Fiscal incentives to LGUs for priority risk reduction investments

3. 
   Catastrophe risk pooling. The level of catastrophe insurance coverage among households is virtually non-existent. This could be improved by the creation of a mandatory (or semi-mandatory) national catastrophe insurance pool with public-private participation.
   

4. 
   Insurance of public sector assets. While GSIS provides insurance coverage for some government owned assets, most remain either uninsured or underinsured. Hence, increasing the insurance coverage of publically owned assets could be a priority. This could be achieved by providing for a line item in the budgets of respective government agencies that are responsible for the annual maintenance and management of infrastructure and government buildings.
   

5. 
   Securing contingent funding for extreme catastrophic events. Budgetary appropriations to the National Calamity Fund vary considerably from one year to the next. In the case of funding shortages the government typically has been making additional appropriations to the NCF retroactively. To address this issue, the government could tap international financial institutions to finance the establishment of a catastrophe risk financing facility (e.g., a contingent line of credit) which would disburse in the event of a major catastrophe and provide immediate liquidity to fund relief efforts and other short term emergency response needs.
   

Dasgupta, Susmita, et al. (2007). The Impact of Sea-Level Rise in Developing Countries: A Comparative Analysis. World Bank Policy Research Working Paper No. 4136 (http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2007/02/09/000016406_20070209161430/Rendered/PDF/wps4136.pdf)

PricewaterhouseCoopers UK, Economic Outlook, November 2009. https://www.ukmediacentre.pwc.com/imagelibrary/downloadMedia.ashx?MediaDetailsID=1562

The World Bank

1. 
   The Philippines is considered highly vulnerable to climate change impacts. It is particularly vulnerable to typhoons and sea level rise, mainly because of its location and archipelagic geography. During the past decade, the country has experienced strong intensity typhoons with increased frequency, packing strong winds and with high levels of rainfall. These climate-related phenomena have caused unprecedented flooding and massive landslides resulting in the loss of property and thousands of lives, causing havoc to the country’s fragile economy.
   

2. 
   The Philippines is highly exposed to extreme weather. It is expected that climate variability will lead to an increase in the number, severity and unpredictability of events. On average, around 20 typhoons hit the country annually, of which five are expected to cause major damage in terms of both lives and property. In the past 10 years, the Philippines has experienced the highest recorded rainfall, and the strongest typhoons. Only recently, tropical storms Ondoy, Pepeng, and Santi, all occurring in a span of less than a month, hit Metro Manila and neighboring provinces, and Northern Luzon, causing unprecedented flooding resulting in loss of lives and damage and losses to properties. A post-disaster needs assessment led by the World Bank in collaboration with other donors and the Government of the Philippines has estimated the total damage and losses from typhoons Ondoy and Pepeng at more than US$4 billion or almost 3 percent of GDP. The Philippines is ranked in the top 10 countries worldwide at risk for both climate change and disasters.
   

3. 
   Significant changes in temperatures, rainfall levels, and the sea-level are envisaged. Temperatures will rise, though by how much is uncertain, but an average warming of at least 2 degrees seems inevitable toward the latter part of this century. It could be higher unless drastic measures are taken to slow down emissions of GHG. Rainfall will both increase and decrease depending on the location. Agriculture, one of the most vulnerable sectors to changes in rainfall patterns, represents over one fifth of the country’s GDP. About one third of the labor force is dependent on agriculture. For a doubling of CO₂ in the atmosphere, The Philippines’ Initial National Communication on Climate Change (DENR, 1999) projects a 60-100 percent increase in annual rainfall in the Central Visayas and Southern Tagalog provinces, including Metro Manila. On the other hand, a decrease in annual rainfall is expected for other sections of the country, such as northern and eastern Mindanao and parts of western Luzon. As a potential indication of the things to come, Typhoon Ondoy’s six-hour continuous rain in Metro Manila and neighboring provinces was equivalent to a month’s average rainfall. Sea level rise and storm surges will become greater threats to coastal communities. Globally, IPCC estimates that sea levels will rise about 28-43 centimeters from the base level (1980-1999) until 2100, depending on the temperature scenario. The Philippines is particularly vulnerable as about 60 percent of the country’s 1,500 municipalities and 120 cities are situated along its coast line. Manila, some parts of which lie below sea level, is predicted to be adversely affected by the rise in sea level.
   

4. 
   The contribution of the Philippines to global GHG emissions was about 0.40 percent in 2005 (excluding land use change), but GHG emissions are projected to increase drastically under business as usual. The expansion of coal-fired generation dominates the emissions. For the transport sector, future projections show a strong increase of GHG emissions under the business as usual scenario. Emissions from the waste sector are also expected to increase with the mandatory blending of diesel and gasoline with biodiesel and bioethanol, respectively. The production of biofuels under the business as usual process of treating wastewater through an open lagoon system could result in considerable increases in methane emissions.
   

Source: Esquerra et al (forthcoming).

5. 
   Climate change mitigation is identified as a priority in the Medium-Term Philippine Development Plan (MTPDP) for 2004-2010. The government has introduced a number of Executive Orders to address shortcomings. At the national level, several sector agencies, such as the Department of Energy, have elaborated plans for addressing climate change through improved energy efficiency and the promotion of renewable energy sources. At local level, several Local Government Units (LGUs) have also been active in the promotion of climate change risk management. The National Conference on Climate Change Adaptation convened in 2007 was followed up in 2009 by the provincial government of Albay, which prepared the Albay Declaration on Climate Change. Albay is pursuing follow-up activities in the development of the national strategic framework on climate change adaptation.
   
6. 
   The Philippines has been active in undertaking legislative actions and in creating institutions to address climate change issues. However, until recently these responses have been considered to be both fragmented and uncoordinated. The Climate Change Act of 2009 is passed to address these issues. This new law, an act mainstreaming climate change into government policy formulations, establishing a framework strategy and program on climate change was signed into law on October 21, 2009. The law calls for the creation of a Climate Change Commission to address the current institutional set up and inadequate coordination as well as fragmentation of various actions. It also requires the formulation of a National Climate Change Strategy which will be used as a basis for developing a well-coordinated and fully-funded action plan. The implementing rules and regulations of the new law have already been promulgated, and the new Commission has recently been formed. Even without the new law, there is already extensive legislation with relevance to climate change. (See Box 2). The Philippines has also ratified key conventions on climate change. The UNFCCC was ratified in 1998, and the Kyoto Protocol in 2003, enabling the country to participate in the Clean Development Mechanism (CDM).
   

7. 
   Despite the potential synergies between disaster risk mitigation and climate change adaptation, so far there is inadequate convergence in policy, planning, action implementation and coordination across national government agencies. As current disaster management legislation concentrates on emergency response, most resources have been focused on ensuring timely response to disasters. The government is finalizing its Strategic National Action Plan (SNAP) for Strengthening Disaster Risk Reduction in the Philippines for 2009-2019. The National Disaster Coordinating Council (NDCC) is also implementing parts of the Four Point Plan of Action for Preparedness. This aims to strengthen the capacity of LGUs in vulnerable areas. There is also a Bill on Disaster Risk Management, which is proposed to be certified as a priority Bill to speed up action by Congress because of the recent typhoons and their unprecedented effects.
   

8. 
   Various climate change projects have been undertaken by the country, many of them in cooperation with international development agencies. Most of these initiatives are grant-funded and focus mainly on capacity building, knowledge generation and mitigation, mainly in the energy sector. As of October 2009, there were 40 projects registered with the CDM Executive Board. It is only recently that climate change adaptation interventions have begun to receive attention. (See Box 3).
   

9. 
   As many observers and experts have noted, ongoing initiatives seem to be fragmented and not well-coordinated mainly because of the unclear institutional set up and the absence of a clear and coherent framework. With support from development partners and international agencies, it is critical for the Government of the Philippines to seize the momentum and take actions in the following key areas.
   

10. 
    The passage of the Climate Change Act of 2009 provides the foundation and legal basis for pursuing the climate change agenda of the country. It is an excellent step towards addressing institutional issues and formulating a coherent strategy that can be used to develop and implement action plans that are well-coordinated, fully-funded and with measurable outcomes. The Climate Change Act has been signed and the Climate Change Commission has been created recently though it has yet to establish the Climate Change Office that will support the Commission. In addition, the implementing rules and regulation of the law have also been recently promulgated.
    

11. 
    The Climate Change Commission has recently been formed but not the Climate Change Office that will support the Commission in implementing the law. The law’s implementing rules and regulation (IRR) that provides the legal procedures and processes to effectively implement the law have also recently been promulgated. With these positive developments, it is critical for the Commission to establish the Climate Change Office with adequate funding and staffed by qualified personnel. Training and capacity building for the Office will need to be done.
    

12. 
    While the IRR has already been promulgated, this needs to be supported by clear guidelines to effectively implement the law and to also delineate functions and responsibilities of the Commission vis-à-vis sector agencies, including NEDA. In developing the guidelines, it is critical to consult various stakeholders.
    

13. 
    The Philippines is very active in the climate change agenda both in the local and international arena. However, the country lacks a clear and coherent government strategy on climate change. The new law recognizes this shortcoming and now calls for the formulation of the strategy, which will be the basis for developing the priority action plan for a well-coordinated and fully-funded implementation.
    

14. 
    Given the country’s vulnerability and experience on extreme climate-related events , the government needs to focus its resources and attention on adaptation and disaster preparedness. To this end, the following needs to be done: