Chapter 2

REVIEW OF RELATED LITERATURE

This chapter presents the concept and theories in the study of

Delivery of Services of Local Water District in Southern Negros: LWUA’S

support, competencies and client satisfaction. This serves as reference of

ideas and basis of the study particularly in the aspect on how expanding

a water district and procedures of others local water district.

Conceptual Literature

The Philippines is one of Asia’s fastest urbanizing countries, with

138 cities, 1,496 municipalities, and 42,027 barangays.1 Since 2000,

the country’s population has increased 1.9% annually on average, and

reached a total population of 92.34 million in 2010 (as reported by the

2010 census).

According to the searchable database of the World Resources

Institute, the Philippines has total annual renewable water resources of

479 billion cubic meters (m3) from its surface water and groundwater

sources. This translates into an annual per capita availability of about

6,100 m3, which is twice that of the rest of Asia, and 6 times the global

scarcity threshold of 1,000 m. The National Water Resources Board

(NWRB) estimates total available groundwater supply to be 20,200

million m3/year. Based on an 80% probability for surface water, the total
 16

dependable surface water supply is 206,230 million m3/year, implying a

total mean supply of 226,430 million m3/year. Agricultural use accounts

for 83% to 85% of this amount, the remainder being shared by the

industrial, commercial, and domestic sectors. Growing population

especially in the urban areas together with water pollution, wasteful and

inefficient use, continued denudation of forest cover (particularly in

watersheds), and saltwater intrusion caused by excessive withdrawal of

groundwater (particularly in the metropolitan area of Cebu, Davao City,

and certain areas of Metro Manila), are the major challenges facing the

country’s water resources. (Philippine Water Supply Sector Roadmap.

Manila,2012).

In the Philippines, water systems are classified into one of three

levels: Level I, stand-alone water points (e.g., hand pumps, shallow wells,

rainwater collectors); Level II, piped water with a communal water point

(e.g., bore wells, spring systems); and Level III, piped water supply with a

private water point (e.g., a household service connection). The World

Health Organization (WHO)–United Nations Children’s Fund (UNICEF)

Joint Monitoring Programmed (JMP) reported in March 2012 (the JMP

March 2012 Report) that the Millennium Development Goal (MDG) of

92% coverage has been met for drinking water.13 The JMP estimated

that national coverage in the Philippines was 92% in 2010, with 93%

coverage in urban areas and 92% in rural areas. The National Statistics

Office (NSO) reported a lower figure of 84.8% of the population nationally

 17

having access to potable water (Levels I, II, and III) in 2011, noting a

slight increase from 82.9% in 2007. ([Link] (accessed July

2012).

The country’s water resources are under mounting stress because

of rapid population growth, increasing demand for food production,

urbanization, pollution, excessive and inefficient use of water, and

climate change. Ensuring adequate availability of water in the future will

require protecting the country’s water sources through improvement of

catchment areas and watershed protection, regular assessment and

monitoring of consumption patterns and trends, and efficient allocation

of existing water supplies. All of the latter need to be taken into account

in the institutional decision-making framework.

Strategic Issues

The challenge is to assess and manage water resources

comprehensively, covering urban and rural areas in a holistic manner.

Water supply coverage has not kept pace with the growing population in

the last few decades.

Many water utilities face financial difficulties because tariffs are

too low to recover costs and systems are too small to work efficiently.

Persistent problems in water supply include (i) institutional

fragmentation, (ii) weak sector planning and monitoring due to lack of

sector information, (iii) poor performance of many water utilities, (iv) low

public and private sector investment and limited access to financing for
 18

service expansion, and (v) inadequate support for poor urban

communities and rural water utilities.

The challenges posed by sanitation are even greater. Few

households are connected to a sewerage network (less than 5% by most

estimates). The majority of households with toilets are connected to

septic tanks that are poorly designed or maintained, therefore, most

effluent is likely to be discharged without treatment. Weak management

of solid waste and sanitation is a large challenge, since this contributes

to contamination and pollution of surface and ground water sources.

Problems include (i) lack of policies and effective governance and

regulation, (ii) low levels of awareness and political will for improving

sanitation; (iii) inadequate funds for financing infrastructure; and (iv)

lack of sanitation capacity. (Government of the Philippines. 2007).

Waterborne diseases are clinically manifested in diarrhea, typhoid,

cholera, and helminthiasis. Acute watery diarrhea remains one of the top

five causes of morbidity in the Philippines. The National Objectives for

Health for 2006–2010 of the Department of Health (DOH) set a target of

diarrhea morbidity levels of not more than 750 per 100,000 population,

and a target of mortality levels of less than one death per 100,000

population.19 Based on 2009 DOH Philippine Health Statistics, the

morbidity target was met for Acute Watery Diarrhea (322,799 cases; 355

per 100,000). Notably, the 2009 figure is almost half the 2004–2008

average (545,362 cases; 653 per 100,000). This decline in morbidity was
 19

largely due to an increase in access to safe water and sanitation services,

and the promotion of hygienic practices such as hand washing. The

incidence of other water- and sanitation-related diseases such as typhoid

and cholera has shown similar declines. Soil-transmitted helminthiasis

(e.g., ascariasis, trichuriasis, and hookworm infection) exists in areas

where personal and environmental sanitation practices are poor.

However, with reported deaths from diarrhea remaining flat (5,540 cases;

6 per 100,000), the diarrhea mortality target in 2009 was still well above

the DOH target.

In spite of the general reduction in the incidence of most

waterborne diseases, access to safe water and sanitation services

remains a critical factor, considering its effect on the overall economy

and the environment. In 2008, a joint study of the United States Agency

for International Development (USAID) and the World Bank reported,

that based on 2005 data, sanitation-related economic losses in the

Philippines amount to P78 billion annually, of which premature death

costs account for P51 billion.21

An inordinate share of this health-related financial burden falls on

the poor, as it is manifested in lost time for productive work and

therefore lost income. The study also showed that improvements in

hygiene practices, particularly hand washing, can reduce annual health

costs by up to P25 billion; improved physical access to sanitary toilets,

by about P2 billion; and improved physical access to improved toilet

 20

systems, by P18 billion. Improvement in the treatment or disposal of

waste also has a large impact on water resources and tourism, and can

reduce costs by P20 billion. On the other hand, gains to sanitation

markets were estimated to be about P83 billion, which is a one-time

benefit arising from the construction of toilets for people who currently

practice open defecation or use unimproved pit latrines. Government of

the Philippines, Department of Health. 2009. Philippine Health Statistics

2009. [Link]

It is estimated that about 1,000 LGU-run water utilities operate in

urban and rural areas throughout the country. According to the Project

Management Unit of the Department of the Interior and Local

Government (DILG), there are about 350 LGU-operated Level III systems,

with an average of about 900 connections each. These utilities are part of

the LGU concerned, with budgetary allotments coming directly from the

LGUs. These systems are basically self-regulated by the LGU’s executive

and legislative units. LGU-run water utilities face strong political

pressure to keep water tariffs low, often below cost recovery levels, and

the absence of commercial practices such as “ring-fencing” likely masks

the indirect material subsidies they receive for water supply.

The Provincial Water Utilities Act of 1973 (Presidential Decree 198)

created the LWUA–Water District concept. LGUs were thus encouraged to

transfer their water supply systems to water districts, which are

corporatized stand-alone entities supplying water in a franchise area. A

 21

government-owned specialized lender to water districts, LWUA was also

established with the dual role of tariff regulator and institutional

development advisor. At present, the major utilities operating Level III

systems in urban areas are (i) water districts, which are local corporate

entities formed at the option of the LGU; (ii) LGU-owned and operated

water utilities; and (iii) a few private sector operators that have been

given a franchise or authority to operate within the geographical

jurisdiction of an LGU or an industrial zone. According to the LWUA, as

of the end of 2011, 861 water districts had been established, of which

502 were operational, their number of service connections ranging from

500 to 200,000 (with an average of 7,011 connections each).

Water districts are financially independent, and do not receive

subsidies from LGUs. Therefore, they are compelled to generate enough

income to cover operating and maintenance costs, debt service, and

essential capital expenditure. Water districts are generally viewed as

being better run than other public sector water utilities. Among the

utilities sampled for the DILG’s benchmarking exercises for the

Philippines Small Towns Water Utilities Data Book, water districts were

reported to have higher coverage rates on average (69%) compared to

other water operators (62%).Most water districts provided water 24 hours

a day, while many LGU-run systems, cooperatives/ rural water utilities,

and private systems fell short of this standard. However, the water

districts’ autonomy in planning and managing their operations has

 22

limitations that may negatively affect their efficiency and sustainability.

Increasing water tariffs to cost-recovery levels is often politically

unpopular. Several central government agencies set the conditions for

institutional arrangements, labor conditions, procurement procedures,

and accounting practices. For many water districts, limited access to

affordable long-dated investment capital impedes their ability to expand

and improve services, which would allow them to achieve operational and

technical efficiencies. Scale is also an issue for many water districts.

LWUA reports that more than half of the 502 operational water districts

at end of 2011 had less than 3,000 service connections.

Many water districts prefer to work with LWUA, which is often the

preferred conduit of funds and technical advisor, in preparing investment

projects for financing. However, water districts face several crucial issues

that need formal clarification if their long-term sustainability is to be

ensured, and to facilitate attracting the necessary amounts of capital for

infrastructure investment. These issues include the following. First, in

geographic areas in which the water districts draw groundwater, a major

issue is whether water districts are liable to pay LGUs a share of national

wealth.36 Second, regulatory guidelines for waterworks operators within

a water district’s service area are lacking (e.g., guidelines relating to

resource regulation, or servicing poor and rural areas). This is

unfortunate, because such guidelines would create a level playing field in

the wake of a court decision that ended exclusivity of water districts in

 23

their franchise areas. Finally, there remains the issue of who actually

owns water districts, since the latter were intended to be quasi-public

corporations, but now bear the characteristics of non-stock, government

owned or government-controlled corporations.

Research Literature

In this study, the research includes the following related studies.

Foreign

Degnet Abebaw, Fanaye Tadesse, and Tewodaj Mogues, (2009). In

recent years access to safe and reliable water supplies has received

increased government attention in Ethiopia. As a result, the national

coverage rate for this service has gradually improved. Yet millions of

people in rural areas still do not get drinking water from an improved

water source. While expanding improved water source schemes is

generally essential, it is equally important to ensure that the schemes

have increased users’ satisfaction with water quality and availability for

everyday use. Using household survey data and employing univariate

and bivariate probit models, this paper attempts to investigate the effect

of access to an improved water source on users’ satisfaction with both

quality and availability of water. The study findings suggest that access

to an improved water source significantly raised household satisfaction

with both quality and availability of water. However, the effect of the
 24

improved water source on users’ satisfaction was slightly lower for water

availability than for water quality.

Access to and use of safe drinking water can make an immense

contribution to health, productivity, and social development. However,

many people in developing countries continue to rely on unimproved

water sources. According to the United Nations Development Program

(UNDP 2006), nearly one-sixth of the world’s population obtains drinking

water from unimproved sources, and in many developing areas, progress

in expanding clean water coverage is modest. In Sub-Saharan Africa, for

instance, the proportion of the population that depends on unimproved

sources has declined only slightly, from 52 percent in 1990 to 44 percent

in 2004 (UNDP 2006). As part of the Millennium Development Goals, the

international community has set a goal of reducing the proportion of

people without sustainable access to safe drinking water by 50 percent

by 2015 compared to its level in 1990 (UN 2010).

However, whereas expanding improved water infrastructure is

necessary, that alone does not guarantee safety and adequacy of water to

its users: Access is an intermediate output and has to be combined with

favorable demand to generate desired outcomes among users (Larson,

Minten, and Razafindralambo 2006). Recent evidence from empirical

research (for example, Vasquez et al. 2009;) also indicates that improved

water supply schemes in many developing countries are not functioning

properly. In Sub-Saharan Africa, for instance, it is estimated that 35

 25

percent of all rural water systems are not functioning (Baumann 2005).

Other authors (Vasquez et al. 2009; Deichmann and Lall 2007) also cited

drinking water safety and reliability as key problems even when the basic

water delivery systems are in place. Thus, “in addition to increasing

access through implementation of improved water supplies, it is also

necessary to ensure that both new and existing water systems are

sustainable, so that access to safe water is sustained for all” (Harvey

2008, 117).

However, despite the importance of providing safe and reliable

drinking water for poverty reduction and social development, relatively

little is known regarding users’ satisfaction with rural drinking water

services in developing countries, particularly in Sub-Saharan Africa.

Investigating users’ evaluation of these services is increasingly seen as

an important means for improving the performance of public services

(Deichmann and Lall 2007). This paper attempts to shed light on this

issue for rural households in Ethiopia. Our main purpose is to examine

the sources of drinking water used by people in remote rural localities

and to investigate whether access to an improved water supply has

increased users’ satisfaction with quality and availability. The paper uses

survey data collected in 2009 from 1,117 rural households residing in

eight district.

Local
 26

Based on the case study of Local Service Delivery of Potable Water

in the Philippines (Israel, 2009). Potable or drinking water is a critical

requirement of human life. Without it, our continued existence on earth

would be immediately threatened. It is for this reason that the provision

of potable water in adequate quantity and quality is a primary national

and international concern of nations. In particular, the Millennium

Development Goals (MDGs) target that 86.6 percent of the population of

countries would have adequate access to safe drinking water by 2015

(NEDA 2007). For its part, the Philippine government aims that 92 to 96

percent of its citizens would have sufficient water supply at an even

earlier date, by 2010 (NEDA 2004).

With 2015 in the not too distant future and 2010 only a year away,

the performance of the Philippines in meeting national and international

objectives related to potable water needs to be asssessed. Evaluating at

this time where we are in terms of our potable water targets will help

determine whether our objectives are achievable or actually farfetched.

Furthermore, an assessment will allow us to see whether we

should finetune our methods and fastrack our efforts with the remaining

time at hand.

In late 2008 and early 2009, the Philippine Institute for

Development Studies (PIDS) and the United Nations Children’s Fund

(UNICEF) conducted a study on local service delivery (LSD) in the sectors

of education, health and potable water in the Philippines. In the case of

 27

potable water, the study reviewed potable water service delivery

nationally and analysed it in two case study sites: Dumaguete City in

Negros Oriental and the Province of Agusan del Sur in Mindanao. In

particular, the study looked into the current situation of water service

delivery in the Philippines and the two sites, determined its performance

relative to national targets and the MDGs, and identified the key issues

and challenges it faces. The end purpose of the water service delivery

study was to generate recommendations for its improvement.

The review at the national level used data and information from

published literature related to potable water service delivery in the

Philippines and from selected national key informants. The case analysis

utilized data and information generated through a survey conducted in

Dumaguete City and Agusan del Sur. The survey had three parts: a)

household module, b) service provider module, and c) key informant

module. The household module was done through personal interviews

with the heads of selected households or their representatives. There

were a total of 183 households in Dumaguete City and 158 households

in Agusan del Sur covered. A questionnaire was prepared, pre-tested and

administered in October and November 2008. The households included

those which were participants and non-participants of the Sub-Regional-

Multiple Indicator Cluster Survey (SR-MICS) of the national government

and were selected at random. The questionnaire generated economic and

other related data and information deemed useful to the study.

 28

The household module of the survey also conducted focus group

discussions in Dumaguete City and Agusan del Sur, particularly among

households which were non-users of certain local potable water services

in their areas. These households were also selected at random. In

Dumaguete City, 11 household heads or their representatives

participated in the focus group discussions while in Agusan del Sur 20

households joined. The activity was conducted in March 2009.

The service provider module of the survey consisted of personal

interviews with the representatives of local water service providers in the

case study sites, including those representing water districts, local

government units and other water service providers. The key informant

module consisted of personal interviews with selected public and private

sector representatives in the study sites. These informants included a

governor, mayors and barangay captains as well as members of the

provincial, municipal and barangay finance committees in the study

sites. The data and information generated centered on public planning,

budgeting and overall management of local water service delivery in the

study sites.

Some economic studies have already been done that reviewed or

analysed the potable water situation in the Philippines. In a study of

water demand and supply in Metro Manila, Ebarvia (1994) stated that

most of the surface water resources in Metro Manila were already

 29

contaminated and that for these to be fit for drinking, tertiary water

treatment was required.

The World Bank Group (2003) further indicated that up to 58

percent of the groundwater supply in the country intended were drinking

are contaminated with coliform and needed treatment. It further asserted

that 31 percent of illnesses monitored during a five-year period were

water-related diseases.

In another study on demand and supply of water in Metro Manila.

Furthermore, it argued that the quality of water service was poor,

reliability of service was inadequate and the progressive rate imposed by

the service provider did not really benefit the poor. On the issue of water

pricing, Largo et al. (1998) asserted that both the price of water and

income of households significantly affected water demand by households

in Metro Cebu. However, price had a greater impact than income on

water demand. This suggested that the high price paid by the poor for

water rather than their low income largely explains their low levels of

water consumption. Also on water pricing in Metro Manila and Metro

Cebu, suggested, among others, the adoption of a pricing policy that

covers the full economic cost of urban water including its financial cost

of water production and distribution, opportunity cost of water where

there are competing users and cost of externalities or negative

environmental impacts.
 30

In another study on the effects of the privatization of the Metro

Manila Water and

Sewerage System (MWSS on the price of water, the poor and the

environment indicated that unless some adjustments were made, the

water shortage problem in Metro Manila will persist even with

privatization. It also asserted that the poor will continue to pay a much

higher price for water. Furthermore, the paper argued that even though

the water pricing is progressive, it may end up having regressive effects

as the poorer households have to rely on shared water connection or

public faucets and thereby actually pay higher water prices.

On institutions, WSP suggested that rural water supply projects

with significant investments in capacity and institution building

produced the most sustainable rural water supply. It further argued that

the involvement of the local government and communities aids the

preparation, planning, implementation, and management of such

systems. The study also suggested that the success of projects will

require strengthening local capacity and building institutions to operate

and maintain systems, developing mechanisms for cost recovery,

explicitly targeting the needs of the poor, and providing more incentives

for local investment. Another institutional study by Singh (2006)

suggested that policy makers in the Philippines should give due attention

to institutional transformation or the creation of appropriate and new

institutions as the country moves towards decentralization.

 31

On alternative potable water sources, a portion of the population of

the Philippines has shifted their preference to alternative sources of

drinking water and that the demand at the water refilling stations or

water stores that sell purified water is now increasing. It asserted that

the quality of purified water conforms to national standards for drinking

water and is even better than the quality of water produced by traditional

water supply systems particularly in terms of removed impurities.

On the issue of accessibility of potable water, Greenpeace (2007)

and World Bank (2005) stated that one out of five Filipinos did not get

water from formal sources.

Furthermore, it explained that only 77 percent of the rural

population and 90 percent of those in urban areas have access to an

improved water source and only 44 percent have direct house

connections. On the issue of financing water projects in the Philippines.

Philippines will have rural water supply for only 77 percent of the

rural population by 2015 which is off track in attaining MDG targets.

ADB (2007) further said that for the Philippines in 2004, overall water

supply coverage achieved was only 85 percent (87% urban and 82%

rural), with overall sanitation coverage of 72 percent (80% urban and

59% rural). It asserted therefore that progress on meeting MDG targets

needs to be improved.

Synthesis
 32

Based on different studies on literature that have been researched,

namely improving water sources, additional services for customer’s

satisfaction, increasing the production, studying other system of local

water districts, and enhancing the quality of services, the researcher

decided that different procedures and methods are needed in terms of

service satisfaction.

The conceptual and research literature are relevance to the present

study as they also deal with customer’s satisfaction which hugely

depends on the firms overall service quality and is considered to be an

essential strategy to improve its performance.

The varied literature and studies were very significant in this

research. The books, journals, magazines and articles in the internet

both foreign and local shed light to the researcher on the various

concepts covered by his study. These have given him insights and a rich

background. These also contributed to and enabled him to formulate

ideas and concepts about service quality and satisfaction.

These related concepts, principles and approaches formulated and

advocated by the world known authors broadened and hastened the

researcher’s intellectual pursuit of the topic understudy. All of these had

similarities yet were presented in various perceptions and ideologies.

Moreover, the concepts formulated by various authors and experts were

used as basis in formulating this study.

33