Added Title

DLSU-AKI Working Paper Series 2026-10-106

College

Carlos L. Tiu School of Economics

Department/Unit

Economics

Document Type

Working Paper

Publication Date

10-2026

Abstract

This study revisits household water use behavior in Metro Manila by estimating residential water demand using the almost ideal demand system (AIDS) and the merged 2021 Family Income and Expenditure Survey-Labor Force Survey. The analysis examines how households respond to price, income, and cross-commodity changes under the two concessionaires, Manila Water (east zone) and Maynilad (west zone). Both have operational environments that differ substantially, particularly in non-revenue water (NRW), tariff structures, and service reliability. Results show that water demand is moderately price-inelastic in both zones. However, households serviced by Maynilad exhibit higher price and income elasticities, reflecting tighter expenditure constraints and greater exposure to inefficiencies. Cross-price elasticities reveal weak complementarity between water and essential goods, and substitution with electricity, situating water within the broader household consumption bundle. Interaction effects further demonstrate that households purchasing drinking water from refilling stations display distinct behavioral patterns. Overall, elasticity structures serve as behavioral indicators of utility performance. This means that lower elasticities in the east zone align with higher operational efficiency, whereas higher elasticities in the west zone reflect affordability pressures and elevated NRW. The findings provide evidence-based insights for tariff design, regulatory evaluation, and capital expenditure planning in urban water systems.

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Keywords

Philippines, water demand, Almost Ideal Demand System, elasticities, privatization

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