Bulk Water Supply Infrastructure for Underserved Areas
Bulk Water Supply Infrastructure for Underserved Areas
Business Model Description
Construct and operate Bulk Water Supply Infrastructure within areas recognised by the local government, requiring support and initial studies. Investment may be made through direct investment or project financing with the local government unit. Return is expected through bulk water charges from off-takers. Recent successful partnerships within the space show a return profile of 10% to 15%. Some examples of companies operating in this space are:
Negros Occidental and Baggao Water Supply Projects: Multiple Private-Public Partnerships have already been executed for providing water supply solutions for underserved areas. Examples of projects include: Negros Occidental Bulk Water Supply Project and the Baggao Water Supply Project (18) and the Honiara Water Supply and Sanitation Project (by ADB).
Initiated in April 2015, the Baggao Water Supply Project is an Unsolicited Build-Operate-Transfer (BOT) Proposal for the Long Term Water Source Development for Metro Manila. It involves the design, financing, construction, testing, operation, and maintenance of a Level III Water Supply System. Its indicative cost is roughly USD 3.8 million. (20)
The Negros Occidental Bulk Water Supply Project is a solicited bulk water project which is undergoing review for approval for implementation in the province of Negros Occidental. Its indicative cost is yet to be determined. The project will cover financing, designing, constructing, operating, and maintaining new bulk water supply facilities and the water will be sourced to Malogo River Basin. (19)
Expected Impact
Providing people with clean water to meet basic daily requirements. Health of poor families is also benefited by having access to clean water sources.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Philippines: Western Visayas
- Philippines: Central Visayas
- Philippines: Caraga
Sector Classification
Infrastructure
Development need
Infrastructure needs cut across multiple sectors including housing, transportation and utilities. Based on a 2015 study by JICA, the annual loss in GDP due to inadequate infrastructure amounts to USD 20 Billion.(4) With the implementation of the "Build Build Build" program, government spending on infrastructure increased, amounting to ~19.5% of total government spending in 2019.
Post-pandemic, inadequacy in key infrastructure across agriculture, transportation and logistics, education and energy persists, thereby prompting continued interest in promoting public-private partnership for infrastructure development. (1)
Policy priority
The Philippine Development Plan for 2023-2028 specifically focuses on the criticality of the Infrastructure sector and recognises that there is further demand for the development of the sector across different aspects (energy, transportation, housing) and regions.
Additionally, DBM's report on the 2022 national budget in 2021 highlights the importance of greater investment in social and economic services in line with the government’s COVID-19 response and recovery agenda. In particular, health, social welfare, and infrastructure development continue to be prioritized to manage the risk of similar outbreaks and boost economic growth. (1)
Gender inequalities and marginalization issues
The Philippine Statistics Authority has noted that the areas in the Philippines with low income lack access to basic infrastructure, such as clean water sources and sanitation. Regions such as BARMM (84% access to water and 51.6% access to basic sanitation) and Central Visayas (94% access to water and 70% access to sanitation) were highlighted. (5)
Women are the most affected by the lack of access to basic water infrastructure with their designated roles as caretakers of the household, requiring them to travel long distances to avail clean water. (1)
Investment opportunities introduction
Multiple policies introduced in recent years support creation of additional PEZA zones, and the target of 1 million new housing per year set by the Department of Socialized Housing and Urban Development. Devolution of national funding to local governments provides opportunities for investment to developers within the infrastructure space. (1)
Key bottlenecks introduction
The World Bank in its report titled, "Philippine Economic Update June 2021", pinpoints that the main challenge within the industry is long timeframes which result in slower budget execution rates. Coupled with policies, there's a significant need to improve the capacity of local government workers to effectively mobilize capital to create public-private partnerships.
Utilities
Development need
12.3% of the Philippines' population, or 12.40 million people, lack access to safe water supplies. Additionally, more than half of the population under 332 municipalities is "waterless", lacking even basic clean water sources.
The Government has allocated a total budget of around USD 18 billion until the end of 2030 which is also covered under the Philippine Water Supply and Sanitation Master Plan. (6) Also, it is generally the duty for women to fetch water, a heavy and physically-demanding work. Bulk water supply will greatly reduce this burden and thus benefit the overall health of local population and the women.
Policy priority
Water security was highlighted as part of the key infrastructure focus areas under the Philippine Development Plan of 2023 - 2028. (1)
It prioritises the upgrading of water infrastructure through
The Philippine Water Supply and Sanitation Master Plan (PWSSMP), the National Irrigation Master Plan (NIMP), the National Water Security Road Map (NWSRM) and various Flood Master Plans for Metro Manila and major river basins. The PWSSMP also laid out a number of legislative priorities for water works that support its initiatives. (6)
Gender inequalities and marginalization issues
Disparities in access to clean water sources persist between high and low-income groups. Only 80% of the poor families have access to water compared to 99% of rich families. Regional disparities also show similar trends in regions where access to water is as low as 60%. (7)
In poor households, women carries the burdern the most wherein 8 out of 10 households whose water sources are off-premises, women and girls are usually responsible for fetching water. (13)
Investment opportunities introduction
Multiple solicited and unsolicited water solutions have been brought forth, both through national and local private-public partnerships, signaling a growing interest in expansion of the sector in the Philippines with the support of local governments to meet the need for improved water supply infrastructure.
Key bottlenecks introduction
Capital intensity and local government's limited capacity and readiness to efficiently work with private partners, are the key bottlenecks for executing investments within this industry. Furthermore, investment in this space requires multiple approvals at both, local and national levels, thereby delaying the execution of investments.
Water Utilities and Services
Pipeline Opportunity
Bulk Water Supply Infrastructure for Underserved Areas
Construct and operate Bulk Water Supply Infrastructure within areas recognised by the local government, requiring support and initial studies. Investment may be made through direct investment or project financing with the local government unit. Return is expected through bulk water charges from off-takers. Recent successful partnerships within the space show a return profile of 10% to 15%. Some examples of companies operating in this space are:
Negros Occidental and Baggao Water Supply Projects: Multiple Private-Public Partnerships have already been executed for providing water supply solutions for underserved areas. Examples of projects include: Negros Occidental Bulk Water Supply Project and the Baggao Water Supply Project (18) and the Honiara Water Supply and Sanitation Project (by ADB).
Initiated in April 2015, the Baggao Water Supply Project is an Unsolicited Build-Operate-Transfer (BOT) Proposal for the Long Term Water Source Development for Metro Manila. It involves the design, financing, construction, testing, operation, and maintenance of a Level III Water Supply System. Its indicative cost is roughly USD 3.8 million. (20)
The Negros Occidental Bulk Water Supply Project is a solicited bulk water project which is undergoing review for approval for implementation in the province of Negros Occidental. Its indicative cost is yet to be determined. The project will cover financing, designing, constructing, operating, and maintaining new bulk water supply facilities and the water will be sourced to Malogo River Basin. (19)
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
5% - 10%
12.4 million people in need of adequate access to water supply
The 2019-2023 Philippines Water Supply and Sanitation Master Plan lists investments in the range of USD 3 million to 5 billion. (14) Water expenses across different sectors grew in the range of 6–9% during 2010–2020. (17) According to the 2019-2023, Philippine Water Supply and Sanitation Master Plan, 12.4 million filipinos lack access to safe water sources. (14)
Metrics shown by the PSA for the period 2010–2020, breaking down water expenses per sector, show a CAGR of 6.3%, 8.9%, and 8.0% for Mining and Quarrying, Manufacturing, and Construction; Services; and Households, respectively.
The 2019-2023 Philippines Water Supply and Sanitation Master Plan highlights several investments made in the local water supply and sanitation sector since 2010. Both private and public agencies—including the Asian Development Bank, the United States Agency for International Development, and the Asian Infrastructure Investment Bank—have invested ~USD 3 million to USD 5 billion in this area.
Indicative Return
10% - 15%
Historical Public-Private Partnership bulk water supply projects note IRRs in the range of 11–14% (15) IRR are dependent on the project scale. However, historical projects have reported IRRs in the range of 10 to 15%. (15)
Investment Timeframe
Long Term (10+ years)
Projects are expected to generate revenues as the operations commence. However, the level of revenue is dependent on the overall strategy of the Private Sector Proponent and its ability to improve upon the PPPC studies on water projects.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Impact Case
Sustainable Development Need
Based on the 2020 Annual Poverty Indicators Survey of the Philippine Statistics Authority, the main sources of water supply for Filipino families were water piped into their dwelling (54.1%), sourced from protected wells (21.5%), communal sources such as public taps, and developed springs (16.0%), while around 10% of rely on “unsafe sources” such as unprotected wells, or rainwater (1).
This Bulk Water Supply Infrastructure for Underserved Areas will provide sanitised water for daily necessities to this group of people, and thereby also reduce the probabilities of diseases that can be communicated via water.
In a survey conducted last December 2023, 17 million out of 25 million households or 67% have access to running water. With the looming El Niño phenomenon, at least 16 provinces in the Philippines, most of which are big palay producers, will be severely hit by its impact (8).
Large corporations such as Ayala Corporation and San Miguel identify water security risks to be one of the main issues expected to arise due to climate change impacts. A study conducted by the World Resources Institute ranked the country 57th most likely to be water-stressed by 2040. (10) The bulk water supply system offers better control of water use and reduce wasting water.
Gender & Marginalisation
Women and girls are typically responsible for fetching water, a physically demanding and time-consuming task that can expose them to risks of assault and prevent them from attending school or earning an income (1). The designated infrastructure will greatly reduce the burden of taking and carrying heavy water. The overall supply will be controlled and administered centrally for easy access.
Lower-income groups and those without access to piped water resources spend a disproportionately high percentage of their income for water, with the maximum at 13.3% (11). The bulk water supply infrastructure will significantly ease the situation and stable the supply and price of water in almost all areas of the Philippines.
Indigenous groups in far-flung areas are largely impacted by the lack of access to clean water. They are at greater risk for dehydration, poor immune systems, and water-related illnesses (20)
Expected Development Outcome
Contribute to achieving universal access to safe water and basic sanitation by 2030 in the Philippines. Additionally, improve the quality of access to water sources for families across the income spectrum. Reduce cases and mortality rates from water-borne illnesses such as cholera and diarrhea. Mortality for acute bloody diarrhea is at 3 deaths per 100,000 in 2019.(12)
Gender & Marginalisation
The supply of bulk water will reduce the burden on women and girls by providing water sources closer to their homes, schools, and workplaces, which would allow them more time to engage in education and economic activities. Also, by doing less labour-intensive works, their healthy conditions can be imporved as well.
Improve access to safe water and sanitation services to reduce the risk of waterborne diseases, particularly for women and children, leading to improved health outcomes and reducing the burden on healthcare systems. Local residents (especially women and children) no longer need to fetch heavy water for a long distance, and this is also beneficial for their body health and physical development
Primary SDGs addressed
1.4.1 Proportion of population living in households with access to basic services
Around 3 million Filipinos are not guaranteed with clean and safe water, and most of then are in remote areas that are not easily reached. (21)
Access to water target for 2030 is set at 100%
6.1.1 Proportion of population using safely managed drinking water services
The proportion of families with access to improved water supply peaked in 2019 with 88.5 percent, but declined during 2020 with 87.7 percent (2)
The Philippines didn't set a target for this SDG specifically, however targets based on No Poverty 1.4.1.p in relation to water is 100%
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Financial risks: cost overruns, revenue uncertainty, and affordability challenges for low-income communities, impact financial viability and equitable access to water services. Social risks: Displacement and land rights concerns, limited inclusion of marginalized groups, and cultural impact leading to social unrest, exacerbation of inequalities, and loss of cultural heritage.
Environmental risks: ecological impacts like habitat destruction and water pollution, climate vulnerability leading to compromised ecological balance and biodiversity loss. Health and sanitation risks: increased risk of waterborne diseases due to inadequate water quality management and sanitation facilities impacting vulnerable populations in underserved areas.
Gender inequality/marginalization risks: insufficient consideration of gender dynamics resulting in unequal access to water services (e.g. location of services) and decision-making processes and perpetuating gender disparities, especially in far flung areas where women are usually assigned to take care of the household.
Impact Risks
Environmental impact risks: Extraction for bulk supply may increase water scarcity, deplete groundwater, destroy habitats, contaminate water, and make it vulnerable to climate change. Social and Economic Impact Risks: Construction may displace communities, sustain inequalities, hinder affordability, disrupt economies, and erode cultural practices tied to traditional water sources.
Gender inequality/marginalization risks: Exclusion in decision-making, burdensome responsibilities, discrimination, violence risks, and inadequate services can perpetuate gender inequalities.
Impact Classification
What
Providing access to clean water through bulk water infrastructure solutions
Risk
Possible delays in project implementation due to timeliness of multiple government approvals involved in the process
Contribution
Increased access to clean water of communities residing in underserved areas to achieve 100% by 2030.
Impact Thesis
Providing people with clean water to meet basic daily requirements. Health of poor families is also benefited by having access to clean water sources.
Enabling Environment
Policy Environment
RA 6716. An Act Providing for the Construction of Water Wells, Rainwater Collectors, Development of Springs and Rehabilitation of Existing Water Wells in all Barangays in the Philippines declares this national policy to provide adequate potable water supply to each barangay in the country.
RA 9275. Philippine Clean Water Act of 2004. The Department of Environment and Natural Resources is mandated to designate certain areas as water quality management areas using appropriate physiographic units such as watershed, river basins or water resources regions.
LWUA Board Resolution No. 147, Series of 2009 amended the Guidelines for the Formation of Water Districts in Communities without Existing Water System (9) The National Water Resources Board is mandated to administer and enforce provisions of the Water Code of the Philippines which provides guidelines in the proper appropriation and utilization of water sources.
Financial Environment
The Philippines' financial environment for bulk water supply infrastructures includes private sector investments, foreign aid grants, and loans from government financial institutions e.g. Development Bank of the Philippines, Land Bank of the Philippines. Tax incentives is given to construction of public utilities in less-developed areas of a total of 100% of its necessary and major waterworks (22)
Regulatory Environment
The regulatory environment for Bulk Water Supply Infrastructures for Underserved Areas in the Philippines includes guidelines from the NWRB, DENR, LWUA, and DPWH. Financial and technical support for these projects is provided by the government through organizations such as the NIA and DBP.
Marketplace Participants
Private Sector
Private sector: Manila Water, Maynilad, Primewater Infrastructure Corp., Metropolitan Cebu Water District (MCWD), Laguna AAA Water Corp, Acciona Agua, Subic Water & Sewerage Co., Clark Water Corporation, HUNGARIAN Water Technology Corporation (HWTC) Ltd; Development Bank of the Philippines, Banco de Oro, Unibank Inc., Aboitiz Equity Ventures
Government
Public-Private Partnership Center, Local Government of Capiz, Local Government of Quezon City, Local Water Utilities Administration, Department of the Interior and Local Government
Multilaterals
United Nations Children Fund, Asian Development Bank, World Bank
Non-Profit
Manila Water Foundation, Waves for Water, Clean Water International
Public-Private Partnership
Luzon Clean Water Development Corporation; Clark Water Corporation; Manila Water Company; Maynilad Water Services
Target Locations
Philippines: Western Visayas
Philippines: Central Visayas
Philippines: Caraga
References
- (1) NEDA. Philippine Development Plan 2023 to 2028 https://pdp.neda.gov.ph/philippine-development-plan-2023-2028/
- (2) INFF. Development Finance Assessment 2022 https://medium.com/@jp.inff.ph/2022-development-finance-assessment-shows-ph-financing-landscape-in-the-time-of-covid-19-and-the-68dcc39bcc19
- (3) Savoy, C. and Staguhn, J. (2022). The Role of Water in Catalyzing Gender Equity. Center for Strategic & International Studies. https://www.csis.org/analysis/role-water-catalyzing-gender-equity#:~:text=The%20United%20Nations%20highlights%20three,access%20to%20a%20water%20source.
- (4) KMC SAVILLS. https://kmcmaggroup.com/research-insights/2014/poor-infrastructure-impedes-ph-from-attaining-maximum-growth/
- (5) PSA. Majority Families have Access to Improved Source of Drinking Water https://psa.gov.ph/content/majority-families-have-access-improved-source-drinking-water-results-2022-annual-poverty
- (6) NEDA. Philippine Water Supply and Sanitation Plan 2019 - 2030. https://neda.gov.ph/wp-content/uploads/2021/09/120921_PWSSMP_Main-Report.pdf
- (7) UNICEF. 2 Billion People Lacking Safe Water Twice Lack Safe Sanitation. https://www.unicef.org/philippines/press-releases/two-billion-people-lack-safe-drinking-water-more-twice-lack-safe-sanitation#:~:text=Around%2099%25%20of%20the%20one-fifth%20wealthiest%20households%20are,20%20million%20lack%20access%20to%20basic%20sanitation%20facilities"
- (8) Mateo, J. 2023 April 14. Only 67% of households have access to running water - SWS. PhilStar Global. https://www.philstar.com/headlines/2023/04/14/2258820/only-67-households-have-access-running-water-sws#:~:text=A%20ranking%20official%20of%20the,crisis%20was%20likely%20next%20year.
- (9) Local Water Utilities Administration. n.d. What is a Water District. https://lwua.gov.ph/water-districts/what-is-a-water-district/#:~:text=A%20duly%2Dorganized%20water%20district,a%20water%20district%20or%20not.
- (10) World Resources Institute. 2015. Aqueduct Projected Water Stress Country Rankings https://www.wri.org/research/aqueduct-projected-water-stress-country-rankings
- (11) Shiela Marie Alfonso, Shinobu Kazama, Satoshi Takizawa. 2022. Inequalities in access to and consumption of safely managed water due to socio-economic factors: Evidence from Quezon City, Philippines https://www.sciencedirect.com/science/article/pii/S2666049021000955
- (12) PSA. 2021. Compendium of Philippine Environment Statistics Component 5: Human Settlements and Environmental Health https://psa.gov.ph/press-releases/id/165164
- (13) Philippine Daily Inquirer (2023). https://newsinfo.inquirer.net/1737981/women-girls-bear-brunt-of-water-and-sanitation-crisis"
- (14) NEDA. (2021). 2019-2030 Philippine Water Supply and Sanitation Master Plan. https://neda.gov.ph/wp-content/uploads/2021/09/120921_PWSSMP_Main-Report.pdf
- (15) PPPC Bulk Water Feasibility Studies and Project Information Sheets.
- (16) PPPC. List of Projects. https://ppp.gov.ph/list-of-projects/
- (17) Philippine Statistics Authority (2016) https://psa.gov.ph/content/water-resources#:~:text=This%20represents%20an%20average%20annual,not%20included%20in%20the%20estimation.
- (18) Baggao Water Supply Project. PPPC. https://ppp.gov.ph/ppp_projects/baggao-water-supply-project-2/
- (19) Negros Occidental Bulk Water Supply Project. PPPC. https://ppp.gov.ph/ppp_projects/negros-occidental-bulk-water-supply-project/ "20) Indigenous Water, Sanitation and Hygienic (WaSH) Practices: The Case of the IP Community in Barangay Lower Panaga, Panabo, Philippines https://www.researchgate.net/profile/Jevannel-Borlio/publication/356057160_Indigenous_Water_Sanitation_and_Hygienic_WaSH_Practices_The_Case_of_the_IP_Community_in_Barangay_Lower_Panaga_Panabo_Philippines/links/618bd98d61f09877207a6a30/Indigenous-Water-Sanitation-and-Hygienic-WaSH-Practices-The-Case-of-the-IP-Community-in-Barangay-Lower-Panaga-Panabo-Philippines.pdf"
- (21) Water.Org https://water.org/our-impact/where-we-work/philippines/
- (22) The Omnibus Investment Code of 1987 (EO 226 as amended) https://lawphil.net/executive/execord/eo1987/eo_226_1987.html