State-run policy think tank Philippine Institute for Development Studies (PIDS) is urging comprehensive reforms in the country’s water sector to address growing environmental pressures and ensure a sustainable water supply.

In a discussion paper published on Dec. 23 titled “Securing Tomorrow’s Water: Insights on Groundwater, Surface Water, and the Role of Water Districts in the Philippines,” PIDS supervising research specialist Adrian D. Agbon highlighted the intensifying stress on water resources amid economic growth. The think tank noted that increasing links between surface and groundwater mean that contaminated aquifers can increasingly pollute rivers and other surface water bodies.

“As economies grow, environmental concerns also become more pronounced with issues related to water supply, water quality, and degradation of aquatic environments,” PIDS said, emphasizing that the country’s water future depends on moving from fragmented, source-specific approaches to integrated planning, stronger monitoring, and better-supported water service providers.

The think tank identified water districts (WDs) as a practical vehicle for implementing reforms, but stressed that success depends on clearer authority, reliable data, predictable financing, and partnerships across government, communities, and the private sector.

PIDS pointed out that while most districts rely on groundwater, its “invisible” nature makes it more challenging to design a suitable “pricing mechanism.”

On water pricing, PIDS noted that while increasing block tariffs (IBTs) aim to promote “equity” by having wealthier households or firms subsidize poorer ones, such cross-subsidies often reflect subjective notions of fairness rather than true equity and can sometimes harm the intended beneficiaries.

The think tank also warned that setting high water prices for industrial users may drive large consumers off the system, ultimately harming residential and other industrial users, noting that effective incentives for efficient use do not require prices to exceed the marginal cost of supply.

Given the crucial role of WDs, PIDS recommended establishing integrated source-planning units at the regional or provincial level to coordinate groundwater and surface-water allocation, protection, and emergency response as part of reforms in the water sector.

PIDS also called for scaling up a national groundwater monitoring network with standardized data reporting and open access for water districts, other service providers, and researchers, ensuring a science-based approach to understanding water dynamics and their links to economic activities across both urban and rural areas in the Philippines.

The think tank further observed that the use of water resources modeling in government planning and management is limited due to insufficient investment and technical capacity. It urged establishing source-protection zones and enforcing pollution controls, paired with community stewardship, to ensure safe and quality water for all users.

To improve infrastructure and operational efficiency, PIDS recommended that WDs and other service providers adopt blended financing—combining public grants with low-cost loans—to fund treatment upgrades, reduce leaks, and build climate-resilient systems.

It also called for investment in capacity-building and technical assistance—including asset management, hydrogeology, smart metering, non-revenue water (NRW) reduction, and financial modeling—through ongoing partnerships with private and multilateral agencies to adopt best practices and innovative technologies.

PIDS concluded that modeling water resource systems is vital for creating science-based information, policies, and management strategies, highlighting that modern tools now consider not just physical and ecological factors but also their interactions with social and economic systems.