ON March 3, 2021, in celebration of World Wildlife Day, the Department of Environment and Natural Resources (DENR) released a study on the economic value of marine turtles and blue-naped parrots.
Based on the DENR-ADB/GEF study, one marine turtle is projected to have an economic use value of P4.80 million (estimated $95,900) throughout its 57-year lifetime. This is based on its ecological role in coastal and marine ecosystems (P900,000 per turtle) and on the tourism value it generates (P3.90 million per turtle). Meanwhile, the annual use value of the entire population of the Philippine marine turtle—conservatively estimated at 7,294 individuals by the DENR-BMB—ranged between P2.89 billion and P3.19 billion ($57.88-$63.85 million) per year.
The study underscores the fact that a marine turtle or a blue-naped parrot, which are both being pushed to the brink of extinction by the illegal wildlife trade, costs a lot more alive than dead, or being traded for their meat, eggs or body parts, or being caged in the case of the illicit exotic pet trade.
Native plants and animal wildlife are not the only undervalued commodity as far as the country’s natural wealth is concerned.
Pencas bill
THE House of Representatives unanimously approved on third and final reading a bill that seeks to change all that. HB 8443 or the Philippine Ecosystem and Natural Capital Accounting System (Pencas) was identified as a priority measure by the Legislative-Executive Development Advisory Council (Ledac). A similar measure that seeks to establish Pencas has also been filed in the Philippine Senate.
Pencas is a framework that takes into account the country’s natural capital and its impact on the economy.
It will establish a system for the collection, compilation and development of natural capital accounts in the government as a tool for development planning and programming, policy analysis, and decision-making.
Pencas will also serve as a comprehensive data framework in the generation of natural capital statistics and account for their progressive integration in macroeconomic indicators.
During an economic affairs committee hearing on Pencas, DENR Secretary Maria Antonia Yulo-Loyzaga said: “We must measure what we treasure as a country.”
The country’s chief steward of the environment and natural resources said indeed, institutionalizing a framework and system that accounts for the country’s natural assets will better align socioeconomic growth targets and indicators with sustainable development goals and take into account agendas on biodiversity, climate change and disaster resilience.
She believes that Pencas, once enacted, “will lay out a comprehensive data framework of natural capital statistics and accounts; and provide tools and measures to contribute to the protection, conservation, restoration and resiliency of ecosystems.”
More important, the DENR chief said Pencas will significantly support the development of strategies for science-based, risk-informed, ethical and equitable stewardship of the environment as this will enable the DENR and other government agencies to come up with specific policies and programs that integrate the economic and climate-change agenda and unlock potentials of the green and blue economies.
Linking multiple disciplines
THE BusinessMirror sought to learn more about Pencas, and here’s what we’ve learned from the DENR.
“Developing a Natural Capital Accounting system is a process that can link multiple disciplines and data providers—including statisticians and economists, with social and natural scientists, remote-sensing and artificial intelligence experts, and communities themselves that may be engaged in citizen science. These transdisciplinary structures will enhance and bridge information for decision-makers in the public and private sectors. It can inform decision-making with respect to incentives, finance, and national and local policy coherence, and support monitoring, evaluation and learning from the implementation of these policies and programs.
The trans-discipline and integrated framework of Pencas would provide a systems perspective to risk-based decision-making and provide a common reference from which different agencies may locate their mandates, identify opportunities for collaboration and synergy, and track their performance.
Economic contribution
PENCAS will not only provide us with a snapshot of the environment and its contribution to the economy. It will help map possible directions in the development of the nation beyond traditional indicators and allow us to explore multiple trajectories for social, economic and environmental development from the valuation of our natural resources.
Once we have a framework that can measure our natural resources and locate what natural assets we have, policy and planning—even the basis for regulatory decisions—will change.
For one, Pencas will provide the opportunity to operationalize an integrated water resource management system, which Executive Order No. 22 Series of 2023, issued by the President, creating the Water Resources Management Office at the DENR, aims to achieve, the DENR chief stressed in recent policy pronouncements.
Pencas can provide information on the physical flows of water within the economy, and between the economy and the environment, the stocks of water assets and changes to these stocks, economic activity, and transactions related to water resources.
This can help policymakers design better policies on water allocation, and pricing strategies more in line with the ability to pay and can inform where targeting investments in water infrastructure can generate the largest impact on the economy.
Sound decisions, well-informed policies
THE DENR’s Biodiversity Management Bureau headed by Director Marcial C. Amaro Jr., concurrently an assistant secretary for policy, planning and foreign-assisted and special projects, for his part believes Pencas can help the DENR make sound decisions and well-informed policies in managing the country’s natural resources.
DENR-BMB through the Coastal and Marine Division explained the importance of Pencas finally being put in place through legislation.
“Pencas policy will enable the development of a comprehensive information system and accounting framework that will collect and analyze data about our environmental assets and resources. This will take into account and make explicit the role of our natural resources or natural capital in supporting economic development.”
The DENR-BMB said natural capital accounting will, in fact, highlight the dependency of the Philippine economy on the flow of ecosystem services provided by nature.
“The Pencas will additionally provide data concerning the state [condition and health] of our natural resources and the various environmental issues that are crucial for well-informed management interventions in terms of threat reduction and the allocation of necessary resources to guarantee their long-term sustainability,” it says.
Highlighting worth of nature
ACCORDING to the DENR-BMB, the economic valuation of the ecosystem services provided by the country’s natural resources—the vast terrestrial and marine biodiversity—is also part of the Pencas. It will help policymakers, businesses and society as a whole to understand the value of ecosystems, biodiversity and natural resources in economic terms. This will give them concrete information to guide them in developing financing instruments, viable business models and investment decisions with high regard for impacts to the environment.
More important, the Pencas will highlight the immeasurable worth of nature, its inherent value, and the interconnections in the implementation of current policies. It acknowledges that nature and ecosystems have intrinsic rights to exist, ultimately recognizing legal rights that serve as safeguards to protect endangered ecosystems, and applying the precautionary principle, especially when economic values cannot be quantified.
Mainstreaming environmental protection, conservation
BY gaining a deeper understanding of the nation’s natural resources and ecosystems that underpin economic development, it is anticipated that all sectors, particularly economic actors, will be able to incorporate environmental protection and conservation as integral aspects of their core activities (not just their corporate social responsibility arm).
“This approach will safeguard the primary source of raw materials—which is, the environment—ensuring the continuous provision of ecosystem services that, in turn, sustains a flourishing and resilient economy,” it says.
Expounding further, with Pencas, there will be an enabling framework, the BMB said. “The significance of natural capital accounting has been widely acknowledged globally in recent years. It underscores the necessity not only to assess the value of our natural resources but also to create practical financial mechanisms that can guide the private sector in making environmentally responsible investment decisions. Natural capital accounting helps us comprehend the true worth of the ecosystems and resources that underpin our economy and human well-being.”
“In this context, the private sector plays a crucial role in economic activities. However, for these activities to align with sustainable and biodiversity-friendly principles, it is essential for the government to provide guidance and create the necessary institutional framework. Governments are responsible for setting up the rules, regulations and support systems that enable businesses to operate sustainably. The private sector often follows the lead of the government in shaping its practices and investments. The Pencas bill, if it becomes law, represents a historic achievement for the Philippines. The country is known for its incredibly diverse and ecologically valuable biodiversity. By enacting this bill, the Philippines is taking a significant step toward protecting and preserving its natural assets. The bill not only recognizes the importance of conserving ecosystems but also emphasizes the economic value they bring to the nation.”
Decision-making support tool
“WHAT we measure, we value; and on what we value, we have a chance to manage better. For the private sector, the implementation of the Pencas will also enable them to evaluate and communicate their reliance on nature, offering a clearer perspective to align their sustainable investment choices,” the DENR-BMB said.
Meanwhile, on the government side, the disclosure of private sector dependencies to nature will allow the government, primarily financial institutions, to better direct the businesses toward various opportunities to mobilize private capital for environmental sustainability, yielding returns on investment and additional co-benefits.
At the macro level, the Pencas will allow the measurement of indicators beyond the usual GDP, especially environmental degradation, and the measurement of ecosystem services that contribute to human well-being. This will also help ensure that economic growth does not come at the expense of our environment.
“It aims to provide a more comprehensive picture of economic growth that considers environmental costs and benefits. Traditional GDP does not account for negative externalities like pollution and resource depletion. By considering the Pencas data in the GDP, policymakers can better understand the trade-offs between economic growth and environmental sustainability.
In addition to the abovementioned, Pencas will play a vital role in quantifying the value of the country’s ecosystem services. It will organize and guide the government’s data collection efforts through the Philippine Statistics Authority, the National Economic and Development Authority, the Department of Environment and Natural Resources, and other relevant agencies, ensuring that information on ecosystem extent, condition, assets and service flows is systematically gathered. Pencas will provide clear directives to field offices, specifying the data needed to assess both the physical and monetary worth of various ecosystems, including forests, watersheds, and coastal and marine areas. This data-driven approach will inform policymaking, allocate resources efficiently, raise public awareness, and align with global sustainability goals, solidifying the importance of preserving these invaluable natural assets for economic and environmental well-being.
Revenue measuring tool
ACCORDING to the DENR-BMB, assigning economic values to ecosystem services can play a significant role in determining taxes, and Pencas can help in this regard. For instance, by providing information on the economic benefits derived from services like carbon sequestration or water purification, Pencas can guide the creation of tax incentives for practices that enhance ecosystem health. Similarly, it can inform user fees and charges based on the value of these services.
“Pencas data can also support the design of environmental levies, such as carbon taxes, with revenue allocated to environmental mitigation efforts. Furthermore, Pencas values can be used in market-based instruments, such as cap-and-trade systems, to facilitate the trading of permits related to ecosystem impacts. Finally, Pencas can help calculate the financial value of biodiversity offsets for projects with environmental impacts, ensuring equitable compensation for ecological services disrupted. However, careful planning and stakeholder engagement are vital for effective implementation and equitable outcomes.”
A tool against environmental crimes
PENCAS can be instrumental in determining penalties and fines for environmental damage by quantifying the economic value of impacted ecosystems. This transparent and evidence-based approach ensures that fines are proportionate to the harm inflicted on the environment. The system acts as a strong deterrent, encouraging compliance with environmental regulations. Additionally, revenues from fines can be reinvested in conservation and restoration efforts, guided by Pencas data to prioritize ecosystem recovery. This approach promotes equitable and restorative penalties while enhancing enforcement by targeting high-risk areas and activities.
Furthermore, the economic value derived from Pencas can serve as a vital input for amending current policies on fines and penalties, potentially allowing for top-up premium fines to augment existing penalties, thereby further discouraging environmental destruction and incentivizing responsible environmental practices.
Pencas can also serve as a deterrent against environmental crimes through its provision of transparent and economically grounded data. It quantifies the economic value of ecosystems, enabling objective fines and penalties that discourage illegal activities. The knowledge that environmental harm directly translates into significant financial consequences serves as a strong deterrent for potential offenders. Additionally, Pencas supports incentives for compliance and reinvests penalty revenues into conservation efforts, further discouraging environmental misconduct. This data-driven approach enhances enforcement, making it more challenging for offenders to evade detection, and it raises public awareness about the economic value of ecosystems.
Finally, the Pencas involves the valuation of ecosystems and their components, which can include wildlife and their habitats. This valuation recognizes not only the economic value of natural resources but also the intrinsic and ecological value of biodiversity.
The values/accounts that will be generated by the system can be used as a basis for the imposition of fines and penalties for violations, as well as in the determination of compensation for damages in cases of loss/damage to resources and biodiversity.
Special studies on the economic valuation of wildlife may also be undertaken. Results of which may be utilized as a basis to estimate the fines and penalties arising from offenses/violations on illegal wildlife collection and trading. The calculated values that may be derived for individual wildlife species are crucial information underlining the urgency of interventions.
While the bill has no dedicated section addressing environmental crimes, the results of implementing this framework or legislation in the future can help shape the penalties for actions like timber poaching, the harvesting of endangered plants, or the hunting of animals. The extent of these penalties would be contingent upon the precise stipulations and modifications introduced in the current environmental laws and regulations in the Philippines.
Perspective of an environmental economist
ASKED to weigh in on Pencas, Rina Rosales, a natural resources management specialist and environmental economist, said Pencas is a welcome new development as it mandates the bureaucracy to produce the accounts.
“The accounts have many components. It is not just about counting the trees in the forest but what is being measured is their contribution to the different services a forest provides—that is what natural capital accounting measures,” she said in a mix of English and Filipino.
It means that what you gain or lose in the ecosystem will now be accounted for, such as when the government builds roads and has to cut down trees. Government agencies, she explained, will now have to provide data as to how many trees and put value to the trees and the ecosystem services that they provide which will now be lost because of the road project.
According to Rosales, there are standards or protocols in the valuation. There’s a standard and valuation in doing the accounting work.
“There will be a process. This is where the Philippine Statistics Authority, the National Economic and Development Authority (Neda), and other partners in the accounting process come in. “A lot of data are required and the agencies will provide. But of course, most of the data will also come from the DENR being the natural capital manager. It’s their mandate. They are the ones who are managing the ecosystems,” she said.
Beyond GDP
ACCORDING to Rosales, a project consultant of the DENR for the USAID-funded Sibol Project, natural capital accounting is more than helping measure the GDP, which she said is merely the produced capital, which means all the exchanges going on in the economy. “NCA goes beyond that and it recognizes the contribution of natural capital to the economy,” she said, citing for instance the services provided by the natural ecosystem to produce energy, water or to clean the air—which is not valued because they are not exchanged in the market. “But we know we need that to continue the economic activities so there should be a way to value that,” she said.
According to Rosales, it will take a long process but there are ways to do it. “Parts of value can be computed. It’s really expensive to do that and we don’t have enough people to be able to do that. No one country can actually do complete natural capital accounting,” she said, adding that even the United States, recently, South Africa, has just started natural capital accounting.
“It will take a long time to complete.” For the Philippines, she said the Pencas’ more important use or application will be to make decision-making more informed.
“You really don’t need to have a value in everything. You only need to put value on what is important, or the most threatened, which is more useful for the government,” she said.
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