Externality and user cost of shallow tube well irrigation in Central Luzon, Philippines
2000
Almeria, J.L.R.
The results of the study showed that there exists a divergence between social and private cost of extracting water for irrigation using shallow tube wells in Central Luzon. The external effects estimated as the cost imposed on others, i.e., externality cost, and the inter-temporal consideration of scarcity premium, i.e., user cost, were what made the divergence. The study estimated the marginal externality cost to be P899.55 per hectare per year and the marginal user cost to be P534.55 per hectare per year. Together, P1,434.10 per hectare per year which is about 24 percent of the marginal private cost of extracting water using STW [shallow tube wells], represent the divergence between marginal private cost and marginal social cost. For Tarlac province [Philippines], the aggregate unpaid cost of STW operation is estimated at P48,546.00 per year. When external diseconomics exists, the cost of action as perceived by private individual differs from the true cost consequence of their action falling upon society as a whole. This cost figure is substantial and call for the need of government intervention, either through regulation of STW development, pricing reforms, or institutional reforms by way of enforcement of water rights system
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