51683

The Philippines:

Country Environmental Analysis

October 2009

East Asia & Pacific Region

World Bank

Table of Contents

Acknowledgments

Executive Summary

  1. Environmental Policy, Legislation, and Institutions
  2. Policy Framework for Environmental Management
  3. Environmental Legislation
  4. Institutions for Environment and Natural Resources Management
  5. Indicators of Environmental Management
  6. Challenges and Issues
  7. Recommendations
  1. Outdoor Air Pollution
  2. The Growing Problem of Outdoor Air Pollution
  3. Economic Costs of OAP-related Morbidity
  4. Economic Costs of Premature Mortality due to OAP
  5. Suggested Interventions
  1. Indoor Air Pollution
  2. Household Solid Fuels and Indoor Air Pollution
  3. Economic Costs of IAP-related Morbidity
  4. Economic Costs of Premature Mortality due to IAP
  5. Suggested Interventions
  1. Water Pollution, Sanitation, and Hygiene
  2. Water, Sanitation, and Hygiene Problems
  3. Economic Costs of WSH-related Morbidity
  4. Economic Cost of Premature Mortality due to Poor WSH
  5. Suggested Interventions
  1. Coastal and Marine Resources
  2. The Resource Base
  3. Economic Values of CMR in the Philippines
  4. Costs of Environmental Degradation of CMR
  5. Conclusions on Costs and Benefits
  6. Suggested Interventions
  1. Forestry
  2. Forests in the Philippines
  3. Estimating Economic Values of Forestlands
  4. Estimating the Economic Contribution of Forests
  5. The Costs of Resource Degradation
  6. Summary and Conclusions
  1. Land Management
  2. Extent of Land Degradation in the Philippines
  3. Impacts of Land Degradation on Agricultural Productivity
  4. Costs of Land Degradation
  5. Potential Policy Responses
  1. Climate Change
  2. Climate Change Vulnerabilities and Impacts
  3. Philippine Response to Climate Change
  4. The Way Forward

Annexes

  1. Environmental Health: Methodology and Assumptions
  2. Natural Resource Data
  3. References

List of Figures

2.1Annual Average PM10 Levels in Metro Manila and AntipoloCity

2.2Annual Average PM2.5 Levels in Metro Manila

2.3Components of Morbidity Costs

2.4Annual Cost of OAP-related Health Effects

3.1Household Use of Solid Fuel by Income Level, 2004

3.2Primary Cooking Fuel in Households in the Philippines, 2004

3.3Households Exposed to Indoor Air Pollution from Solid Fuels

3.4Annual IAP-related Morbidity Costs

3.5Annual Cost of IAP-related Health Effects

4.1Household Access to Improved Water Supply and Sanitation, 2003

4.2Components of Morbidity Costs

4.3Annual Cost of WSH-related Health Effects

4.4Percent Reduction in Diarrhea from Water and Sanitation Interventions

4.5Median Per Capita Construction Cost of Water Supply in Selected Regions

4.6Median Per Capita Construction Cost of Sanitation in SelectedRegions

5.1Net Benefits from Coastal and Marine Resources

5.2Percentage Distribution of CMR Net Benefits by Type of Service, 2006

5.3Cost of Environmental Degradation

5.4Share of Environmental Costs Across Ecosystems

6.1Philippine Forest Cover, 1934–2003

6.2Valuation Framework

7.1Fertilizer Application, All Types, the Philippines, 1961–2002

List of Tables

1.1The State of the Philippine Environment

2.1Attributable Fractions for OAP-related Morbidity, 2003

2.2Incidence of OAP-related Illnesses by Age Group, 2003

2.3Annual Cost of Morbidity from OAP

2.4Relative Risk Ratios and Corresponding Attributable Fractions for Specific Causes of Mortality from OAP

2.5Mortality Incidence due to OAP by Specific Age Group, 2003

2.6Annual Cost of OAP-related Premature Mortality

2.7Benefit-Cost Ratios of Low-sulfur Diesel and Diesel Vehicle Conrol

2.8Proposed Railway Projects and Costs

3.1Attributable Fractions of Morbidity from IAP

3.2Morbidity Cases Attributable to IAP, by Age, 2003

3.3Annual IAP-related Morbidity Costs

3.4Mortality Incidence due to IAP by Specific Age Group, 2003

3.5Annual Cost of IAP-related Premature Mortality

3.6Benefit-Cost Ratios of Converting to Improved Wood Stoves and LPG to Control IAP in the Philippines

4.1Responses to the Demographic and Health Survey 2003

4.2Attributable Fractions for WSH-related Illnesses, 2003

4.3Estimated Annual Cases of Illness from WHS, by Age, 2003

4.4Annual Cost of Morbidity from WSH

4.5Annual Cost of Mortality in Children under 5 from WSH

4.6Annual Cost of Mortality in Population Age 5 or Older from WSH

4.7Benefit-Cost Ratios for Children under 5 Years of Age

4.8Benefit-Cost Ratios for Rural Household Improved Water Supply and Sanitation

5.1Categories of Ecosystem Services and Benefits

5.2Philippine Coastal and Marine Ecosystems

5.3Net Benefits from CMR per Unit Area, 2006

5.4Target MPAs in the Philippines

5.5Major Species Produced in Aquaculture Fisheries, 2006

6.1Selected Use and Non-use Values of Forests

6.2Reported Production of Forest Products and Estimated/Actual Production, 1995–2006

6.3Summary of Forest Depletion, 1992–2003

7.1Area Harvested by Crop, the Philippines, 1999–2007

7.2Yield of Major Crops, the Philippines, 1970–2006

A.1Per Capita Diarrheal Cases, 2003

A.2COPD Incidence Rate for Each Age Group

A.3Adjustment Factor Used to Adjust for Published Mortality Figures from PHS

A.4Health Outcomes and Relative Risks

A.5Relative Risks for OAP-related Illnesses, 2003

A.6Attributable Fractions Used to Calculate the OAP-related Illnesses

A.7Relative Risk Ratios Used to Calculate the Number of Cases of IAP-related Illnesses

A.8Attributable Fractions for WSH-Related Diseases (Excluding Diarrhea)

A.9Relative Risks and Population Proportions Used to Compute Attributable Fraction for Diarrhea

A.10Attributable Fractions for WSH-related Illnesses, 2003

A.11Relevant Particular Matter and β Coefficient of RR Formula for OAP-related Health Outcomes

A.12Relative Risk and Attributable Fraction for OAP-related Health Outcomes

A.13Current and Estimated Counterfactual Underweight Prevalence Rates in Children under 5 in the Philippines

A.14Relative Risk of Mortality from Mild, Moderate, and Severe Underweight in Children Under 5

A.15Estimated Cause-specific Annual Deaths in Children Under 5 in 2003

A.16Estimated Annual Malnutrition-related Mortality in Children under 5 from Poor WSH, 2003

A.17Percentage Share of Illnesses per Health-Seeking Behavior

A.18Average Number of Days of Treatment/Confinement

A.19Associated Costs per Health-Seeking Behavior, 2003

A.20Employmentin Age Group 20–64

A.21Days of Illness Used for Estimating Indirect Cost of Morbidity

A.22Unit Valuation of Mortality

B.1Summary of Net Benefits from Coastal and Marine Resources, 2006

B.2Summary of Net Benefits from Coastal and Marine Ecosystems per Unit Area, 2006

B.3Summary of Environmental Costs to Coastal and Marine Resources, 2006

B.4Cost Comparison:Open Field and Hedgerow Intercropping

B.5Approximate Net Present Value for Alternative Farming Methods

List of Boxes

1.1Major Legal Instruments in the ENR Sector

1.2Environment and Natural Resources Functions Devolved to LGUs

1.3Successful LGU Implementation of Devolved Functions

1.4Philippine Environmental Impact Statement System: Framework, Implementation, Performance, and Challenges

1.5A Long Road to Justice

1.6Using Market-based Instruments to Save Laguna Lake, Philippines

1.7Government Agencies Ordered to Clean Up ManilaBay

2.1Improving Air Quality

5.1Protecting Fishery Resources

6.1Valuing Non-timberForest Benefits

6.2Managing Forests

7.1Introducing Sustainable Upland Development

7.2Payments for Ecosystem Services

8.1Preparing for Natural Disasters

Abbreviations and Acronyms

ADBAsian Development Bank

AFattributable fraction

ALRIacute lower respiratory infection

BCAbenefit-cost analysis

BCRbenefit-cost ratio

BODbiochemical oxygen demand

CASCountry Assistance Strategy

CBAcost-benefit analysis

CBFMCommunity-based Forest Management

CDMClean Development Mechanism

CEACountry Environmental Analysis; also cost-effectiveness analysis

CMRcoastal and marine resources

COcarbon monoxide

CO2carbon dioxide

COIcost-of-illness

COPDchronic obstructive pulmonary disease

CRUClimate Research Unit, World Wildlife Fund

DADepartment of Agriculture

DALYdisability-adjusted life year

DBMDepartment of Budget and Management

DENRDepartment of Environment and Natural Resources

DHSDemographic and Health Survey

DILGDepartment ofInterior and Local Government

DOCdiesel oxidation catalyst

DOHDepartment ofHealth

DOLEDepartment ofLabor and Employment

DOSTDepartment of Science and Technology

DPFdiesel particulate filter

DTIDepartment of Trade and Industry

EAenvironmental assessment

EIAenvironmental impact assessment

EMBEnvironmental Management Bureau

ENRenvironment and natural resources

EOExecutive Order

EUFSEnvironmental User Fee System

FHSISField Health Surveillance Information System

FMBForest Management Bureau

GDPgross domestic product

GFDRRGlobal Facility for Disaster Reduction and Recovery

GHGgreenhouse gas

GNIgross national income

GNPgross national product

GOCCgovernment-owned and controlled corporations

GSGood Shepherd

HCAhuman capital approach

HCVhuman capital value

HECSHousehold Energy Consumption Survey

IACCC Inter-Agency Committee on Climate Change

IAPindoor air pollution

I/Minspection and maintenance

IRAinternal revenue allocation

ISDRU.N. International Strategy for Disaster Reduction

KCCC Klima Climate Change Center

LGCLocal Government Code

LGUlocal government unit

LISCOPLaguna de Bay Institutional Strengthening and Community Participation

LPGliquefied petroleum gas

LTOLand Transportation Office

MDGsMillennium Development Goals

MPAmarine protected area

MTPDPMedium Term Philippine Development Plan

MVISMotor Vehicle Inspection System

NAMRIANational Mapping and Resource Information Authority

NSCCNueva Segovia Consortium of Cooperatives

NDCCNational Disaster Coordinating Council

NEDANational Economic and Development Authority

NIPASNational Integrated Protected Areas System

NGnational government

NGOnongovernmental organization

NOnitrogen oxide

NPnet price

NPVnet present value

NREnew and renewable energy

NTFPnon-timber forest products

OAPoutdoor air pollution

OCDOffice of Civil Defense

PA21Philippine Agenda 21

PABPollution Adjudication Board

PACCPresidential Adviser on Climate Change

PAFASAPhilippine Atmospheric, Geophysical, and Astronomical Services Agency

PAWBProtected Areas and Wildlife Bureau

PCSDPhilippine Council for Sustainable Development

PEPPhilippine Environmental Policy

PESpayments for ecosystem services

PETCprivate emission testing center

PHSPhilippine Health Statistics

PMparticulate matter

PTFCC Presidential Task Force on Climate Change

RRrelative risk

SDstandard deviation

SOxsulfur oxide

TEVtotal economic value

TFHtricycles for hire

TSStotal suspended solids

UNFCCCUnited Nations Framework Convention on Climate Change

VFventilation factor

VSLvalue of statistical life

WAweight-for-age

WAZweight-for-age z-score

WHOWorld Health Organization

WSHwater, sanitation, and hygiene

WTPwillingness to pay

Acknowledgments

The World Bank Country Environmental Analysis (CEA) for the Philippines consists of a wide-ranging process and a set of documents. It was task-managed by Jan Bojö (Sector Leader, Environment) and co-TTL Maya Villaluz (Senior Operations Officer, ), both in the Sustainable Development Department of the East Asia and Pacific Region of the World Bank.

The main “building blocks” in the process, and the chapters or text they formed the basis of, were the following papers commissioned for the CEA:

  • Antonio La Viña: Re-thinking Philippine Environmental Institutions: Do We Need to Reallocate Mandates, Powers, and Functions?(Chapter 1)
  • Agustin Arcenas: Environmental Health: Economic Costs of Environmental Damage and Suggested Priority Interventions (Chapters 2–4)
  • Bjørn Larsen: Cost-Benefit Analysis of Selected Environmental Health Interventions International Evidence and Applications to the Philippines and The Philippines Malnutrition Related Mortality from Water, Sanitation and Hygiene Accounting for the Effect of Diarrheal Infections on Child Malnutrition (Chapters 2–4)
  • Jose Padilla: Analysis of Coastal and Marine Resources (Chapter 5)
  • Roehlano Briones: The Philippines Country Environmental Analysis: Land Degradation and Rehabilitation(Chapter 6)
  • Antonio Carandang: The Forestry Sector:Costs of Environmental Damage and Net Benefits of Priority Interventions(Chapter 7)
  • Maria-Fernanda Garcia-Rincon and Felizardo Virtucio:Climate Change in the Philippines (Chapter 8)
  • Elmer Mercado: Preserving Cultural Heritage through Good Environmental Management in Vigan City, Ilocos Sur; A Case Study of Ubay, Bohol on Sustainable Coastal and Fishery Resource Management; A Case Study of Bayawan City, Negros Oriental on Controlling the Effects of Lowland Flooding and Siltation through Sustainable Forest Land Use Planning and Management; A Case Study of the Municipality of Infanta, Quezon Province Community-based Disaster Preparedness and Management (CBDPM): Surviving and Recovering from a Natural Catastrophe; Using Market-based Instruments to Save Laguna de Bay; and A Case Study of Nabunturan, Compostela Valley on the Rehabilitation of its Degraded Uplands through Sustainable Management (six case studies underpinning boxes throughout the CEA)

With minor exceptions, these papers were processed through two broad-based consultative workshops in the Philippines: June 16–17, 2008, and November 18–19, 2008. About 100 participants from government, academia, donors, and nongovernmental organizations contributed to the first workshop, while about half that number contributed to the second. The second workshop was arranged in collaboration with the Asian Development Bank. The draft CEA was presented to the World Bank’s Decision Meeting in April 2009. After revisions, it was officially conveyed to the Government of the Philippines in May 2009. This version—which is final—reflects adjustments made in response to comments received from the Government since then. It should be recognized that it was not possible to accommodate all comments that came in at this late stage, as some suggested major restructuring of the document and the launch of new analysis. The CEA does not aim to completely cover all environmental issues but instead selects a few that are judged to be of most significance.

Consultants Bjorn Larsen and Maureen Cropper actively supported the work on environmental health spearheaded by consultant Arcenas. Similarly, consultant John Dixon actively supported the work on natural resources management by consultants Briones, Carandang, and Padilla at several stages of the process.

A large World Bank team provided comments and suggestions. In addition to the members already mentioned, this team consisted of Fabrizio Bresciani (Rural Development Economist, EASR); Maria Fernanda Garcia Rincon (Consultant, ENV); William Magrath (Lead Natural Resources Economist, EASOP); John Morton (Environmental Specialist, EASRE); Josefo Tuyor (Senior Operations Officer, EASPS); Fernanda Ruiz Nunez (Young Professional, EASOP); and Felizardo Virtucio (Operations Officer, EASRE). Throughout, the team was supported by Maria Consuelo Sy (Team Assistant, EACPF) and Inneke Ross-Herawati (Program Assistant, EASOP).

The current document was written by a core team of Jan Bojö, John Dixon, Bjorn Larsen, Josefo Tuyor, Maya Villaluz, and Felizardo Virtucio. Linda Starke (consultant) edited the document. Many other team members contributed comments on draft versions of this CEA. The core team based most of the text on the contributing building blocks, but it is responsible for considerable simplifications, adjustments, and additions. Although individual authorship is assigned to the underlying building blocks, available at we do not assign individual authorship to this CEA, which is an institutional product of the World Bank.

Peer reviewers of the CEA document were Kulsum Ahmed (Lead Environmental Specialist), Marian delos Angeles (Sr. Environmental Economist), and Ben Eijbergen (Sr. Infrastructure Specialist), all World Bank staff members.

In addition to the World Bank’s own resources, the financial support from the Finish-Norwegian Trust Fund for Environmentally and Socially Sustainable Development and the Danish Country Environmental Analysis Trust Fund is gratefully acknowledged.

All mentioned, and other participants in the process who are too numerous to mention, are sincerely thanked for their contributions.

TTLJan Bojö

Co-TTLMaya Villaluz

Sector Manager/LeaderRahul Raturi/Mark Woodward

Country DirectorBert Hofman

Executive Summary

The objectives of this Country Environmental Analysis (CEA) were to assess the environmental quality in the Philippines with a focus on how this affects human welfare and sustainability, measure and analyze the biophysical significance and monetary cost of environmental degradation and derive priority areas of action, assess the Philippines government’scapacity to manage the environmental challenges identified, and identify opportunities for reform and interventions.

The selection of issues for inclusion in the CEA was determined on the basis of literature review, expert judgment, and an existing public perception survey. On that basis, the following topics were chosen: environmental policy, legislation, and institutions; environmental health (including water pollution, sanitation, and hygiene (WSH) and outdoor and indoor air pollution); and natural resources (coastal and marine resources (CMR), land, forestry, and climate change).

The CEA has been written in a very consultativeprocess. The foundation is a large number of reports produced by local consultants, as identified in the acknowledgments. These have been processed through two major consultative workshops with wide stakeholder representation, additional peer review, and public access on the World Bank’s Web site. On that basis, this document has been distilled and refined through a team vetting process, also involving international peer reviewers. The CEA team has also been actively involved in contributing to the World Bank Group’s Country Assistance Strategy (CAS), which evolved in parallel with the current document.

The methodology applied gives great weight to economic analysis, including sectoral contributions to national income, damage costs inflicted by environmental degradation, and cost-effectiveness and net benefits of proposed interventions. The database for such calculations has been quite uneven across sectors, which inevitably will strike the reader as a lack of comparability. Nevertheless, a certain panorama can be sketched, and top priorities emerge. The broad sectoral analyses are complemented by six case studies of successful environmental management, reflected as boxes in the main text. Unless otherwise noted, costs are stated in 2007 prices, and using the annual average exchange rate of PhP46 per U.S. dollar. Biophysical and health impacts refer to different years, as stated in the respective chapters and consultant reports.More detailed recommendations beyond the following general summary are given in the main text.

Environmental legislation, regulation, and institutions: The Philippines has sound and comprehensive environmental laws and policies. However, it suffers from weak implementation because of inadequate capacity and financial constraints both at the national and local levels. A shift in strategy toward more devolution to local levels of government, enhanced resource mobilization for environmental management, better prioritization, and retooling of human resources are urgently needed to accommodate new priorities. The CEA also recommends improvements in environmental information systems and public access to such information.

.

The Philippine environmental impact assessment system has all the elements of a sound system, such as the presence of screening, scoping, independent review, public participation, disclosure,and monitoring. However, it has limited use as a planning tool because in most cases it is applied downstream of key feasibility decisions. Its implementation suffersfrom a highly regulatory and control-oriented approach that emphasizes compliance with rigid bureaucratic procedures,from overlap with many laws,from more attention being given to procedural compliance rather than technical contents, and from a complex and poor system of follow-up and monitoring.

Outdoor air pollution (OAP): We estimate that more than 1 million people get sick every year due to outdoor air pollution in urban areas. About 15,000 people die prematurely due to OAP. As explained in the main text and in detail in Annex A, the economic costs of this depend very much on what method is being used but are in all cases significant.