Box 1. Environmental problems and their main causes

9. The judiciary influences ENR management through its power of judicial review. Trial courts have jurisdiction over criminal cases for offenses defined under ENR laws. To improve access to justice, the Supreme Court in 2008 designated 84 branches of first-level courts and 31 branches of second-level courts as special Environmental Courts, with jurisdiction to try and decide violations of environmental laws. For pollution and mining cases, the DENR’s Pollution Adjudication Board and Mines Adjudication Board have exclusive original jurisdiction, and courts only have appellate jurisdiction. In a recent citizens’ suit filed by the concerned residents of Manila Bay, the Supreme Court issued a mandamus order to the state agencies, led by the Department of Environment and Natural Resources (DENR), to clean up and rehabilitate the Manila Bay.

4. 
   Where the Philippines Could be: Policy Options
   

11. To meet the key environmental challenges that the country is facing, the Philippines needs to make investments in better environmental management as it easily pays off in the short to medium term, not to mention its significant returns to the society at large. This section outlines policy reforms to work towards the sustainability of the country’s economy.

13. A well-functioning inspection and maintenance program is one of the most cost-effective interventions in abating outdoor air pollution. The CEA estimates a benefit-cost ratio of 3.9 of an inspection and maintenance program for diesel vehicles in the Philippines. This indicates that health benefits (averted loss in human lives and reduced morbidity) of such a program are almost four times higher than the cost of the program. Switching from two-stroke to four-stroke tricycles will reduce particulate matter emissions from these vehicles by 80 percent. A cost-benefit analysis (CBA) of low-sulfur diesel and vehicle emissions control technology also shows promising results. Vehicle emission technologies are useful short-term interventions while the country is building capacity, awareness, and adoption of cleaner fuels. As such, a national program that requires vehicles (new and in-use)—especially public utility vehicles such as jeeps, buses, and tricycles is to install pollution control devices. Another intervention is the rehabilitation of the current traffic management system and strategies that can greatly improve the flow of traffic including coordinated signals/traffic lights, reversible lanes, one-way street pairs, parking controls, exclusive pedestrian zones, vehicle ban, etc.

14. For abating indoor air pollution, some of the most effective measures with high economic returns are improved ventilation, better stoves, and switching to cleaner fuels. Likewise, switching to liquefied petroleum gas is also found to provide higher benefits than costs in households cooking indoors in poorly ventilated conditions.

15. For water pollution abatement and health protection, improved sanitation and hygiene practices should be promoted widely. The largest reduction in diarrheal disease, which is the most important factor in water-sanitation-hygiene related morbidity, can be attributed to hand washing with soap and household point-of-use drinking water treatment. Hand washing with soap can also prevent acute respiratory infections like pneumonia.⁴²

16. Improved water supply, improved sanitation (that includes excreta disposal facilities such as latrines), improved hygiene (hand washing), and household point-of-use drinking water treatment (rural areas) show very high economic returns for boiling of water and hand washing and the reduction in diarrheal morbidity. The benefits are clear, with hand washing and household drinking water treatment being the most effective interventions in reducing diarrhea, followed by improved sanitation facilities and improved drinking water supply.

Action 1.2 Protect coastal and marine resources

17. The Philippines harbors coastal and marine resources of major international significance. Well managed, they could also contribute much more to sustainable income generation through eco-tourism and other alternative sources of livelihoods. One low-cost intervention that could give significant economic returns is through the protection and conservation of habitats through marine protected areas (MPAs), providing real alternatives through pro-poor aquaculture, and instituting a licensing scheme with the long-term objective of limiting entry to open access fishery and through nature-based tourism.

18. Mangroves, for example, although relatively small in size, generated net economic benefits of PhP 8,859 per hectare per year—the largest of any single coastal or marine resource on a per hectare basis. This somewhat surprising result reflects the large economic values associated with coastal protection, waste assimilation, and the role of mangroves in sustaining healthy fishery. Mangroves, an often overlooked resource considered as having little or no value, are actually a very important economic asset. (Mangroves will be increasingly important if climate change leads to rising sea levels; healthy mangroves provide important economic benefits too in land areas by controlling damages from storm surges.) Coral reefs were second on a per unit basis (PhP 1,487 per hectare per year), reflecting the important contribution of healthy coral reefs to fisheries, recreation, and shoreline protection.

19. The largest source of damage to coastal and marine resources is overfishing. One solution to this problem is to provide fishers with alternative sources of income that would reduce their dependence on capture fishing. A potentially attractive investment (if environmental issues can be overcome) is the development of aquaculture, especially aquaculture that is pro-poor. Aquaculture is not only potentially beneficial in terms of sustainable use of marine resources, it can accelerate socioeconomic growth and food security. However, the biophysical impacts of aquaculture may include fecal discharge of fish, waste food, and changes to genetics and biodiversity as well as poor siting, overcapacity, overstocking, and overfeeding with negative impacts on the environment. It is recommended that a 1:1 mangrove-to-fishpond ratio be maintained to improve the balance between production and conservation.

21. Selected interventions to remedy the situation of over-extraction of forestry products and conversion to other uses show promise in helping to maintain the sustainable flow of goods and services from forests. Several government actions are proposed, including the following: improvement of forest statistics and consistent application of definitions over time; long-term tenure arrangements to give forest users the proper incentives to make long-term investments; stepped up enforcement of logging regulations, including both logging techniques and reforestation and land management; and promotion of community forestry. The management and institutional costs of these interventions are high, but the potential exists for large gains for the Philippines if interventions can be successfully and efficiently carried out together with institutional strengthening and social “buy-in” on the part of those using forestlands.

23. The results of several cost benefit analyses of soil conservation investments confirm the intuition that farmers would have an incentive to invest in such technologies only if they have long planning horizons and a low discount rate. Security of land tenure is not believed to be important in influencing the planning horizon, but high private interest rates imply that less soil conservation is undertaken than economically optimal. Added to this is the fact that off-site impacts will not be included in land managers’ decisions. Correction of this major market failure can be achieved by a system of payments for ecological services. These have high transactions cost but could be used selectively in watersheds that show major downstream impacts from upland land degradation.

26. Given the country’s poor fiscal position, the limit on financial resources is a problem that the DENR and other ENR institutions share with the rest of the bureaucracy. The Government should continue streamlining the bureaucracy to free up resources for the much needed capital outlays and development expenditures. Issues on pollution are treated separately, with the responses highly compartmentalized and not fully coordinated. Budget allocations are fragmented across too many programs and projects, with priority programs changing from year to year with each new DENR secretary. This has limited the effectiveness of these programs as resources are not optimized and in many cases, issues remain unresolved. For example, within DENR, the allocation for personnel services is 62 percent of the total budget, while maintenance and operating expenses and capital outlays get 27 percent and 10 percent, respectively. Also, its sectoral allocation reflects old mandates and priorities which has been historically focused on forestry, with the Forest Management Bureau getting 27 percent of the total budget, while the Environmental Management Bureau is allocated only 5 percent and the Protected Areas and Wildlife Bureau 4 percent (World Bank 2007). To put fiscal discipline in the allocation of its limited resources, the government could choose to focus on selected priority programs or areas to ensure impact, or tasks that can be completed despite limited resources, or those that are environmentally critical in the case of enforcement and compliance monitoring functions.

27. To address the ENR sector’s financial needs, reforms are necessary to generate more financial resources. This may include increasing the payment for environmental services and the use of environmental user fees to complement regulations and to generate revenues, encouraging private sector investments in ENR management, and tapping Government-Owned Companies and Corporations (GOCCs) and Government Financial Institutions. International development agencies could be engaged and encouraged to invest in longer-term, strategically programmed undertakings. Finally, to ensure that allocations went to the intended purposes, there should be results-based monitoring and evaluation. An assessment of the National Integrated Protected Areas Services (NIPAS) Act is also in order. The fees mandated by this act have not been used directly in the management of the protected areas where the fees are collected.

28. In the case of the Environmental User Fee system instituted by the Laguna Lake Development Authority, the system was used to complement the regulatory approaches to environment management in the lake and encourage industrial firms to invest in and operate pollution prevention and abatement systems. It includes a fixed fee for administrative costs and a variable fee that is calculated based on the biochemical oxygen demand (BOD) level and the volume of wastewater discharged into the lake. It is integrated in the payment of the discharge permit, which is only issued if the discharge complies with the BOD effluent standard.

29. 
    The Philippines has a vibrant citizens’ organization movement, with about 60,000 nongovernmental institutions. Participation by citizens and citizens’ organizations is backed by a strong legal framework. However, a number of factors hinder participatory mechanisms from being wholly effective. These factors include poor access to environmental information, lack of mechanisms for transparency in local decision making, lack of mechanisms for feedback and integration of inputs, and overlapping jurisdictions. The Philippines has a poor record of enforcing environmental legislation due to lack of political will, institutional capacity and incentives. It is important then that political intent that was demonstrated when the new environmental laws and policies were framed be continued through its implementation by involving civil society in the planning, decision-making and monitoring of ENR management.
    

29. 
    Basic and essential information, such as a pollution inventory for major sectors and its health outcomes are outdated and not even available for key cities in the country. Large uncertainties in information on ENR make analysis and drafting of legislation and policies difficult. Without public knowledge and demand for specific actions, political action will continue to lag behind the rhetoric. Timely and accurate information on ENR management processes and its attendant costs and benefits can catalyze public participation. Civil society has an important role to play but must have access to the necessary information. Sharing such information encourages environmental stewardship among citizens, improves the willingness to pay for environmental services and enhances the effectiveness of economic instruments in achieving compliance.