PROJECT Development Facility
Request for Pipeline Entry and PDF Block B Approval
Financing Plan (US$)GEF Allocation
Project (estimated) * / 9,000,000
Project Co-financing (estimated) / 30,000,000
PDF A
PDF B / 350,000
PDF C
Sub-Total GEF PDF
/ 350,000PDF Co-financing (details provided in Part II, Section E – Budget)
IBRD/IDA/IFC / 100,000
Government Contribution (in kind) / 50,000
Others
Sub-Total PDF Co-financing: / 150,000
Total PDF Project Financing: / 500,000
* This financing for Phase I is sought under GEF 3. A proposed second phase of the program would continue beyond GEF 4, at which time additional funds would be requested.
Agency’s Project ID: P091147
GEFSEC Project ID: 2761
Country: Philippines
Project Title: Environment and Natural Resources Management Program, Phase 1
GEF Agency: World Bank
Other Executing Agency: Department of Environment and Natural Resources
Duration: 12 months
GEF Focal Area: Integrated Ecosystem Management with linkages to Biodiversity and Sustainable Land Management
GEF Operational Program: OP-12: Integrated Ecosystem Management; OP-2: Coastal Marine and Freshwater Ecosystems; OP-3: Forest Ecosystems; OP-15: Sustainable Land Management
GEF Strategic Priority: EM-1: Integrated Approach to Ecosystem Management; SLM-1: Capacity Building; SLM-2: Implementation of Innovative and Indigenous Sustainable Land Management Practices; BD-1 Catalyzing Sustainability of Protected Areas; BD-2 Mainstreaming Biodiversity in Production Landscapes and Sectors
Estimated Starting Date: May 2005
Estimated WP Entry Date: June 2006
Pipeline Entry Date: (if applicable)
Record of endorsement on behalf of the Government:Roberto B. Tan, Assistant Secretary, Department of Finance / Date: 03/23/2005
Analiza R. The, Assistant Secretary &GEF OFP, DENR / Date: 05/03/2005
This proposal has been prepared in accordance with GEF policies and procedures and meets the standards of the GEF Project Review Criteria for approval.
Steve Gorman
GEF Executive Coordinator, World Bank / Robin Broadfield
Project Contact Person
Date: May 5, 2005 / Tel. and email: 1-202-473-4355
PART I - Project Concept
A - Summary
1. Country Background
The Philippines is an archipelago of more than 7,100 islands, covering an estimated area of 29.9 million hectares and it is recognized for its rich terrestrial and marine biodiversity. Much of the country is undulating, and at least three-fifths of it is classified as “uplands”. There are 419 river basins with steep and short topography. Within its extensive lands are areas that contain high species diversity and high levels of endemism. Per hectare, the Philippines probably contains more biological diversity than any other country on earth (Heaney 2002). Of the country’s 52,000 described species, more than 50% are endemic, and many are unique to individual islands. Philippine biodiversity can be considered a separate biological region in a global setting (Ong et al 2002 in NBSAP-PBCP). The high level of locally-confined endemism is a result of the complex geological history of the Philippine archipelago, and its isolation from the nearby land areas of mainland Asia and the islands of Indonesia and Malaysia. Deep-water channels also subdivide the Philippine archipelago and limit the movement of species between the main island groups. This has resulted in high levels of localized endemism that is divided into 16 main and small island groups with distinct fauna and flora (biogeographic regions or zones). Marine areas are divided into 6 separate zones. The biogeographic regions and zones are shown in Figure 1.
The Philippines’ coastal and marine ecosystems are some of the richest on Earth. The Philippines is one of two countries in the world (Madagascar being the other) that is both a global megadiversity country and a global biodiversity hotspot. At the same time, it is also one of the most heavily impacted by environmental degradation. The primary sectors (agriculture, fisheries, forestry) depend heavily on natural resources, contribute about 20% of GDP, and employ approximately 37% of the workforce, many of whom constitute the poorest households in the Philippines. Threats to species and habitats have consequences for both biodiversity and human livelihoods, since a large proportion of the 80 million Filipino citizens are highly dependent on natural resources. As a result, more than 93% of its natural vegetation is already gone and many species are endangered.
Figure 1. Terrestrial and Marine bio-geographic regions of the Philippines.
Source Ong et al 2002
2. Direct Causes of Environmental Degradation.
A large proportion of the population of the Philippines lives in or adjacent to the biodiversity and natural resource rich areas, and a significant percentage of local subsistence livelihood and protein intake of the people comes from forest, wetlands and marine resources. Therefore, the Philippines is culturally and economically closely linked to and highly dependent on its natural ecosystems. Limited availability of agricultural land to the fast growing population, displacement due to natural disasters and insurgencies, and inequitable ownership and rights over land and natural resources have contributed to the substantial degradation of both land and marine areas. The extraordinarily high number of threatened fauna and flora is one indicator of the alarming status of the environment. This pressure on the environment and natural resources (ENR) is reflected in:
· severe forest degradation, with forest cover reduced from 70% in 1900, to only 6% currently;
· only one third (32%) of coral reefs remain in good condition, while most are degraded with 27% in poor condition with coastal mangroves significantly depleted;
· loss of watershed integrity due to inappropriate upland agriculture, deforestation, and road construction, leading to water shortages, sedimentation and accelerated effects of natural disasters such as typhoons;
· almost half (45%) of the arable lands in the Philippines have been moderately to severely eroded, forcing subsistence farmers to move onto marginal lands;
· due to deforestation and overexploitation, the Philippines has many species under severe threat and endangered with 331 species on IUCN’s Vulnerable or Endangered list in 2002 (compared to 183 species in 1992) while 23% of the endemic vertebrate species are threatened;
· although the country has 206 priority protected areas only 8 of these have been approved by Congress, and most PAs are “paper parks” with inadequate/neither staff nor budgets.
The overall population growth rate is rapidly increasing, and has reached 2.36 percent of that estimated in 1995-2000, with the population expected to double in 30 years (DENR-UNDP-Philippines 2002). Poverty is most acute and widespread in rural areas where about 47 per cent of the population lives below the poverty line. Subsistence poverty – the proportion of families with income below the food threshold - has increased to 26 percent of the rural population. There are regional disparities, with the Autonomous Region of Muslim Mindanao (ARMM) having the highest rate of poverty (Reyes 2002). In addition, the number of unemployed has grown to about 4 million. Many are joining the ranks of the most marginalized poor.
The rural poor – the majority being landless – tend to be self-employed, primarily in agriculture or as temporary laborers. Increasing poverty, compounded by high unemployment, and the lack of tenure security (and in Mindanao, the armed conflicts) are driving factors behind migration into the frontier areas. Demographic pressure on resources continues to increase in the coastal and upland areas as a result of resource scarcities in lowland areas. Rural-to-rural migration describes the demographic change resulting from poverty. One example is Palawan Province, where natural resources are still abundant. The in-migration from depleted areas of Visayas and Luzon accounts for half of the province’s growth rate of 4.3 percent. The migrants settle in new frontier areas such as the forest of Puerto Princesa Subterranean National Park (Jensen 2003).
At present, about 30% of the country’s population or an estimated 17.4 million people live in upland areas. Half of the area cultivated in the upland areas is characterized by very steep slopes, and much of this land is cultivated without proper soil and water conservation measures being undertaken (Contreras 2004). This is a particularly serious problem because critical watersheds and protected areas are being damaged. Furthermore, swidden agriculture (or kaingin) is extensively practiced in many areas, adding to the pressure on local forest systems. In addition, agricultural production is often supplemented with the collection of non-timber forest products such as rattan, bamboo, resin, medical and ornamental plants. In many communities, subsistence wildlife hunting is also important for local food security. These activities tend to increase the pressure on upland natural resources and biodiversity.
Many upland areas rich in valuable timber and minerals are severely affected by unsustainable exploitation practices. Widespread and commercialized illegal logging takes place in many forests, watersheds and protected areas. It has a devastating impact on the ecosystems and negatively affects local communities' livelihood and resource management options. Likewise, current environmentally unsustainable mining practices have serious implications for many communities (De Alban 2004).
The recent joint Philippines/World Bank Report on Natural Resources Governance in the Philippines found the direct causes of environment and natural resource (ENR) degradation to be sector-wide and inter-related including: overexploitation; conversion of natural ecosystems, such as forests and mangroves, to other uses (such as inappropriate land conversion, upland agriculture, deforestation, and road construction); and pollution and sedimentation from urban and industrial centers and agricultural expansion. In addition, a number of policy and institutional failures, which often bring about negative incentives, have contributed to resource degradation, including:
· deficient property rights (due to overlapping and conflicting laws), resulting in open access in many areas and lack of incentives for natural resource protection;
· skewed distribution of rights to land and natural resources resulting in over-intensive cultivation of small plots;
· overlapping and conflicting mandates and functions of ENR institutions together with insufficient capacity to manage forests, lands and waters under their jurisdiction, both at the central and local government unit (LGU) levels; and,
· market failures attributed to insufficient internalization of externalities have also contributed to degradation. Externalities usually derive from the divergence between private and social costs and benefits of ENRM or degradation. Externalities are difficult to measure as they are not included in the decision-making of, or price of the commodities produced by, farmers, or companies harvesting/processing environmental goods and services products. However they can have significant costs to society at large. Under these circumstances there can be considerable divergence between private and public costs of ENR degradation. Government policy (e.g. taxes and laws) and/or market-based instruments may be required to encourage private users to bear some of the societal costs of their activities. While there are promising and working models of payment for environmental goods and services (PES) in the Philippines, these instruments remain largely un-replicated and mechanisms to support their institutionalization are weak or lacking.
Since the mid 1980’s, the Government of the Philippines (GoP) has enhanced the policy and institutional framework for natural resources management. Numerous laws and regulations are in place, while government institutional functions were transformed through some of the most comprehensive decentralization policies undertaken in the developing world. Despite these commendable initiatives, implementation of policies and laws has generally been incomplete and uncoordinated, and jurisdictional overlaps, conflicting regulations and weak institutional capacity have resulted in continued poor management of environment and natural resources.
A very large number of agencies and organizations are involved in natural resources management representing different legal mandates and interests and they implement programs and projects jointly or separately from each other. The following is a list of entities that in one way or another have a major impact on biodiversity aspects of resource management and related livelihood options for local communities: National Economic and Development Authority (NEDA), Department of Environment and Natural Resources (DENR); Department of Agriculture (DA); National Commission on Indigenous People (NCIP); and regional, provincial and municipal level institutional structures.
The Department of Environment and Natural Resources (DENR), in particular, has lagged behind other institutions in decentralization and is faced with an ever-growing mandate, linked to inadequate funding and capacity, especially at the local level where NRM activities are implemented. Furthermore, the DENR is in a unique position, having dualistic mandate of protecting the environment and pursuing the sustainable development of the nation's natural resources, including water, land, minerals, forests, wetlands, and biodiversity. These are indeed difficult tasks to accomplish and balance and, in many cases, the various bureaus under DENR end up being in conflict with each other. For example, the promotion of extraction of natural resources such as mining by the Mines and Geosciences Bureau (MGB) and large scale logging by the Forest Management Bureau (FMB) are in immediate direct and indirect conflict with the conservation of forests, terrestrial and marine biodiversity by the Protected Areas and Wildlife Bureau (PAWB).
The large number of institutions and officials involved in natural resource management makes decision-making difficult. Oftentimes, there are overlaps in jurisdiction, functions and responsibilities among the different agencies. Inevitably, this has led to limited coordination and complementation among the implementers of programs and projects. Although the institutional set-up of the natural resources management sector is gradually starting to improve, particularly with the new generation of decentralization and co-management policies, there are still several factors that constrain the effective implementation of sectorial activities.
3. Rationale for World Bank and GEF involvement
Over the past 25 years, DENR has received more than US $1 billion in foreign assistance (grants and loans) to implement ENRM activities. Most of this support was/is implemented through a series of more than 219 individualized projects, usually focused on single issues. The scope of the supported activities covers all areas of DENR responsibility, ranging from air, water, soil, minerals, forestry, fisheries, inland and marine ecosystems, capacity building, information and education programs, policy reforms and legislative actions. This support has been instrumental in helping to slow down the loss of biodiversity and the general degradation of environment and natural resources. But these resources have not been used cost-effectively.
Even with all the support that has gone towards environmental management, the primary mechanism for conserving biodiversity in Philippines, the Protected Area Management system, remains weak and is under increasing pressure. By the end of 2002, 360 initial and proposed protected areas had been included in the National Integrated Protected Areas System, NIPAS, but some of these areas have little natural vegetation remaining. The Philippines Biodiversity Conservation Priorities report identified 206 protected areas as priority areas (170 terrestrial and 36 marine) but some key habitats are still not represented within the PA network. Of the 206 priority areas, however, many are paper parks with no or very limited resources even though PAMBs have been established at 159 sites. Most areas fall under DENR management; only 10 PAs are managed by other institutions e.g. LGUs or other government agencies. DENR budgets for PA staffing (only 500 staff for 169 PAs), operations and capital support are inadequate and management is complicated by conflicting legislation (NIPAS Act, Indigenous Peoples Rights Act), overlapping jurisdictions, assignment of property rights and need to raise own revenues. Although ODA support to the PA system has been generous ($62 million was allocated to PA system from 1998-2003 with 82% of total costs from MDBs and bilaterals and 15% from NGOs) this assistance has been targeted to only 45 sites of which 28 are high priority sites. The Integrated Protected Areas Fund (IPAF) in 71 areas generated close to $1 million by 2002 but it is a complicated mechanism for collecting small revenues for permits and it does not provide sufficient resources for sustaining management or even PAMB activities at most sites.