Contributing to the foundation and ensuring GETTING A GRIP… the future for a low-carbon, climate resilient society on Climate Change through the Philippine Climate Public Expenditure in the Philippines and Institutional Review EXECUTIVE REPORT 1 © 2013 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, NW Washington, DC 20433, U.S.A. Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved. June 2013 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected]. TABLE OF CONTENTS ABBREVIATIONS ..............................................................................................5 ACKNOWLEDGEMENTS .......................................................................................8 FOREWORD ..................................................................................................9 SYNOPSIS ....................................................................................................10 I. INTRODUCTION ............................................................................................19 II. SIGNIFICANCE OF THE REVIEW ............................................................................22 Global climate change is taking its toll on the Philippines . 22 Greenhouse gas emissions in the Philippines are increasing rapidly . 25 Climate action contributes to inclusive growth and poverty reduction . 25 The Philippines’ climate reform agenda aims to consolidate climate policy across all levels of Government . 27 Centralized institutional coordination supports the reform agenda . 29 III. KEY ANALYTICAL FINDINGS: OVERCOMING BARRIERS THAT IMPEDE SUSTAINED CHANGE ...............31 The first phase of the climate reform agenda must be finalized in order to reach sustained low-carbon and climate-resilient development . 31 Climate policy reform efforts are only partially aligned with development plan outcomes, thereby limiting effectiveness . 32 Execution and coordination of climate actions are hindered by a lack of clarity in roles and responsibilities across institutions . 34 Leveraging a low-carbon green-growth strategy and market-based instruments can strengthen engagement with the private sector . 37 Differences in the classification of climate PAPs hinders climate budget planning and prioritization . 37 Climate appropriations have been increasing relative to overall Government budgets . 39 Climate appropriations have been funded largely from domestic sources, while development partner support has concentrated on flood control and management . 39 Climate appropriations focus on a few large PAPs . 40 Financing gaps for knowledge and capacity development may slow implementation progress. 43 LGUs are action-oriented, but sources of funding are fragmented and their available amounts are limited. 44 Climate appropriations have been focused on adaptation, but the share of appropriations for mitigation has been rising faster . 47 Convergence of the Climate Change Adaptation and Disaster Risk Reduction and Management agendas is not reflected in budgets and plans . 49 Available planning and design tools are often not mainstreamed or are overly complex . 50 Public finance reforms provide opportunities to improve planning, prioritization, execution, and monitoring of climate PAPs . 51 Innovative budgeting tools introduced through the PFM Reforms will enhance planning and prioritization, as well as significantly advance convergence . 54 Increased budget transparency facilitates mobilization of domestic and development partner resources for climate action .. 55 Existing monitoring and evaluation systems have cumbersome reporting requirements, and the lack of climate indicators limits their usefulness to support the Government’s climate reform agenda . 56 Weak institutional capacity, including limited access to knowledge, has hindered efficient execution of the climate reforms and action . 58 IV. RECOMMENDATIONS ......................................................................................60 Pillar 1: Strengthening the Planning, Execution, and Financing Framework for Climate Change . 61 Pillar 2: Enhancing Leadership and Accountability through Monitoring, Evaluation, and Review of Climate Change Policies and Activities. 63 Pillar 3: Building Capacity and Managing Change . 64 REFERENCES ................................................................................................65 ANNEX A: STRATEGIC ACTION PLAN .........................................................................66 ANNEX B: FRAMEWORK FOR ANALYSIS AND LIMITATIONS ...................................................72 3 TABLE OF CONTENTS: Tables, Figures and Boxes Figure 1 . Scientific Agreement on Temperature Changes . 23 Figure 2 . Climate Change Vulnerability Map . 23 Figure 3 . Greenhouse Gas Emissions in the Philippines . 25 Figure 4 . From Fragmented to Comprehensive Laws and Policies. 27 Figure 5 . NCCAP Priority Areas and Outcomes 2011-2028 . 28 Figure 6 . Linkages between Climate Adaptation Actions and DRRM . 28 Figure 7 . Institutional Structure on Climate Change . 29 Figure 8 . Institutional Responsibilities by Functional Stream Designated by the Climate Change Act . 34 Table 1 . Comparison of Selected Major PAPs by Different Tagging Initiatives . 38 Figure 9 . Climate Appropriations by Classification, 2008-2013 (in Php billions) . 39 Figure 10 . Evolution of Climate Appropriations Based on the NCCAP Classification, 2008–2013 . 40 Figure 11 . Growth Rates of Climate Appropriations and Total Budget Appropriations of Departments/Agencies, 2008-2013 (in %) . 40 Figure 12 . Trends of Climate Appropriations by Department/Agency, 2008-2013 (on appropriation basis, in Php billions) . 40 Figure 13 . Composition of Expenditures and Appropriations by NCCAP Strategic Priority Area, 2008-2013 (on obligation and appropriation basis, in %) . 41 Figure 14 . Climate Expenditures and Appropriations by the NCCAP Thematic Priority, 2008-2013 (in Php billion) . 42-43 Figure 15 . Appropriations for Climate Change Initiatives of the Province of Albay, 2008-2012 (in Php billions) . 45 Box 1 . Contrasting Circumstances, Similar Successes: Case Studies on Makati and Albay . 45 Figure 16 . Spending on Climate Change Programs and Projects of Makati City, 2008-2012 (in Php billion) . 46 Figure 17 . Per Capita LGU Income of Provincial Governments, Ranked According to Various Hydro-meteorological Risks, 2009 (in pesos) . 46 Figure 18 . Key Characteristics of Local Sources of Climate Financing . 47 Figure 19 . Climate Appropriations by PAPs Addressing Adaptation, Mitigation, or Both 2008-2013 (in %) . 48 Figure 20 . Climate Appropriations for PAPs Contributing to Adaptation only by Department, 2008-2013, (in %) . 49 Figure 21 . Climate Appropriations for PAPs Contributing to Mitigation only by Department, 2008–2013 (in %) . 49 Figure 22 . The Philippine Budget Cycle: Examples of Entry Points for Integrating the Climate Agenda . 52 Box 2 . Secondary Tagging: Lessons from Uganda’s Virtual Poverty Fund . 53 4 ABBREVIATIONS ADB Asian Development Bank AIP Annual Investment Program AO Appropriations Ordinance AUSAID Australian Agency for International Development BARs Budget Accountability Reports BMU Bundesministerium für Umwelt, Naturschutz Und Reaktorsicherheit BSWM Bureau of Soils and Water Management BUB Bottom-Up Budgeting CC Climate Change CCA Climate Change Adaptation CCC Climate Change Commission CCCC Cabinet Cluster on Climate Change Adaptation and Mitigation CDP Comprehensive Development Plan CFG Climate Finance Group CLUP Comprehensive Land Use Plan CPEIR Climate Public Expenditure and Institutional Review CSOs Civil Society Organizations DA Department of Agriculture DBM Department of Budget and Management DENR Department of Environment and Natural Resources DILG Department of the Interior and Local Government DND Department of National Defense DOE Department of Energy DOF Department of Finance DOH Department of Health DOST Department of Science and Technology DP Development Partner DPWH Department of Public Works and Highways DRR Disaster Risk Reduction DRRM Disaster Risk Reduction