According to an article created by Vice News, there are 55 people who die in the Philippines everyday because of the lack of clean water. As one can see clean water is greatly needed by all people. As a student who is lucky to be given all the necessities needed in life it would be normal not to think of this because we normally do not notice it. However, we need to. According to Katrina Arianne Ebora, who works for UNICEF’s Water, Sanitation and Hygiene program in the Philippines stated that “Over 30 million people in the Philippines do not have access to improved sanitation facilities.” Also, according to the PIS by 2050 the population of the areas with poverty in Manila will reach over 9 million! With the rising population of the Philippines there will be a problem with the economy of clean water because there will be too much demand for the supply of water. To explain the effects of the water shortage around the Philippines we must look at its causes, understand its demand and supply as well as the elasticity of clean water.
Before we talk about the different effects of the water shortage in the Philippine economy. We must first define what a shortage means. As I have learned in class, a shortage is when there is an excess demand for the quantity supplied. For example, if there are 10 pieces of ice cream and there are 20 students who want it, then there will be only 10 students whose demands are met while the others will not be able to be given anything. In economic terms: Qd (quantity demanded) > Qs (quantity supplied) These two will be talked about later into the blog.
Decreasing amount of places to gather clean water:
Aside from the known factors that cause the decreasing amount of clean water such as El Nino and climate change, there is another factor that is not really talked about. According to an article from philstar.com which stated facts about the decreasing water supply in the Philippines. An example of this was that out of 127 freshwater bodies only 47% had good water quality. Also, in the article it stated that 50 out of 421 rivers in the Philippines are considered dead and this number continues to rise every few years. The way that this affects the suppliers for fresh water is that they are running out of places to
get resources from. This in turn decreases the supply that they can provide for the infinite demand of the people. The reason why the amount of bodies of water with good quality water which can be used for sanitary or drinking purposes is pollution. Nowadays that the economy of the Philippines is booming and all the different infrastructures being built and more companies are increasing their supply it affects the water because of how they dump the trash. Some companies are said to have thrown their waste directly into the bodies of water. Due to this, the government loses more than $1.3 billion dollars a year since it includes various expenses like tourism losses (worse ecosystem) and healthcare. The problem with this is that despite the water being low quality or dirty those who cannot afford high quality water still buy it because the price of clean water goes higher as the supply of it goes down.
It is understood that everyone in the world needs water to survive. Due to this there is an infinite demand for water since it is a necessity and we cannot live long without it. As I learned in class, quantity demanded is the amount of good that consumers are able to and wanting to purchase. We also learned that there is a Law of Demand which states “Ceteris paribus, holding other things equal, when the Price of a product rises the quantity demanded goes down, and if the price goes down the quantity demanded increases”. There are many different factors which can affect the demand of water however, in this case of a shortage the factor is the price. Since there is a shortage a supplier needs to sell the product (clean water) for a higher price in order to supply more for the demand. However, since there is an increase in price the amount of consumers that can pay for clean water goes down. In order to see this clearly we can draw a graph for this:
As can be seen in the graph the amount of people that can or are willing to buy clean water lessens. The problem with this is that people who cannot afford or who are forced to buy less will not be able to use clean water and that they will be forced to use poor quality water. As can be seen from the example from above in the introduction it can lead to death.
The suppliers for water will have a harder time to find new places to find good quality
and clean water for its consumers. This is because the amount of clean and good quality bodies of water is slowly decreasing. In class we learned that the quantity supplied is the amount of good that sellers are willing and able to sell. This may change because of different factors, the effect of these factors may cause a shift in the supply curve. The factor that applies to this situation is resource costs. The resource costs of supplying clean water increases because companies will need to spend more into finding a new supply or cleaning a polluted supply of clean water, thus, this will hinder the suppliers an opportunity to sell more. The graph of the supply curve of clean water will look similar to this:
Price Elasticity of Demand for Clean Water:
In class we learned that the Price Elasticity of Demand is how much a good responds to a change in price of that certain good, in this case it is water. When a product's demand is elastic it means that the quantity demanded changes a lot to a raising or lowering of price. When a product is deemed to be inelastic it is when the demand for a product does not change that much when the price is either raised or lowered. We determined different factors to see if a product is elastic or not, in this case a factor that water has which makes it inelastic is that it is a necessity. When you say a product is inelastic, there is a very slight change of quantity demanded when the price of the product increases. For example, if the prices of water rise, a lot of people will still buy it despite the raising of the price.
Price Elasticity of Supply:
Price Elasticity of Supply is a measure of how much of a good's supply changes because of the price of the product. We can say that a Price Elasticity of Supply is elastic when the suppliers can easily supply the demand for the consumers. It is inelastic when it will take a long time for the suppliers to meet the demands of the consumers. Based on this knowledge the Price Elasticity of Clean Water is becoming inelastic because it is getting more difficult for the suppliers to be flexible to the demand of the consumers. This is because that there are less places of suppliers to find bodies of water with good quality water which are for sanitary uses or even for drinking.
Conclusion After looking at the effect of the shortage of water on the economy and understanding its elasticity. We can use this to see the importance of clean water in our society. I hope that this was able to motivate people to see that clean water does not have an infinite supply and it can in the future run out. We must learn to save water and help those who do not have access to it.
Sources:
Images:
http://images.nationalgeographic.com/wpf/media-live/photos/000/001/cache/ethiopia-tap-water_150_600x450.jpg http://en.people.cn/mediafile/201003/12/P201003121013013115818879.jpg http://smallbiztrends.com/wp-content/uploads/2013/10/price-elasticity.jpg http://gosouthonline.co.za/wp-content/uploads/2014/10/water_vortex2.jpg
Articles:
Jones, S. (2015, March 28). A Lack of Clean Water and Sanitation in the Philippines Kills 55 People Every Day. Retrieved August 24, 2015, from https://news.vice.com/article/a-lack-of-clean-water-and-sanitation-in-the-philippines-kills-55-people-every-day Brotoisworo, P. (n.d.). Manila's Current Water Situation and Impending Water Crisis. Retrieved March 8, 2015, from http://www.academia.edu/6919209/Manilas_Current_Water_Situation_and_Impending_Water_Crisis Velez, F. (2014, September 3). Water shortage feared in Central Luzon, Manila Read more at http://www.mb.com.ph/water-shortage-feared-in-central-luzon-manila/#lvXLZuSlh4KSWhWl.99. Retrieved August 23, 2015, from http://www.mb.com.ph/water-shortage-feared-in-central-luzon-manila/
De Leon, P. (2015, March 15). Water shortage looms with onset of dry spell. Retrieved August 23, 2015, from http://cnnphilippines.com/news/2015/03/12/El-Nino-water-shortage.html