Developing Pro-Poor Markets for Environmental Services in the Philippines FINAL REPORT International Institute for Environment and Development by RESOURCES, ENVIRONMENT AND ECONOMICS CENTER FOR STUDIES (REECS), Inc. February 2003 TABLE OF CONTENTS List of Tables List of Figures List of Acronyms 1. INTRODUCTION……………………………………………………………………………… 1 1.1 Background……………………………………………………………………………. 1 1.2 Purpose and Objectives of Research……………………………………………… 2 1.3 Methodology………………………………………………………………………….. 3 1.4 Structure of the Report………………………………………………………………. 3 2. MARKETS FOR ENVIRONMENTAL SERVICES IN THE PHILIPPINES – SOME EXISTING INITIATIVES………………………………………………………………………. 5 2.1 Landscape and Seascape Beauty………………………………………………….. 11 2.2 Watershed Protection………………………………………………………………... 17 2.3 Biodiversity Conservation…………………………………………………………… 23 2.4 Carbon Sequestration………………………………………………………………… 26 2.5 Environmental Waste Disposal Services…………………………………………. 27 2.6 Elevation Services…………………………………………………………………….. 27 3. INSTITUTIONAL SUPPORT MECHANISMS FOR ENVIRONMENTAL SERVICE MARKETS – CURRENT ISSUES AND PROBLEMS……………………………………… 30 3.1 National Integrated Protected Areas System (NIPAS)…………………………. 30 3.1.1 NIPAS Act……………………………………………………………………. 30 3.1.2 User Fees for NIPAS Sites…………………………………………………. 31 3.1.3 Protected Area Management Boards (PAMBs)………………………... 32 3.1.4 Implementation of User Fees – Some Emerging Difficulties………. 43 3.1.5 Integrated Protected Area Fund (IPAF)…………………………………. 44 3.1.5.1 Definition…………………………………………………………… 44 3.1.5.2 Current Flow of IPAF Disbursements…………………………. 45 3.1.5.3 Problems in IPAF Disbursements………………………………. 49 3.1.6 Potential Solutions on Issues Regarding NIPAS Act Implementation…………………………………………………………….. 53 3.1.7 Conclusion…………………………………………………………………… 57 3.2 Balian, Pangil, Laguna: A Case Study on Watershed Protection by a Community-Based Organization………………………………………………….. 57 3.2.1 The Study Site……………………………………………………………….. 57 3.2.2 Historical Background……………………………………………………... 59 3.2.3 Current Operations…………………………………………………………. 62 3.2.4 Institutional and Resource Use Conflicts………………………………. 64 3.2.5 Potential for Developing Markets for Watershed Protection Services……………………………………………………………………….. 66 3.2.6 Lessons Learned…………………………………………………………….. 67 ii 4. SOCIO-ECONOMIC FRAMEWORK FOR EVALUATING AND MONITORING MARKETS FOR ENVIRONMENTAL SERVICES………………………………………….. 70 4.1 Apo Island Protected Landscape and Seascape (AIPLAS)…………………….. 71 4.1.1 Description of the Study Area……………………………………………. 71 4.1.2 Economic Profile……………………………………………………………. 76 4.1.3 Protection Efforts……………………………………………………………. 76 4.1.4 Resource Use Conflicts……………………………………………………. 77 4.1.5 Revenues Generated………………………………………………………. 77 4.1.6 Key Informant Interviews: Testing the Methodology……………….. 81 4.1.6.1 Institutional/Process Indicators…………………………………. 81 4.1.6.2 Impact Indicators – Economic…………………………………. 82 4.1.6.3 Impact Indicators – Social and Biophysical…………………. 82 4.1.7 Conclusion…………………………………………………………………… 84 4.2 Reforestation, Watershed Management, Health and/or Environment Enhancement Fund (RWMHEEF) of the Department of Energy…………….. 85 4.2.1 Definition……………………………………………………………………. 85 4.2.2 Institutional Set-up…………………………………………………………. 87 4.2.3 The Universal Charge……………………………………………………... 90 4.2.4 Guidelines in Approving Project Proposals…………………………... 90 4.2.5 Funds Accrued, Funds Disbursed……………………………………….. 92 4.2.5.1 Amount on Paper…………………………………………………. 92 4.2.5.2 Actual Money on Hand…………………………………………. 95 4.2.6 Matrix of Approved Projects……………………………………………… 96 4.2.6.1 List of Projects by Type………………………………………….. 96 4.2.6.2 Beneficiaries……………………………………………………….. 98 4.2.7 Socio-Economic Impact Analysis………………………………………... 98 4.2.8 Conclusion…………………………………………………………………… 102 5. PROPOSAL FOR FURTHER RESEARCH………………………………………………….. 104 References Appendix A DENR Administrative Order No. 2000-51 Appendix B DENR Administrative Order No. 13, Series of 1992 Appendix C-1 Schedule of Interview for All the Study Components Appendix C-2 Schedule of Presentations on the Integrated Protected Area Fund (IPAF) Appendisx D DBM Circular Letter No. 99-9 Appendix E Municipal Ordinance Declaring Balian Water Sources as Protected Area Appendix F Presidential Proclamation No. 438 Appendix G AIPLAS PAMB Resolution No. 1 Appendix H Matrix of the AIPLAS Survey iii Guide Questions and Set of Respondents August 2002 Appendix I Rule 29, Republic Act No. 9136 Implementing Rules and Regulations Appendix J Sample Memorandum of Agreement, DOE and Bataan Appendix K Guidelines on the Review/Evaluation of Project Proposals For DLF and RWMHEEF iv LIST OF TABLES Table 1 List of Environmental Valuation Studies Conducted in the Philippines 1988-2002 Table 2a Protected Areas Proclaimed under NIPAS Area and PAMB Structure by Region and Protected Area As of December 2002 Table 2b Protected Areas Proposed for NIPAS As of September 2002 Table 3 Protected Areas with IPAF Disbursements Average Total Number of Days, Total Income, Total IPAF Disbursement and Status of NIPAS Proclamation by Protected Area As of December 2002 Table 4 Protected Areas with IPAF Revenues Area and Total Income by Region and Protected Area As of December 2002 Table 5 Mean Percent of Living and Dead Substrate Cover in Apo Island Fish Sanctuary Negros Oriental, 1981, 1982, 1983, 1985, 1992 and 2002 Table 6 Schedule of Fees and Charges Apo Island Protected Landscape and Seascape Table 7 Revenues and Number of Tourists by Quarter Apo Island Protected Landscape and Seascape 2000-April 2002 Table 8 Results of the Key Informant Interviews on Apo Island Dauin, Negros Oriental, September 2002 Frequencies in Percent Table 9 Preferred Development and Livelihood Projects to be Funded Under Development and Livelihood Fund Table 10 Accruals and Disbursements, Benefits Under Republic Act 9136 1994-2002 Table 11 Total Generating Capacity of Power Plants that have Availed of Funds from RWMHEEF Under E.R. 1-94 As of July 24, 2002 v Table 12 Approved Reforestation, Watershed Management, Health and/or Environment Enhancement Projects Under Energy Regulations No. 1-94 By Type of Project, January 1995 to June 2002 vi LIST OF FIGURES Figure 1 IPAF Funds Flow Figure 2 Administrative Flowchart of Current IPAF Process Figure 3 Proposed Administrative Flowchart of IPAF Process Figure 4 Location Map of Balian, Pangil, Laguna Figure 5 Interwood Logging Concession Figure 6 Relative Location Map of Apo Island Marine Sanctuary Figure 7 Flowchart of Availment of Development Livelihood Fund and Reforestation, Watershed Management, Health and Environmental Enhancement Fund Figure 8 Program for Granting of Financial Benefits to Host Communities Under E.R. 1-94, as Amended Figure 9 Flowchart of Funds, Payment and Withdrawal for Development Livelihood Fund and Reforestation, Watershed Management, Health and/or Environment Enhancement Fund vii LIST OF ACRONYMS AICBGR Inter-Agency on the Collection of Biological and Genetic Resources AIPLAS Apo Island Protected Landscape and Seascape ARED Assistant Regional Director ARMM Autonomous Region of Muslim Mindanao ATCRD Appropriate Technology Center for Rural Development BCA Benefit-Cost Analysis CA Commonwealth Act CAR Cordillera Administrative Region CBP Community-Based Program CENRO Community Environment and Natural Resources Officer CPPAP Conservation for Priority Protected Areas Program CRA Commercial Research Agreement CRM Community Resource Management EI Economic Instruments EIAB Energy Industry Administration Bureau EF Electrification Fund EMS Environment Management Specialist ENR Environment and Natural Resources ENRAP Environmental and Natural Resources Accounting Project EO Executive Order EPIRA Electric Power Industry Reform Act ER Energy Regulation ERC Energy Regulatory Commission ERMP Environmental Resource Management Project ES Environmental Service DAO DENR Administrative Order DBM Department of Budget and Management DENR Department of Environment and Natural Resources DLF Development and Livelihood Fund DOE Department of Energy DOH Department of Health GEF Global Environmental Facility HEA Head Executive Assistant IACBGR Inter-Agency on the Collection of Biological and Genetic Resources ICC Indigenous Cultural Community IEC Information and Education Campaign IP Indigenous People IPAF Integrated Protected Area Fund IPAS Integrated Protected Areas IPP Independent Power Producer IRR Implementing Rules and Regulations KKP Kabang Kalikasan ng Pilipinas (World Wildlife Fund) LGC Local Government Code LGU Local Government Unit LK Lingap Kalikasan LLDA Laguna Lake Development Authority viii MCDP Marine Conservation Development Program MES Markets for Environment Services MFR Makiling Forest Reserve MKRNP Mt. Kitanglad Range Natural Park MMC Marine Management Committee MOA Memorandum of Agreement MS Master of Science MSFR Mangrove Swamp Forest Reserve NAPWNC Ninoy Aquino Parks and Wildlife Nature Center NCA Notice of Cash Allocation NCIP National Commission of Indigenous People NGO Non-Government Organization NIPA NGOs for Integrated Protected Area, Inc. NIPAS National Integrated Protected Areas System NP National Park NPA New People’s Army NPC National Power Corporation NWRB National Water Resources Board OIC Officer in Charge OGA Other Government Agencies OGF Old Growth Forest OVI Objectively Verifiable Indicators PA Protected Area PAMB Protected Area Management Board PAWB Protected Areas and Wildlife Bureau PCSD Philippine Council for Sustainable Development PCU Program Coordinating Unit PENRO Provincial Environment and Natural Resources