GETTING A GRIP… Contributing to the foundation and ensuring the future for a low-carbon, on Climate Change climate resilient society through the Philippine in the Philippines Climate Public Expenditure and Institutional Review EXECUTIVE REPORT 78809 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: feedback@worldbank.org 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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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Financing gaps for knowledge and capacity development may slow implementation progress 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 4. From Fragmented to Comprehensive Laws and Policies 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 Management DRRMA Disaster Risk Reduction Management Act DRRMF Disaster Risk Reduction Management Framework DRRMP Disaster Risk Reduction Management Plan DSWD Department of Social Welfare and Development EIA Environmental Impact Assessment EMB Environment Management Bureau ENSO El Niño/Southern Oscillation FMB Forest Management Bureau GAA General Appropriations Act GAS Government Accounting System GDP Gross Domestic Product GHG Greenhouse Gas 5 GII Geographic Information Infrastructure GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German Society for International Cooperation) HLURB Housing and Land Use Regulatory Board ICC Investment Coordinating Committee (of NEDA) IEC Information, Education, and Communication ILO International Labor Organization IRA Internal Revenue Allotment IRR Implementing Rules and Regulations IWMP Integrated Watershed Management Plan JICA Japan International Corporation Agency KRA Key Results Area LCCAP Local Climate Change Action Plan LDF Local Development Fund LDRRM Local Disaster Risk Reduction Management LDRRMC Local Disaster Risk Reduction and Management Council LDRRMF Local Disaster Risk Reduction and Management Fund LDRRMP Local Disaster Risk Reduction and Management Plan LEDS Low Emission Development Strategies LGC Local Government Code LGU Local Government Unit MDB Multilateral Development Bank MDGs Millennium Development Goals MDG-F Millennium Development Goal Fund M&E Monitoring and Evaluation MFO Major Final Output MGB Mines and Geo-science Bureau MMDA Metropolitan Manila Development Authority MOU Memorandum of Understanding MRV Measurable, Reportable, and Verifiable MtCO2e Metric Tons of Carbon Dioxide Equivalent MW Megawatt NAMA Nationally Appropriate Mitigation Action NAMRIA National Mapping & Resource Information Authority NCA Notice of Cash Allocation NCAA Non-Cash Availment Authority NCCAP National Climate Change Action Plan NCF National Calamity Fund NCR National Capital Region NDRRF National Disaster Risk Reduction Fund NDRRMC National Disaster Risk Reduction and Management Council NDRRMF National Disaster Risk Reduction and Management Act framework NDRRMP National Disaster Risk Reduction and Management Act action plan NEA National Electrification Administration NEDA National Economic Development Authority 6 NEEDS National Environmental, Economic and Development Study NEP National Expenditure Program NFPP National Framework for Physical Planning NFSCC National Framework Strategy on Climate Change NGAs National Government Agencies NGOs Non-Governmental Organizations NGP National Greening Program NHA National Housing Authority NIA National Irrigation Administration NLUC National Land Use Committee NAMA National Appropriated Mitigation Actions OPIF Organizational Performance Indicator Framework PAMP Protected Area Management Plan PAGASA Philippine Atmospheric, Geophysical and Astronomical Services Administration PAPs Programs, Activities, and Projects PCAARRD Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development PCIEERD Philippine Council for Industry, Energy and Emerging Technology Research and Development PCF Performance Challenge Fund PCHRD Philippine Council for Health Research and Development PCIC Philippines Crop Insurance Corporation PCIERD Philippine Council for Industry and Energy Research and Development PDAF Priority Development Assistance Fund PDF Philippine Development Forum PDP Philippines Development Plan PER Public Expenditure Review PFM Public Financial Management PhilRice Philippine Rice Research Institute Php Philippine peso PIP Public Investment Program PSF People’s Survival Fund PSFB People’s Survival Fund Board R&D Research and Development RWCSs Rain Water Collection Systems SAFDZ Strategic Agriculture and Fisheries Development Zone SEARCA Southeast Asian Regional Center for Graduate Study and Research in Agriculture SEER Sectoral Effectiveness and Efficiency Review SIADP Sustainable Integrated Area Development Plan SPF Special Purpose Fund UNDP United Nations Development Program UNFCCC United Nations Framework Convention on Climate Change VA Vulnerability Assessment WB World Bank (International Bank for Reconstruction and Development) ZBB Zero-Based Budgeting 7 ACKNOWLEDGEMENTS The report, Getting a Grip on Climate Change in the Philippines from the DILG, former Undersecretary Josefina Patricia Asirit, results from a Climate Public Expenditure and Institutional Director Carmencita Bariso, Director Mario Marasigan, and Di- Review conducted by the World Bank, the DBM, and the CCC. rector Jesus Tamang from the DOE, Treasurer of the Philippines This report benefited from extensive discussions with the Office and Undersecretary Rosalia De Leon, Assistant Secretary Maria of the Presidential Assistant on Climate Change, the DA, the Edita Tan, Director Stella Laureano and Officer-in-Charge of the DENR, the DOE, the DOF, the DOST (PAGASA, PCIEERD, Bilateral Assistance Division John Narag from the DOF, Assistant PCAARRD, PCHRD), the DPWH, the NEDA, the HLURB, Secretary Robert Dizon and Director Bernie Justimbaste from the Cabinet Cluster on Climate Change, the NDRRMC and the the DOST, Director Melvin Navarro and Director Aristeo Reyes City of Makati and the Province of Albay. from the DPWH, OIC-Director Sheila Marie M. Encabo, Direc- tor Mercedita Sombilla, Director Jonathan Uy, Deputy Director This report was written by a World Bank team co-led by Christo- General Emmanuel Esguerra, Deputy Director General Rolando phe Crepin, Practice Leader; and Josefo Tuyor, Senior Operations Tungpalan and Senior Economic Development Specialist Kath- Officer, under the supervision of Motoo Konishi, Country Direc- leen Capiroso from the NEDA, Acting Deputy Administrator tor for the Philippines; John Roome, Sector Director, Sustainable Flaviniana Hilario from PAGASA, and Presidential Adviser on Development, East Asia and the Pacific; Ousmane Dione, Sector Environmental Protection Secretary Nereus Acosta. Manager, Sustainable Development, Philippines; and Iain Shuker, Sector Manager, Environment, Social and Rural Development. We are appreciative of the support from the Provincial Govern- The team included Ruth Maturan Cruz, Ashraf El-Arini, Isao ment of Albay and their Governor Joey Salceda, as well as the Endo, Carolina V. Figueroa-Geron, Eduardo Gonzalez, Ching City Government of Makati and their Mayor Jun Binay, Senior Jorge, Dave Llorito, Ngozi Malife, Rosario Manasan, Sara Trab Advisor Attorney Violeta Seva, and her staff. Nielsen, Reinaluz Ona, Connie Pabalan, Kiran Pandey, Julie Paran, Nenette Santero, Maria Consuelo Sy, Catherine Vidar, We are thankful for the input made by Development Partners Sylke von Thadden, and George Wood. in the Philippines. We thank Neil Britton from ADB, Luc Le Cabellac from AFD, Anne Orquiza and Geoff King from AusAid, We acknowledge with gratitude Secretary Mary Ann Lucille Bernd-Markus Liss and Agnes Balota from GIZ, Megumi Muto Sering of the CCC and Secretary Florencio Abad of the DBM for from JICA, and Amelia Supetran from UNDP for their support. their guidance all throughout the process, and Undersecretary Laura Pascua and Director Rolando Toledo of the DBM and We also thank Mr. Melvin Purzuelo and Aksyon Klima, Mr. Assistant Secretary Joy Goco and Maria Ayn Jella Villanueva of Red Constantino and the Institute for Climate and Sustainable the CCC for their leadership and coordination role. We are grate- Cities, Ms. Leonor Briones and Social Watch Philippines, and the ful to Secretary Elisea Gozun from the Office of the President, Council of Asian Liberals and Democrats for their involvement in Secretary Proceso Alcala (DA), Secretary Ramon Paje (DENR), the course of the study and for their support. Secretary Manuel Roxas II (DILG), Secretary Jericho Petilla The report benefited greatly from its reviewers. We would like (DOE), Former Secretary Jose Rene Almendras (DOE), Secretary to thank Philippe Ambrosi, Milan Brahmbhatt, Jane Ebinger, Cesar Purisima (DOF), Secretary Mario Montejo (DOST), Sec- Adrian Fozzard, Kirk Hamilton, Motoky Hayakawa, Kai-Al- retary Rogelio Singson (DPWH), and Socio-Economic Planning exander Kaiser, Jolanta Kryspin-Watson, and Andrea Liverani. Secretary Arsenio Balisacan (NEDA). Valuable comments were provided by Laura Altinger, Christopher A special thanks to Commissioner Naderev Saño and Commis- C. Ancheta, Yolanda J. Azarcon, Victor Dato, Kathryn Hollifield, sioner Heherson Alvarez from the CCC, Undersecretary Mario Chiyo Kanda, Ajay Kumar, Tony La Viña, Lilanie Magdamo, Relampagos of the DBM, Assistant Secretary for Operations Luz Hans Shrader, Lawrence Tang, Alan Townsend, Rogier van den Cantor, Assistant Secretary Gil Montalbo, Director Ricalinda Brink, Felizardo Virtucio Jr., Samuel G. Wedderburn, and Mark Adriatico, Director Estrellita Bangsal, Director Soledad Doloiras, Woodward. Director Ruby Esteban and Director Teresita Salud from the A sincere thanks to the editing and design team from DBM, Undersecretary Segfredo Serrano, Director Agnes Miranda ICF International, led by Brad Hurley and Fatima Amon. and Director Silvino Tejada from the DA, Undersecretary of the DENR and Chief of Staff Analiza Teh, Director Neria Andin, Director Angelito Fontanilla, Director Eriberto Argete and Lilia Raflores from the DENR, Undersecretary Austere Panadero 8 FOREWORD Climate change affects all of us. The poor, however, are usually is moving to establish the policies, institutions, and financing more severely affected. needed to scale up and mainstream climate action across all sec- tors and levels of government. The same could be said of countries. The greatest challenge that poorer countries face today is that hard-earned development To assess gaps and accelerate implementation of the climate progress they have achieved in the last several decades could be agenda, the Department of Budget and Management and the reversed in a short time because of climate change. CCC sought advisory services from the World Bank to carry out a Climate Public Expenditure and Institutional Review (CPEIR). The Philippines is the third most vulnerable country to weath- The review, carried out between February 2012 and March 2013, er-related extreme events, earthquakes, and sea level rise. The sought to identify innovations in policy, institutions, and financ- country’s exposure to extreme weather conditions adversely affects ing of climate action, along with achievements, limitations, and people’s lives, especially those in high-risk urban and coastal disconnects in the current approaches to addressing climate issues areas. Food security is threatened as land and nursery areas for and policy. It identified process reforms that could deliver desired plants, trees, and fisheries are affected by climate change. The climate results more effectively and enhance the quality of the de- livelihoods of poor communities that rely on natural resources cision-making process. The analysis, based on the rich set of data are hampered and their lives and properties are further put at gathered by the team, provides a valuable basis for the Philippines risk. For the Philippines to reduce poverty, accelerate economic to develop a baseline for financing climate change. growth, and create jobs, it is therefore necessary to address the country’s vulnerabilities to climate change. This can be accom- The recommendations and action plan in this report complement plished by reducing the exposure and improving the adaptive and reinforce the multi-faceted public finance reform agenda that capacity of communities at risk. the Government is currently implementing (e.g., by increasing transparency and accountability in public climate financing, op- To effectively deal with climate change, the Philippine Govern- erationalizing the program approach, and bottom-up budgeting). ment enacted the Climate Change Act in 2009. This law estab- The operationalization of the People’s Survival Fund can also be a lished the Climate Change Commission (CCC) which is tasked catalyst—not only for putting in place systems for local climate fi- to coordinate and guide all policies related to climate change. The nancing, but also as a stepping stone to manage climate financing CCC was mandated to formulate the National Framework Strate- at the national level. gy on Climate Change and the National Climate Change Action Plan (NCCAP). As the Chairperson of the CCC, the President The report’s recommendations and action plan are offered at the mid- made climate change adaptation and mitigation one of five key point of the current Philippine Development Plan. They are intended results areas of his Social Contract with the Filipino people. The to provide timely, specific suggestions for strategies and actions that implementation of the NCCAP has begun, and the Government can be used to strengthen the Philippines’ framework for action on climate change, enhance accountability, and build capacity. It is our hope that the report will help spur all of us into action. Secretary Mary Ann Lucille Sering Secretary Florencio Abad Philippine Climate Change Commission Philippine Department of Budget and Management Motoo Konishi John Roome Country Director, East Asia and Pacific Sector Director, Sustainable Development The World Bank East Asia and Pacific, The World Bank 9 SYNOPSIS The Philippines already experiences and will continue to face impacts from climate change. In the decades ahead, the most serious consequences will be felt in coastal and urban areas. Severe hardships are expected in agriculture and fisheries, leading to negative impacts on jobs and the economy. With these risks in mind the Philippine Government has initiated significant climate reforms, establishing a basis for transformation. To assess gaps and accelerate implementation of the climate reform agenda, in 2012 the Department of Budget and Management and the Climate Change Commission sought advisory services from the World Bank to carry out a Climate Public Expenditure and Institutional Review (CPEIR). Carried out at mid-term of the first phase of the National Climate Change Action Plan, the Philippine Development Plan (2011–2016), and the current Administration, this review comes early enough to help guide the finalization and operationalization of the first phase of the climate reform agenda. This Executive Report summarizes the findings and recommendations of the CPEIR, including an analytical snapshot of the policies, institutions, and expenditures for undertaking climate action in the Philippines, and recommendations to contribute to a successful implementation of the Philippine climate reform agenda. The Extended Technical CPEIR Report, which provides more detailed background, analysis, and recommendations, is available online at www.worldbank.org/reference. Global climate change will continue to cause severe impacts By virtue of its location, climate, and topography, the Philippines to global, regional, and national economies and livelihoods, is exposed to a range of climate-related hazards such as typhoons, unless action is taken to build adaptive capacity of communi- floods, landslides, and droughts. Sixteen of its provinces are among ties, increase natural ecosystems’ resilience to climate change, the top 50 most vulnerable regions in Southeast Asia (Yusuf & and optimize mitigation opportunities toward sustainable Francisco 2010). Climate-related impacts are projected to increase development. Climate model projections show that even if in the coming decades, threatening in particular: Parties of the United Nations Framework Convention on Climate Change (UNFCCC) comply with the emission pledges made • Coastal Populations: In a 4°C world, sea-level rise around at the Conferences of the Parties in Cancun and Copenhagen, the East Asia and Pacific region is likely1 to exceed 50 cm global warming is set on a trajectory that is likely to exceed 3°C, above present levels2 by 2060, and 100 cm by 2090, with with a possible 4°C increase as early as 2060. This will cause a Manila being especially vulnerable (World Bank 2013). non-linear path of climate-related events, leading to a wide range Climate change is expected to lead to more intense typhoons, of impacts affecting global, regional, and national economies whose storm surges will be superimposed on higher sea levels. (World Bank 2013). Middle-income countries, which already In the Philippines, storm surges are projected to affect about struggle to meet sustainable development goals, will experience 14 percent of the total population and 42 percent of the additional challenges as climate change halts or reverses some of coastal population (Brecht et al 2012). their development gains and objectives. • Urban Populations: Informal settlements, which account for 45 percent of the Philippines’ urban population, are par- ticularly vulnerable to floods due to less secure infrastructure, Global climate change reduced access to clean water, and lack of health insurance (World Bank 2013). is taking its toll on the Philippines As the world’s third most vulnerable country to extreme weath- er events and sea level rise, the Philippines is already feeling the 1  Likely� is defined as >66 percent chance, using the modeling approaches adopted in “ this report. impacts of climate change (Alliance Development Works 2012). 2 1986–2005 levels. 10 • Agriculture: Climate-related impacts are expected to reduce agricultural productivity in the Philippines. The annual It is imperative to damage to agriculture from typhoons, droughts, and floods has already reached Php 12 billion, equivalent to 3 percent of fully implement climate total agricultural production (CCC 2011). A 30 cm sea-level reforms now rise by 2040 is projected to reduce rice production in the region’s major rice growing region—the Mekong River Del- Given the Philippines’ vulnerabilities, it is critical that the ta—by about 2.6 million tons per year, or about 11 percent country implements the measures needed to protect itself of 2011 paddy production (World Bank 2013). against ever-increasing climate change and variability. Through the Philippines Development Plan (PDP), the Philippines • Fisheries: Warming oceans and ocean acidification affect aims to accelerate annual economic growth to 7–8 percent. coral reefs, which serve as important feeding and spawning Unless it is planned and carried out with accommodation to grounds for many fish species that support the livelihoods of future climate change in mind, the development plan could be fisher folk (World Bank 2013). Even minor changes in ocean locked into infrastructure development, land use changes and dynamics can cause severe impacts. For example, during urbanization processes that are more vulnerable to climate risks. the 1998 to 1999 ENSO event, the live coral cover of the The process of developing institutions to implement climate re- Philippines decreased by half, diminishing fisheries yield by forms can be lengthy; the time to start acting is now. more than Php 7 billion (Center for Environmental Concerns Philippines 2011; Santos, Dickson, and Velasco 2011).The Since many climate change activities are good development projected changes in maximum catch potential in a 4°C policies, implementing the Government’s climate reform pro- world range from a 50 percent decrease around the southern gram contributes to broader development goals. For example, Philippines during the 2050s to a 6–16 percent increase reforms in the energy sector promoting renewable sources and around the northern Philippines (World Bank 2013). energy efficiency contribute directly to energy security and can lower energy costs, thereby also increasing competitiveness. In Non-climate factors—such as fast-growing environmental agriculture, adaptation activities that conserve water and improve deterioration, unsustainable development practices, and soil quality will enhance water resources management and help population growth and movement—aggravate climate vul- alleviate food insecurity. Similarly, significant opportunities exist nerability in the Philippines. For example, widespread mining to increase employment in the fields of agriculture, infrastructure, and deforestation in Mindanao were blamed for recent flash and energy. Labor-intensive activities, such as the development of floods, including those produced by Tropical Storm Sendong in small-scale sustainable and climate resilient farming activities or 2011, which cost the lives of about 1,000 people (Iqbal 2011). The retrofitting infrastructure for flood control, will build resilience neglect of drainage systems and the lack of long-term planning while increasing employment opportunities. and enforcement exacerbated the floods in 2012, which swamped nearly all of Manila (Macaraig 2012). While building resilience, the Philippines must also ensure A reformed policy that greenhouse gas emissions remain in check. Though a mi- nor global contributor to climate change globally, the Philippines’ and institutional greenhouse gas emissions rank in the top 25 percent of low and middle income countries, with significant increases projected in structure adds value the coming decades. Emissions from the energy sector are pro- The Philippine Government has engaged in a comprehensive jected to quadruple by 2030, and the transport sector is expected and strategic climate reform agenda focused on integrating to double its emissions. The underlying data for these projections climate change into national and local policy formulation need to be updated through the ongoing low-carbon studies and and development. Enacted in 2009, the Climate Change Act was through the next National Communication to the UNFCCC. passed to strengthen, integrate, consolidate, and institutionalize previous specific sector-based government initiatives. The Act called for the formulation of a National Framework Strategy on Climate Change (NFSCC), which defines the overall param- eters for developing a National Climate Change Action Plan (NCCAP). The NCCAP serves as the Government’s road map for climate action and the lead policy document guiding the climate agenda at all levels of government. 11 The Government’s climate change policy agenda emphasizes and disaster risk reduction and management. However, some a shift to adaptation, as well as convergence between climate immediate NCCAP outcomes are excluded from the PDP change adaptation and disaster risk reduction and manage- while others lack detailed articulation of supporting activi- ment. Prior to the passage of the Climate Change Act, climate ties. Since both plans are scheduled for updates in mid-2013, activities in the Philippines focused on mitigation. Now, six out of an opportunity exists for improved alignment. the seven NCCAP priority areas are directly related to adapta- tion. The new agenda also clearly reflects convergence on climate • NCCAP activities can be only partially linked to the Key change adaptation and disaster risk reduction and management Result Area-5 (KRA-5) programs, activities, and projects (DRRM), by mainstreaming DRRM and CCA in development (PAPs). This is in part because a range of the NCCAP processes. This is an important step toward focusing on preven- activities are not yet funded, and in part due to a different tion and protection instead of recovery and rehabilitation. classification system of climate PAPs used for KRA-5 and the NCCAP. PAPs have been classified under KRA 1-5 based on The climate change policy agenda is supported by the the primary objective and mandate of the Departments or establishment of centralized national institutions aimed at Agencies. As a result, preference has been given to attribute stronger coherence and coordination. Several new institutions the climate change related PAPs to other KRAs (e.g., poverty have been created or are at various stages of mobilization, includ- reduction or growth) instead of KRA-5. For instance, import- ing the Climate Change Commission (CCC), the Cabinet Cluster ant adaptation measures, such as flood control projects, were on Climate Change (CCCC), and the People’s Survival Fund tagged as KRA-3 as they were deemed intended for economic/ Board (PSFB). Through coordination with existing oversight agen- infrastructure development and thus are not captured under cies like the DBM and NEDA, the new institutions were placed at KRA-5. Ideally, climate PAPs under KRA-5 should be aligned the center to guide, coordinate, and monitor Departments at the to the NCCAP. In practice, the linkage between the NCCAP national level—and Local Government Units (LGUs) at the local and KRA-5 is not straightforward: some KRA-5 PAPs could level—with formulating and implementing climate action. be linked to the NCCAP activities while others are not cov- ered by the NCCAP. Likewise, not all NCCAP activities are The climate reform agenda builds a foundation for consistent included under the KRA-5. Some activities could be found reforms at all levels of government, but the Philippines has under other KRAs, and a range of them are not included at all much to lose if the Government fails to deliver on the reforms as their funding has not yet been mobilized. already begun. At the midpoint of its term, the current adminis- tration aims to finalize first-phase reforms focused on establishing • The NCCAP has not yet gained enough traction among readiness, and to start preparing for the second phase. While the the CCCC Department members, as a clear link with the country is moving in the right direction, effective implementation KRA-5 is not yet established. Departments’ performance is of the climate agenda is being hampered by a number of barriers measured and monitored against their Major Final Outputs and gaps. These must be addressed now to ensure successful im- using the Organizational Performance Indicator Framework plementation of the reforms underway. indicators,. In addition, following the introduction of the KRAs, the Departments were asked by the CCCC to prepare work programs for 2011–2016 that include funded climate Synergies between national/ PAPs and future funding needs. They were also asked by the DBM to annually identify PAPs that contribute to the sector/local policies are key KRAs. Ideally, the work programs should be used as a tool to support the implementation of the NCCAP and feed into The Government’s development plans are only partially the KRA-5. In practice, the work programs were not linked aligned with the NCCAP. Incorporating the NCCAP into to the NCCAP outcomes and activities and have also not national and local development planning processes is important to been used to identify climate PAPs for the KRA-5. Given ensure that national climate change goals and priorities are trans- these shortcomings, the Departments have focused primarily lated into actions and implemented. The NCCAP priorities are the- in recent years on identifying climate PAPs for the KRA-5 matic in nature, often cutting across the sector-based focus of the and have had no incentives to update their work programs to development plans. This hampers coordination and convergence of ensure a better NCCAP alignment and implementation. climate activities across Departments and between administrative levels, and renders monitoring of climate activities difficult. • The Climate Change Act requires LGUs to complete Local Climate Change Action Plans (LCCAPs). Such new • The NCCAP and the PDP are only partially aligned. Even requirements impose significant administrative burdens and though the PDP was launched as the NCCAP was still being pressure on LGUs, especially when clear guidelines are not developed, five chapters in the PDP include extensive discus- available on how to translate the NCCAP into LCCAPs. To sions on climate change, particularly in relation to adaptation 12 lighten this load, the CCC encouraged LGUs to incorporate services of the DENR and the CCC have often led to a duplication their LCCAPs into the CDPs and CLUPs and is working of secretariat services in the CCCC, and competing demands on toward developing supporting guidelines. the CCC staff have limited their ability to provide needed support to the Cabinet. Some steps are being taken to clarify these roles, Climate change adaptation and disaster risk reduction but more work is required to establish a better balance between management policies have converged at the policy level, in executive agency priorities and strategic, high-level goals. that both consider adaptation as a mechanism for addressing climate-related disaster risk. The linkages between adaptation The CCC is a national agency with limited local presence, and disaster risk reduction are recognized in the conceptual con- and lacks the capacity to engage with all LGUs. Several vergence of the Climate Change Act and the National Disaster entry points have proven useful for increased coordination with Risk Reduction Management (NDRRM) Acts. The NDDRM LGUs. For example, the CCC can take advantage of establishing Act led to a paradigmatic shift away from disaster response to relationships to expand coordination through NEDA’s board prevention. It revamped both the National and Local Calamity committees. The CCC’s relationship with the Housing and Land Funds, creating the National Disaster Risk Reduction and Use Regulatory Board can be used to assist with integration of Management Fund (NDRRMF) and the Local Disaster Risk adaptation in local development plans. Reduction and Management Fund (LDRRMF), from which 70 percent of appropriations should go to disaster prevention While new institutions are being mobilized to fill the existing activities and the remaining 30 percent to support the Quick institutional gaps in strategic climate financing oversight and Release Funds for relief and recovery programs. coordination, significant gaps remain. Operationalizing the PSF provides an opportunity to develop and strengthen climate financ- Though greenhouse gas emissions reduction activities are ing institutions and policies while also readying the Philippines being carried out, there is currently no common strategy to receive climate financing. This entails developing national and to direct the roles and responsibilities of institutions in local institutions that can meet fiduciary standards at the project financing low-carbon development and green growth. So far, and the portfolio levels and can effectively plan, prioritize, and activities have been carried out on a fragmented basis by different implement climate action. The primary focus of the PSF Board Departments and Agencies, and to some extent by the private is oversight and coordination of climate financing for adaptation sector. This piecemeal approach has made it difficult to prioritize at the local level. Institutional gaps remain at the sectoral and na- activities and maximize effectiveness. tional levels for overall climate financing coordination, including mobilization of additional resources and adoption of appropriate market- and non-market-based financing instruments. The Cli- Climate institutions mate Finance Group, which is currently an ad-hoc informal group, can play an important role in filling this gap to create the enabling need joint and consistent environment for climate financing readiness at the national level. strategic direction No clear organizational model exists to execute and deliver climate results across the various Departmental structures The broad scope and many responsibilities of the CCC hamper and needs. The organizational models to address climate issues its ability to streamline implementation of the NCCAP and vary across Departments; the DA and the DENR are the only operationalize some of its tasks. The CCC is solely responsible Departments with internal climate units. The organizational for a number of key functions, such as leading climate policy mak- structure of Departments is an important determinant of their ing and coordinating, monitoring and evaluating climate programs effectiveness in pursuing or prioritizing climate objectives. and action plans. Because of its wide array of responsibilities, the CCC has not been able to divert enough resources to advocate Coordination on disaster risk reduction and climate change effectively for immediate action on climate change. adaptation is difficult due to overlapping responsibilities and action plans. The LGUs are mandated to develop local disaster The CCC is jointly responsible for several tasks with other risk reduction management plans. The CCC and the NDRRMC agencies, yet its effectiveness is limited by a lack of clear or for- are required to work with each other on their engagement with malized roles and relationships. In particular, clarifying the rela- the LGUs, and the two Agencies have signed an MOU affirming tionship with the NEDA and DBM is essential to ensure effective their collaboration to harmonize and coordinate with each other coordination and integration of the climate change, poverty reduc- in supporting the LGUs, and to develop a joint work plan. How- tion and development agendas. Similarly, while the CCC provides ever, in practice there are no guidelines on how to operationalize secretarial services to the CCCC, it remains without much their agreement to coordinate. decision making powers, which have slowed the integration of the NCCAP at the highest level of government. The dual support 13 Lack of institutional capacity, of Public Works and Highways (DPWH), about 94 percent of the climate expenditures in Departments are financed from local knowledge generation sources. Most Departments are funded from the GAA, except for the Department of Energy (DOE), where a third of funding is and management, and from Special Accounts. monitoring and evaluation Externally funded sources have played an important catalytic role as well. The bulk of aid from development partners directed are key barriers to climate change supports flood control protection and is man- aged by DPWH, accounting on average for more than a third There is a great need for increased institutional capacity on of the Department’s total climate expenditures or for 80 percent climate change. Departments and Agencies that implement the of total development partner aid. Most other Departments have Government climate agenda require knowledgeable and skilled benefited by small-scale, innovative grant-funded climate projects staff. At the local level, the development of climate change plans that are often off budget. These have been instrumental in pilot- and activities imposes significant pressure on LGUs, which are ing initiatives and supporting investments to assist Government already burdened by other pressing development needs. In some in developing climate action at the national and local levels. Giv- cases local progress is hampered by lack of technical capacity, such en the range and different levels of development partner support as guidelines and simplified tools that can be used to transform of the Government’s climate reform agenda across several sectors, national policies to local policies. the management, coordination, and mobilization of aid has been Knowledge generation and management are needed to com- a challenge. plement capacity building. Insufficient access to information Climate budget appropriations have increased significantly, and knowledge has been a persistent issue across Departments and reflecting a heightened concern for climate change. Between at the local level. Some information is available through Govern- 2008 and 2012, climate appropriations increased by two and a ment agencies, but systems could be enhanced significantly. half times in real terms, from Php 12 billion to Php 35 billion, Monitoring and reporting on NCCAP implementation now accounting for 1.9 percent of the national budget. Over the progress has been challenging. The CCC has been assigned the period, climate appropriations have grown, by 26 percent annual- responsibility of consolidated monitoring of progress on NCCAP ly on average in real terms, outpacing the growth of the national implementation. However, there is no guidance on how progress budget (around 6 percent). This is mirrored by faster growth of is to be monitored. A lack of agreed-upon indicators and targets climate appropriations in absolute and relative terms across De- has hindered the process of monitoring the integration of the NC- partments in comparison to their total appropriations. CAP across development plans at different levels of government The upward trend in climate appropriations is due to in- and across Departments, which impedes an evaluation of results creased allocations to a few major PAPs, concentrated within across climate PAPs. The Government has introduced a unified a few Departments and Agencies. The distribution of climate-re- and integrated Results-Based Performance Management System lated public resources reflects the Government’s commitment across all Departments and Agencies within the Executive Branch to prioritize major investments for flood control protection to address existing shortcoming, with expected improvements in (DPWH) in the face of more severe periodic flooding events and reporting and auditing systems. the upscaling of the National Greening Program managed by DENR in recent years. Other increases in budgetary allocations Government financing can be attributed to DOE’s funding of the Electric Vehicle Project in 2013 and DA’s appropriations in favor of a major climate PAP of climate action has managed by the Philippine Rice Research Institute and a variety of smaller PAPs supporting the promotion of organic agriculture. increased, with a priority The trends in climate appropriations are reflected across the for a few large-scale PAPs NCCAP priority areas, though most increases allocated to the NCCAP priority areas primarily supported activities related to Sources of financing for climate change activities stem pri- Water Sufficiency, followed by Ecosystem and Environmental marily from domestic sources through the General Appropri- Stability and Food Security. Funding for all of the NCCAP pri- ations Act (GAA), Special Purpose Funds (SPFs), and Special orities has been steadily rising in the past five years, with the largest Accounts in General Funds. Domestic resources have funded on growth deriving from investments to the NCCAP priority on Water average 82 percent of climate expenditures in the Departments Sufficiency, from about Php 6 billion to nearly Php 20 billion. assessed between 2008 and 2011. Other than the Department 14 Financing gaps show a LGUs are action-oriented, but mixed picture of the sources of funding available funding adequacy of are fragmented and their selected climate PAPs available amounts are limited A preliminary assessment of climate financing gaps indicates LGUs most vulnerable to the impacts of climate change have that several large climate activities identified in the PIP the greatest need for public support, yet have the least capacity are either underfunded or not funded in the 2013 budget. to provide support under current revenue-sharing arrange- An assessment of four selected sectors (agriculture and fishery, ments. The provinces and municipalities at greatest risk of being water, environment and natural resources, and energy) in the affected by climate hazards are on average poorer, with lower total PIP against the GAA revealed that appropriations for several income per capita. In the aggregate, about 70 percent of LGU PAPs were not mobilized in the 2013 budget. In the agriculture income is derived from the Internal Revenue Allotment (IRA), a and fishery sector, significant funding was pledged in the PIP for direct transfer of resources from the national government accounts the development and implementation of the National Farmers to LGUs. The amount of the transfer to each LGU depends on its Registry System and Inventory System of Agriculture and Fishery area and population and not on the level of its vulnerability. The Investments, but the respective appropriations were not secured. poorer LGUs rely on the IRA for nearly 90 percent of their income. Similarly, in the energy sector, two major PAPs with mitigation co-benefits (Renewable Energy Project and Ocean-Thermal Ener- Assessing local climate expenditures is challenging, as fund- gy Conservation Project) included in the PIP for 2012 and 2013 ing is highly fragmented due to different funding sources. were not funded in the 2013 GAA. For the environment and Sources of funding for Climate PAPs at the local level have differ- natural resource sector, the Clonal Nursery project was delayed ent sets of rules and processes, eligibility criteria, and cost-sharing by a year and falls short by Php 400 million in the 2013 GAA requirements, making it difficult for LGUs to plan, mobilize compared with the respective commitments in the PIP. resources, and monitor and report on results. Many smaller activities, including capacity development, were Climate PAPs often compete against the many other develop- also underfunded or not funded in 2013. From an NCCAP pri- ment priorities of LGUs. The Local Government Code provides ority area perspective, capacity development, which is included in that the LDF can only be used to finance projects that are explicitly the various NCCAP priorities as well as the overall NCCAP prior- identified in the Local Development Plans (CDP and CLUP). Most ity to fund knowledge and capacity development, remains under- LGUs are already challenged by other development needs, such as funded. This needs to be monitored, considering the significant ca- high poverty levels and environmental deterioration, which may pacity development needs of the Departments and Agencies. Some sometimes take priority. This highlights the need to mainstream evidence suggests that small-scale activities for ecosystem stability climate change in local development planning. services might lack funding or might not be sufficiently funded. Climate appropriations For instance, capacity building, training, or the mainstreaming of CCA in planning tools to be conducted at a pilot basis have not yet been scaled up. The assessment of the water sector showed that funding for water harvesting technologies or the profiling of water- are adaptation-focused, sheds and river basins is small and was not funded in 2013. In the case of the agriculture and fishery sector, significant opportunities but mitigation funding to scale up include research on climate-resilient crop varieties, is rising faster water conservation, establishment of field schools, and the set-up of a climate database that informs technical and planning units on Nearly three-fourths of climate budget appropriations since location-specific climate risks at the DA. 2008 have been directed toward adaptation interventions, though the share of appropriations directed toward mitigation has grown faster on average. From 2008–2013, nearly 72 percent of climate appropriations have been directed to PAPs that provided adaptation benefits while about 18 percent have been directed to PAPs with mitigation benefits; the remaining 10 percent financed PAPs that support both mitigation and adaptation. Appropriations for mitigation PAPs have grown at an average annual rate of 46 percent, more than three times as fast as adaptation PAPs, which grew at an average annual rate of 15 percent. As a result, the share 15 of appropriations directed to adaptation has dropped to 64 percent have been increasing efforts by the Government to integrate adap- in 2013 (from 76 percent in 2008), while the share of appropria- tation- and mitigation-related issues into planning tools at national tions for PAPs with mitigation benefits rose to 30 percent. and subnational levels. However, challenges remain to ensure that climate actions are prepared and prioritized in budget planning. Despite increased appropriations to the national Calamity Fund in recent years, most of the resources continue to be Screening guidelines can facilitate the inclusion of climate directed to response, recovery, and rehabilitation efforts action in budget planning at national and subnational levels. instead of disaster prevention. Through 2013, the GAA has not While the recently developed screening guidelines will focus included any appropriations for the NDRRMF. Instead, appropri- primarily on tagging climate PAPs, the tool cannot yet be used for ations have continued for post-disaster relief, recovery, and recon- prioritizing PAPs. Most Departments and LGUs do not yet appear struction through the Calamity Fund. The Calamity Fund can to be making use of internal policies, budget calls, directives, or support disaster prevention activities, but has rarely done so over memorandums to promote the identification and prioritization of the past years. According to the DBM, disaster prevention should climate activities in the budget or to integrate climate risk consid- be funded as part of the regular budgets of the Departments, but erations in infrastructure vulnerable to weather extremes. the Department have yet to develop systems to incentivize climate change adaptation and disaster prevention actions. The adoption of new budgeting tools and processes through the Government’s PFM reforms offers unique opportunities to en- hance climate planning and prioritization. The Program Approach Complex tools make promotes convergence and greater coordination of the Department’s climate activities. The effectiveness of this approach will depend on planning and prioritization the Government’s ability to address some problems such as the clarity of tasks and responsibilities; the coordination between the DBM, challenging CCC, and the eight involved Departments; and the uneven technical capacity of staff. The Bottom-up Budget (BUB) was developed to The planning and prioritization process in Departments could respond to the development needs of poor municipalities and the be strengthened by the use of improved decision-making sup- Government’s poverty reduction goals, and it offers an opportuni- port tools on climate change activities. For example, vulnera- ty for local communities to mobilize funding for climate-related bility assessment (VA) tools provide useful information to support activities. Potential challenges could arise regarding the selection of prioritization of adaptation actions at the local level. However, they activities and the capacity of the municipalities to implement them. are often too technical and complex for use by LGUs and need A closer look at the DA and the DENR showed that both face many to be better integrated into disaster risk tools, which are focused reporting requirements and limited capacity to use reported data for primarily on current risks. Environmental impact assessments, strategic planning purposes. The introduction of a new Unified Ac- which are used for large PAPs, are completed downstream of the count Code Structure and Results-Based Management Performance decision-making process and often do not provide information System are expected to enhance reporting of mid-year expenditures early enough to influence project design. In contrast, the climate and evaluations, but this is expected to materialize in the medium screening tool being developed by the DENR provides upfront term. The recently introduced Zero-Based Budget approach offers an assessment of PAPs to guide project manager decisions, but the tool opportunity to evaluate the implementation of major climate PAPs, is not yet widely used. While decision tools are not used systemati- though this needs to be pursued more consistently. cally to assess and integrate the development co-benefits of climate action and to prioritize such action, standardizing their use could provide additional public support for them. The Way Forward The recommendations of the review aim to consolidate the Innovative tools and strategic direction of the NCCAP and set the stage for scaling processes introduced up climate action over the remaining two phases of the NCCAP. The goals for the remainder of the Administration’s through the PFM reforms term should be to: enhance budget planning i. Ensure that the enabling environment is firmly in place by completing and implementing the remaining pieces of the and prioritization core climate change reforms; ii. Formulate, enact, and support complementary sector and Inconsistencies of climate priorities across national plans, sector local-level policy and institutional reforms; strategies, and local development plans hamper the main- streaming of climate PAPs in the budget. In recent years, there 16 iii. Enhance planning, prioritization, design, and reporting of Approach); sector policy reform; and improved design and climate programs, activities, and projects to improve their execution of PAPs (e.g., establishing clear objectives and targets, effectiveness; and improved management of risks and uncertainty, increased iv. Through the above reforms, increase efficiency of resource convergence, and increased recognition of co-benefits). The use and provide support for higher levels of financing. policy convergence on CCA and DRRM needs to be reflected in implementation strategies, institutional arrangements, and These recommendations, together with the Strategic Action financing by simplifying and integrating the vulnerability and Plan, are anchored to the Government’s climate reform disaster risk assessment tools so that they focus on short- to agenda through a framework that includes three pillars: (1) long-term climate risk management; developing common indi- Strengthening the Planning, Execution, and Financing Frame- cators for monitoring progress; and standardizing reporting on work for Climate Change; (2) Enhancing Accountability through climate-related disaster activities. In addition, at the local level, Monitoring, Evaluation, and Review of Climate Change Policies climate change needs to be systematically incorporated into and Activities; and (3) Building Capacity and Managing Change. CLUPS and CDPs as well as Annual Investment Plans, with Each of these pillars includes a set of objectives (eight in total) and strengthened guidance from CCC. Similarly, the formulation of underlying activities, as described below. a national low-emission strategy, together with the development of monitoring, reporting, and verification systems; systems for Pillar 1: Strengthening the Planning, Execution, collecting data; setting baselines; and establishing regulatory and Financing Framework for Climate Change institutions is essential for optimizing mitigation opportunities. The three objectives under this pillar aim to address a major weak- • The third objective under this pillar aims to rationalize ness in the present policy and budget institutional framework: the and harmonize climate financing instruments. This entails lack of a mechanism that unifies all climate change activities. establishing strategic and complementary rules and eligibility criteria for climate change financing at the local level across • The first objective under this pillar aims to strengthen the different sources of financing (e.g., PSF, LDRRMF, and the budget planning and execution framework to better LDF) toward improving targeting, reducing fragmentation, manage climate PAPs. This entails integrating climate change and increasing transparency and effectiveness of these financ- into the budget planning process, such as budget calls and ing instruments. The PSF Board could lead such an effort MTEF; making systematic use of management tools, such as through the examples it sets in operationalizing the PSF and climate screening guidelines to identify and tag climate PAPs; through the convening power resulting from its size and in- more effectively utilizing new opportunities created by PFM stitutional visibility. Gaps need to be filled in the institution- reforms, such as the Program Approach; and developing and al arrangement for mobilizing additional resources to support adopting new tools for prioritization of climate activities in the mitigation and adaptation action at the national and sectoral budget planning process. The CCC and the DBM developed levels, and in the development and adoption of market-based climate-screening guidelines to tag PAPs aimed at climate ad- instruments. While the DOF has a powerful infrastructure aptation and mitigation. The guidelines should be updated and to help mobilize and coordinate domestic and international implemented on a regular basis going forward, based on clearly resources, including for leveraging private sector resources, defined processes. Additional activities include comprehen- these need to be coordinated with CCC, NEDA, and DBM. sive and harmonized mainstreaming of climate priorities and Development Partner support for the Government’s climate activities in national and sector plans, strategies, and budgets, reform agenda could be strengthened through greater coor- and the monitoring of ongoing reform efforts that aim to dination and use of the programmatic approach orchestrated strengthen the reporting and evaluation of expenditures. through the Philippine Development Forum. • The second objective under this pillar would align plans and strengthen implementation to achieve climate change Pillar 2: Enhancing Leadership and Accountability goals. This entails establishing a shared climate program by through Monitoring, Evaluation, and Review of aligning NCCAP priorities with national plans and policies (the Climate Change Policies and Activities PDP, PIP, KRA-5) as well as Department work programs and The second pillar aims to strengthen leadership and accountability local plans. It also involves the development of a results-oriented across the CCC, oversight Agencies, and Departments. Clearly operational business plan—including indicators and targets, defined institutional roles and responsibilities are essential for and reflecting the shared program—for subsequent phases of fostering leadership that effectively facilitates the translation of NCCAP. While planned updates to the PDP and the NCCAP policies into actions and results. In this context, good use can be in 2013 provide opportunities to align these plans, there is still made of effective champions of climate change policy and practice. a need to define what should be included in the KRA-5 classi- fication. The Department work programs can be strengthened • The first objective under this pillar is to enhance the CCC’s to include NCCAP priorities in three areas: work program leadership role in monitoring and communicating climate convergence across Departments (e.g., through the Program change performance by strengthening the annual CCC 17 review of climate change implementation. The CCC’s Pillar 3: Building Capacity and Managing Change monitoring and reporting of NCCAP implementation could The third pillar is focused on ensuring that the CCC, Oversight be improved in three areas: First, the annual implementation Agencies, Departments, LGUs, and the public are informed and progress report needs to include desired goals of the coming have the capacity to undertake climate action proactively. year, assess the achievements relative to the goals for the prior year, summarize key issues leading to performance shortfalls, • The first objective under this pillar is focused on building and recommend actions to overcome them. Second, the CCA/ staff skills through training, incentivizing knowledge DRRM agenda remains uncoordinated but could be improved generation and sharing, and facilitating access to knowl- if the CCC consolidated its reporting of all climate-related di- edge to overcome the significant capacity gap in Over- saster prevention to provide a comprehensive picture. Third, the sight Agencies, Departments, and LGUs. Staff training to CCC needs to establish a system to review LCCAPs and their raise capacities would speed implementation of the climate integration into local development plans, as well as to generate reform agenda. Government agencies, in consultation with lessons learned that can be used to improve local planning. the CCC, should develop staff training programs in climate • The second objective under this pillar aims to strengthen change technology and administration, and adapt business coordination between the CCC and Oversight Agencies processes to incorporate these skills. Staff training needs to and Departments by convening a Champions’ Group; be complemented with efforts to incentivize knowledge gen- operationalizing the terms of reference for the CCC Advi- eration and facilitate knowledge sharing. Programs, activities, sory Board members; and strengthening coordination be- and projects under implementation can provide powerful tween the CCC, national and local DRRM councils, and lessons and data to all areas of government that are involved the PSF Board. A key step in facilitating greater coordina- in climate activities. Incentives should be provided to help tion between the Agencies (CCC, NEDA, DBM and DOF) staff extract lessons, categorize and organize information, and responsible for overseeing implementation of the most critical synthesize lessons learned to improve dissemination. Internal policy instruments affecting climate change is convening a knowledge can be complemented with other sources of Champions’ Group consisting of these Agencies to lead by knowledge, such as through a virtual network of practitioners example. The Champions would work together based on a or through the establishment of Centers of Excellence. Both terms of reference that includes clear enforceable targets, roles internal and external knowledge need to be updated regularly and responsibilities, and accountabilities that could establish in information portals or knowledge repositories, and staff the norms for climate change governance. Areas where the accessibility improved to enable informed decision making. relationship between the NEDA and the CCC could be clari- • The second objective under this pillar is to raise public fied include (a) setting entry points for updating the PDP and awareness on climate change and strengthen support for the NCCAP to ensure consistency, and (b) establishing re- the climate reform agenda. The majority of Filipino people view criteria for the PSF consistent with updated ICC review are already knowledgeable about climate change, and are per- criteria that reflect climate considerations. With respect to sonally taking actions to address climate change risks or reduce the CCC and the DBM, areas for coordination include up- emissions. Raising public awareness through a targeted infor- dates of the climate screening guidelines and integrating the mation, education, and communication campaign can increase CCC inputs into the budget process. Similarly, in relation to the adaptive capacity of the most vulnerable populations. Civil the DOF, the role of the CCC in identifying financing needs Society Organizations (CSOs) serve a particularly important and the role of the DOF in mobilizing financing need to be role in ensuring implementation of the climate change agenda clarified. The CCC also needs to strengthen coordination by raising awareness of the issue, building trust in commu- with national and local DRRM Councils and the PSF Board. nities, and exerting pressure for increased transparency. This • The third objective under this pillar is to strengthen moni- helps garner the necessary popular support for climate change toring in the Departments and the LGUs. The development programs and the current reform agenda. The quality of CSO of a consistent set of climate performance indicators, supported participation can be strengthened by providing easy access to by measurable targets to monitor progress, will further enable ac- knowledge repositories and information portals. tivities across the government to be clearly focused and aligned. The CCC could support the Departments to develop such indicators and support their inclusion in the currently developed RBPMS in consultation with DBM, which is leading the inte- gration effort on the various monitoring and accounting systems. At the local level, climate activities could be reported by the LGUs in their Annual State of the Local Governance Report. 18 I. INTRODUCTION Climate change is occurring now and will intensify in the well as global, regional, and local economies. The Philippines is next few decades, threatening in particular developing na- already experiencing temperature increases; sea-level rise; stronger tions, with the Philippines being one of the most storms, floods and droughts; and ocean acidification, all of which vulnerable countries in the world. The global mean will intensify and affect subsistence livelihoods as well as urban temperature and sea levels have increased gradually since and coastal areas. These impacts will put pressure on jobs and the pre-industrial times, with the largest changes occurring in the economy, increasing the social vulnerability of poor communities. past few decades. The frequency of heavy precipitation events Models project that global average temperatures may very likely has increased over most land areas, along with more intense and increase by as much as 4°C within this century, which will lead longer droughts, leading to severe impacts on human lives as to non-linear and unpredictable weather patterns. While it may 19 be technically possible to hold warming below 2°C, doing so will institutions aim to integrate and coordinate climate change at all require a commitment by all governments to set their countries levels of government—national, regional, and local—to improve on a low-carbon, green-growth development path. Yet, even a 2°C financing, prioritization, and planning. The Philippines has made increase will require significant action to build resilience against considerable progress in implementing the reforms, but important climate impacts. elements are still missing. Climate-related impacts will put additional pressure on de- To assess gaps and accelerate implementation of the climate velopment, and may halt and in some cases reverse gains from agenda, the Department of Budget and Management and the development activities. The Philippines’ ambitious development Climate Change Commission sought advisory services from goals are at risk unless significant measures are taken to increase the World Bank to carry out a Climate Public Expenditure climate resilience. Many development activities implemented and Institutional Review (CPEIR). The review is being carried in the past few decades may not have taken climate change into out at the mid-term of the current administration, which coin- consideration. For example, water management and agricultural cides with the mid-term of the first six-year phase of the National activities designed only with past or current climate conditions Climate Change Action Plan (NCCAP) as well as the Philippine in mind may fail to meet food security and water supply goals in Development Plan. It has occurred early enough to provide the event of increased droughts. Some coastal infrastructure and recommendations for finalizing the first phase of the NCCAP, settlements may not have taken into account the threats from and creates a firm baseline of results for the second phase of the sea-level rise, and efforts to protect coral reefs from pollution may NCCAP. It offers specific recommendations to make the reforms be hampered by the effects of ocean acidification. more effective; to facilitate and develop a coherent, transparent, and effective system for mobilizing and utilizing climate financ- Climate change and development are interconnected and ing; and to better align policies, institutions, and public spending should be addressed symbiotically; most activities to address with the country’s climate change agenda. The CPEIR builds on climate change also advance the development agenda. Re- methods used in traditional and environmental public expendi- sponding to the risks from climate change creates opportunities ture reviews to identify: that benefit the Philippine economy and society. Many of the measures that could be taken to adapt to climate impacts are i. Innovations in policy, institutions, and financing also good development practices, increasing the resilience of of climate action; communities and vulnerable populations to current weather–re- ii. Achievements, limitations, and disconnects in the current lated disasters and bringing significant benefits to agriculture and approaches to addressing climate issues; and urban and coastal areas. Similarly, the prospect of growth in the transport and energy sectors could create opportunities for the iii. Policy and process reforms to more effectively deliver development of renewable energy and the implementation of ener- desired climate results and enhance quality of the gy-efficient technologies, which can increase energy independence decision-making process. and reduce costs. The CPEIR, carried out from February 2012 to March 2013, Recognizing the challenges posed and opportunities created is a qualitative and quantitative examination of factors that by climate change, the Philippine Government has put for- determine the ability of public institutions, policies, process- ward a comprehensive and strategic climate reform agenda. es, and financing to translate the climate agenda into desired Carried out through three six-year phases from 2011–2028, the results. The CPEIR uses a policy-based approach to identifying climate change agenda focuses on transforming the climate poli- climate expenditures, focusing on budget and institutional prac- cies and the institutions that support it to better plan, prioritize, tices of five government Departments and their attached Agencies execute, monitor, and report on climate change expenditures as well as two local government units. It is used to identify ways and activities, thereby achieving sustained goals. The first phase to increase the efficiency and effectiveness of implementation, and focuses on creating an enabling environment and readiness, with helps guide longer-term Government-led stakeholder dialogues climate change recognized as one of five key results areas in the on climate change. It offers a rich set of findings and analysis to Government social contract. Through the Climate Change Act, inform the climate change dialogue in the Philippines, and should the country has enacted a set of climate-specific laws comple- be useful for carrying out similar exercises in other countries. mented by the creation of climate-specific institutions. These 20 This publication is an Executive Report of the CPEIR, This Executive Report provides a detailed overview of the excerpted from the CPEIR Extended Technical Report, key elements from the Extended Technical Report. It offers which consists of six parts: decision makers (as well as stakeholders not directly involved in the review) with a summary of the key analytical findings, lessons i. Part I: Analyzing the physical science and underlying learned, and recommendations. It begins with a synopsis of the socioeconomic basis of the challenges and opportunities overall report, followed by background on the climate science and posed by climate change to the Philippines. its development impacts, and a review of the current policy and ii. Part II: Reviewing the national, sectoral, and local policy institutional system to address climate change in the Philippines. environment relevant to the climate agenda, and the insti- It then offers an analytical assessment of the main findings and tutions that support these policies, for effective and efficient major barriers in the policy and institutional systems, identi- implementation of the policy and financial agenda. fying areas where action is needed to ensure full and effective implementation of the climate agenda. This assessment includes a iii. Part III: Providing a snapshot of the country’s public public expenditure review of climate financing in the Philippines, expenditure on climate change, including the strategic and an assessment of the public finance management. The key allocation of resources to the country’s climate agenda and recommendations, which correspond to a strategic action plan, priorities at the national, Departmental, and local levels. are summarized in Annex A of this report. This plan is established iv. Part IV: Providing a set of recommendations for the to guide the Government in the development of a work plan for development of an action plan. the next three years. Finally, the framework of analysis used in the v. Part V: Annexes providing a summary of the key findings; CPEIR is summarized in Annex B. the methodology; the framework of the three-year work plan. vi. Part VI: A collection of data used, and a list of programs, activities, and projects as a separate addendum. The Extended Technical Report is available online at www.worldbank.org/reference. 21 II. SIGNIFICANCE of the Review Global climate change to adapt to the impacts of a changing climate (Figure 1). For most of the past 650,000 years, carbon dioxide in the atmosphere is taking its toll on the has remained at or below 300 parts per million, yet current levels are above 400 parts per million. Primarily as a result of rising Philippines concentrations of greenhouse gases in the atmosphere, the global mean temperature has increased by 0.8°C above pre-industrial Climate scientists concur that global climate change is levels. Most warming has occurred since 1970, with the rate of happening and will gain strength in the coming decades, warming in the past decade being nearly double that of the past requiring immediate action to prevent further warming and century. All 12 years to date in the 21st century (2001–2012) 22 rank among the 14 warmest danao), landslides (based on terrain), and droughts, making the Climate change is in the past 133 years. Philippines more vulnerable to climate risks than other Southeast already underway Temperature increases of Asian countries (Figure 2). Sixteen provinces in the Philippines are 1.8–2.2°C are virtually cer- among the 50 most vulnerable regions in Southeast Asia (Yusuf & and further warming tain both globally and local- Francisco 2010).4 The southern Philippine islands are projected to is virtually certain— ly during the 21st century. see the strongest increase in frequency and intensity of extremes, even if emissions Even if Parties of the United with all summer months experiencing unprecedented heat extremes are reduced. Nations Framework Con- (World Bank 2013). By the end of this century, tropical cyclones vention on Climate Change are expected to intensify, with a projected increase in the average (UNFCCC) comply with instantaneous maximum wind velocity at the Philippine coast. the emission pledges made at the Conference of the Parties in Cancun and Copenhagen, warming is set on a trajectory that may The Philippines is increasingly exposed to likely exceed 3°C, with a possible 4°C increase as early as 2060, causing a non-linear path of unforeseen climate events affecting climatic hazards of climate change, from global, regional, and national economies (World Bank 2012a). gradual changes such as sea level rise, coral bleaching, and salinity intrusion to extreme Figure 1. Scientific Agreement on Temperature Changes Source: NASA Earth Observatory events such as typhoons, floods, and droughts. .5 NASA Goddard Institute for Space Studies Average Temperature Anomoly (°C) Met O ce Hadley Centre/Climatic Research Unit .25 NOAA National Climatic Data Center Figure 2. Climate Change Vulnerability Map Japanese Meteorological Agency Source : Yusuf & Francisco 2010 0 -0.25 -0.50 -0.75 1880 1900 1920 1940 1960 1980 2000 Gradual changes in global temperature patterns have already led to and will continue to result in severe impacts worldwide. Since 1950, oceans have warmed by 0.09°C. While this may seem like a minor change, it takes very little to cause severe disturbances in ecosystems. Warming oceans, along with ocean acidification, already impact coral reefs worldwide, which serve as important feeding and spawning grounds for many fish species that support the livelihoods of fisher folk. Extreme climate-related events have increased worldwide, with a greater frequency of prolonged droughts, intense rains and flooding, and intensifying and more A. Southeast Asia (above), B. Philippines (below) deadly storms. In the coming years, all nations will be affected by climate change, which already causes detrimental impacts to global, regional, and local economies (World Bank 2013). The bur- den on developing countries is expected to be the greatest, as they contain large poor populations, often living in densely populated areas, whose livelihoods are at severe risk. As the third most vulnerable country in the world to weath- er-related extreme events, earthquakes, and sea level rise3 (Alliance Development Works 2012), the Philippines is already feeling the consequences of climate change (World Bank 2013). Absent of land barriers, the Philippines is exposed directly to multiple climate-related hazards such as typhoons (in the northern and eastern parts), floods (in central Luzon and southern Min- 3 Th  is ranking is based on the 2012 WorldRiskIndex, which was developed by the United Nations Institute for Environment (UNU-EHS) in cooperation with the Alliance Devel- 4  usuf & Francisco (2010) derive their vulnerability index for each sub-national area by Y opment Works. The WorldRiskIndex assesses a country’s disaster risk by combining four factoring in its exposure to bioclimate-related hazards, human and ecological sensitivity components: exposure to natural hazards (i.e., earthquakes, storms, floods, droughts and to exposure (through population density and biodiversity information as proxies, respec- sea level rise), susceptibility, coping capacity, and adaptive capacity. tively), and adaptive capacity. 23 Sea-level rise within this century will affect a larger percentage Climate-related impacts will reduce cultivatable land, which of the Philippine coastline compared with that of other de- will decrease agricultural productivity and increase food veloping countries in the region. By the end of this century, sea insecurity. Because of unpredictable climate patterns (e.g., high levels in the region are expected to rise by about 125 centimeters, temperature and periodic rains and drizzles) and extreme weather exceeding the global average by 10–15 percent (World Bank 2013). events, the country’s agricultural productivity is projected to con- Even assuming the sea level in the region rises at the global average tinue to decline (CCC 2011; DENR 2009; PAGASA 2011). The rate of about 100 cm, about 14 percent of the Philippines’ total annual damage to agriculture from typhoons, droughts, and floods population and 42 percent of its total coastal population will be has already reached Php 12 affected by intensifying storm surges resulting from more intense billion, constituting 3 percent typhoons (Brecht et al. 2012). In the Philippines, the impacts of Climate change of total agricultural production storm surges associated with sea level rise and more intense storms will have significant (CCC 2011). Global warming are particularly significant in terms of the percentage of affected impacts on the is likely to further reduce rice coastal land area, population, and gross domestic product (GDP) economy, and yield by up to 75 percent in the (Dasgupta et al. 2009). From 1990 to 2006, the country experi- Philippines by 2100 compared in particular the enced record weather-related disasters, including the strongest ty- with 1990 (Asian Development phoon, the most destructive typhoons, the deadliest storm, and the livelihoods of the Bank [ADB] 2009). According typhoon with the highest 24-hour rainfall on record (NDRRMC). poor in high-risk to Balisacan, Skoufias, and These events are projected to continue to intensify, requiring urban and coastal Piza (2012), negative rainfall the Philippines to improve its climate resilience and develop its shocks, defined as less-than- areas. adaptive capacity to alleviate the risk of catastrophic economic and usual precipitation, reduce humanitarian impacts. rural household consumption. The impact of the negative shocks varies according to regions, The urban poor in informal settlements are one of the most and the most affected regions include Ilocos and Western Visayas vulnerable groups to climate-related impacts, due in part to Islands. In these regions, a negative shock decreases household the additional pressures on urban systems and livelihoods cre- consumption by 9 percent. Households with less access to the ated by rapidly increasing population growth. Four Philippine highway and the market suffer greater impact of negative rainfall cities (San Jose, Manila, Roxas, and Cotaboato) are among the shocks than those with more access. top 10 most vulnerable cities in the East Asia and Pacific region to sea level rise and intensified storm surges (Dasgupta et al. 2009). Fisheries in particular will suffer as a result of loss or degra- The urban population is growing faster in the Philippines than in dation of ecosystem services, which are projected to accelerate similar Southeast Asian countries such as Indonesia, Thailand, and as a consequence of growing species extinctions, declining Vietnam. The urban poor in informal settlements account for 45 species abundance, or widespread shifts in species and biome percent of the total Philippines’ urban population, and are partic- distributions (World Bank 2012a). The degradation of coral ularly vulnerable to floods associated with intensified storm surges reefs from ocean acidification will accelerate as the atmospher- and sea-level rise due to less secure infrastructure, reduced access ic concentration of carbon dioxide increases, affecting coastal to clean water, and lack of health insurance. (World Bank 2013). protection, fisheries, and tourism (Hoegh-Guldberg et al. 2007). The live coral cover of the Philippines decreased by half after the Climate change will have significant impacts on communi- 1998 to 1999 ENSO-inducing coral bleaching, and fisheries yield ties dependent on subsistence livelihoods. Farmers and fisher diminished by more than Php 7 billion (Center for Environmen- folk, who are among the poorest population categories in the tal Concerns Philippines 2011; Santos, Dickson, and Velasco Philippines with poverty incidences of 45 percent and 50 percent, 2011). In a 4°C warmer world, the projected changes in maximum respectively, will be affected most severely because of their high catch potential range from a 50 percent decrease around the dependence on resources that rely on a stable climate. They are southern Philippines to a 6–16 percent increase around the north- less equipped to adapt to climate-related disasters and weather ern Philippines. Such shifts in catch potential are likely to place variations (Peralta 2008; NAST; NEDA 2011). Increases in local additional challenges on coastal livelihoods in affected regions temperatures, extreme weather events, droughts, and floods will (World Bank 2013). lead to reduced crop yields (Schlenker and Lobell 2010; Schlenker and Roberts 2009). With limited access to sustainable, alternative Non-climate factors, such as fast-growing environmental livelihoods and economic means, the capacity of poor people to deterioration and unsustainable development practices, ag- adapt to climate variability and extremes is low (Butardo-Toribio gravate climate vulnerability in the Philippines. For example, 2011). Food insecurity and loss of livelihood are likely to be fur- widespread mining and deforestation in Mindanao were blamed ther exacerbated by the loss of cultivated land and nursery areas for recent flash floods, including those produced by Tropical Storm for fisheries due to inundation and coastal erosion in low-lying Sendong in 2011, which cost the lives of about 1,000 people (Iqbal areas (Cruz et al. 2007). 2011). The neglect of drainage systems and the lack of long-term 24 planning and enforcement Figure 3. Greenhouse Gas Emissions in the Philippines Climate change exacerbated the floods in 2012, emissions (MtCO2e) Intensity (tCO2e/$million) impacts are which swamped nearly all of 80 400 60 300 aggravated by Manila (Macaraig 2012). Mean- 40 200 while, water scarcity, already felt rapid environmental (MtCO2e) Intensity (tCO2e/$million) 20 80 100 400 in many areas of the country at Total deterioration and certain seasons, is aggravated by 0 60 0 300 Total emissions 00 08 06 04 02 0 88 90 86 98 84 94 96 82 92 40 200 8 unsustainable 20 20 20 20 20 19 19 19 19 19 19 19 19 19 19 the deterioration of water quality 20 Year 100 development due to pollution from untreated  Greenhouse gas emissions and emissions intensity per GDP (a) 0 0 domestic sewage, industrial 250 (excluding land use changes and forestry). Source: World 00 08 06 04 02 practices. 0 88 90 86 98 84 94 96 82 92 8 20 20 20 20 20 19 19 19 19 19 19 19 19 19 19 wastewater, agricultural runoffs, Resources Institute 2012. Power Year 200 Transport and urban runoffs (CCC 2011). 250 150 MtCO2e Greenhouse gas Power 200 100 Transport emissions in the Philippines 150 50 MtCO2e 0 100 are increasing rapidly 2007 50 2010 2015 2020 2025 2030 0 The Philippines has been a minor contributor to global warm- 2007 2010 2015 2020 2025 2030 ing, though among low- to medium-income countries its an- Projected greenhouse gas emissions from energy and transport (b)  nual greenhouse gas emissions rank in the top 25 percent. The sectors. Source: Transport and Traffic Planners Inc. 2010. country ranks 43rd in terms of global greenhouse gas emissions, and 112th in terms of emissions intensity, accounting for only 0.3 percent of global emissions. Among the 128 low- and middle-in- Climate action contributes come countries that are the members of the World Bank, the Phil- ippines’ greenhouse gas emissions and emissions intensity are 24th to inclusive growth and (in top 25%) and 71st (in top 75%), respectively. The country’s total greenhouse gas emissions, excluding land use change and poverty reduction forestry, have hovered around 80 million metric tons of CO2 Implementing climate change activities is good equivalent (MtCO2e) since the late 1990s. development policy, as both adaptation and mitigation mea- sures also support sustainable development goals and provide Greenhouse gas emissions in the Philippines are very opportunities for increasing employment. Climate change activ- likely to increase significantly due to its growing economy, ities yield benefits even in the absence of climate change through a urbanization, and motorization. The country’s principal emis- host of co-development benefits. For example, many climate change sion sources are the energy and transport sectors, accounting for activities also reduce poverty and help generate jobs, particularly in 36 percent and 32 percent of total greenhouse gas emissions in vulnerable urban and coastal areas. Adaptation measures will make 2005, respectively (Transport and Traffic Planners Inc. 2010). By the Philippine society more resilient to climate impacts by helping 2030, under a business as usual scenario, the emissions from the to achieve development objectives set by the Philippine Devel- energy sector are estimated to quadruple. Under this scenario, the opment Plan (PDP) and/or the Millennium Development Goals dependence on coal for power generation and the carbon intensity (MDGs). Similarly, mitigation activities, which often call for the of electricity production would increase; similarly, the transport use of new clean technologies, will drive innovation and promote sector is expected to double its emissions, exacerbating current economic growth. The implementation of these actions constitutes severe traffic congestion. The underlying data for these assumptions a very efficient first step in a long-term climate change strategy. must be updated through the next National Communication to the Climate action can also offer employment growth benefits across UNFCCC and through the ongoing low-carbon studies. the agriculture, energy, and construction sectors. Adaptation measures help build assets and strengthen the resilience of communities, especially in poor areas. Hard adap- tation measures, such as the use of technologies that involve large capital expenditures, can include the enhancement of flood con- trol and storm protection through the construction or strength- ening of dikes and embankments, which lowers risks from floods 25 and storm surges (World Bank 2012b). Soft adaptation measures be created in the Philippines, a shift from traditional chem- typically include knowledge development, capacity building, and ical-based farming to organic agriculture is likely to have a policy and strategy formulation, which help reduce vulnerabilities positive impact on the country’s employment because of its and improve resilience to the effects of climate change. In the labor-intensive nature (Strietska-Ilina et al. 2011). Philippines, such measures can include the establishment or im- • Enhancing flood control and storm protection, including provement of flood-warning systems (ADB 2009). In urban areas, retrofitting infrastructure and buildings would provide using vulnerability mapping, land-use planning, and zoning plans significant job opportunities. Large-scale investments in to restrict future development in hazardous locations and to retire multi-hazard retrofitting and reconstruction enhance the key infrastructure and vulnerable buildings would reduce the capacity of the engineering and construction industries and costs of damage (World Bank 2010). In the agricultural sector, create local jobs (Strietska-Ilina et al. 2011). soft adaptation measures are commonly used and include adjust- ment in cropping calendars and patterns, changes in management • Scaling up of the renewable energy market and expand- and farming techniques, use of heat-resistant varieties, diversified ing energy efficiency programs, including retrofitting farming, intercropping, and crop rotation (ADB 2009). buildings would create new jobs. Clean technology development is still an expanding market, with plenty of Low-carbon measures that increase renewable energy gen- opportunities for training engineers, building managers, eration and improve energy efficiency also decrease local and a host of other alternative livelihoods to those that may pollution. Energy efficiency programs, many of which have neg- be lost because of climate change. ative abatement costs, would contribute greatly toward reducing fossil energy use, and therefore By acting now to develop its adaptive capacity and employ greenhouse gas emissions a sustainable green growth strategy expanding on mitiga- Measures to from buildings, industry, and tion opportunities, the Philippines will avoid substantial reduce greenhouse municipal services. Wind and economic and humanitarian costs that could arise from the hydropower are particularly impacts of climate change. gas emissions also The country has already promising options for reducing improve air quality The development shown its capability to benefit greenhouse gas emissions in and public health, the Philippines, as they offer benefits from from adaptation. In Guagua, increase energy lowest abatement costs, sig- implementing the Philippines, adaptation activ- ities implemented since 1991 security, and reduce nificantly reduce dependence climate agenda— on imported oil for energy have reduced flooding by 77 energy costs. and the potential percent, thereby increasing supply, and improve energy self-sufficiency. In addition, costs of failing to resilience. This has reduced the implementation of energy efficiency and renewable energy would do so—make it damages to household and in- improve the competiveness and profitability of the Philippine imperative to frastructure in both the public industry by lowering energy costs, which are currently the second and the private sector (Pulhin, act now. Tapia, & Perez, 2010). Green- highest in the region after Singapore and the ninth highest out of 44 international markets (Visconti 2012). house gas mitigation activities bring additional benefits, such as reductions in local air pollutant Climate action, especially in the fields of agriculture, infra- emissions that contribute to negative health effects, particularly structure, and energy, can create employment opportunities. in poorer communities. The global community is taking action This will help satisfy the Government’s priority to create oppor- to implement adaptation and mitigation activities to ensure tunities for inclusive growth to increase the quality and quantity sustained economic growth in a climate-resilient and low-carbon of jobs, coupled with addressing climate change and disaster risk. society. The Philippines could take advantage of similar opportu- Institutional changes that redirect climate resilience financing and nities, which would improve its competitive advantage. Countries its prioritization at the local level toward the most vulnerable ar- that build resilience in their industries and economy by focusing eas and people could generate programs that are more participato- on R&D and the development of new technologies will be at the ry and labor-intensive in nature, thereby facilitating job creation. forefront of innovation, helping to drive sustained growth and the expansion of the economy. • Small-scale sustainable and climate resilient farming and forest management have great potential to create jobs globally (UNEP 2008). While there is a lack of publicly available official statistics regarding the number of jobs to 26 The Philippines’ climate The National Framework Strategy on Climate Change (NFSCC), developed on a foundation of available scientific reform agenda aims to evidence, was formulated with clearly defined overall objectives and the broad parameters for developing a climate action plan. consolidate climate The framework was developed in relation to the country’s socioeco- nomic conditions, envisioning a climate risk-resilient Philippines policy across all levels with healthy, safe, prosperous, and self-reliant communities and of Government thriving ecosystems. It includes two pillars—adaptation and mitiga- tion—with an emphasis on adaptation as the anchor strategy. Disas- ter risk reduction management (DRRM) is explicitly recognized as Recognizing the urgency of addressing its vulnerability to one of goals under the adaptation pillar. The NFSCC is expected to climate change, the Philippines embarked on a reform agenda guide the national and subnational development planning processes. consisting of a comprehensive set of policy changes aimed at It recognizes capacity development, knowledge management; in- strengthening, integrating, and institutionalizing government formation, education, and communication (IEC) advocacy; gender initiatives to address climate change in the context of growth mainstreaming; research and development; and technology transfer and sustainable development. The Philippines has gradually as important issues that cut across pillars. The NFSCC was crafted expanded the scope of its cli- in close collaboration with Government agencies, nongovernmental mate-related policies. Between organizations (NGOs), and academia. The means of implementing The Philippines is 1997 and 2008, a series of the NFSCC include multi-stakeholder partnerships, financing, one of 23 developing stand-alone laws designed to valuation, and policy planning and mainstreaming. address climate change in dif- countries that have The National Climate Change Action Plan (NCCAP) strategi- ferent segments of the economy enacted climate- was enacted (Figure 4). In cally established the Philippines’ first long-term climate agen- specific laws (Globe 2009, the Climate Change Act da from 2011–2028, divided into three six-year phases, cor- responding to the terms of the Philippine Development Plan International 2013). was passed to strengthen, inte- (PDP) and the Philippines’ electoral and planning cycles. The grate, consolidate, and institu- tionalize government initiatives first phase of the agenda is focused on building an enabling en- addressing climate change, and to coordinate their implementa- vironment, while the subsequent phases will focus on scaling up tion. It calls for the systematic integration of climate change in climate action. The NCAAP is formulated around seven thematic various phases of policy formulation, development plans, poverty priorities aimed at two ultimate outcomes: (1) enhance adaptive reduction strategies, and other development tools used by all capacity of communities, resilience of natural ecosystems, and agencies and departments. The Climate Change Act declares sustainability of built environment to climate change; and (2) as state policy the systematic integration of climate change in achieve a successful transition to climate-smart development (see various phases of policy formulation, development plans, poverty Figure 5). The seven thematic priority areas include: Food Security, reduction strategies, and other development tools and techniques Water Sufficiency, Ecological and Environmental Stability, Human by all agencies and instrumentalities of the government. Security, Climate-Smart Industries and Services, Sustainable Energy, and Knowledge and Capacity Development. The NCCAP provides a detailed results matrix that includes 92 activities (supported by 328 sub-activities) in 41 output areas aimed at achieving 19 im- Figure 4. From Fragmented to Comprehensive Laws and Policies FRAGMENTED SECTORAL APPROACH COORDINATED NATIONAL INTEGRATION • Agriculture and Fisheries Modernization Act (1997) • Climate Change Act (2009) • Philippine Clean Air Act (1999) • National Framework Strategy on Climate Change (2010) • Ecological Solid Waste Management (2000) • Disaster Risk Reduction and Management Act (2010) • Philippine Clean Water Act (2004) • National Climate Change Action Plan (2011) • Biofuel Act (2006) • National Disaster Risk Reduction and • Renewable Energy Act (2008) Management Plan (2011) • People’s Survival Fund (2012) 27 mediate outcomes, albeit without specific targets for most areas. Figure 5. NCCAP Priority Areas and Outcomes 2011-2028 Source: Climate Change Commission The agenda is highly ambitious, with over 90 percent of activities expected to begin during the first phase, of which three-fifths are to be completed. The NCCAP activities also include many sectoral policy reforms, indicating the desire to be transformative and the importance of acting at the sectoral level under a coordi- nated national approach. The climate change policy agenda under the Climate Change Act and NCCAP provides a strong focus on, and shift to, adaptation, representing a clear evolution of priorities from mitigation to adaptation. Prior to the passage of the Climate Change Act, climate activities in the Philippines Development Plans focused explicitly on mitigation (e.g., in the Philippine Development Plan 2004–2010), even though they contained some adaptation actions; now six out of the seven NCCAP priority areas are related directly to adaptation, indicating a clear shift in concern. The NCCAP envisions that public financing prioritize adaptation to reduce vulnerability and risks for communities, while creating an enabling environment encouraging private sector participation to Policies on climate change adaptation have converged at optimize mitigation opportunities for sustainable development. the policy level with those on disaster risk reduction and management, in that both consider climate adaptation as The People’s Survival Fund (PSF) Act was established to pro- an appropriate mechanism for addressing climate-related vide dedicated financing for adaptation at the local levels. The disaster risk. Adaptation actions aimed at increasing the resil- Act establishes the People’s Survival Fund, an annual one-billion ience of people and their assets to climate change also make them peso replenishable fund to finance PAPs based on the NFSCC. less vulnerable to current weather-related disasters. Similarly, The Final Implementing Rules and Regulations reconfirm the climate disaster risk reduction efforts need to increase the scope of activities that are to be funded by the Act, which is resilience of people to future medium- and longer-term changes narrower—with support only for adaptation activities of the local in climate (Figure 6). These linkages are recognized in the government units (LGUs) and communities—than the NFSCC conceptual convergence of the Climate Change Act and the or the NCCAP.5 National Disaster Risk Reduction Management (NDRRM) Acts. Climate related disaster prevention is one of the priorities under the NCCAP. Similarly, the NDRRMA represents a paradig- matic shift in the way disaster risks are managed away from disaster response and toward prevention, with climate adaptation considered an appropriate mechanism for disaster prevention. Accordingly, the CCA and the NDRRMA require the CCC and the NDRRMC to jointly undertake certain activities (e.g., com- munity-based and scientific DRRM/CCA assessment, mapping, analysis, and monitoring) at the local level. Figure 6. Linkages between Climate Adaptation Actions and DRRM 5 Th  e PSF Act provides an illustrative list of activities that would be supported, which in- Adaptive Capacity cludes the following: (a) adaptation activities in the areas of water resources management, Prevention land management, agriculture and fisheries, health, infrastructure development, natural CLIMATE CLIMATE CHANGE ecosystems including mountainous and coastal ecosystems; (b) improvement of the RELATED DRRM Preparedness ADAPTATION monitoring of vector-borne diseases triggered by climate change, and in this context im- proving disease control and prevention; (c) forecasting and early warning systems as part Response & of preparedness for climate-related hazards; (d) institutional development, for the LGUs, Rehabilitation in partnership with local communities and NGOs, for preventive measures, planning, preparedness and management of impacts relating to climate change, including contin- gency planning, in particular, for droughts and floods in areas prone to extreme climate events; and (e) strengthening or establishing regional centres and information networks to support CCA initiatives and projects. Interestingly, the fund may also serve as a guarantee for risk insurance needs for farmers, agricultural workers, and other stakeholders. 28 Figure 7. Institutional Structure on Climate Change CLIMATE POLICY CLIMATE FINANCE CCCC Oversight NEDA CCC NDRRMC DBM CCC PSFB DOF Implementation Sector Sector Local Local Government Departments and Government Communities Departments and Units Attached Agencies Units Attached Agencies CCC: Climate Change Commission DBM: Department of Budget & Management CCCC: Cabinet Cluster on Climate Change DOF: Department of Finance NEDA: National Economic & Development Authority PSFB: People’s Survival Fund Board NDRRMC: National Disaster Rist Reduction and Management Council Centralized institutional from a policy and a finance perspective (left and right sides of the figure, respectively). Within each perspective, the policy making/ coordination supports oversight function is shown in the top half and the implementa- tion/execution function is in the bottom half. the reform agenda The CCC was established as the lead policymaking body The Philippines has reformed its institutional structure by es- tasked to coordinate, monitor, and evaluate the government tablishing centralized national institutions aimed at stronger programs and action plans related to climate change, and to coherence and horizontal and vertical coordination of a joint ensure the mainstreaming of climate change into national, climate change agenda, filling a critical gap in support of sector, and local development plans and programs. The CCC effective and efficient climate serves as secretariat to the Cabinet Cluster on Climate Change policy and financing. Several (CCCC), which was created to strengthen delivery of results Centralized coor- new institutions have been in Key Result Area 5 (KRA-5), one of the five key result areas dination in climate created or are at various stages identified in the President’s Social Contract corresponding to the integrity of the environment and climate change adaptation change policy making of mobilization, including the Climate Change Commission and mitigation. The CCCC meets monthly to consider agenda fills a critical gap items introduced by its members, which have been dictated by (CCC), the Cabinet Cluster while coordination on Climate Change (CCCC), the concerns raised by individual Departments rather than by any on climate financing and the PSF Board (PSFB). long-term program. In its capacity as secretariat of the CCCC, the has begun. The CCC is at the center of the CCC coordinates the policy discourse within the cabinet cluster. new arrangement, coordinating On the finance side, the People’s Survival Fund (PSF) Board across the oversight agencies is designed to guide coordination and mobilization of and with the implementing agencies on all aspects of climate poli- resources. The PSF Board was created with responsibilities to cies. Existing Departments/Agencies and the LGUs were assigned promulgate policies, provide strategic guidance to the CCC on with the responsibility of planning and implementing climate the management and use of the PSF, and to provide final approval action. As such, coordination between the new institutions and for projects to be funded. The CCC is to constitute an interim existing Departments and the LGUs is an important determinant secretariat in the climate change office of the CCC to support of implementation progress. The key institutions and linkages the PSF Board, providing the CCC a strong role in developing in the new structure are shown in Figure 7, illustrated separately 29 the operations manual for the PSF Board. The CCC supports the When the CLUP is enacted Department of Budget and Management (DBM) in its efforts to The Climate Change into a zoning ordinance, it improve utilization and effectiveness of climate resources at the Act requires the becomes a statutory plan. national level, and assists LGUs in their efforts to better integrate national government As such, it is a powerful climate objectives into their programs. instrument that the LGUs to provide technical use to align land allocations The Climate Finance Group (CFG) remains an ad-hoc group and financial assis- between competing and often to support climate financing needs. The CFG was conceived tance to the LGUs. conflicting uses, including during a discussion between the DOF, the DBM, the National climate adaptation.The Climate Economic Development Authority (NEDA), and the CCC for Change Act requires LGUs to mobilizing financial resources to respond to technical and human develop Local Climate Change Action Plans, which can be inte- capacity needs for sustaining efforts to reduce and/or mitigate the grated into the CLUP, CDP, Local Disaster Reduction Manage- impacts of climate variability and change. The legal basis for its ment Plan, Annual Investment Plan, Annual Operation Plan, and creation was not pursued, and CFG remains an ad-hoc group. Physical Framework Plan. The national government is required to provide technical and financial assistance to LGUs in formulating At the local level, LGUs are the frontline Agencies in formu- and implementing their local action plans. 6 The NEDA and the lating, planning, and implementing climate action. The Phil- Department of the Interior and Local Government (DILG) have ippine Congress passed the Local Government Code (LGC), a been providing direct assistance to LGUs in this regard, with the key decentralization measure, in 1991, transferring responsibility DILG spearheading efforts to streamline planning processes in for delivering many of the basic services and resources to LGUs in the LGUs’ planning processes, and to integrate climate change the form of an Internal Revenue Allotment. LGUs are responsible into the CDPs and the CLUPs (in lieu of developing a stand-alone for many of the basic services affected by climate change. Mu- climate/disaster plan). The implementing rules and regulations nicipalities are generally responsible for the delivery of frontline create an LGU coordination unit within the Climate Change basic services such as primary health care, construction, and Office of the CCC, and encourage LGUs to create their climate maintenance of public elementary schools. The LGC mandates change focal units. that LGUs develop Comprehensive Development Plans (CDPs) and Comprehensive Land Use Plans (CLUPs), which correspond to the PDP and the NFPP at the national level. 6 “  It shall be the responsibility of the national government to extend technical and financial assistance to LGUs for the accomplishment of their Local Climate Change Action Plans.� (Climate Change Act 2009, Section 14). 30 III. KEY ANALYTICAL FINDINGS: Overcoming Barriers That Impede Sustained Change The first phase of the climate The Philippines’ new comprehensive climate agenda builds a foundation for consistent reforms at all levels of government, reform agenda must be but it has much to lose if it fails to deliver on the climate reforms that have begun. The current administration, with a six- finalized in order to reach year term, rightly aims to finalize first-phase reforms focused on es- tablishing readiness and to commence execution of the full agenda sustained low-carbon and and operationalizing it at the sector and local levels to prepare for climate-resilient development the second phase. However, though the country is moving in the right direction to ensure solid integration of climate change into 31 New climate policies development plans, there are several pieces missing, which Climate policy reform efforts build a foundation need to be addressed to ensure successful implementation and are only partially aligned for consistent reforms at all levels execution. If it fails with development plan to address these issues, the of government. Philippines may experience outcomes, thereby limiting challenges in achieving its overall development goals. effectiveness With the already high level of vulnerability in the The national, Departmental, and local development plans Philippines, it is critical that the country adequately imple- and policies are only partially aligned with the NCCAP. The ments measures needed to protect against ever-increasing cli- NCCAP priorities are thematic in nature, often cutting across mate change and variability. Through the PDP, the Philippines the sector-based focus of the aims to accelerate annual economic growth to 7–8 percent toward PDP,7 Key Result Area 5 The lack of (KRA-5), the Department meeting its MDG goal of halving the poverty rate by 2015 and creating one million new jobs alignment among Work Programs, and local annually through large investments in infrastructure in roads, the thematic prior- development plans. As such, outputs, outcomes, and goals water, and energy, as well as in productive sectors (agriculture). ities of the National The Philippines has a lot to lose by not acting expeditiously to are not always similar, and Climate Change what constitutes a climate address climate change. While it is evident from recent typhoons such as Ondoy, a single climate-related event can result in dam- Action Plan and change activity under one ages amounting to 2–3 percent of GDP, wiping out much of the development plans plan/policy may not be economic gains with significant impacts on the poor, addressing at the sector and considered a climate change slow-onset events is just as important. Land use plans can be set activity under another. Such local levels requires differences lead to difficul- to provide proper incentives to locate people and assets away from improved coordina- ties in monitoring climate high-risk areas at low cost, but will be costly to protect or relocate in the future under harsher climate conditions. The processes of tion across sectors activities; they also hamper building capacity and institutions to enact and implement reforms in planning and coordination and convergence across Departments and are inherently slow, and failure to act now can lead to urbaniza- policy development. tion processes that are much more vulnerable to climate risks. between levels of government. To ensure consistency and Implementing the Government’s climate reform program good structured coordination, the NCCAP should be aligned contributes to the broad development goals through several with plans and policies at the national (PDP, KRA-5, and the channels. For example, the reform supports the development of a PIP), sector (Departments), and local (CLUPs and CDPs) levels. workforce that understands and is able to quickly respond to cli- mate events, whether those events are slow-onset or fast-moving. At the national level, the NCCAP and the PDP are only par- Further, the reforms support tially aligned with each other in terms of climate-related out- improved targeting of resources toward the poor and the most comes and outputs. Even though the PDP was launched as the vulnerable through reliance on evidence-based decision-making. NCCAP was still being developed, five chapters in the PDP in- The climate change agenda and these reforms should go hand in clude extensive discussions on climate change, particularly in re- hand to ensure that the development agenda considers the present lation to adaptation and disaster risk reduction and management, and future impacts of climate change, and vice versa. which are discussed in the agriculture and fisheries chapter, and the chapters in industry and services, infrastructure, and social development as well as the environment and natural resources. Mitigation is discussed only in the context of the chapter on eco- system degradation and deforestation. Some immediate NCCAP outcomes are excluded from the PDP (e.g., climate risk responsive health delivery systems), while others lack detailed articulation of supporting activities. For instance, the immediate NCCAP out- comes on sustainable water supply and knowledge and capacity 7  e PDP aims to (1) attain sustained economic growth that provides productive employ- Th ment opportunities; (2) equalize access to development opportunities across different geographic, income, and social spectra; and (3) formulate and implement effective and responsive social safety nets. 32 building in the water sector are presented without any reference to Mainstreaming the NCCAP in the Departments’ plans and climate change, as is the case in other chapters. Since both plans work programs requires the adoption of a common approach are scheduled to be updated in mid-2013, an opportunity exists to tagging climate PAPs and the establishment of indicators for improved alignment. The NEDA’s Effectiveness and Efficiency and targets. To address the first shortcoming, the CCC and the Review process provides an opportunity to fill many of these gaps, DBM have recently developed climate screening guidelines for as do the CCC climate screening guidelines, which help identify use in budget preparation beginning in FY 2014, based on the a comprehensive set of PAPs based on the NCCAP. NCCAP. Upon its operationalization, climate PAPs supporting the NCCAP will be clearly be identified in the budget across Comparison of the NCCAP and KRA-5 outcomes indicates the Government, providing the ability to monitor against the that the two are only partially aligned. While outcomes and NCCAP. However, this still does not provide Departments outputs for the KRAs are not clearly defined in a policy doc- with strong incentives to prioritize PAPs that support NCCAP. ument, each of the PDP outcomes are mapped to one or more Accountability of Departments can be ascertained only if the KRAs in the PDP results matrix, providing a first cut at defining NCCAP includes indicators and targets to measure implemen- potential KRA-5 outcomes. The PDP results matrix identifies tation progress. While the NCCAP includes indicators for each objectives, sectoral and intermediate outcomes, as well as indi- output, it does not provide specific targets nor assign them to cators, baseline values, and targets to monitor progress. While specific Departments. As a result, the size and scope of specific the PDP results matrix is not mapped to NCCAP outcomes, a NCCAP programs in the Departments currently depend on each simple comparison indicates that increasing sector resilience to Department’s goals and MFOs. While in a few cases these may be climate change in agriculture and fisheries and environment and well aligned with NCCAP outcomes (e.g. DA’s MFO on increas- natural resources is an outcome common to both the NCCAP ing sector climate resilience with NCCAP outcome on food secu- and KRA-5, which is supported by intermediate outcomes, rity), most Departments do not have MFOs related to NCCAP outputs, and indicators. However, the alignment breaks down for outcomes. Establishing targets for the NCCAP indicators and key infrastructure subsectors (energy, water, transport). While aligning them with established Departmental goals and outputs improving climate resilience in infrastructure is a KRA-5 sectoral would incentivize Departments to fully mainstream NCCAP into outcome, it is not supported by underlying outcomes, outputs, their strategies and work programs. or measurable indicators related to climate resilience, which only include those for quality, adequacy, and accessibility of service. Despite the mandate for LGUs to develop and integrate Local Instead, the sectoral outcome for infrastructure refers to subsector Climate Change Action Plans (LCCAPs) and Local Disaster outcomes on improving resilience to climate change, which are Risk Reduction and Management Plans (LDRRMPs) into the yet to be defined. CLUP and CDP, few have been developed. New requirements to develop the LCCAPs and the LDRRMPs impose significant The NCCAP has not yet gained traction among the CCCC administrative burdens and pressure on the LGUs, as they already Department members, due to lack of incentives to focus on must produce many development plans that correspond to central KRA-5 and limited guidance on the inclusion of NCCAP in government plans. To lighten this load, the CCC encouraged strategies and work programs. The performance of Departments LGUs to incorporate their LDRRMP and LCCAPs into the is measured and monitored against their Major Final Outputs CDPs and CLUPs instead of preparing separate, stand-alone using the Organizational Performance Indicator Framework LLCAPs and LDRRMPs. Both LGUs studied in the CPEIR, the indicators, which have been mapped to the KRAs, but not to NC- Province of Albay and Makati City, have proactively led on the CAP. As such, Departments have incentives to align their climate climate agenda, specifically in mainstreaming climate change strategies and work programs with the KRA-5. Moreover, toward policies and action in their respective areas, highlighting the supporting the KRA-5 outputs, the CCCC asked Departments importance of plan integration (see Box 1); however, they do not to identify their climate activities in their work programs for represent the norm across LGUs. the 2011–2016 period, and the DBM has asked Departments to report on their activities supporting the different KRAs, includ- ing those on KRA-5. While the CCCC request was a one-time exercise carried out with limited guidance on the appropriate criteria to be used, the DBM guidance for reporting for KRA-5 has varied over the years, and was not related to the NCCAP. In contrast, the Departments have not been provided guidance or incentives to align their strategies and work programs to the NCCAP. In part, this reflects the finalization and dissemination of the NCCAP only after the KRAs had been established. 33 Execution and coordination The Climate Change climate change programs. In addition, the CCC is jointly of climate actions are Commission must set responsible for many other tasks, including coordinat- priorities and stream- hindered by a lack of clarity line its coordination ing sector policy, implying a need to consult and reach an in roles and responsibilities role to be effective in agreement with the Depart- its primary responsibil- across institutions ity as a policy-making ments and Agencies before the tasks can be carried out. Failure to reach an agreement Leadership and accountability in implementation of the and coordinating body. climate agenda is hindered by the broad scope of roles and and the lack of full account- responsibilities of the CCC as well as lack of effective coor- ability for these tasks risks dination among stakeholders, including: (1) between oversight their completion. A lack of prioritization of the roles and joint agencies, (2) between Departments, (3) within Departments, (4) responsibilities of the CCC has hindered its ability to fulfill all of vertically from the CCC to the LGU level, and (5) between LGUs its tasks. at the local level. The CCC staff is dispersed across the spectrum of functions, The CCC’s key challenges in streamlining NCCAP imple- with only a few staff assigned exclusively to the strategic pol- mentation are to operationalize the many tasks for which it icy-making and coordination roles. As a result of its wide array has joint responsibilities and to set priorities among all of of responsibilities, the CCC has not been able to divert enough its responsibilities (Figure 8). The CCC is solely responsible resources to strongly advocate for immediate action on climate for a broad spectrum of responsibilities that include leading change. Some of the CCC’s focus has been on implementing climate policymaking, coordinating, monitoring, and evaluating projects. Coordination is impeded across Departments and with Figure 8. Institutional Responsibilities by Functional Stream Designated by the Climate Change Act DOST (PAGASA) • Climate projections/ scenarios KNOWLEDGE GENERATION & MANAGEMENT ENSURE PROGRESS • CC risk/vulnerability assessment • Monitor and evaluate programs (enabling environment, guidelines) and action plans LGU & LINE AGENCIES INSTITUTIONAL RESPONSIBILITIES • CC Service delivery FORMULATE POLICIES & PROCESSES RAISE AWARENESS AND TAKING ACTION • NSFCC • Statutory guidance • NCCAP • Coordinate sectoral policy Shared responsibilities with: Line Agencies • Implement regional and local actions • Engage stakeholders (enabling environment) Legend Government Financial Investments ■ CCC Responsibility • Key development investments ■ Responsibility of Department, LGU, or Other Oversight Body DILG, NEDA ■ Joint Responsibility of CCC with Other Department, LGU, • Build local adaptation capacity or Oversight Body Philippine Information Agency • Disseminate information 34 the private sector because the CCC has not yet successfully linked is often hampered by the failure of many principals to attend them together, and thus it has not yet succeeded in creating meetings. Most attendees at the cluster meetings, except the Chair the necessary enabling environment to entice the private sector. and the head of the Secretariat, are Department Undersecretaries, Despite its many roles, the CCC still must overcome the resource Assistant Secretaries, or Bureau Directors with no decision-mak- strain that another significant expansion of providing secretariat ing power. Furthermore, the dual support services of the DENR services to the PSFB may create. The CCC has started to con- and the CCC have often led to a duplication of secretariat services solidate and delegate some of its tasks to other agencies so it can in the CCCC and competing demands on the CCC staff have refocus on its strategic policymaking role. sometimes limited their ability to provide needed support to the Cabinet. The DENR Climate Change Office has backstopped the The roles of and relationships between the CCC and the other CCCC leadership, both in technical and administrative terms in oversight agencies are not yet formalized, prioritized, or these instances. streamlined, which can limit the CCC’s effectiveness as a pol- icy coordinating body. In particular, it is a very high priority to Departments employ different approaches to develop their clarify the relationship between the CCC and the NEDA, as well climate portfolio, in accordance with their organizational as the DBM, with regard to climate change and the development needs, which highlights the need for flexibility in program and use of the Monitoring and Evaluation (M&E) framework. planning. A diversity of Departmental needs and capacities may The CCC has a mandate to manage, review, and guide the Gov- require flexible approaches and an integration of systems in a ernment’s climate change initiatives, whereas NEDA and DBM phased manner. For example, the DA used a strategic planning have more general devel- approach to develop a comprehensive climate change action plan, opmental responsibilities. giving climate change adaptation an organizational mandate. It is Formalized institu- Since the NEDA overseas the being mainstreamed across all of the DA units (through an Office tional collaboration implementation of the PDP, of the Secretary Administra- between the Climate improved alignment with tive Order). The resulting cli- NCCAP could take place The different mate change actions have an Change Commission if coordination between approaches used by organizational mandate and and key Departments the two agencies increased. are well distributed across the each Department in and Agencies is an However, there are still no DA. In contrast, the DENR developing its climate does not have a comprehen- important, required standardized mechanisms for aligning the NCCAP portfolio require flexi- sive climate change action next step. outcomes and activities in bility in coordination.� plan and its climate change national and sector plans. initiatives are a cumulative In the absence of standardized processes for carrying out updates pattern of actions that are in consideration of climate change, the NEDA has no additional only rationalized retrospectively. Its practices are based on past guidance on climate change beyond what is currently in the PDP. mitigation experiences at the program level rather than the entire In the program budgeting process, it is often difficult to reconcile Department level, resulting in an uneven distribution of resources the strategic function of oversight agencies managing specific pro- (Forest Management Bureau, Environment Management Bureau, grams (like the CCC) versus the line management responsibilities Mines and Geo-science Bureau). Its preferred course of action is of oversight agencies of the Government (like the DBM). If the evolutionary, incremental, system-conserving, and based on the scope for effective strategic review and redirection of priorities is ongoing flow of available information. limited, the general objectives of line agencies tend to prevail over high-level strategic goals. Some steps are being taken to clarify The organizational models to address climate issues have these roles, but more work is required to establish a better balance varied across Departments based on the existing Depart- between oversight agency priorities and strategic, high level goals. mental structures and needs, with the DA and the DENR the only Departments that have internal climate units. The DA Coordination between Departments on the climate change created the Climate Change Program Office within its Planning agenda is facilitated by the CCCC to ensure needed harmo- & Policy Department in 2011 to serve the entire department. As a nization and coordination at the highest level of government; centralized unit, it has struggled to coordinate the execution of the however, the CCCC has not yet been fully effective in carry- Department’s climate initiatives. In contrast, the DENR created ing out the climate agenda due to limited decision making op- a Climate Change Office in 2009 to service a joint DENR-GIZ portunities and fragmented support. Decision-making, moni- climate change adaptation program, which has also provided toring, reporting, and advocacy on climate change at the highest support, on an as-needed basis, to the remainder of the Depart- level of government are not fully informed, and the CCCC has ment. It is staffed by personnel from the different DENR offices no decision-making powers in the cabinet. Moreover, the CCCC and contractual employees, and thus has a greater outreach than a 35 stand-alone unit would. An important accomplishment of the unit On DRRM/CCA, despite the convergence at the policy level, was the development of the Climate Change Adaptation Frame- coordination has been difficult because of overlapping respon- work, which has contributed to reorienting the DENR’s focus sibilities, action plans, and tools, and limited monitoring and from mitigation to adaptation. Meanwhile, the DPWH does not reporting requirements for climate adaptation and climate have a separate climate unit but is expected to create a cross-De- related disaster prevention. The LGUs are mandated to develop partmental cooperation scheme. The internal organizational struc- LDRRMPs that are to be integrated into the CDPs and the CLUPs. ture of Departments could be an important determinant of their Both the CCC and the NDRRMC are required to coordinate with effectiveness in pursuing or prioritizing climate objectives. each other on their engagement with the LGUs, and the two Agen- cies have signed a memorandum While Departments and Agencies use several different modes of of understanding (MOU) service delivery to support LGUs, some are more appropriate than Policy convergence affirming their collaboration others in specific circumstances. This highlights the need for ver- on addressing to harmonize and coordinate tical convergence of activities for effective execution at the local climate-related with each other in supporting level. The delivery modes include: disaster manage- the LGUs and to develop a joint work plan. However, in prac- a. Co-management of an activity by an LGU and Depart- ment has not led tice, there are no guidelines on ment is the simplest form of vertical coordination and to corresponding how to operationalize the MOU entails a partnership between an LGU and Departments convergence leading to limited coordination at the national level to execute a program through shared responsibilities and the injection of Departmental resources on institutional and collaboration between the and financing two agencies. The DRRM and to the LGUs. The LGUs are often better able to implement CCA are not viewed within and manage specific local tasks due to their proximity and arrangements. a sustainable development local knowledge. framework by most Agencies b. Regional offices can be a bridging mechanism that coor- and communities. Few LGUs have DRRM plans and strategies, dinates intra-Departmental services to LGUs, but a lack of and most have been developed following a disaster, which increases functional integration often hampers service delivery. Most the chance that some CCA/DRRM plans may arrive too late for Departments have a “hub-and-spokes� management setup: many LGUs. The DILG has been mobilized to supply DRR/CCA the DA, the DENR, the Department of Science and Tech- protocols in cities and municipalities and to issue an ISO-type “seal nology, and the DPWH have field offices in all Philippine of disaster preparedness� for high performing LGUs. regions.8 To support the devolution of basic service delivery to the LGUs, many central Departments have redirected Implementation of the Ecotowns approach is an effective LGU support functions to their regional offices. method of coordination from the national level to the LGU level, and can help facilitate increased coordination between c. Service convergence is when multiple government units LGUs. Ecotowns are implemented by the CCC on a pilot basis use the same medium or network facility at the LGU level and involve the establishment of ecologically stable and econom- to improve vertical intergovernmental coordination. ically resilient towns at the LGU level on a demonstration basis. Ecotowns attempt to blend sustainable development, natural The CCC is a national agency with limited local presence, and resource management, and climate action through sustainable does not have the capacity to engage with all of the LGUs as financing mechanisms, which are based on the payment for the NEDA and its sub-committees do. Still, it can take advan- ecosystem services and supplemented conditional cash transfers tage of establishing relationships to increase coordination on and for poverty alleviation.9 The President has ordered the scaling convergence of the climate policy agenda. For example, the CCC’s up of the Ecotown project across various regions, increasing the relationship with the Housing and Land Use Regulatory Board is responsibilities based on preliminary results and demand from an entry point to assist with integration of adaptation in local de- LGUs. However, successful implementation typically requires velopment plans. In addition, coordination and convergence of the bringing multiple LGUs on board; as a fairly new agency, the adaptation agenda at the local level has been successful through CCC has faced challenges in implementation as it does not have a Climate Field Schools and Integrated Ecosystem Management. supporting regional or local network. Effective partnerships with Departments with strong vertical structures that reach down to local levels can help alleviate some of these challenges, while at the same time freeing up staff resources to engage on the policy and coordination functions of these programs. 8 The DOE is probably the only Department with very few regional offices, but then it is focused more on climate change mitigation. 9 The CCC has piloted Ecotowns in twelve LGUs across the country. 36 Community participation through Civil Society Organiza- partners—including the European Union, the governments of tions (CSOs) increases transparency of the climate policy Germany (BMU) and Australia (Ausaid), the United Nations De- agenda and can help guide the climate resource allocation velopment Programme (UNDP), and the U.S. Government—have process. NGOs have provided critical support for the climate supported and complemented these efforts. However, the piecemeal reform agenda, and maintaining the momentum for the reform approach by which these programs have been developed and their will require their continued support. NGOs were active in the fragmentation across sectors may create difficulties in prioritizing formulation of both the NFSCC and the NCCAP, strengthening activities. A more comprehensive approach, backed by a common the mandate for the climate policy, would not only facilitate prioritization and coherence to agenda. They have participat- better manage trade-offs, but also provides the necessary signal to Civil Society has ed in climate change steering promote greater private sector engagement. played an important committees or task forces as role in the develop- members institutionalizing While some sector policies have promoted Market Based In- consensus-based climate poli- struments and private sector engagement, their scope remains ment of the climate limited to a few sectors. As mentioned, the climate agenda cy-making. Continued avenues agenda, helped calls on the private sector to finance mitigation activities, while for NGO participation include increase transparen- the PSF Board, the CCC Ad- the government remains responsible for building the enabling cy, and can help keep visory Body, and the PDF. As environment, making collaboration highly important. Increased engagement of the private sector in the renewable energy and the momentum for a pressure group, they monitor UNFCCC negotiations and energy efficiency programs is achievable with the support of energy reform going. sector reforms, which is already evident following the deregula- the implementation of the Climate Change Act. Civil tion, restructuring, and privatization of government companies society and NGO participation increases transparency and builds and agencies. The deregulation of the power sector has provided trust in communities. NGOs have improved public awareness and many incentives and has brought in private resources and players helped garner the necessary popular support for climate change to support mitigation efforts. Some of these programs include tax and for the current reform program. They were instrumental in holidays for carbon credits, renewable portfolio standards, finan- the push for creating the PSF, and their continued participation in cial incentives for wind geothermal and mini-hydro development, the policymaking process will not only help policies and programs tax exemptions for biofuels, building and equipment standards, remain responsive to community needs, but also strengthen the cleaner production technology, efficient lighting, eco-labeling, and decision making process. the sustainable consumption program. Leveraging a low-carbon Differences in the green-growth strategy and classification of climate market-based instruments PAPs hinders climate budget can strengthen engagement planning and prioritization with the private sector The various approaches to Though mitigation activities are being carried out, there is The different defining what constitutes a approaches to climate change activity have currently no common strategy dictating roles and responsibil- led to inconsistencies in clas- ities on low-carbon development and green growth. Efforts to classifying climate sifying and defining the level develop low-carbon, green growth policies need strong coordination PAPs results in a of funding budgeted for cli- under a comprehensive national low-carbon development plan. In the Philippines, different Departments have developed an assort- three-fold variation mate PAPs. To assess climate ment of low carbon initiatives based on their interests and needs, in the level of climate PAPs, the CPEIR used four different approaches that have but activities have been carried out on an uncoordinated basis. The expenditures. either classified current PAPs in CCC is currently spearheading several projects with key govern- the budget, or provide criteria/ ment Agencies to establish a national system for the preparation activities to identify climate PAPs in the budget. These include of GHG emission inventories, to formulate National Appropriate the NCCAP, KRA-5, the Department’s work programs, and PAPs Mitigation Actions and Low Emission Development Strategies, and based on the climate financing classification system developed by to develop Monitoring Reporting Verification systems to support several multilateral development banks (MDBs). These initiatives implementation and evaluation of mitigation actions. Development 37 Table 1. Comparison of Selected Major PAPs by Different Tagging Initiative Departments’ Classification Selected Major PAPs KRA-51 NCCAP3 Work Programs2 System of MDBs4 Flood Control (DPWH) Excluded Included Included Included Quick Response Fund Included Excluded Excluded Excluded Calamity Fund Excluded Excluded Excluded Excluded Disaster-related Rehabilitation (DPWH) Excluded Included Excluded Excluded PAPs financed by Special Accounts Excluded Excluded Included Included 1 Based on selections by the DBM and sector Departments/Agencies. 2 Based on selections by sector Departments/Agencies. 3 Based on selections by the CCC and sector Departments/Agencies. 4  Based on selections by MDBs. (Note: Based on the MDBs’ criteria, all PAPs contributing to mitigation and all PAPs that indicate in the title a link to climate change/adaptation/ DRRM were tagged.) have, however, used different definitions for climate PAPs result- KRA-5 2013. There is a need for guidance and application of con- ing in different classifications. For instance, flood control projects sistent criteria to ensure that similar climate PAPs can be tracked were classified as an adaptation activity by the NCCAP, the De- over the years. partments’ work program, and the MDBs, but not included under KRA-5 (Table 1). On the other hand, some post-disaster related Departments’ work programs 2011–2016 have reflected an investments were tagged under KRA-5 and the Departments’ effort to identify available resources and estimated funding work programs but not included by the others. Likewise, climate needs for climate PAPs. Departments were requested by the PAPs funded through DOE’s Special Accounts were not consis- CCCC to prepare a work program for 2011–2016 that included tently classified by all initiatives, and only included under the funded and planned climate-related PAPs. Departments were NCCAP’s and MDBs’ classification. A particular case constitutes requested to identify PAPs and not subcomponents (specific activ- the work program of the DA, which includes entire programs ities). While the initial plans were to update the work programs such as the National Rice Program, the National Corn Program, annually, such updates have not been conducted. Analysis of the and the Bureau of Agricultural Research, even though only a initial work programs shows that: few activities within these programs address climate change. In • The Departments that are within the scope of the CPEIR contrast, all other initiatives have tagged only a selected number account for the bulk of the funding reported in the work of small climate PAPs managed by the DA, which are largely programs (on average, 90 percent) over the period 2011–2016, considered to address climate change (such as the promotion of with the main funding proposals being derived from DA and organic agriculture). On the whole, given the general formulation DPWH. of NCCAP outcomes and activities, the largest number of climate PAPs included in the budget were identified under the NCCAP • The inclusion of total appropriations for a PAP, even though classification (Table 1). only some activities embodied in the PAP address climate change, overstates the reported climate appropriations. While efforts have been made by DBM to strengthen the • The Departments’ work programs for 2011–2016 are only classification of climate PAPs under KRA-5 for 2013, there partially aligned with the NCCAP activities, because the is still insufficient clarity and guidelines on the selection of latter were being drafted as the work programs were prepared. activities, Departments, and Agencies included under KRA-5. Under KRA-5, the identification of climate PAPs is not confined • The estimated funding needs are significantly higher than to the major programs, and PAPs of all members of the CCCC the actual appropriations in the Departments within the were included under KRA-5. However some inconsistencies CPEIR scope. remain that render the tracking of climate PAPs over the past three years difficult. First, PAPs from different Departments and Agencies were tagged for different years, and not all of the Departments or Agencies tagging PAPs are part of the CCCC (e.g., the Department of Health, NEDA, Department of Social Welfare and Development, or the Land Bank of the Philippines). Second, different Departments tag similar activities differently. For example, the DA tagged the Quick Response Fund in 2012 but the DPWH did not tag the Disaster Rehabilitation Project in 38 Climate appropriations have Multiple approaches used for classifying climate been increasing relative to activities across the Government make bud- get planning and prioritizing for climate PAPs overall Government budgets difficult and result in a three-fold variation in Climate appropriations have been increasing steadily in the climate appropriations. past five years across the budgets of all Departments and Agencies, regardless of the classification approach used. As indicated in Figure 9, climate appropriations supporting the NC- Climate appropriations have CAP have increased by nearly two and a half times in real terms over the past five years, from Php 12 billion in 2008 to Php 35 been funded largely from billion in 2012. The Department work programs have followed the NCCAP trend quite closely. domestic sources, while Climate budget Climate appropriations tagged under KRA-5 increased from development partner support appropriations have Php 9 billion in 2011 to Php 16 billion in 2013, an increase has concentrated on flood been increasing indicating increased of 66 percent in real terms. control and management Despite this increase, KRA-5 leadership and accounts for, on average, only Sources of funding for climate change activities stem primar- growing awareness. 1 percent of the total sum of ily from government sources through the General Appropria- KRAs between 2011 and 2013. tions Act, Special Purpose Funds (SPFs), and Special Account This is, however, associat- in General Funds. Domestic resources have funded on average ed with the fact that PAPs were tagged according to Agencies’ 82 percent of climate expenditures in the four selected Depart- mandates under the KRAs (1-5), which means that they are not ments (DPWH, DENR, DOE, PAGASA) between 2008 and excluded from the total national budget, but just not captured 2010. However, develop- in the current system of KRA tagging. The MDB classification ment partner support is very The effectiveness concentrated, with Depart- identifies a total budget for climate PAPs of Php 50 billion in 2013 that has increased significantly over the past years, from Php 16 and efficiency of ment of Public Works and billion in 2008. The MDB classification accounts for the highest systems for plan- Highways accounting for 80 percent of the total develop- amount of climate appropriations among the four approaches, as ning, executing, it covers major PAPs (notably flood control protection and traffic ment partner support (most and reporting on of which is focused on flood decongestion) that represent two-thirds of its climate appropria- tions in 2013. climate PAPs is the protection). About 94 percent key to delivering of the climate expenditures in Figure 9. Climate Appropriations by Classification, the remaining Departments 2008-2013 (in Php billions)1 climate results. are financed from domestic sources. Development partner support has also played an important catalytic role in financing pilot activities, providing global knowledge, and developing lessons learned. While most of the domestic funding stems from the GAA, Special Accounts provide a third of the funding for the Department of Energy. While Special Accounts clearly offer some flexibility in managing resources, they can weaken accountability for the use and absorption of funds.  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on 1 T GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 figures are based on GAA Budget, 2013 figures are proposed NEP. 39 Climate appropriations Climate appropriations are concentrated in a few Depart- ments, with a few major PAPs accounting for a large share of focus on a few large PAPs10 the total climate appropriations. The DPWH commands the lion’s share of total climate appropriations (52 percent), yet climate Climate appropriations represent a small part of the national change appropriations account for only about 10 percent of its to- budget, but have grown faster than the total budget appropri- tal budget. It is followed by the ations for each of the Departments included in the CPEIR. DENR and DA, which account The total climate appropriations have increased from 0.9 percent The increase in for 33 percent and 9 percent of in 2008 to about 1.9 percent of the national budget in 2012. This climate appropria- the total climate appropriations, corresponds to about 0.3 percent of GDP, which falls below the tions results from respectively (Figure 12). The Stern review recommendations that countries should expend at distribution of funding across the significant the Departments reflects the least 2 percent of GDP to implement climate change action. Given the level of vulnerability in the Philippines, it seems important expansion of a small Government’s commitment to for the Government to reassess allocations in the budget across number of major prioritize investments for flood Departments to finance climate action. Climate appropriations climate PAPs. control protection (DPWH) have been increasing in magnitude, and rose at a faster average in the face of periodic flooding annual rate (26 percent) than the national budget (6 percent) events in the recent past, and between 2008 and 2012. This is mirrored by faster growth of the National Greening Program (NGP) by DENR. Increases in climate budgets in absolute and relative terms across Departments appropriations for the Philippine energy efficiency project since in comparison to their total appropriations (Figure 11). 2010 and the creation of Electric Vehicle Project in 2013 have resulted in spike in DOE’s funding. Similarly, funding for DA has Figure 10. Evolution of Climate Appropriations Based on the NCCAP Classification, 2008–2013 (on appropriation basis, in Php billions) 1 increased due to several projects managed by the Philippine Rice Source: DBM, DA, DOST [PCIEERD, PCAARD, PCHRD]. Research Institute and the Tamang Abono Program. Figure 12. Trends of Climate Appropriations by Department/Agency, 2008-2013 (on appropriation basis, in Php billions)1 Source: DBM, DA, DOST [PCIEERD, PCAARD, PCHRD]. 1 T  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 figures are based on GAA Budget, 2013 figures are proposed NEP. 1 T  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on Figure 11. Growth Rates of Climate Appropriations and Total Budget GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 figures are based on GAA Budget, 2013 figures are proposed NEP. Appropriations of Departments/Agencies, 2008-2013 (in %)1,2 Source: DBM, DA, DOST [PCIEERD, PCAARD, PCHRD]. Most of the climate expenditures and appropriations in the Departments reviewed by the CPEIR fall under the NCCAP priority on Water Sufficiency, followed by Ecosystem and Environmental Stability, and Food Security. While funding for some NCCAP priority areas, such as Food Security, are covered largely by one Department, funding for other NCCAP priorities are spread across several Departments. Funding for NCCAP prior- ities has been steadily rising in the past five years, with the largest 1  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on T GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 growth arising from appropriations for NCCAP priority on Water figures are based on GAA Budget, 2013 figures are proposed NEP Sufficiency (from about Php 6 billion to about Php 20 billion). 2  For the DA, 2009–2012 average annual growth rates are included. Budgetary appropriations in support of the NCCAP priority on Food Security increased by more than 140 percent in real terms since 2011, from Php 3.3 billion to Php 8.3 billion in 2012 (Figure 10  e NCCAP classification system is used for the remainder of the analysis of the report, Th as it provides the best estimate based on the Government’s climate policies. 40 13).11 This upward trend coincides with the DA’s efforts in 2011 flooding in outlying areas and cities. While not always document- and 2012 to mainstream climate change aspects in budget plan- ed separately, other activities have also been funded, such as the ning, including the reinforcement of some ongoing activities (e.g., use of bioengineering technologies to strengthen the resilience of education and training on climate change resilience or activities infrastructure, upgrading flood control and road drainage stan- related to weather-based insurance) and the development of new dards, provisioning underground detention tanks, establishing climate change–related activities (e.g., the composting or the adap- retarding basins, desilting rivers, and installing flood monitoring tation and mitigation projects managed by PhilRice). Finally, PAPs and warning systems. Appropriations in favor of the NCCAP supporting the NCCAP Priority on Ecosystem and Environmental output to improve water supply and demand are either small Sustainability have also supported the upward trend, increasing (rainwater collectors) or could not be identified (localized water from Php 3 billion to nearly Php 10 billion owing to large-scale systems), or are implemented by the National Septage and Sewage investments in the NGP. Program (“implement the Clean water Act and the National Septage and Sewage program�), which was only recently launched Figure 13. Composition of Expenditures and Appropriations by NCCAP Strategic Priority Area, 2008-2013 (on obligation on a pilot basis. 12 Another NCCAP activity, the improvement of and appropriation basis, in %)1 “water quality of surface and ground water,� is partially supported Source: DBM, DA, DOST [PCIEERD, PCAARD, PCHRD]. by DENR’s budget through the implementation of the opera- tional plan for the Manila Bay Coastal Management Strategy and EMB’s budget (under water quality management); however, the appropriations are not reported separately in the budget and instead merged with other budget items. The majority of funding for the NCCAP priority on Ecosys- tem and Environmental Stability has in recent years support- ed the “development and implementation of mitigation and adaptation strategies for key ecosystems.� The DENR accounts 1  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on T GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 for 90 percent of all budget appropriations under this priority. figures are based on GAA Budget, 2013 figures are proposed NEP However, the alignment is not straightforward because the PAPs also contribute to activities under other NCCAP outputs (e.g., Expenditures and appropriations supporting the NCCAP “implement the National REDD-Plus Strategy�). The identi- priority on Water Sufficiency are concentrated on improving fication of funding activities related to the management and water governance, primarily through flood control protection, conservation of protected areas and biodiversity areas, performed and are higher than the targets reflected in the PIP. Nearly under the Protected Area & Wildlife Service PAP, is more clear- all of the expenditures and appropriations are allocated to the cut. Forest management (such as the NGP) together with land flood control protection PAPs management–related activities (e.g., land services) accounted for to rehabilitate and protect 84 percent of total appropriations in 2012. This suggests a clear Flood control pro- watersheds and river basins in priority toward high-scale investments, raising some questions tection is the largest support of the NCCAP output about sufficient funding in capacity building, research, and PAP, accounting for “CCA and vulnerability reduc- broader ecosystem management (Figure 14c). The NGP is a na- tion measures implemented.� tional priority program, managed by the DENR Office of the Sec- at least 40 percent The government’s strong com- retary. It is a large forest rehabilitation program focusing mainly of climate appropria- mitment to address flooding, on plantation development, such as seedlings produced, area tions each year. drainage, and shore protection planted, jobs generated, and contracts issued. While many NGP is shown by budgetary alloca- activities provide multiple benefits, including poverty reduction, tions in the 2013 budget (Php enhancing food security, environmental stability and biodiversity 20 billion) that exceed pledges made in the PIP (Php 14 billion) conservation, and carbon sequestration, the program is tagged as and the DPWH’s work program (Php 13 billion). Many of these providing mitigation benefits. activities primarily address the “rehabilitation and protection of watersheds and river basins� in direct support of perennial The DA’s climate appropriations to food security are spread across 86 PAPs, though the bulk of funding is focused on a few 11 The selection of climate appropriations for the DA made use of information at the sub- PAP level, which was prepared by the DA during the 2012 NEP review and based on a major PAPs. Most of the DA’s climate appropriations (93 percent special request by the Senate. The exercise focused on attributing DA’s budget (including in 2012) fall under its first two climate sector strategies addressing its attached agencies) with its strategic sector goal “sector resilience to climate risks increased.� This goal is part of the DA’s commitment inscribed in the PDP together with “the reduction of climate change-related risks and the vulnerability two other sector goals related to “improved food security and increased rural incomes� and “enhanced policy environment and governance.� This exercise did not include the 12 Th  e level of adequacy of funding is difficult to judge for two reasons: (1) most PAPs 2008 budget figures, and only captured at the time 2013 budget figures based on the included in the PIP were not included in the 2012 budget exercise conducted by the DA, Department and Agencies estimates. A similar exercise for 2008 and 2013 NEP data could and (2) the bureaus and agencies included in the PIP are different from those included in not be conducted due to time constraints. the 2012 budget exercise conducted by the DA. 41 of natural ecosystems and biodiversity� (72 percent) and “increase Figure 14. Climate Expenditures and Appropriations by the NCCAP Thematic Priority, 2008-2013 (in Php billion) the resilience of agriculture communities� (22 percent). However, 67 percent of this total account for three projects managed by A) Department of Agriculture PhilRice, the Tamang Abono Program (composting activities), the small-scale irrigation projects managed by the Bureau of Soils and Water Management (BSWM), and activities covered by the Re- gional Field Unit 1. Budgetary allocations in favor of risk-reducing mechanisms have been decreasing in real terms between 2009 and 2011. A challenge remains to ensure that climate vulnerabilities are reflected in the premium for which a new insurance weather index still needs to be established. In contrast, allocations to strengthen the capacity of communities and conduct vulnerability assessments are quite modest, representing 6 percent and 3 percent of total climate change related budget allocations, respectively. (Figure 14). Mirroring the large expansion of the DOE climate appro- priations, the appropriations and expenditures for NCCAP Sustainable Energy priority grew from around Php 0.2 billion in 2008 to about Php 3.8 billion in 2013. With the exception of 2009, the budget increased steadily by 117 percent in real Energy efficiency terms from 2008–2011, but and conservation experienced a large boost from account for the 2012–2013 due to the funding of the Electric Vehicle Project. vast majority of On average, promotion of spending under the energy efficiency and conser- B) Water Sufficiency Sustainable Energy vation accounts for 71 percent Thematic priority. of total climate appropriations and obligations, whereas appropriations and obligations on environmentally sustainable transport and renewable energy are low in both relative and absolute terms. Future funding needs will need to focus mainly on the implementation of the Government’s Energy Management Program and the renewable energy roadmap for which the DOE is carrying out an initial resources assessment (Figure 14d). The rise in appropriations has not been matched by corresponding increases in obligations, suggesting potential opportunities to increase impacts by strengthening financial efficiency. The impact of public spending depends on the financial efficiency with which the allocated resources are managed. While the lack of comparability of obligations and appropriations data makes it difficult to obtain an accurate pic- ture of budget execution rates, the limited data available suggest that budget execution rates for the four Departments (DPWH, DOE, PAGASA, and DENR) assessed have varied over the years, ranging between 64 and 104 percent. Three of the four Depart- ments have budget execution rates below 40 percent for at least one of the four years assessed. More telling is the difference in the increase in obligations for the four Departments, which have risen by 38 percent between 2008 and 2011 compared with increases in appropriations for these four Departments of 213 percent. 42 C) Ecosystem and Environmental Stability Financing gaps for knowledge and capacity development may slow implementation progress While the PIP includes some major activities that support NCCAP goals, their contribution to these goals are difficult to determine and require further review. The PIP aims to prior- itize PAPs that contribute to the attainment of PDP goals. While the PIP is not focused on NCCAP activities or goals, it includes PAPs that support NCCAP goals included in the PDP such as flood protection, the NGP, and integrated coastal resource man- agement and the renewable energy project. The extent to which these programs contribute to NCCAP goals is difficult to assess due to the lack of climate indicators and monitoring. In comparing funding needs—as expressed in the De- partments’ work programs and the PIP—with the budget, some climate PAPs suggest being adequately funded while others remain underfunded or not funded at all. Based on an assessment of four selected sectors (agriculture & fishery, water, D) Sustainable Energy 1 environment & natural resources, and energy) in the PIP, several findings could be drawn from the analysis: • Agriculture & fishery sector13: Despite significant funding planned for the development and implementation of the National Farmers Registry System and the Inventory System of Agriculture and Fishery Investments in the PIP, respective appropriations were not mobilized under the 2013 budget. Similar, the DA has not yet pursued activities related to research on climate-resilient crop varieties, water conserva- tion, establishment of field schools, and the setup of a climate database that informs technical and planning units on loca- tion-specific climate risks. • Environment & natural resource sector: The Clonal Nursery project has been delayed by a year and falls short by Php 400 million in comparison to the commitments in the PIP for 2013. Some evidence suggests that small-scale activities for ecosystem stability services might lack funding or might not be sufficiently funded. For instance, funding for the ground water resource assessment has not yet been mobilized in the budget. 1  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based T on GAA Budget, and 2012 figures are proposed NEP. For all other Departments, 2008–2012 figures are based on GAA Budget, and 2013 figures are proposed NEP. 13 Th  e level of adequacy of funding is difficult to judge as most PAPs included in the PIP were not included in the 2012 budget exercise conducted by DA; similar bureaus and agencies 43 • Energy sector: The funding for alternative fuels for transport ic Information Infrastructure in Agriculture and Fisheries was program, the biofuel program, and the National Energy Effi- not secured under the 2013 budget, but could be implemented. ciency and Conservation Program were delayed compared with Similarly, several tools related to capacity building, training, or commitments in the PIP, and resources were only allocated in the mainstreaming of climate change adaptation in planning are the 2013 budget. Funding for the clean fleet program and the conducted at a pilot basis only and could be expanded upon. adoption of the integrated land use and transport planning LGUs are action-oriented, process were not secured in the 2013 budget. • Water sector: Funding for water harvesting technologies or the profiling of watersheds and river basins is small. For oth- but sources of funding are ers (notably related to water supply and weather forecasting), more work is needed to understand the adequacy of funding fragmented and their available amounts are limited and potential funding gaps. Capacity development, which is included in the various NCCAP priorities as well as the overall NCCAP priority At the local level, the Makati to fund knowledge and capacity development, is largely Capacity develop- City and Albay Province case underfunded. Overall the NCCAP priority on Knowledge and studies indicate success in ment accounts Capacity Development accounts for a very minor part of climate integrating climate change appropriations (Figure 13). Capacity building and research under for a very small in development plans (CDPs, the Ecosystem and Environmental Stability priority appears to share of all Depart- CLUPs, and MDPs). The two be underfunded. Under the Food Security priority, allocations ments’ budget case studies carried out through to “strengthen the capacity of communities� and “conducting appropriations. the CPEIR indicate that they vulnerability assessments� represents only 6 percent and 3 percent expend a greater share or their of total climate change related budget allocations, respectively. In budget on climate change pro- the Water Sufficiency priority, the DENR is responsible for the grams than the national government, reflecting strong leadership, implementation of several capacity building projects (on IWRM commitment, and concern. At 761 Php million, Albay has appro- and adaptation planning) and studies (water and supply demand priated about 15 percent of its budget for climate change/DRRM analysis), the Department has not been able to secure respective programs, while Makati City’s expenditures accounted for more funds in the 2013 budget. than 8 percent at a total of Php 5.9 billion. These amounts may in- clude expenditures on disaster response, recovery, and preparedness, Some NCCAP priorities and sub-activities were not fully so overstate the climate expenditures. Nevertheless, compared with identifiable in the budget and could be either underfunded or the 2 percent average at the national level, these commitments are not funded. Three outputs under the Ecosystem and Environmental five to nine times higher as a share of the total budget. Stability priority seem to be unfunded: the strict implementation of environmental laws, the institutionalization of natural resource The CPEIR indicates that climate appropriations at the accounting, and the enhancement for integrated ecosystem-based local level are directed toward the primary concerns of the management approach in protected areas and key biodiversity areas. LGUs. The province of Albay is much more vulnerable than Furthermore, as the NDRRMC is the only agency with a mandate the municipality of Makati, which is reflected in the way their to carry out activities under the Human Security priority, the level climate expenditures are of funding for this priority could be subject to discussions. Mainstreaming appropriated (see Box 1). Finally, funding for activities under the Climate-Smart Industries Climate appropriations in and Services are either at an initial stage or are mainstreamed under climate change in Albay are focused almost the Government Accounting System and through support to op- land-use planning and entirely on climate change erations. This weak level of funding or ability to identify activities the presence of sup- adaptation, which accounts for could very well be tied closely to the lack of coherent roles and portive local policies more than 97 percent of the responsibilities for carrying out climate action. total climate change spending have contributed to from 2008–2012 (Figure 15). While several NCCAP priorities seem to be covered by only the relative success in About 30 percent is mainly a few major PAPs, there are significant opportunities to scale funding climate action for infrastructure outlays in up many key activities. The DA has not yet pursued activi- at the local level. support of the redirection ties related to research on climate-resilient crop varieties, water of development toward less conservation, establishment of field schools, and the setup of a hazardous, lower-risk areas, climate database that informs technical and planning units on and mainstreaming climate change adaptation in the Provincial location-specific climate risks. In addition, funding for remote Development Plan, while the remaining 70 percent is directed sensing as well as for the expansion of the web-enabled Geograph- toward addressing disaster risk mostly for recovery, rehabilita- 44 tion, and preparedness. In contrast, Makati City spends about Figure 15. Appropriations for Climate Change Initiatives of the Province of Albay, 2008-2012 (in Php billions) 55 percent of climate appropriations on adaptation, with most Source: Status of Appropriations, Allotments and Obligations of it going to support flood control, and 45 percent on emissions of Provincial Government of Albay, various years mitigation activities. This is consistent with the city’s focus on promoting itself as a green and livable city. While its climate mitigation expenditures have fluctuated from year to year, they peaked at 5.3 percent of total expenditures in 2012. The city’s spending on GHG emissions mitigation is focused on transport sector interventions (about 64 percent) that are intended to reduce GHG emissions by reducing vehicular traffic,14 along with the promotion of energy efficiency (about 34 percent) (Figure 16). 14 Th  ese include road improvement projects and the construction of more walkways con- necting different buildings in the central business district. The city’s transport strategy also includes the adoption of the e-jeepney, and the anti-smoke belching campaign. Box 1. Contrasting Circumstances, fiscal capacity, highlighting the local competitive advantages of Similar Successes: Case Studies on engaging in climate action. The city is less exposed to climate and weather-related hazards compared with the rest of coun- Makati and Albay try, but it has experienced flooding in some of the barangays While the province of Albay and the city of Makati have led along the Pasig River. It had the lowest poverty incidence (1.4 proactively on the climate agenda, their circumstances are percent) among all Philippine cities in 2009. quite different, presenting contrasting case studies of local Cognizant of the adverse impact of climate and weather-related leadership on the climate agenda. Both LGUs have led the hazards on poverty reduction and the achievement of the MDGs, mainstreaming of climate change policies and actions in their the provincial government of Albay has proactively enacted respective areas by incorporating climate change issues in policies and programs that have facilitated the financing of cli- development and land-use plans, enacting complementary mate action, despite its relatively weak fiscal capacity. The Albay local policies, financing climate Provincial Government started to mainstream CCA and DRRM action from their own budgets, in its provincial development plan even prior to the enactment Proactive main- and mobilizing additional ex- of the Climate Change Act and the DRRM Act. For instance, in ternal resources. They present streaming of contrasting case studies due 2007, the Government proclaimed CCA as provincial policy in 2007, funded the Albay Action for Climate Change program in its climate action, to differences in their exposure budget, and reorganized the PLUC and CLUP Technical Working to climate hazards, specific vul- coupled with Group. In 2009, the Provincial Development Council approved nerabilities, per capita income the 2011–2016 Provincial Development and Physical Framework strong leadership, levels, and incidence of poverty. Plan, explicitly recognizing climate change action and disaster global knowledge, The level of vulnerability, fiscal risk reduction as essential to the attainment of the province’s and supportive capacity and poverty incidence overall development goal of achieving the MDGs. Its develop- have clearly guided both Albay ment plan ordains the concentration of high-regret investments local policies, have and developments in landscapes that are less exposed to haz- and Makati in their climate plan- contributed to the ning process. Albay is a highly ards and which are not environmentally constrained. relative success of vulnerable LGU with a high The Makati City Government has proactively enacted policies poverty incidence and low fiscal Makati and Albay capacity, which have guided its and implemented programs to address environmental con- cerns, including those raised by climate change. Formulated in in funding and focus on CCA and DRRM. The 2000, the latest CLUP recognizes the need to address existing province is highly exposed to implementing climate- and weather-related environmental concerns for preserving the city’s predominant status as the center of finance and commerce in the country. climate PAPs. hazards, experiencing three to In line with this, the city’s legislative body has passed several five typhoons annually, and has ordinances on environmental management and the city has been identified by the NDRRMC developed PAPs (e.g. solid waste management, urban greening, as being at high or very high risk for temperature and precipita- and vehicular emission control) aimed at improving livability tion changes, as well as typhoons. The provincial government of while reducing GHG emissions. In recent years, the city has Albay is one of the poorest in the country, with a per capita in- been actively participating in various global networks of cities come of 837 pesos in 2009, less than half the national average. on benchmarking and capacity-building activities related to CC The incidence of poverty in Albay has remained high at roughly and DRM. While the impacts of climate and weather-related 43 percent, which is significantly higher than the national aver- impacts are less severe than other parts of the country, the city age of 25–26.5 percent in 2003–2009. In contrast, Makati City continues to undertake measures to reduce flooding risks in is a less vulnerable LGU with a low poverty incidence and high low-lying areas. A revised CLUP is about to be approved. 45 Figure 16. Spending on Climate Change Programs Funding of climate PAPs at the local level is highly fragment- and Projects of Makati City, 2008-2012 (in Php billion) Source: Makati City Government ed, making it difficult for LGUs to plan effectively (Figure 18). The LDRRMF and the LDF are the primary potential sources of funding for climate change related activities at the local level. In turn, both of these funds are sourced from the General Fund income of LGUs, which, as mentioned above, varies across LGUs. The LDRRMF, aimed to finance DRRM, accounts for 5 percent of the regular General Fund income, and the LDF, aimed to finance development (which includes adaptation and DRRM), accounts for 20 percent of the IRA. The LGC further provides that the LDF can only be used to finance projects that are explicitly identified in the Local Development Plan. Given the fairly large fiscal autonomy granted to LGUs and the many devel- opment priorities that they have, climate change adaptation and Beyond the two case studies, LGUs most vulnerable to the mitigation programs and projects often have to compete against impacts of climate change have the greatest need for public the demand for funding from other development priorities. This support yet have the least capacity to provide support under highlights the need to mainstream climate change in local devel- the current revenue sharing arrangements. Provinces have opment planning. On top of their regular General Fund income, been classified for their risk of experiencing four weather-related LGUs may also tap into other sources of financing, including hazards—flooding, rainfall change, El Niño, and typhoons—in categorical or conditional grants from the national government a 2010 Global Facility for Disaster Risk Reduction study. The (e.g., PCF, PDAF, BUB, PSF and grants from DPs). LGUs can provinces and municipalities at also receive direct funding from national government agencies high or very high risk of being for climate PAPs that previously were the responsibility of the Poorer LGUs have affected by these hazards also national government. NG-LGU cost sharing schemes are meant lower fiscal capacity have higher poverty incidence, to leverage national government resources and to induce LGUs to and are often also hence the greatest need to pro- provide greater funding for the specified service or program. Each the most vulnerable vide public support. However, source of financing has its own set of rules complicating access, these LGUs are on average but they play a significant role in ensuring sufficient financing for to climate risk. poorer, with lower total income lower-income LGUs such as Albay. Total financial assistance re- per capita (Figure 17). In the ceived from Agencies and various DPs in Albay from 2008–2012 aggregate, about 70 percent of LGU income is derived from the was equal to about 82 percent of what the provincial government Internal Revenue Allotment (IRA), a direct transfer of resources spent on its own, allowing the province to implement a host of cli- from the national government accounts to LGUs. The amount of mate change activities; however, this is a unique example as most the transfer to each LGU depends on its area and population and LGUs have weak capacity to mobilize such resources. not on the level of its vulnerability. While LGUs can also generate income from their own sources, the poorer LGUs have limited The PSF, which represents a dedicated source of funding at capacity to do so, relying on the IRA for nearly 90 percent of their the local level, is aimed at adaptation but has gaps in coverage income. Among LGUs, the average per capita income of cities is and is not yet operational. As currently structured, only the more than twice the average per capita income of provincial and LGUs and communities can submit proposals for consideration municipal governments, reflecting their greater capacity to mobi- by the PSF Board. Given the size of the PSF, this selectivity may lize own resources. be appropriate. However, this seems to preclude the funding of adaptation activities undertaken by other regional entities Figure 17. Per Capita LGU Income of Provincial Governments, or the Agencies that directly support multiple LGUs and local Ranked According to Various Hydro-meteorological Risks, 2009 (in Php)1,2 communities through a number of important programs, such as forecasting and early warning systems and the strengthening and establishment of regional information networks. Such programs will need to be funded by the National Agencies as part of their regular budget, so it is important that they have adequate incen- tive for prioritizing them in their work program. The modalities of how such inter-LGU or multi-LGU programs can be funded and the incentives for individual local governments to propose 1 L  ist of provinces subject to high/ very high risk for flooding, rainfall change, such programs with large spillover benefits outside of their own El Nino, typhoons obtained from GFDRR (2010). jurisdiction is not indicated. Moreover, the IRR exempts PSF 2  Similar disparities exist for municipalities, even though the differences are somewhat smaller for them compared with provinces. 46 Figure 18. Key Characteristics of Local Sources of Climate Financing Partial None REQUIRED • PCF (50%) • PDAF COST • BUB (5–30%) • LDF (not applicable) SHARING • Direct Spending by NGAs • LDRRMF (not applicable) (10–70%) Non-restrictive Poverty-based Multiple Factors • LDRRMF • PDAF (Poor LGUs; • PCF (Based on Performance • LDF 4th to 6th class) Assessment and poverty rate) ELIGIBILITY • PSF • BUB (609 poorest • Direct Spending by municipalities) NGAs (Qualify if help deliver sectoral priorities) Adaptation and DRRM Adaptation Only General Development • LDRRMF • PSF (including adaptation) • LDF PURPOSE • PCF • PDAF • BUB • Direct Spending by NGAs projects from ICC review and approval processes, resulting in a i. Adaptation only more streamlined but fragmented process. In addition, mech- ii. Mitigation only anisms to help prioritization for the proposals in a transparent manner are not yet available. Such issues must be considered by iii. Adaptation and mitigation the PSF Board in establishing its operational guidelines and when In 2008, about 76 percent of climate appropriations were directed to operationalizing the fund. The operationalization of the PSF can PAPs that provided adaptation benefits, while about 11 percent were not only serve as a catalyst for local climate financing but also can directed to PAPs with mitigation benefits (Figure 19). Appropria- be a stepping stone for preparing the institutions and processes tions for mitigation PAPs have grown at an average annual rate of 46 to accept international finance that might be available from the percent, more than twice as fast as PAPs providing only adaptation Green Climate Fund or other private sources. benefits, which grew at an average annual rate of 17 percent. As a result, in these five years, the share of appropriations directed to Climate appropriations adaptation has dropped to 65 percent while appropriations for PAPs with mitigation benefits rose to nearly 29 percent. The rapid increase have been focused on in mitigation appropriations in the last five years comes primarily from the expansion of the NGP, the Electric Vehicle project, and the adaptation, but the share Tamang Abono Program. Furthermore, these results do not include several PAPs financed by Special Accounts that address mitigation, of appropriations for which likely result in an underestimation of the share of climate mitigation funding has expenditures directed toward mitigation. Of note, 65 percent for adaptation is actually on the low side compared with allocations by been rising faster other countries in the region, where the breakdown of funding is 70–80% for adaptation and 20–30% for mitigation (UNDP and Nearly three-fourths of climate appropriations have been CDDE, 2012). With several major mitigation PAPs being expanded, directed toward adaptation intervention over the 2008–2013 new opportunities present themselves for further scaling up adapta- periods, though the share of appropriations directed toward tion through the co-benefits of such PAPs. For example, a redesign mitigation has grown faster on average. The PAPs addressing and improved targeting of the NGP can deliver its full carbon climate change are classified based on a simplification of the sequestration potential while also making the participating poor MDB classification system into: communities and their livelihoods more resilient to climate hazards. 47 Figure 19. Climate Appropriations by PAPs Addressing research than before, so some adaptation is considered. Still, Adaptation, Mitigation, or Both 2008-2013 (in %)1 Source: DBM, DA, DOST [PCIEERD, PCAARD, PCHRD] only about a third of appropriations have direct adaptation co-benefits. Well-designed forestry programs can provide significant adaptation as well as carbon sequestration benefits; however the design and the targeting of the NGP have not fo- cused on these, limiting its potential to deliver climate results. • About three-quarters of the DA’s total climate appropria- tions is for adaptation, composed primarily of funding for PhilRice, the Tamang Abono program, and for a range of small-scale projects related to organic and conservation agri- culture. Though these projects’ main purpose is to enhance production resilience, they also provide significant mitigation 1 T  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 co-benefits, which explains the increase under mitigation. figures are based on GAA Budget, 2013 figures are proposed NEP • DOST’s small-scale attached Agencies 15 mainly support adaptation activities, with most of the budget going for The shift toward adaptation is taking place in some of the PAGASA’s weather, flood forecasting, and research services. Departments, but is happening at varying rates, with the DOE This represents about six percent of the total climate ap- continuing to focus on mitigation consistent with its mandates propriations for adaptation. PAGASA’s funding makes an and the DENR and DA experiencing win-win opportunities important contribution to building adaptation and disaster through adaptation and mitigation co-benefits. The DPWH risk prevention capacity (notably related to understanding accounts for about 72 percent of appropriations for adaptation, and monitoring hazards, i.e., hazard identification, mapping, followed by the DENR (15 percent), and the DA (12 percent). and forecasting). Efforts to prioritize more resources to such (Figure 20). On the mitigation side, the DENR accounts for ex ante disaster investments have been called for, but the level nearly 75 percent of mitiga- of funding remains very modest.16 tion appropriations followed Flood control pro- by DOE (15 percent) and the • The spike in the DOE’s climate appropriations envelope from tection accounts for DA (10 percent) (Figure 21). Php 157 million in 2008 to Php 3.8 billion in 2013 is driven about three-fourths About 13 percent of DENR’s by the Philippine energy efficiency project since 2010 and the climate appropriations in 2012 new Electric Vehicle Project (replacing petrol-fuelled tricycles of the appropriation target measures that include with electric models), which is included in the 2013 budget. directed at climate both adaptation and mitigation Actual spending could be significantly higher, due to the adaptation. benefits. For instance, strength- Department’s high reliance on SPFs.17 Despite its clear focus ening the adaptive capacity of on mitigation (given its mandate), the DOE recognizes the forests also allows for terrestrial importance of adapting energy systems to climatic changes, carbon sequestration. It also offers significant development co-ben- but these activities are more difficult to identify in the budget efits through protected area management, soil conservation, and and remains at an initial stage. 18 It is noteworthy that adap- watershed management. Similarly, the DA also manages projects tation-related investments is suggested to be primarily funded that have adaptation and mitigation co-benefits (e.g., mangrove planting or PhilRice’s project to develop mitigation and adaptation technologies and strategies). • Nearly all climate appropriations under the DPWH envelope are directed to providing adaptation benefits, and are almost 15 P  AGASA, Philippine Council for Industry and Energy Research and Development (PCIEERD), Philippine Council for Agriculture, Aquatic, and Natural Resources entirely aimed at flood control protection projects. Budgetary Research and Development (PCAARRD), and Philippine Council for Health Research allocations to flood control protection increased by 124 per- and Development (PCHRD). 16  The recent DRR study that reviewed DRR budget allocations in the national budget cent in real terms, from Php 7.5 billion in 2008 to Php 20.2 concluded that funding for understanding hazards (mainly funded by PAGASA and billion in 2013. NAMRIA) accounted for Php 1 billion in 2010 (less than 5 percent of the total DRR budget) (Understanding Existing Methodologies for Allocating and Tracking National • The DENR is very clearly focusing on mitigation, as appropri- Government Budget for Disaster Risk Reduction (DRR) in the Philippines, 2012). ations in this area have increased by 380 percent in real terms, 17 See section below on special purpose funds for more details. 18 DOE considers programs that address the country’s self-sufficiency needs in energy  from Php 1 billion in 2008 to almost Php 7 billion in 2013, (promotion of energy efficiency or further exploring renewable energy potentials) an a mostly directed toward the NGP. Discussions with the DENR daptation intervention. The CPEIR methodology considered a program to have adapta- tion co-benefits if it takes into account climate change aspects in planning and design of show that, in recent years, climate variability has been taken the energy supply, demand side management to respond to climate change by reducing into greater account in the choice of locations for planting or energy consumption, or increasing energy efficiency and climate-related regulatory support aimed at improving energy efficiency such as norms, building codes, etc. 48 by the National Grid Cooperation or other private electricity NDRRMF is funded annually corporations, including the strengthening of power trans- Despite success- in the GAA, LGUs are required missions and distribution systems, the laying of underground ful convergence of to appropriate 5 percent of their cables for power distribution systems, or the protection of the climate adap- regular General income for the energy facilities along coastal defense walls. LDRRMF. Between 2008 and tation and disaster 2012 the total resources direct- Figure 20. Climate Appropriations for PAPs Contributing risk reduction and ed to the LDRRMF rose from to Adaptation only by Department, 2008-2013, (in %)1 Source: DBM, DA, DOST [PCIEERD, PCAARD, PCHRD] management policy Php 11.5 billion to Php 15.8 agendas, funding is billion. Unutilized LDRRMF resources accrue to a special still directed primarily trust fund to address DRRM toward recovery and issues for five years, after which rehabilitation. they revert back to the General Fund. The new provisions allow Departments and LGUs to better address emergencies and hazards by mitigating their effects 1 T  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on and preparing communities for future climate-related disasters, as GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 figures are based on GAA Budget, 2013 figures are proposed NEP. well as strengthening communication and early warning devices. Figure 21. Climate Appropriations for PAPs Contributing to At the national level, despite increased funding of the Mitigation only by Department, 2008–2013, (in %)1 national Calamity Fund in recent years, most of the resources Source: DBM, DA, DOST [PCIEERD, PCAARD, PCHRD] continue to be directed to response, recovery, and rehabil- itation efforts. Through 2013, the GAA has not included any appropriations for the NDRRMF. Instead, appropriations have continued for disaster relief, recovery, and reconstruction through the Calamity Fund.19 The Calamity Fund can support disaster prevention activities, but has rarely done so over the past years. This can be explained in part by increased funding needs for post-disaster activities, reflected in increased budgetary alloca- tions for the Calamity Fund from Php 5 billion in 2011 to Php 1  he DA’s 2008 and 2013 budget figures are excluded, 2009–2011 figures are based on T 7.5 billion in 2012 and 2013. GAA Budget, 2012 figures are proposed NEP. For all other Departments, 2008–2012 figures are based on GAA Budget, 2013 figures are proposed NEP. The DBM is of the opinion that disaster prevention should be funded as part of the regular budgets of the Departments to Convergence of the Climate reduce implementation delays, but has yet to develop systems to incentivize climate change adaptation and disaster pre- Change Adaptation and vention actions by Departments. According to DBM, funding Disaster Risk Reduction disaster prevention under the Departments’ regular budgets would better facilitate the execution of cost-intensive investments, and Management agendas such as seawalls, which are not undertaken normally under SPFs. Operationally, funding disaster prevention measures out of the is not reflected in budgets NDRRMF, a special-purpose lump sum fund, would entail Departments submitting proposals for funding to DBM, followed and plans by an evaluation and approval of such proposals during the budget year. The need to evaluate individual proposals would likely delay In line with the paradigmatic shift toward disaster prevention, implementation of these activities. However, the current arrange- the NDRRM Act introduced changes in the allocation crite- ment does not allow the DBM to incentivize Departments in un- ria. The NDRRM Act revamped both the National and Local dertaking disaster prevention activities from the resources that are Calamity Funds, creating the National Disaster Risk Reduction to be set aside for such activities under the NDRRMF. Systems to and Management Fund (NDRRMF) and the Local Disaster Risk Reduction and Management Fund (LDRRMF) from which 70 percent of the amounts appropriated should go to disaster 19  e Calamity Fund can be used to fund relief, reconstruction, and rehabilitation activi- Th ties (including pre-disaster activities such as preparation of relocation sites, and disaster prevention activities, with the remaining 30 percent to support the management training) related to the occurrence of natural calamities, epidemics, crises Quick Release Funds for relief and recovery programs. While the resulting from armed conflicts, and other catastrophes. 49 improve monitoring and tracking of such expenditure in Depart- assessments, environmental impact assessments, and climate ment budgets could begin to address the current shortcomings. screening tools, but these tools are often too technical to be useful Further, the funds disbursement process of the Calamity Fund is to Department staff. cumbersome, resulting in long delays. As a result, Agencies have been more hesitant to apply for funds. Similar procedures under Vulnerability assessments (VAs) are used for different purpos- the NDRRMF could affect incentives to apply for funds. es at different geographic scales, but are often too technical and use fragmented approaches. VAs are the first step in under- Tracking the utilization of climate resources at the local level standing the impacts of climate change. In the Philippines, VA is difficult, and evidence indicates that funding is still chan- tools are being developed sporadically, with much of the current neled toward recovery and rehabilitation. While the NDRRM practice focused on disaster-related risks. All of the available Act focuses on the transparent utilization of disaster funds, instruments, including guidelines from IPCC, the Disaster Risk requiring monthly reporting from the Departments, a challenge Exposure and Assessment for Mitigation tool, climate-proofing remains in the physical verification of the funded activities. instruments developed by the University of the Philippines, and Guidelines have been issued by the DILG and NDRRMC on the tools being developed by local scientists for DA’s Climate Field use of resources earmarked under the LDRRMFs, with a long list Schools, have been reported to be too technical for use by Agency of eligible equipment, goods, and services. However, it is difficult technical personnel. This calls for a review to assess how these to track the utilization of LDRRMF’s resources given the pur- instruments can be simplified and potentially better streamlined. chase of relief goods reported as Maintenance & Other Operating Expenditures. Additionally, the LDRRMF is off budget, making While standardization is not essential, a common VA frame- activities more difficult to track. However, significant funding for work would be useful in prioritizing climate action. There are prevention was channelled through the Performance Challenge no universally accepted approaches to VAs because of variations in Fund, where 395 LGUs were able to access Php 524 million to thresholds, tipping points and hotspots, diversity in local knowl- fund a total of 629 projects related to CCA and DRRM. edge and adaptability, and differences in time and space scales at which the climate change processes operate. Nevertheless, policy Some LGUs have raised concerns about the LDRRMF as an coherence and effective use of financial resources, avoidance of infringement on their autonomy. While some LGUs consider duplication, and unnecessary competition among VA tools are the LDRRMF resources essential for their disaster preparation and at stake. These could be achieved only if a common framework welcome the setup of a fund to protect the use of the resources,20 is used. Such a framework might include a comprehensive set of other LGUs are less prepared to make effective use of the resources physical indicators of climate vulnerability, identification of target for disaster preparedness. The use of the LDRRM funds at the vulnerable groups that are a priority for adaptation policy, a “map- local level is being questioned by some LGUs, which consider the ping� of the pathways of present vulnerability, and how these preset use of the funds as an infringement on their autonomy. might change in the future (using PAGASA scenarios). The climate-screening tool, which is being developed by Available planning and the DENR, provides upfront assessment of PAPs to identify design changes needed to account for climate change risks design tools are often and opportunities.21 Its use can improve the ability of project managers to understand and integrate climate change factors into not mainstreamed or are project planning, particularly at the early stages of project prepa- overly complex ration. The screening process assesses the vulnerability of a project concept to climate change. In particular, it provides information on climate-related risks on specific sectors or project activities. The Most tools in use in the Phil- tool’s application should guide project manager decision making Tools to support ippines need to be improved about the need to incorporate climate-change-related factors in the planning and prioriti- and made more accessible, design of their projects, the appropriate level of effort to be used while other tools still need zation are often not to address these concerns and tools available for supporting the to be developed and oper- mainstreamed and ationalized. The planning choice among adaptation options. At present, implementation of too complex to use. the tool is not yet well applied, calling for scaling-up. and prioritization processes in Departments already have a variety of tools to support decision making on climate change activities, including climate vulnerability and disaster risk 20 I  n the past, these resources had been set aside on an annual basis and frequently were 21 Th  is is different from the Climate Screening Guidelines piloted by the CCC and adopted used at the end of the fiscal year for other purposes, such as Christmas bonuses by the DBM in 2014 budget call which is focused on tagging PAPs in the budget. 50 The Philippines already has a comprehensive framework in place that mainstreams climate change impacts into existing Public finance reforms Environmental Impact Assessments (EIA), but the processes are reported to have technical shortcomings and experience provide opportunities time delays, limiting effectiveness. The mainstreaming effort to improve planning, does not imply a separate and Environmental added layer of data and work prioritization, execution, requirements over and above Impact Assessments the existing procedure, but is and monitoring of are often carried out merely designed to enhance late in the project and improve analyses of climate PAPs approval process, adaptive capabilities of the The inconsistency across national climate plans, sector strate- project vis�a�vis the environ- gies, and local development plans hampers the mainstreaming after significant ment in which it will function. of climate PAPs in the budget. In recent years, there have been expenditures have Technical shortcomings increasing efforts by the Government to integrate adaptation- and been incurred, and include the poor quality of mitigation-related issues into planning tools (such as the PDP, NC- provide limited many EIA reports, the limited CAP, sector strategies and plans, CDPs and CLUPs) at national utility of generic mitigation and subnational levels. At the level of policies, plans, and strategies, space for redesign- and management measures, climate change priorities have been mainstreamed in several of the ing the PAP. and the relevance of reports PDP’s core chapters, and a range of sector strategies and plans have for decision-making. The EIA been or are currently being updated by including climate change is often undertaken downstream of the decision-making process. considerations However, despite a range of planning tools and Effectiveness is further limited by complicated procedures, in- climate-friendly strategies and plans, challenges remain at the na- cluding inconsistencies in interpretations at various levels, lack of tional and subnational level to ensure climate actions are prepared EIA professionals steeped in CCA/DRR, localization of the EIA for and prioritized in budget planning. The NCCAP provides the process, and monitoring of compliance. strategic framework for government’s climate action prioritization, but it has not been used by Agencies to feed into the Departments’ Though the climate agenda includes provisions that vulnera- budget planning and resource allocation. A main challenge for ble population groups and communities should be included in the Departments and Agencies remains the use of the NCCAP to the consideration of climate PAPs, there is currently no tool integrate climate change concerns into their sector plans and iden- accessible to help identify their specific needs. The NCCAP tify activities for their respective budgets. Recognizing the need to envisions building up the adaptive capacity of women and men make the NCCAP a more operational tool for the Departments, in their communities guided by the principles that adaptation the CCC launched a series of initiatives in 2012 to update the doc- measures should be based on equity and in accordance with ument, including a review of the alignment between the NCCAP differentiated responsibility, and accord special attention for the priorities and the budget, and the preparation of a results-based protection of the poor, women, children, and other vulnerable monitoring framework to allow better identification and tracking groups. Tools to include poverty and social assessments in the of the NCCAP activities. design of PAPs have been used in a wide range of areas that assess the impacts of policies and programs on targeted segments of the The budget serves as the instrument by which resources are population, including the poor, women, and socially vulnerable allocated to PAPs, with the budget process providing entry groups. Given the poverty levels and significant vulnerability of points for mobilizing finance for climate action. Given fiscal many poor groups in the Philippines, there is a need to ensure constraints and competing development priorities, it has been a the availability of tools that assess such issues when planning and challenge for the government to mobilize additional resources for prioritizing for the climate agenda. climate change activities. It is therefore important to understand the budgeting process and allocation of resources among Depart- ments to examine constraints and opportunities to finance cli- mate PAPs. Through its four phases—budget preparation; budget legislation; budget execution; budget accountability—the budget process offers several entry points for integrating the climate agenda (Figure 22). 51 Figure 22. The Philippine Budget Cycle: Examples of Entry Points for Integrating the Climate Agenda Source: DBM CCC has recently defined Screen- Venue for the DBM to include ing Guidelines for identifying PAPs CCC’s technical advice in that support the NCCAP and DBM evaluating requests for finding is integrating this into the budget of PAPs above the ceiling with process to make Departments a climate lens more responsive to NCCAP Secondary tagging of climate PAPs Costing of will facilitate NCCAP priority tracking of programs and spending activities and with CCA and inclusionin mitigation sector MTEFs co-benefits will enhance ability of sector Agencies to access resourc- es available in medium term fiscal program Ongoing initiatives to improve performance indicators for each of MFOs in the OPIF of Departments and Agencies 52 Box 2. Secondary Tagging: the main beneficiary being local governments); (2) mobilizing Lessons from Uganda’s Virtual Poverty Fund development partner resources and harmonizing conditions by organizing more sector-specific development partner • Virtual Poverty Fund (VPF). VPF uses the existing budget resources and supporting development partners’ shift from classification system for tagging and tracking the perfor- project to budget support; and (3) improving budget predict- mance of specific poverty-reduction expenditure in the ability, transparency, and accountability. budget. A number of budget codes are identified that label a portion of government expenditures as poverty-reducing. In • Some Key Lessons. The PAF experience in Uganda has principle, a well-designed VPF would allow for (1) maintaining demonstrated a number of key lessons on how to establish the integrity of budget management and systemic reforms, VPFs as mechanisms for tracking and monitoring poverty (2) adapting the existing budget classification system to “tag� reducing expenditures: A VPF should be simple, regarded as pro-poor programs (hence “virtual� poverty fund), (3) linking a mechanism to identify priority expenditures in the budget specific (e.g., HIPC) resources to these budget allocations, (4) classification system in alignment with the Poverty Reduction protecting budget disbursements to these programs, and (5) Strategy Paper. The definition of the programs included in the monitoring of performance of these expenditures. VPF should be reviewed regularly. Tracking of performance of the expenditures should be within a transparent budget-wide • Uganda’s Experience with its VPF. In response to the need reporting and review system. A VPF should also support to ensure budget expenditures are oriented toward poverty rather than replace the implementation of a country’s public reduction, the Government of Uganda introduced the Poverty expenditures management reforms. A key element of VPFs, Action Fund (PAF) in 1998. The setup of the PAF was simple the protection of VPF expenditures, should be linked to a sys- and did not require additional institutional arrangements. The tem of controlling overspending in other parts of the budget PAF has been successful in (1) re-orienting Uganda’s budget to limit the shocks to unprotected sectors. allocations toward pro-poor service delivery by ensuring additional resources were channeled to specific priority Source: T Williamson and S. Canagarajah. Is there a place for vir- programs of Uganda’s Poverty Eradication Action Plan (as tual poverty funds in pro-poor public spending reforms? Lessons a result, allocation to PAF programs increased rapidly, with from Uganda’s PAF 2003 While climate screening guidelines do serve to facilitate the to standardize the develop- inclusion of climate action in budget planning at national Only a few Depart- ment of MTEFs and roll this and subnational levels, prioritization requires additional tools ments and Local out for use by departments. and decision support processes. The recently developed climate Likewise, other potential Government Units screening guidelines focus primarily on identifying climate PAPs, entry points at the level of the tool cannot yet be used for experiment with and investment appraisal have not prioritizing PAPs. In addition use screening and yet been fully explored, such Prioritization tools to a database of geographic and other budget tools as the integration of climate need to be devel- sector vulnerability, prioritiza- considerations in the ICC’s to facilitate main- oped to supplement tion requires a decision support investment appraisal criteria. streaming of climate screening guidelines. system that translates NCCAP The application of a climate priorities into fundable activ- change in budget lens to infrastructure stan- ities, the adoption of targets planning. dards or building codes is also that are to be achieved, indicators to measure these targets, and still at an initial stage, and will a decision support process that accounts for the multiple benefits require careful selection of investment PAPs due to its possible that result from climate action and the cost of inaction, recog- high budget implications. nizing the inherent uncertainties surrounding potential climate impacts and the benefits of actions taken (Box 2). Well-intentioned Government programs designed for one purpose can have perverse effects with unintended conse- On the whole, it seems that most Departments and LGUs have quences, inadvertently increasing vulnerability or increas- not yet made use of internal policies, budget calls, direc- ing carbon emissions. The Philippines’ Government does not tives, or memorandums to promote the identification and provide a subsidy for fossil fuel consumption in the form of low, budgeting of priority climate activities or to integrate climate regulated prices or tax levels. While environmental taxes on risk considerations in infrastructure vulnerable to weather fossil fuel energy consumption are currently under discussion, extremes. For instance, only DENR and DPWH have adopted a the price signals from the market are strong as the country has Medium Term Expenditure Framework (MTEF) in their internal the second-highest energy costs in Asia after Japan. These costs planning and budgeting. The Fiscal Planning Bureau is planning should incentivize companies and households to undertake energy 53 efficiency and conservation efforts. However a number of direct a holistic program approach. For the CCCC, all eight Depart- or indirect subsidies incentivize increasing vulnerability or reduce ments contributing to the Climate cluster were asked to identify sequestration of carbon, such as those that promote the location their main activities that contribute to the Cluster’s key program, of infrastructure or people in higher risk areas or those that en- “managing risk of communities within the 18 major river basins courage land conversion from forest and watershed to other uses, vulnerable to critical geological and hydro meteorological hazards as well as those that encourage conversion of prime agricultural through enhancing local adaptive capacity and strengthening nat- land to commercial, residential, and industrial uses. ural ecosystems’ resilience to climate change and disasters.�22 The total appropriations for this program amount to Php 13.6 billion, Innovative budgeting tools with the bulk of the funding coming from DENR (Php 9 billion, of which 73 percent of the funds are allocated to watershed and introduced through the river basin management activities, 17 percent to Namira’s large- scale topographic base mapping, and the remaining 10 percent to PFM reforms will enhance various other items). However, the effectiveness of this approach planning and prioritization, will depend on the Government’s ability to address some emerg- ing problems, including: as well as significantly a. The need for increased consultations between the DBM advance convergence and the CCC when implementing the Program Approach. Lacking consultations early on often requires changes in the The adoption of new budgeting tools such as the Program Ap- scope of the program later on in the process, and thereby proach and the Bottom-Up Budgeting approach offers unique slows down program implementation. opportunities to enhance climate outcomes, increase conver- b. The improvement of coordination, planning, and gence, reduce duplications, and leverage additional resources. implementation, which has been difficult as the In an effort to strengthen approach involves eight Departments and more than the reflection of policies and nine attached Agencies. The Government’s priorities in the budget as laid c. Adequate technical capacity of staff, which is critical for 2011 PFM reforms, out in the social contract and tasks such as the identification of appropriate targets and the five KRAs, the Government particularly the indicators, and subsequent monitoring of them, which introduced a number of budget Program Approach varies and is often lacking. procedures, such as the adop- and Bottom-Up tion of the Program Approach d. The limited incentives that Departments have to coordi- nate among each other in formulating and executing the Budgeting, can and the Bottom-Up Budgeting approach, to promote the focus Program Approach. reinforce and boost on critical program targets effectiveness in the underlying the five KRAs and While the Program Approach was established as a first step to draw on uncommitted resources or leveraging additional implementation to converge with the develop- funds from existing budgets of the agencies, such potential for of climate action. ment needs of poor/focus cities resource mobilization has not yet been fully exploited. To this and municipalities. Given the point, the DA and the CCC have benefited mainly from increased multi-sectoral nature of climate budget appropriations. However, the Program Approach has not change, these budget procedures provide opportunities to enhance yet resulted in leveraging reallocations (towards the program) the effectiveness of NCCAP implementation and mainstream cli- from existing budgets of agencies. Incentives and arrangements mate change considerations in bottom-up planning approaches. are yet not in place to allow the program to attract additional The Program Approach offers a unique opportunity for the funding from any fiscal space or reallocations. Philippines Climate Change Agenda to bring about con- BUB offers an opportunity for local communities to better vergence and greater coordination in the related activities plan and prioritize their activities, as well as to increase of several Departments, thereby helping to enhance the collaboration with CSOs. The programmed appropriation for effectiveness of the selected programs, reduce duplication all BUB projects in 2013 was Php 8 billion. The approach is being of interventions, and leverage additional resources from the piloted by the Human Development and Poverty Reduction Departments’ budgets. To support the accomplishment of the Cluster and the Good Governance Corruption Cluster to respond key performance targets under the five KRAs, the Government to the development needs of poor municipalities and move toward committed to use its fiscal space or uncommitted resources for the five key programs managed by each of the Clusters based on 22  e participating Departments are DA, DENR, DILG, DND, DOH, DOST, DPWH, Th and MMDA, and nine Agencies attached to them. 54 satisfying the Government’s goal to reduce poverty from 26.5 sources of financing. However, the further fragmentation of percent in 2009 to 16.6 percent by 2015. Under the approach, resources could result in piecemeal approaches if systems are 595 poor municipalities, including several cities with high poverty not put in place to plan, coordinate, and assess across financing concentration, prepare their Local Poverty Reduction Action Plan sources. Another possible risk is “double dipping,� in which local in a participatory manner with the help of CSOs, of which 61 project proponents successfully avail of different, uncoordinated partnerships have been formed so far. The major output of this funding windows for the same programs. A key in making new planning exercise is the identification of projects from a menu of funds more effective is improved access at low transaction costs. programs that are already being undertaken by selected Agen- Some of the policy barriers that need to be addressed by the PSF cies, and for which target LGUs want to secure funding from Board include the complexity of climate scenarios, transaction said Agencies. The participating Agencies under the BUB (DA, costs to comply with bureaucratic requirements, and widespread DENR, DOE, and DOH, among others) were asked to earmark support for high-carbon alternatives. There are also limitations of 10 percent of their total budget, on a notional basis, for programs the LGU support capacity as well as the limited capacity of local and projects for the funding requests of the target LGUs, but only implementers. DA reached this limit. There remains an important institutional gap in coordinating While the BUB approach is also laudable, the details of the the mobilization of additional resources to support national design and implementation are under review based on recent programs and in devising appropriate financing instruments experience. The BUB Executive Committee is the approving to reduce fragmentation. While the PSF Board is focused on lo- authority for the Local Poverty Reduction Action Plans. Com- cal adaptation financing, no such institution exists for addressing munities have submitted about 1,500 draft proposals pertaining climate financing at the national and sectoral level. Conceptually, to “environment and natural resources� directly to the DENR. the CFG could be constituted as a powerful group for carrying The lack of adequate guidelines for selecting the projects and the out such a task, but it remains informal group. This shortcoming specific role that RDCs can or should play in the selection process can be addressed by either augmenting the role of the PSFB or by are the main issues that remain unresolved. To increase the ef- providing some legal basis for the CFG to undertake this role. fectiveness of the BUB, the Government may want to strengthen the linkages between poverty and CCA and mitigation in project Development partners’ funding plays an important role in selection and review. global knowledge transfer, piloting new initiatives, and sup- porting investments to assist the Government in developing climate action at the central and local levels. More than 10 Increased budget development partners support the Philippine Climate Change Agenda, including the United Nations Development Program, the transparency facilitates Asian Development Bank, the World Bank, the Japan mobilization of domestic Development Part- International ner support plays an and development partner Corporation Agency, the important role in Australian Agency for Inter- resources for climate action sharing and generat- national Development, Euro- peaid, the French Develop- ing knowledge, and ment Agency, GIZ, the U.S. Transparency in the mobilization and use of climate resources is essential for increasing the efficiency of resource utilization in dedicating addi- Agency for International De- and for attracting additional new resources. A key part of such tional resources to velopment, and the British transparency is clear and agreed-upon definitions and criteria for support investments Embassy. Most development what constitutes climate expenditures, with public access to infor- partner-supported initiatives and capacity devel- have focused on climate-re- mation. Accountability and transparency can also be increased by using the national panel of technical experts in the processes of opment that can lated disasters and disaster project appraisal, monitoring, and evaluation. boost climate action recovery interventions in the at the central and infrastructure, energy, and The fragmentation of resources often results in piecemeal environment sector, with a approaches with higher transaction costs and lower effective- local levels. particular focus on capacity ness. Climate action has been funded mainly from the GAA, building, policy advocacy, from external sources, or through internal resource mobilization and awareness-raising and technology adoption, notably at the local by the LGUs, often on a project-specific basis. The creation of the level. Development partner funding has been, and remains, an PSF and the ability of the CCC to directly mobilize a specific pot important source of financing for flood control under DPWH. of resources provide new additional, innovative, and dedicated 55 The Climate Change Working Group of the Philippine De- M&E systems are indispensable for evaluating the performance velopment Forum (PDF) provides a venue for development of climate PAPs with respect to their objectives, to test the partners to share information, developments, and priorities, accuracy of ex ante projections of climate vulnerabilities or but has not yet led to significant strategic harmonization. The projects’ impacts on the respective vulnerabilities, and to incor- Climate Change Working Group of the PDF meets quarterly, porate lessons learned about the adoption and mainstreaming primarily to share information. While the working group has not of new and effective adaptation and mitigation interventions. developed a coordinated program of support, efforts are underway The monitoring and evaluation of climate PAPs in Departments is to develop a joint CCA and DRRM working group in line with sporadic and has been primarily focused on mitigation. The DOE the policy convergence on this issue. has long been monitoring the supply and utilization of biofuels. Along with the DENR, it is involved in GHG accounting and monitoring. There is little evidence of any Departments setting Existing monitoring and adequate adaptation outcomes or any processes for evaluating the effectiveness of their plans, policies, and programs. evaluation systems have A lack of agreed-upon indicators and targets has hindered the cumbersome reporting progress of implementing the NCCAP. Though the NCCAP requirements, and the lack provides a detailed results matrix including outcomes, outputs, activities, and outputs indicators, systems have not been put in of climate indicators limits place to adapt existing systems to monitor based on these indica- tors. The CCC requires Agencies to submit through the CCCC their usefulness to support their existing climate change related activities and programs. The NCCAP does not include agreed-upon indicators and targets the Government’s climate for reporting to the CCCC on Departmental climate PAPs to reform agenda measure against climate results. Thus, there is no mechanism to aggregate these submissions across Departments to report on a consolidated progress report. While LGUs are required to submit Monitoring and reporting on NCCAP implementation prog- their LCCAPs to the CCC, no systems are in place to receive, ress has been challenging, as systems are not in place to col- monitor, or review them. As a result, the CCC accomplishments lect and integrate results from various National Government report provides a narrative highlighting significant achievements Agencies. The NCCAP assigns the CCC overall responsibility on climate change, but does not report against the NCCAP for monitoring, reporting, and evaluating the progress of the NC- results matrix. Specifically, it lacks basic information essential CAP implementation. The results framework includes a detailed for assessing effectiveness of the overall program, including the structured articulation of the resources that are directed to the NCCAP objectives and outputs overall vision, intermediate and Monitoring and and the results that they have delivered. immediate outcomes, and a list evaluation systems of priority activities that are to Establishing targets for the NCCAP indicators and aligning are needed to be carried out during the three them with established Departmental Goals and outputs, such ensure efficiency six-year phases of the NCCAP. as in the OPIF, would provide greater incentive for NCCAP It also assigns the specific implementation. Department incentives to undertake activities and increase the responsibility of leading and that support NCCAP outcomes depend strongly on the degree accountability and supporting each of the listed of alignment between the Departmental goals and the NCCAP transparency of activities to specific Agencies. goals, and on the incentives that Departments have established for institutions imple- It does not, however, specify meeting their performance goals. While efforts have been made menting climate how the progress of implemen- to enact some reforms included in the NCCAP, many others have tation on specific tasks is to yet to begin or are at the initial stages of discussion. Other outputs change activities. be monitored and where the are in conflict or overlap with existing mandates, hindering their responsibility for monitoring implementation. The adoption of OPIF has shifted the focus of lies. While Departments and Agencies do report on the PAPs that M&E systems away from inputs or activities to MFOs delivered to they are implementing, they do not necessarily collect or provide clients.23 None of the Departments have climate-related MFOsl; information on their climate results. Further, there are no guide- however, the DA’s OPIF logical framework includes increasing lines to ensure that the collected information can be aggregated 23 Th  rough OPIF, DBM seeks to focus on three key outcomes: fiscal discipline—living across the PAPs to provide higher-level results. within the means or resources available to the government; allocation efficiency— spending money on the right priorities; and operational efficiency—obtaining the best value for the money or resources available. 56 climate resilience as one of its to subnational governments in setting up a joint database, this The lack of appro- goals. While this supports the approach has not yet been pursued. A few initiatives reflect efforts priate quantifiable integration of climate change by DA’s staff to introduce impact evaluations, but these have indicators has limited activities in the DA’s programs, remained one-time efforts. The last comprehensive impact assess- the absence of an MFO on ment of DA’s programs dates was undertaken in 1997. Since then, the extent to which climate limits its effectiveness. the Planning and Monitoring Unit has faced staff and resource climate change is The DENR and DPWH are shortages that have hindered its ability to conduct thorough incorporated into reviewing their OPIF logical impact evaluations. OPIF. frameworks. The lack of capaci- ty to develop appropriate quan- The new Results-Based Performance Management System tifiable indicators has limited (RBPMS) could provide a powerful opportunity to incor- the extent to which climate change is incorporated in OPIF. The porate climate change indicators to monitor progress on the creation of climate units in DENR and the DA may provide some climate change agenda. The Government is introducing a unified capacity to develop M&E indicators. and integrated Results-Based Performance Management System across all Departments and agencies within the Executive Branch, Department M&E systems are overburdened by reporting with expected improvements in reporting and auditing systems. requirements, affecting managers’ ability to use reports for This system will enhance the mid-year and year-end M&E of cli- planning purposes. An assessment of practices and their implica- mate PAPs. With a goal of strengthening the overall M&E system, tions for the M&E of climate PAPs of two Departments (DENR the President created an inter-agency task force (AO25) to align, and DA) showed a number of challenges affecting planning, unify, streamline and simplify all existing monitoring and report- monitoring, and evaluation of all Departments’ PAPs, including ing requirements in government agencies relative to the National the climate PAPs. During the fiscal year, DENR and DA have to Leadership’s Agenda, the PDP 2011–2016, agency mandates, comply with many reporting requirements and respond to ad hoc commitments, and targets. The RBPMS uses the five KRAs set by requests from oversight Agencies. According to DA, its M&E unit the President, the OPIF of the DBM, and the PDP-Results Matrix prepares one to four reports on a daily basis. Regional offices often of the NEDA as underlying frameworks. The RBPMS will incor- fail to submit timely financial and physical information, which in porate a common performance scorecard, and at the same time turn affects the quality of mid-year reporting (notably the monthly create an accurate, accessible, and up-to-date government-wide, and quarterly reports). As a result, the Departments’ senior man- sector, and organizational performance information system. For agement is unable to use the information for its strategic resource FY 2012, the AO25 task force required each Agency to incorporate allocation planning, which in turn affects planning and funding of a “transparency seal� that categorizes major programs along the climate PAPs. The assessment’s further findings include: five KRAs’ program/projects beneficiaries, as identified in the ap- plicable special provisions, as well as the status of implementation • The most important PAPs of DENR are climate-related PAPs and program/project evaluation and/or assessment reports. Each (notably the NGP) that are captured through DENR’s M&E Agency’s delivery unit should include it as a performance indicator. system; efforts to closely monitor this presidential program One component of the RBPMS, the Performance Based Incentive have resulted in the creation of a separate information sys- System, became operational in 2012. In FY 2013, Departments tem, raising questions about DENR’s effective management will be expected to submit an improved set of performance targets of two separate reporting systems. and indicators to satisfy the RBPMS. • Efforts have been made by DENR to introduce results-based monitoring and to develop performance indicators, but the At the local level, the Community-Based Monitoring Program Department has not yet been able to fully capitalize on this. and the DILG’s Local Government Performance Management In 2011, DENR began to roll out on a pilot basis a re- System (LGPMS) serve as starting points for developing a sults-based M&E system (with the Operation Manual devel- systematic M&E system. An assessment of the horizontal M&E oped with help of the WB). While the system is being rolled systems (e.g., community-based monitoring system [CBMS] and out to the regions, a current challenge is the lack of trained or LGPMS) and vertical M&E systems linking local level M&Es staff on M&E validations, survey mapping, and planning. to national levels (e.g., MDG monitoring by the NEDA) will also be performed. The CBMS, launched in 2002, serves as a Challenges in establishing a joint database at the regional and tool for local governance and complements the national poverty provincial levels can affect the monitoring of climate PAPs monitoring system. The CBMS also facilitates the implementa- in the future. Similarly, different information systems at the tion of targeted poverty reduction programs, with its household regional and provincial levels affect DA’s ability to monitor PAPs. and individual-level data as well as the M&E of these poverty While some lessons could be learned from the WB-funded rice reduction programs. The LGPMS is a self-assessment development program implemented in Milano, in terms of providing incentives management tool for provinces, cities, and municipalities that 57 provides information on the capacities and limitations of LGUs Understaffing and a lack of capacity at the regional and na- in the delivery of essential public services. Its major output, called tional levels have contributed to weak and invalidated budget the Annual State of Local Governance Report, provides strategic reports. Delayed reporting and the many formal and ad-hoc re- information concerning LGU performance in governance along porting requirements have also weakened budget reports. Likewise the areas of administration, social services, economic develop- at the central level, the preparation of numerous reports does not ment, environmental management, and valuing the fundamentals leave time for staff to verify and validate data. Furthermore, there of governance. Both CBMS and LGPMS could be used both for is insufficient software support and the planning unit lacks tools service convergence and for vertical coordination. Meanwhile, the to prioritize data assessment, and senior management does not use DILG has developed DRR/CCA protocols to issue an ISO-type the information for its strategic resource allocation planning, “seal of disaster preparedness� for high-performing LGUs. The capacity and knowledge base of LGUs to identify, design, Weak institutional and carry out climate reforms remains low, as the informa- tion available to LGUs to deal with localized climate risks capacity, including limited is generally lacking or not in an easy-to-use format. A recent assessment of the technical capacity of LGUs to undertake climate access to knowledge, change adaptation interventions indicated key gaps. Specifical- ly, the LGUs lack knowledge and access to information about has hindered efficient climate change risks, biophysical features, climate impacts on key execution of the climate economic sectors and ecosystems, adaptation options appropriate to local conditions, and funding mechanisms that can support cli- reforms and action mate change adaptation at the local level (Regional Resource Cen- tre for Asia and the Pacific 2012). Downscaled climate projections Departments that implement the climate change agenda re- at the municipal level as well as climate trends covering 30 years quire knowledgeable and skilled staff in all aspects of climate for LGUs’ respective areas of responsibility are necessary. More policy, financing, and institutions. Capacity building remains context-specific research data are also required on how projected significantly underfunded in the Department budgets, though it changes in climate parameters can affect major economic sectors is one of the NCCAP priorities. Departments largely do not have, and ecosystems, such as farming, fishing, water resources, marine and are unable to recruit, experts to enhance their capacities on a resources, local biodiversity, infrastructure, and human health. permanent basis due to a lack As at the Departmental level, there is a significant lack of staffing of knowledgeable experts. As capacity at the LGU level. Areas with gaps in capacity include the Execution of the discussed earlier, the CCC does ability for LGUs: policy agenda is not have the capacity to engage • To design programs, develop indicators and targets, and hampered by a with all LGUs because of its monitor and report these programs; limited local presence. Further- lack of institutional • To incorporate vulnerability assessments into the CDPs, more, capacity is often limited capacity and due to high staff turnover: CLUPs, and AIPs; and climate knowledge skilled middle-level technicians • Assist communities in identifying and preparing PAPs for at the national and are scarce, and often leave for funding through the BUB, PSF, LDRRMF, and other local level. other Departments. While the sources of funding. capacity to address climate issues is inadequate, it is higher in Departments where climate change is likely to affect many policy objectives directly. Departments’ limited capacity in using data for strategic planning purposes further affects their ability to effectively monitor and evaluate their PAPs. Integrating climate change concerns into the planning and design of DRRM projects has also been difficult because of inadequate data and information. Departments also do not have the tools necessary to prioritize and sequence climate PAPs on the basis of their climate benefits, poten- tially leading to foregone opportunities. 58 Knowledge gaps and the lack of a knowledge management Insufficient information is a persistent issue across Depart- system have been key barriers for scaling up climate action in ments and climate change stakeholders, and it is essential to Departments and LGUs. Knowledge and information gaps lead scale up the provision of information services by support- to a lack of risk awareness, as well as discrepancies and uncer- ing agencies that provide these services and making their tainty about the robustness of plans and decisions. The CCC information available more broadly. Examples of information has developed a Philippine Research and Development Agenda that is already available and in use include hazard maps (e.g., the on Climate Change based on multi-stakeholder consultations. Philippine Institute for Volcanology and Seismology [PHI- This Agenda identifies the gaps and priorities in climate-relevant VOLCS], MGB) used in screening processes, and climate change research that could facilitate implementation of the NCCAP, and projections from PAGASA. The main agencies that provide such is envisioned to serve as the guiding document for the country’s support include PAGASA, NAMRIA, DOST, PCAARRD, research, science, and academic institutions. The key challenge Philippine Council for Industry and Energy Research and Devel- at the local level has been the capacity to generate and capture opment, and the Klima Climate Center. In addition, data portals useful, actionable knowledge. Data collection methodologies are such as the Southeast Asian Regional Center for Graduate Study not synchronized to support planning and budgeting of key pro- and Research in Agriculture provide valuable and highly relevant grams and projects. In addition, mechanisms that allow consistent information. In some cases, climate-related information generated updating and harmonization of raw data are not in place to share by academic institutions, specialized agencies, and civil society such data among the relevant stakeholders, project developers, organizations is not made available to outside users. This issue and key policymakers. Comprehensive and accessible information has contributed to the lack of access to timely information that management systems necessary to ensure coordinated planning has hindered Departments and LGUs from effectively integrating and implementation across the many climate-relevant sectors are climate action into their plans. The generation of knowledge and not available. The DENR, together with specialized agencies, is the ability to access key information and data are both essential in responsible for setting up information collection systems that can ensuring successful implementation of NCCAP. be used by other agencies in support for their own activities. 59 IV. RECOMMENDATIONS Carried out at the midterm of the current Administration, of i. Ensure that the enabling environment is firmly in place by the Philippine Development Plan 2011–2016, and of the first completing and implementing the remaining pieces of the six-year phase of the National Climate Change Action Plan, core climate change reforms; the recommendations of this CPEIR aim to support the Gov- ii. Formulate, enact, and support complementary sector and ernment’s climate reform agenda. The recommendations aim local-level policy and institutional reforms; to consolidate the strategic direction of the NCCAP and set the stage for scaling up actions over the next two phases. The goals for iii. Enhance planning, prioritization, design, and reporting of the remainder of the Administration’s term should be to: climate programs, activities, and projects to improve their effectiveness; and iv. Through the above reforms, increase efficiency of resource use and provide support for higher levels of financing. 60 The recommendations and the Strategic Action Plan are an- to enable selected Departments (e.g., DA) that have integrated chored to the Government’s climate reform agenda through a climate action into their PAPs to more effectively tag and report framework that includes three pillars. The framework identifies climate expenditures. the major objectives and the specific activities needed to achieve these objectives within each pillar, providing a basis for assessing Strengthen the identification, convergence, and funding of cli- critical linkages between the objectives and activities, prioritizing mate PAPs by making systematic use of budget processes and and sequencing of activities, and assigning clear responsibilities to tools, including new opportunities created by PFM reforms. agencies for achieving the climate change goals. The three pillars A variety of tools (e.g., budget calls, MTEF) already are available of the framework are: (1) Strengthening the Planning, Execution, to improve the identification, development, and selection of and Financing Framework for Climate Change; (2) Enhancing climate PAPs in the Departments’ budget planning and managing Accountability through Monitoring, Evaluation, and Review decisions. New opportunities introduced as part of broader PFM of Climate Change Policies and Activities; and (3) Building reforms (e.g., Zero-Based Budgeting, the Program Approach, Bot- Capacity and Managing Change. Each activity in the framework tom-up Budgeting, and the Results-based Performance Manage- is assessed in terms of priority and risk to enable its sequencing as ment System), when applied to climate PAPs, provide additional part of the Strategic Action Plan. opportunities to improve convergence, effectiveness, and efficiency of the outcomes of the Government’s climate reform agenda. DBM needs to provide Departments with guidance for more effective Pillar 1: Strengthening the use of these tools as well as provide participation incentives, for instance to offset likely higher cost to Departments for design and Planning Execution, and coordination in the Program Approach. Financing Framework for Develop and adopt climate prioritization tools for use in the budget planning process. In a fiscally constrained environment Climate Change and facing a broad set of issues, DBM needs to not only identify climate PAPs, it also need to prioritize and sequence them. Depart- A major weakness in the present policy and budget insti- ments need support in balancing the need to satisfy their respective tutional framework is that no single mechanism unifies all mandates while delivering on their climate change related respon- climate change activities. Considerable efforts are being made sibilities. Similar tools should be developed to support LGUs in to strengthen budget coordination and establish a comprehensive prioritizing climate action in their Annual Investment Plans. results-oriented budget system. The success of these efforts is crit- ical to aligning the NCCAP with the PDP, Departmental work Establish comprehensive coverage of climate PAPs in national programs, local development plans, and the KRA-5. Effective use and sector plans, strategies, and budgets, and strengthen of budget and policy planning tools that are either in use or being reporting of mid-year and end-year implementation. Budget developed is essential to ensure that climate change activities of transparency is impeded by the lack of a separate identification the Government—whether funded by the Government or by of climate change in the economic and functional classification Development Partners—are assessed, coordinated, and evaluated of the budget, multiple sources of the appropriation structure, against the NCCAP goals, and that these goals are reviewed effec- in-year re-alignments, and off-budget expenditure (e.g., Develop- tively in light of the implementation experience. ment Partner funds, Special Accounts, and SPFs). While some of these issues are addressed through the current PFM reforms (e.g., appropriations will be limited to one year), others will remain and Objective I: Strengthen the Budget Planning should be closely monitored through off-line methods. The DBM and Execution Framework for Managing Climate is committed to capturing the full spectrum of climate activities Programs, Activities, and Projects through secondary coding of the budget to support strategic Implement and update climate screening guidelines to planning and reporting. In addition, it is important to continue provide a common reference point for budget planning and strengthening the reporting of budget execution of climate PAPs management. In the context of the CPEIR, the CCC and the at mid-year and end-year to identify the sources of financial ineffi- DBM developed climate screening guidelines to tag PAPs aimed ciency on climate expenditures. at climate adaptation and mitigation. These were included as part of DBM’s FY 2014 budget memorandum. The results of the Objective II: Align Plans and Strengthen Implementa- tagging should be used to identify climate PAPs in the budget tion to Achieve Climate Change Goals planning and management process throughout the Government. The guidelines should be implemented and updated on a regular Establish a shared climate program across Government by basis going forward, based on clearly defined processes. In ad- aligning the National Climate Change Action Plan with the dition, support needs to be provided to develop off-line systems Philippine Development Plan, Department work programs, 61 local development plans, and KRA-5. The NCCAP provides a on priority areas. Finally, greater recognition of the development reference point for the Government’s climate change agenda, but of co-benefits, in particular those related to poverty alleviation, of is not explicitly linked to the climate outcomes and outputs of the climate PAPs can strengthen the design of climate action. national plans (PDP, PIP, KRA-5), Department work programs, and local development plans. Planned updates to the PDP and the Converge CCA and DRRM agendas at the national and local NCCAP in 2013 provide an opportunity to ensure a coherent set levels. The policy convergence on CCA and DRRM needs to be of climate outcomes and outputs among these plans. While the reflected in implementation strategies, institutional arrangements, climate screening guidelines provide a common reference point and financing. A first step in operationalizing this convergence at for NCCAP activities, there is still a need to define what should the national and local levels would be to simplify and integrate be included in the KRA-5 classification to reduce confusion. De- the vulnerability and disaster risk assessment tools so that they partment work programs can be aligned with NCCAP priorities focus on short- to long-term climate risk management; to develop by: (1) increased convergence across Department work programs common indicators for monitoring progress; and to standardize (e.g., through the Program Approach), (2) reformed sector policy, reporting on climate-related disaster activities. In addition, at and (3) improved design, execution, and monitoring of PAPs. At the local level it also entails the integration of CCA/DRRM into the local level, incorporating CCC should provide guidelines on LDPs on the policy front, building implementation capacity of formulating and incorporating LCCAPs into CLUPs and CDPs, the LDRRMCs and LDRRMOs on the institutional front, and which in turn provide the basis for LGU resource allocation the harmonization of LDRRMF and PSF rules that ensure equi- decisions in the Annual Investment Plan. Accountability for the table access and cost-sharing agreements to reflect vulnerability shared climate program can be increased through the formulation and needs on the financing front. of an operational business plan that identifies specific measurable Adopt approaches to optimize mitigation opportunities. targets by institution, in particular in preparation for phase 2 of The CCC, the DBM, the NEDA, the DENR, and the DOE the NCCAP. have taken steps to identify mitigation opportunities to support Formulate, enact, and implement complementary sector pol- the implementation of mitigation action. However, neither the icy reform to enable transformative climate action. The Gov- NCCAP nor the development plans (PDP and Department work ernment has already enacted some sector reforms (e.g., renewable programs) have formulated an overall national low-carbon and portfolio standard, privatization of power generation), and the low-emission strategy that optimizes mitigation opportunities or NCCAP identifies the need for additional reforms in key sectors identifies national and sector-specific priorities for reducing GHG (e.g., water sector governance, introduction of risk transfer mecha- emissions in the form of marginal abatement curves. Formulation nisms). Complementary sector reforms are essential to bring about of such a national strategy can leverage some of the existing ini- larger-scale climate results, including through the mobilization of tiatives. In addition, strategy implementation would be facilitated the private sector. by the development of an MRV system, which is essential to reduce uncertainties and to leverage private financing, and by the Reform the design of climate PAPs to strengthen relevance to establishment of data collection systems, baselines, and regulatory country climate priorities and maximize benefits. The effec- institutions. The participation of the private sector could also be tiveness of PAPs, in particular the major ones highlighted in this strengthened by establishing a national carbon price to provide review, in delivering climate results can be improved by enhancing greater certainty about the value of mitigation activities. their design in four areas: (1) establishing clear climate objec- tives and targets reflecting the notion of “intent,� (2) improving Objective III: Rationalize and Harmonize management of risks and uncertainty, (3) increasing convergence Climate Financing Instruments across sectors when relevant, and (4) recognizing and valuing co-benefits. PAP designs that explicitly include NCCAP objectives Clarify and streamline rules, as well as the eligibility criteria and that measure their outcomes against the NCCAP targets will for climate financing at the local level. Establishing strate- strengthen support for effective climate action. The application gic and complementary eligibility criteria, scope, and the level of climate screening tools and Environmental Impact Assessment and sources of co-financing—including information on how to also contribute to enhancement of PAP design. This also applies leverage funding—across the different sources of financing (e.g., to project design criteria for the PSF and the ICC review criteria. PSF, LDRRMF, and LDF) will improve targeting and increase In the context of the Government’s large infrastructure develop- effectiveness of these financing instruments. For instance, clear ment agenda, a robust decision-making framework in support of rules should be established to preclude financing from multiple the design of large PAPs would help address uncertainty and dis- sources for the same activity. This streamlining contributes to the agreements about the likely effects of alternative climate plans and convergence on CCA/DRRM. The PSF Board could lead such policies. In addition, the Program Approach can also be used to an effort through the examples it sets in operationalizing the improve coherence and convergence of climate PAPs at the design PSF and through the convening power it has due to its size and stage, resulting in reduced overlap and increased synergy and focus institutional visibility. 62 Establish the Climate Finance Group to coordinate climate recapping past implementation, does not include desired goals financing. Financing the climate agenda remains a challenge for for the coming year, an assessment of the achievements relative to mitigation and for national and regional adaptation PAPs. The the goals for the prior year, or a summary of key issues leading to DOF is in a powerful position to help mobilize and coordinate performance shortfalls and recommend actions to overcome them. domestic and international resources, incentivize market-based In essence, while there is reporting, there are few suggestions for instruments, and leverage private sector resources to address me- improvements. Second, the CCA/DRRM agenda remains uncoor- dium- to longer-term financing gaps. For instance, facilitating the dinated, but could be improved if the CCC consolidated reporting broader use of risk sharing and risk transfer instruments, which of all climate-related disaster prevention. Finally, the CCC needs can be appropriate for addressing large risks (e.g., catastrophic loss- to establish a system to review the LCCAPs and their integration es from large-scale flooding or damages from typhoons), requires into the Comprehensive Development Plan and the Comprehen- tools that appropriately measure risks, set affordable premiums, sive Land Use Plans to generate necessary lessons learned. can ascertain quickly whether a risk event has occurred, and can make payouts quickly. Such coordination requires the engagement Objective II: Strengthen Coordination between CCC of CCC, NEDA, DBM, and DOF, and can be facilitated by pro- and Oversight Agencies and Departments viding some form of legal basis for the Climate Finance Group. Create a champion group to establish coordination between Improve harmonization, alignment, and coordination of De- the CCC and oversight Agencies. Improved coordination and velopment Partner financing as part of programmatic support shared vision are essential for ensuring effective implementation of to the Government’s climate reform agenda. The Philippine the Government’s climate reform agenda. A key step in facilitat- Development Forum Climate Change working group should ing greater coordination between CCC, NEDA, DBM, and DOF be made more effective in providing more strategic support for is convening a Champions’ Group consisting of these Agencies, the Government’s climate reform agenda. A more programmat- to lead by example. The Champions would work together based ic approach that reduces duplication of activities and increases on agreed priorities and strategic directions that include clear coherence and transparency could strengthen support for the enforceable targets, roles and responsibilities, and accountabilities Government’s climate reform agenda. that would establish guidance and reference points for effective climate change governance. Areas where relationships could be Pillar 2: Enhancing Leadership clarified include setting entry points for updating the PDP and the NCCAP to ensure consistency, updating the ICC review and Accountability through criteria to reflect climate considerations, establishing review cri- teria for the PSF (CCC and NEDA), updating climate screening Monitoring, Evaluation, and guidelines or enhancing participation in the budget process (CCC and DBM), and identifying financing needs and strategic resource Review of Climate Change mobilization plans (DOF and CCC and DBM). Policies and Activities Establish coordination between the CCC and the national and local DRRM Councils, and the PSF Board. The MOU Effective leadership can drive climate change to the top of between the NDRRMC and the CCC is not fully effective, the policy agenda; systems to monitor results will improve and will need to be revised and expanded to include operational accountability. Clearly defined institutional roles and respon- guidelines that better reflect the policy convergence with a clear sibilities are essential for fostering leadership that can effectively focus on the specific responsibilities on climate-related disaster facilitate the translation of policies into action and results. In this risk prevention. The CCC does not have a local presence, so the context, good use can be made of effective champions of climate role of the LDRRM Councils could be expanded to formulate change policy and practice. Agency experience can be used in a and implement both DRRM and CCA activities. The PSF Act climate change communication policy. already defines the broad contours of the relationship between the PSF Board and the CCC, which is mandated to provide technical Objective I: Enhance CCC’s leadership role support to the PSF Board with regard to developing criteria for in reviewing and communicating climate project selection and prioritization, and in the review of projects. change performance The Implementing Rules and Regulations designate the CCC as interim secretariat to the PSF, adding to the responsibilities of the Strengthen the annual CCC review of climate change policy CCC and making coordination between the PSF Board and the implementation to increase accountability, and generate CCC essential for the success of the PSF. The CCC will be in a lessons learned for best practices. Monitoring and reporting of position to develop the operations manual and develop the review NCCAP implementation by CCC could be improved in three ar- criteria for PSF projects, which are exempted from ICC reviews. eas. First, the CCC’s annual implementation progress report, while 63 Objective III: Strengthen Monitoring Incentivize generation of knowledge, and facilitate the sharing in the Departments and LGUs of knowledge to overcome the significant capacity gap in over- sight agencies, throughout Departments, and at the LGU level. Reform existing M&E systems to link with the NCCAP across PAPs under implementation can provide powerful lessons and data all levels of Government. The development of a consistent set of to all areas of government that are involved in climate activities. climate performance indicators, supported by measurable targets to This points to the need to develop systems for identifying lessons monitor progress, will further enable activities across the Govern- learned from climate PAPs at national and local levels, incentiv- ment to be clearly focused and aligned. The CCC could lead the ize staff to extract lessons, use content management systems to effort to identify and include climate performance indicators and help categorize and organize information, and synthesize lessons major final outputs as part of the Government’s current efforts to learned to improve dissemination. To complement the develop- refine them and in establishing the RBPMS across Departments ment of internal knowledge, efforts must be taken to establish a and Agencies. At the local level, climate activities could be reported strong network with external key players in climate change by sup- by the LGUs in their Annual State of the Local Governance Report. porting the development of a virtual network of practitioners, and A major long-term effort is required to address capacity issues and through the establishment of Centers of Excellence. The internal integrate Departmental M&E systems into climate change policies and external knowledge need to be made readily accessible to staff and goals. Departments are faced with many reporting requirements to enable them to make informed decisions. The DENR, the lead and limited capacity to use the data for strategic planning purposes, designated agency for effective dissemination of information at impeding the effective M&E of all Departments’ PAPs, including various levels, has an online Climate Change Resource Center that the climate PAPs. Similarly, the newly introduced RBPMS offers the was established to improve science-based knowledge on climate ability to identify entry points for tracking and evaluating climate change. At present, the website offers very limited resources on action, which helps establish a plan and identify priorities. climate change; most of the information available consists of old news articles, suggesting that the website is not regularly updated. Adopt tools to document and inform about the co-benefits of This needs to be strengthened and updated with linkages to climate action and integrate them into the climate prioritiza- information portals and repositories, which could help gather the tion tool. Tools to inform about the co-benefits of climate pro- knowledge created by academia or specialized agencies as well as to grams, activities, and projects would strengthen support for priori- collect lessons learned from the implementation of programs. tizing them in the budget planning process. They would also enable public reporting on NCCAP’s gender-related ultimate goal, raising awareness about climate change among the general populace. Objective II: Raise Public Awareness of Climate Change Pillar 3: Building Capacity Raise Public awareness of climate change to guide private actions. The majority of Filipino people are already knowledge- and Managing Change able about climate change and are personally taking actions to address climate change risks or reduce emissions. However, the Weak institutional capacity and low public awareness of poor and the less educated, who are often the most vulnerable, are the impacts of climate change can limit the effectiveness of also are the least knowledgeable about climate change. Raising climate programs, actions, and projects. Prioritizing capacity public awareness through a targeted information education and building efforts and developing a climate knowledgebase at all communication campaign can increase the adaptive capacity of levels of Government will pay dividends through a more success- the most vulnerable populations. ful mainstreaming of climate change into policy, budgets, and financing. Formalizing systems and networks to facilitate knowl- Strengthen public support for climate reform through enhanced edge sharing is essential to support implementation. and informed civil society participation in climate change policy and review. Civil Society Organizations (CSOs) serve a particularly important role in ensuring implementation of the cli- Objective I: Build Skills and mate change agenda by raising awareness of the issue, building trust Knowledge-base on Climate Change in communities, and exerting pressure for increased transparency. Develop staff capacity through training programs, throughout This helps garner the necessary popular support for climate change the Government. Implementation of the climate reform agenda programs and the current reform agenda. The continued participa- requires knowledgeable and skilled staff throughout Government. tion of CSOs in institutions (the CCC Advisory Board; the PDF, Staff training to raise capacities to carry out these tasks would NDRRMC, and LDRRMC proceedings; and the PSF Board) streamline implementation of the climate reform agenda, and and their input on policies will not only help ensure responsiveness would help significantly with raising institutional memory. Gov- to community needs but also strengthen decisions. 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Singapore: Economy and Environment 65 ANNEX A: Strategic Action Plan Pillar 1: Strengthening the Planning, Execution, and Financing Framework for Climate Change Pillars/Objectives/ Observations on Key Linkages Priority Risks and Risk Lead Supporting Activities Current Status Management Agency Agency 1.1 Strengthen the Budget and Accounting Framework for Managing Climate PAPs  1.1.1 Integrate climate Reforms underway aim to  Link with 1.2.3 VHP1:25 LR2:26 DBM CCC, NEDA change into budget tag all CC-related spending Use of planning Screening planning and man- in budget based on climate tools underpins Guidelines have agement tools. screening guidelines); all climate been tested with change activi- departments, ongoing PFM reforms provide ties. but capacity opportunity to strengthen and institutional identification, convergence, issues may im- and funding of climate PAPs. pede progress. PFM reforms are already in place. 1.1.2 Establish compre- Budget allocations, special Link with 1.3.4 HP: HR: DBM NEDA , CCC hensive coverage purpose funds, development but long-term Broader set of of all climate PAPs partner funds are currently requires system- stakeholders will in national and partially or not included in atic institutional create constrain sectoral plans, climate change monitoring change beyond progress. strategies and and review. climate PAPs. budgets. 1.1.3 Strengthen report- Financial management and re- Link with 1.1.1; VHP: HR: DBM DOF ing of climate PAPs porting systems are currently ultimately, bud- Essential for PH’s decentral- to cover mid-year not integrated. DBM has get management PFM and pro- ized system and and end-of-year begun to implement an inte- of climate PAPs gram budgeting. the long-term implementation. grated financial management depends on nature of GIFMIS system (GIFMIS) on a pilot tracking actual implementation. basis, which is expected to spending and be fully operational in several outcomes. Administrative years. strengthening can be useful in short term. 1.2 Align Plans and Strengthen Implementation to Achieve Climate Change Goals 1.2.1 Establish a shared NCCAP does not include all Link with 1.1.2, HP: MR: CCC, Depart- climate program. climate change activities in 1.2.2, 1.2.3, 1,2,5 Increased align- Necessary, NEDA ments, Department work programs. ment is import- but success LGUs PDP does not include all NC- ant to ensure dependent on CAP outcomes and outputs. the risks and comprehensive Update PDP, sectoral, and opportunities coverage. local plans and NCCAP to to development align outcome. Plans need to programs are be developed based on com- adequately rec- mon economic and climate ognized in the projections. planning stages. 25 VHP = Very High Priority, HP = High Priority, MP = Medium Priority 26 LR = Low Risk, MR = Medium Risk, HR = High Risk 66 1.2.2 Adopt comple- Departments are responsible Link with VHP: HR: Key CCC mentary sectoral for implementing the NCCAP. 2.2.1, 2.2.2; Will be driving Lack of incentive Depart- reforms. Transformative impacts on Depends on force for for more effec- ments climate change will require coordinated transforma- tive coordination sectoral reforms in programs leadership from tive change in and program of key Departments: energy, CCC/DBM/ next phases of formulation transport, agriculture, infra- NEDA. NCCAP. among lead structure, and environment. agencies. 1.2.3 Reform design Most PAPs have not been Link with 3.2.1 VHP: MR: NEDA, Depart- and execution of designed with a climate lens, Can strengthen Increasing Lack of traction CCC ments climate PAPs. resulting in lost opportunities. ties between ap- efficiency and of the CCC with propriations and effectiveness the Depart- The ICC criteria were last implementation of is essential ments, and revised in 2005 and do not performance. for generating NEDA will re- include climate change support for the main the biggest considerations. Revisions to Adds depth and climate agenda. risk. the criteria including robust aids design of decision-making frameworks climate PAPs. would make investments more resilient. 1.2.4 Converge climate CCA/DDRM policy conver- Link to 1.1.1 VHP: MR: CCC  NDRRMC change adaptation gence has converged on adap- screening guide- Paradigmatic Depends criti- DBM and climate-relat- tation as appropriate way ad- lines, and 2.2.2 shift away from cally on progress ed DRRM. dress climate related disaster coordination be- disaster re- in uniformly prevention, but policy has not tween CCC and sponse to disas- tagging climate been operationalized. Thus DRRM council. ter prevention PAPs in national far only draft guidelines have is cost effective and local gov- been issued on integrated and essential ernment. Limit- assessment of vulnerability to for sustainable ed incentives for climate change, particularly at development. coordination. provincial and local level. 1.2.5 Adopt tools and Current policy is focused Links to 1.3.3 and HP: HR: CCC NEDA, processes to op- primarily on adaptation 1.3.4. Will improve CSO and public Depart- timize mitigation measures, but significant Philippines have been ments opportunities. increases in mitigation in- profile inter- outspoken on cluding on REDD+ are being nationally and the need for implemented. potentially international attract financ- financing for In addition, steps are being ing. Provides mitigation, car- taken to develop MRV sys- development bon prices can’t tems and low carbon strate- co-benefits. be perceived as gies for specific sectors. imposing costs. Establishing a notional price for GHG emissions could support the low emission strategies by signaling to private investors. 67 1.3 Rationalize and Harmonize Climate Financing Instruments 1.3.1 Streamline rules Sources of local climate Link with 2.2.3; HP: HR/MR: DOF CCC and eligibility crite- financing are fragmented with Operational- Reducing LGU capacity ria for local climate different eligibility criteria, ization of the fragmentation Limited change financing. cost sharing arrangements. PSF provides of sources incentive for an opportunity of financing harmonization Strategic and complementary to harmonize increases acces- across sources eligibility criteria, includ- across sources sibility of funds of financing. ing information on how to of financing. and improves leverage funding, will increase efficiency. targeting and effectiveness of financing instruments and contribute to operational- izing a joint Climate Change Adaptation-Disaster Risk Reduction and Management framework. 1.3.2 Adopt reform of Taxes and subsidies applied Ensures con- MP: MR: DOF DBM, CCC, selected fiscal for other purposes may have sistency across A limited Divergent stake- Depart- instruments after unintended consequences. PH fiscal policies. number of such holder interests. ments reviewing their has no fuel subsidy, but other programs have climate change tax and spending instruments been introduced impact. should be reviewed. recently. 1.3.3 Establish the The CFG remains an adhoc Link to 2.2.1, VHP: MR: DOF CCC Climate Finance group. The DOF, directly or 2.2.2 NCCAP iden- International cli- Group to coor- through the formal creation tifies climate mate financing, dinate climate of the CFG, needs to develop financing as an esp. for climate financing. a plan that identifies financing implementation risk, is a new needs, develops appropri- challenge. Signif- complex area. ate instruments to address icant gaps exist risk-sharing, and mobilizes in the approach- needed resources. DOF is al- es to be used for ready engaged in catastrophic financing mitiga- risk finance. tion at all levels and coordination of adaptation at the national and regional levels. 1.3.4 Strengthen devel- The climate change Working Link to 1.3.2, HP: MR: DOF CCC, de- opment partner Group of the PDF had been 1.3.3, 1.1.1, 1.12, Coordinated Risks mainly velopment support for Gov- established to share infor- support can be relate to making partners ernment’s climate mation among development a catalyst for the Working reform agenda. partners. This forum should change. Group effective. be used more effectively to establish joint support for the programmatic approach to climate change planning, financing and M&E. 68 Pillar 2: Enhancing Accountability through Monitoring, Evaluation, and Review Pillars/Objectives/ Observations on Current Key Linkages Priority Risks and Risk Lead Supporting Activities Status Management Agency Agency 2.1 Enhance CCC’s role in reviewing and communicating climate change performance 2.1.1 Strengthen the The CCC is required to submit Links climate VHP: MR: Lack of CCC NEDA, annual CCC review an annual progress report change review Establishing ef- traction of the DBM, of climate change on progress in implementing more effectively fective influence CCC with the NDRRMC policy implemen- NCCAP. The reports would to budget poli- of CCC on policy bureaucracy. tation be more effective if they cies and review formulation and include the desired goals of processes. implementation the coming year together oversight is crit- with an assessment of the ical to long-term achievements relative to the success goals for the prior year and a consolidated reporting of all climate disaster prevention activities. 2.2 Strengthen Coordination between CCC and Oversight Agencies and Departments  2.2.1 Develop terms Based on the experience of All climate VHP: MR NGAs CCC CCC Board of Reference for the past few years, coordina- change reforms continue to Agencies all CCC Advisory tion between CCC and execu- depend critically prioritize core Critical for Board members tive agencies (most are Board on coordination executive func- reform. Most members) can be streamlined between CCC tions.. agencies are and formal processes estab- and key NGAs. represented in lished to reduce transaction the CCC Adviso- cost and effectiveness. ry Board. 2.2.2 Convene a Cham- The CCC, NEDA, DBM and Link with 2.1.1, VHP: MR: CCC, pions Group DOF are mandated to oversee 2.2.1 Leadership Bureaucratic NEDA, the implementation of the by the four boundaries need DBM, NCCAP, PDP, Budget Man- agencies would to be clarified DOF agement Memoranda and enable other and possibly the Philippine Investment Departments to adjusted. Plan, key elements of climate conceptualize change governance and public and operation- expenditure. alize their own climate change action. 2.2.3 Strengthen CCC The CCC does not have a local Link with 2.1.1, HP: HR Bureaucrat- CCC NDRRMC coordination with presence, so the role of the and 1.2.4 A necessary ic boundaries the national and lo- LDRRM Councils could be ex- clarification of need to be cal DRRM Councils panded to formulate and im- CCC functions clarifies. Current plement both DRRM actions to strengthen MOU between and adaptation activities. focus on areas NDRRMC and of comparative CCC does not advantage. have sufficient operational detail. 69 2.2.4 Operationalize The CCC is mandated to sup- A necessary VHP: MR: CCC,   CCC responsibili- port the PSF, including iden- refinement of Operationaliz- the limited PSF ties relative to the tifying criteria for projection, CCC duties ing the PSF is resources PSF Board review projects for approval important for compared to the by the board fiscally large LGU needs constrained make it critical LGU, but also to define clear establishing and transparent country systems criteria for proj- for climate ect selection financing. 2.3 Strengthening Monitoring in the Departments and the LGUs  2.3.1 Review Depart- Departments are faced with Linked to activ- HP: MR Department CCC NEDA DBM mental M&E numerous reporting re- ities 2.2.1 and M&E systems capacity con- systems and link quirements and have limited 2.1.1 Essential are the key to straints to climate change capacity to use the data for for long-run increasing ac- M&E requirements strategic planning purposes; improvement in countability climate change Few climate M&E. indicators and targets are in place Pillar 3: Building Capacity and Managing Change Pillars/Objectives/ Activities Observations on Key Linkages Priority Risks and Risk Lead Supporting Current Status Management Agency Agency 3.1 Build Skills and Knowledge-base on Climate Change  3.1.1 Establish a climate change Systems to identify Link to 1.2.3, VHP: MR: Depart-   database and learning system. and disseminate 3.1.2; also The efficiency 1) Department ments best practices are cross-cutting— and effective- capacity con- limited. all aspects of ness of climate straints. the climate PAPs can be change program. improved from 2) Availability of lessons learned appropriately from current skilled practi- experiences. tioners that can capture lessons. 3.1.2 Develop climate change train- Mainstreaming of Cross-cutting— VHP: MR: CCC NGAs LGAs ing programs. climate change all aspects of Knowledgeable Trainees need to is new for all the climate staff is essential be used effec- Departments change program. to implement tively. and Agencies. All climate reform Agencies need to agenda. identify skill gaps and training needs, CCC needs to liaise with the NGAs and facilitate a con- solidated training program. 70 3.1.3 Create a virtual network of The technical pan- Cross-cutting— HP: MR: CCC   practitioners. el of experts has all aspects of CC capacity 1) CCC capacity yet to be formally the climate can be greatly constraints, and established and ac- change program. expanded by tivated. Currently establishing a 2) availability of the CCC works virtual network appropriately with a few experts of practitioners skilled practi- on an individual that can be gal- tioners. basis. vanized through the organization of symposiums, South-South exchange, or similar events. 3.1.4 Establish Centers of Excel- The NCCAP iden- Link to 3.1.2; also HP: MR: CCC   lence on Climate Science. tifies the creation cross-cutting all natural oppor- 1) CCC capacity of Centers of aspects of the tunities exist constraints, and Excellence on climate change to showcase Climate Science. program. innovations in 2) availability of Plan needs to be climate action appropriately devised to select that facilitates skilled practi- and develop terms leadership. tioners. of reference for the centers. The scope should be expanded to provide linkages to development. 3.1.5 Establish an information por- The DENR, the Link with 3.2.1; HP: MR: DENR CCC, tal on climate change. lead agency des- but also Engages the Limited Depart- Depart- ignate for IEC, has cross-cutting— public and gen- ment capacity, ments an online Climate all aspects of erates demand willingness of Change Resource the climate for climate Departments to Center (CCRC) to change program. action. collect and share disseminate infor- best practices. mation at various levels. The website has not been regu- larly updated. 3.2 Raise Public Awareness of Climate Change  3.2.1 Raise public awareness of Majority of Filipi- Cross-cutting HP: LR: CCC climate change nos are aware of Engages the climate changes. public and re- Knowledgeable duces need for citizens are taking more expensive actions on climate public actions. 3.2.2 Strengthen public support CSO were in- Cross-cutting: HP: LR: CCC NDRRMC for climate reform agenda strumental in the CSOs provide Active CSO CSOs are through enhanced civil soci- formulation of essential engagement is already quite ety participation. the CCA, NFSCC, support to all important for engaged. NCCAP, and the aspects of the the continued PSF. They have a climate change public support representative in policy and im- of the climate the CCC advisory plementation. reform agenda. board, the PSF Board, and in the national and local DRRM Councils. 71 ANNEX B: Framework for Analysis and Limitations A CPEIR is a systematic examination of the factors that deter- The CPEIR is based on a policy-based identification of climate mine the ability of public institutions, policies, financing, and expenditures. The scope of government expenditures is confined related processes in a country to translate its climate agenda to the national budget, excluding extra-budgetary spending and into desired climate results efficiently and effectively. It consists fiscal support. The analysis is limited to expenditures categorized of a quantitative and qualitative assessment of public expenditures under operations (excluding support to operations) and inscribed and financial management, and a qualitative assessment of climate under the OSEC budget plus selected special accounts (e.g., Fund policies and institutional arrangements. A more detailed frame- “151,�). Financing of donor projects and programs integrated in work is included in Part V of the Extended Technical Report. the national budget are covered in the CPEIR, but not projects that are funded directly by external donors and managed outside Data sources: The CPEIR draws upon a) primary data collected the national budget At the subnational level, the scope of the from the DBM, CCC, NEDA, selected Departments, Agencies, assessment is confined to the inclusion of appropriations in the and LGUs; b) documentation available in the sectors (e.g., sector LDPs and AIPs. strategies, plans, reporting documents, and analytical work); and c) interviews and consultations were carried out with the respec- Public Finance Management: budget planning and process tive agencies at national and local levels through workshops and (integration of Climate actions into budget proposals), use of technical meetings. strategic planning and screening tools (NCCAP, MTEF, PIP, work programs, guidelines), the decision-making process (budget Conceptual challenges that prior CPEIRs have identified include call, stakeholder engagement, budget hearings), and procedures the absence of climate change function in the classification of the (programmatic approach), budget transparency and execution. Functions of Government (COFOG), difficulties in identifying the incremental cost of an adaptation intervention (e.g., upgrading Establishing the climate change classification required the of public infrastructure), and difficulties attributing adaption and development of a list of PAPs with the related appropriations, mitigation co-benefits to expenditures within a program/project. allotments, and obligations for 2011–2013 (and when available for 2008–2010). They were identified based on the tagging of PAPs under KRA 5 in 2011–2013 and the tagging of climate-relat- Scope ed programs and projects by the Departments in their 2011–2016 work programs (see Box 1). The list was revised and further updat- Policy review: laws, strategies, and policies related to environ- ed based on the identification of NCCAP activities in the budget ment and climate change enacted since 1999, with a specific focus and in consultation with the CCC and Departments. As a result, on those enacted and implemented since the adoption of the a final consolidated list was prepared covering activities in the Climate Change Act of 2009. NCCAP, the KRA-5, and the Departments’ work programs. Institutional review: Processes, approaches, tools, capacity, and The climate change classification categorizes PAPs at central institutional arrangements and coordination in selected Coor- and local level based on whether they contribute to adaptation dinating bodies (CCC, NDRRMC, and CCCC) and oversight or mitigation. Using the Rio Marker on Climate Change as a ref- bodies (DBM, DOF, and NEDA), implementing line Depart- erence, an activity was considered in support of (1) climate change ments (DA, DENR, DOE, DOST, and DPWH), and LGUs mitigation if it reduces GHG emissions into the atmosphere or (Albay and Makati). enhances GHG absorption from the atmosphere or (2) climate change adaptation if it reduces the vulnerability of human or nat- Public expenditure review: Climate change appropriations and ural systems to the impacts of climate change and risks related to obligations by Department and NCCAP priority, departmental climate variability by maintaining or increasing adaptive capacity implementation capacity, sources of financing, financing gap of and resilience. In the case of an activity contributing to both ad- five Departments (DA, DENR, DOE, DOST, DPWH), some aptation and mitigation, the respective projects or programs were attached agencies, and two LGUs (Makati and Albay). See Figure documented separately to avoid double counting. 1 for Departments tagged under KRA-5 and CPEIR. Timeframe: 2008–2013 national level; (Makati and Albay 2008–2012). 72 Figure 1. Tagged Departments and attached agencies under KRA 5 and CPEIR DEPARTMENTS AND ATTACHED AGENCIES TAGGED UNDER KRA 5 2011–2013) Departments (and attached agencies) Departments DAR DEPARTMENTS AND (and attached agencies) ATTACHED AGENCIES DA (BFAR, PCPDM) UNDER CPEIR DA (BSWM, BAR, ATI, BAFPS, DOF, DOH, DILG, DSWD RFU (I, III, V, VI, X), ATI) Attached agencies DND (OCD, Phil Vet Aff. Office, Php DOST (PAGASA, PIVS Army/Air Force/Navy) DA (PCIC, BFAR, ITAF, NIA) DENR (EMB) DENR (NAMRIA, MGB, NWRB, PCSD) DOST (PCCARD, PCIEERD, DPWH PCHRD) Other Institutes/exec offices DOE NEDA, CCC, PRRC, MMDA, Bank of the Philippines, NRDC Limitations: Box 1: Climate Change • Detail of activities often not available in GAA. A number of Classification Initiatives NCCAP activities are merged with several other activities in Philippine Development Plan (PDP). In the context of the same budget line (e.g., activities related to capacity build- preparing the 2011–2016 PDP, NEDA identified climate ing or climate research are included with similar activities). actions in several of the PDP’s chapters (agriculture and Similarly, it is not possible to distinguish the incremental com- fishery, infrastructure development, and natural resource ponent related to adaptation within a PIP (e.g., the additional and environment sectors), which led to the integration of construction costs of irrigation systems or water infrastructure 61 climate-related projects in the PIP. to render the investment more climate resilient) as these costs Key Results Area 5. DBM identified in the 2011, 2012, and are not documented in separate budget lines and, in most 2013 national budget programs and projects that support cases, are included only in a few projects and programs. the KRA 5 objectives (promoting sustainable natural resource utilization and CCA and mitigation strategies). • Identifying climate appropriations in DA’s budget as only a few activities are documented separately while for most Departments’ work programs 2011–2016. Based on the others detailed information about the program/project’s request of the CCCC, the Departments pertaining to the components are missing cluster identified CC-related programs and projects in the GAA 2011 and NEP 2012 and prepared budget proposals for • Incomplete data set on (appropriations and obligations), existing programs and projects as well as planned activities financing needs for CC-related activities and for some for 2012–2016. Out of the 10 Cluster Departments, 5 are Departments limiting assessment of budget execution. part of the CPEIR. • Simple categorization of PAPs into adaptation and mitigation Multilateral Development Bank Classification system. supporting PAPs not based on concept of “climate finance In order to improve tracking and reporting of climate finance–related commitments and investments, several additionality.� MDBs have developed a joint approach to establish a • Lack of alignment to establish linkages between PIP, Depart- practical, harmonized climate finance classification system. ment Work programs and budgets • Limited documentation to allow separate identification of small-scale activities • Short history and less that comprehensive coverage resulting in the omission of irrigation and transportation PAPs at DOTC. 73 Sustainable Development Department East Asia and the Pacific Region THE WORLD BANK 1818 H Street, NW Washington, D.C. 20433, U.S.A. Telephone: 202-473-1000 Fax: 202-477-6392 Internet: www.worldbank.org/eapenvironment WORLD BANK OFFICE MANILA 25th Floor, One Global Place 5th Avenue, Bontacio Global City Taguig City, Philippines Telephone: 632-465-2500 Fax: 632-465-2505 Internet: www.worldbank.org.ph