, Inc.
The Knowledge Platform is designed to promote and showcase an emerging set of approaches to water resources management that address climate change and other uncertainties -- increasing the use of "bottom-up approaches" through building capacity towards implementation, informing relevant parties, engaging in discussion, and creating new networks. This is an ongoing project of the Alliance for Global Water Adaptation (AGWA) funded by the World Bank Group.