In the Philippines, forest investments offer significant returns

It’s well understood that forests are worth more than the sum of their trees. As an ecosystem, forests provide an astonishing array of benefits, from the more obvious ones like timber, fruits and nuts, to the intangible ones like maintaining reliable flows of clean water. But how much are these benefits actually worth? And are forests really so much better at providing these services than, say, human-engineered technology?

According to a new study in the Philippines, reforestation and forest rehabilitation may truly be the most cost-effective option for producing valuable ecosystem services that many people depend on – especially given the uncertainties brought on by climate change.

With funding from the Program on Forests (PROFOR) and technical support from the World Bank, the Government of the Philippines studied three different areas to assess the value of certain “invisible” forest-derived benefits. The research found that healthy forests help reduce risks to climate variability by providing high-quality ecosystem services that contribute to more resilient communities.

For instance, the study showed that in the Upper Marikina River Basin – a degraded watershed upstream from Manila, where most inhabitants live below the poverty line - higher forest cover results in 149 to 167 percent higher water yields during the driest months of the year, ensuring a more reliable water supply during times of scarcity. Meanwhile, during the wettest months, forests can reduce the volume of floodwater in the watershed by 27 to 47 percent. Forests also stabilize hillsides and mountainsides in the region by decreasing the risk of soil erosion by 68 to 99 percent per hectare – helping reduce the impacts of natural hazards like flooding and landslides.

“These services are worth billions of pesos,” emphasized Eugene Soyosa, Economist at the Philippines Forest Management Bureau. “Maintaining forests has a much lower cost than if you would build check dams or other erosion control measures.”

Crucially from a sustainable development perspective, forest ecosystem services are integral to the well-being of poor communities in the Philippines. According to the findings at one pilot site, people obtain about 7 percent of their annual cash income from selling forest resources like bamboo, charcoal, fish, and bush meat.

“Poor households are very dependent on forests, especially for water provisioning services” said Maurice Andres Rawlins, Natural Resource Management Specialist at the World Bank and a lead author of the study. “If these services were lost and people had to pay for them, it could certainly set back poverty reduction gains.”

“In the pilot site of Upper Marikina, forests have been degraded for charcoal-making and the water supply is decreasing; at other sites, the siltation is very pronounced,” explained Soyosa. “When we first talked to communities, they perceive the idea of ecosystem services as too technical. But as the conversation moves on, it turns out that they know a lot about these benefits, and are being heavily impacted by the loss.”

Forest ecosystem services become more important as the impacts of climate change intensify. The Philippines - being an archipelagic country that is naturally vulnerable to typhoons, earthquakes and storm surges– also ranks among the top 5 countries most affected by climate change. According to projections, all areas of the Philippines will get warmer, contributing to more frequent extreme weather events. Dry seasons will become drier, and wet seasons wetter. This study confirms that forests provide services that make communities more resilient to climate change shocks, including acting as a safety net against poverty.   

The Government of the Philippines is already trying to reverse trends of severe deforestation and forest degradation across the country, and has been working on the valuation of ecosystem services with help from the World Bank-led Wealth Accounting and the Valuation of Ecosystem Services (WAVES) Global Partnership. This work is motivated by the recognition that documenting economic values of forest resources can help make forest investments more attractive, and thus improve the livelihoods of poor upland communities.

“The Philippines is committed to regreening,” said Rawlins. “They don’t want to just plant forests where there are none, but to undertake more strategic thinking about which areas to prioritize, and what kind of trees to plant. That’s where measuring specific ecosystem services results is so important. The question now is, ‘How do we mainstream these processes into planning?’ The ability of the government to include this work in their regular processes is the true sign of success.”

Findings of the study are intended to guide the Philippines’ National Greening Program by including forest ecosystem services into land use planning processes. Results have also shaped the indicators in the country’s Forest Investment Road Map (FIRM), which is the government’s strategy for accelerating sustainable economic growth in the wood industry through private sector investment.  The FIRM, in turn, is consistent with the Philippines Master Plan for Climate Change-Resilient Forestry Development, which aims to promote the development of forest plantations and increase the participation of the private sector, local government units, and organized upland communities.

“In the Philippines we have not yet established a national database on forest ecosystem services in terms of inputs into policies and programs,” said Larlyn Faith Aggabao, Senior Forest Management Specialist at the Forest Management Bureau. “This study is a useful start to institutionalizing and formulating a coordinated effort among different agencies for data collection, data sharing, and analysis. This information would provide significant inputs to forestry plans because there are trade-offs to any policy, and these need to be managed.”

(Photo credit: Gordon Bernard Ramos Ignacio)

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Last Updated : 06-16-2024

Understanding the Role of Forests in Supporting Livelihoods and Climate Resilience (and Twin Goals) in the Philippines

CHALLENGE

Tremendous progress has been made in reducing poverty over the past three decades. Nonetheless, more than 1 billion people worldwide still live in destitution. In addition, rising prosperity in many countries is accompanied by social exclusion and increasing inequality. The post-2015 Development Agenda has thus made reducing poverty its priority. The new World Bank strategy reinforces this objective, aiming to end extreme poverty in a generation and to promote shared prosperity for the bottom 40 percent. These goals will only be achieved if development is managed in an environmentally, socially, and fiscally sustainable manner.

The challenge for development is that the poor are often highly dependent on natural resources, such as forests. Although forests provide ecosystem services and safety nets for the livelihoods of the poor, forests are facing significant pressures from the range of sectors that are critical for economic growth, such as agriculture, transport and energy. Therefore, if sustainably managed, forests could play a significant role in achieving the twin goals of reducing poverty and building climate resilience. However, our understanding of this dual forest-poverty relationship is limited, which this study seeks to address..

APPROACH

This study focuses on the Philippines where, similar to many tropical countries, extensive deforestation and forest degradation have taken place over the last century due to logging, fires and other human disturbances, which are further aggravated by climate change. The country’s total forest cover has declined to merely 6.9 million hectares, or 23% of the total land area.

This study builds on the three primary roles that environmental income plays in supporting rural livelihoods: (i) supporting current consumption; (ii) providing safety nets to smooth income shocks or offset seasonal shortfalls, as well as impacts of climate change; and (iii) providing the opportunity to accumulate assets and exit poverty. Each of these roles is examined further in how they depend on and impact the ecosystem services provided by forests (including the impacts of climate change), and how they can help reduce extreme poverty and promote shared prosperity for the bottom 40%. Three case study sites were examined: the Upper Marikina RIver Basin Protected Landscape (UMRBPL), the Libmanan-Pulantuna Watershed (LPW), and the Umayam, Minor and Agusan Marsh Sub-basin (UMAM).

RESULTS

• Higher forest cover generates higher water yields during the driest months of the year. 
• If the water regulating services provided by forests were to be replaced by delivered water, the expected costs would be USD 419-1,064 per household per year, depending on the study site. These costs will be prohibitive to most households in the study sites as the majority subsist below the poverty line.
• Compared to a “no forest” scenario, forest reduce the volume of floodwater by 27% to 47% during the three wettest months of the year.  Forests on steep slopes (>30%) help mitigate the risk of erosion by 68% to 99% per hectare, and have the potential to reduce annual sediment outflows from watersheds by 7 to 100 times compared to bare soil. 
• Replacing erosion and sediment control services with manmade control measures will cost billions of pesos. Reforestation is a lower-cost alternative to securing erosion regulation ecosystem services over the medium term.
• Water was cited by poor upland communities as the most important subsistence benefit from the forest, which they use for domestic purposes and, in some instances, for irrigation. 

• Upland communities in UMRBPL reported that about 7% of their annual cash income comes from the sale of forest resources like bamboo products, charcoal, fish, and bush meat. Approximately 40% of their annual income comes from the sale of farm produce grown on forested land.
• Forests also provide fuelwood and wood for charcoal, which supplies most of the communities’ energy needs.
• Poorer households in upland communities rely more on forest resources for income and subsistence

The study concludes with a list of recommendations for landscape planning and forest management:

• Incorporate ecosystem service modeling and valuation, forest use analysis and scenarios in forest land use planning and forest management. 
• Improve access of upland and forest dwelling communities to forest resources.
• Enhance the value of forest assets by internalizing non-market values and adding value to the existing sources of income.

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Last Updated : 06-16-2024

Road to Kunming: Economics and Finance for Biodiversity

PROGRAM SUMMARY

The development objective of this activity is to raise awareness among staff in ministries of finance and other sector ministries of WB client countries and among international financial sector stakeholders of the importance and opportunity of investing in biodiversity and ecosystem services sustainable management.

CHALLENGE

APPROACH

RESULTS

Event on “Invest in Nature” at IMF-WBG Annual Meetings 2019. The event was attended in person by ~200 people in the room, including ministers, international organizations and Bank leadership, and online by 575 people (of which 41.3 percent women). Most people who engaged online were 25-34 years old. Almost 18,000 people visited the event page. The event was the fourth most livestreamed event at the 2019 Annual Meetings (out of 19 livestreamed events). The event hashtag #InvestInNature reached more than 5 million Twitter users, generating 23.5 million impressions worldwide, and trending in DC area during the live event. On live engagement/comments, the event was rated 2nd out of 19 live-streamed events. Online, the event attracted strong engagement from key influencers, including Alok Sharna, UK, Zac Goldsmith, UK, Inger Andersen, UN Environment, IPBES, CBD. 

China-WB workshop on “Maximizing private finance for biodiversity and ecosystem services”. Over the course of the two days, the workshop was attended by 67 (of which 26 women) representatives of the Chinese Government, notably from the Ministry of Finance and the MEE, and several other CBD Parties and the Secretariat, the European Commission, the financial sector, multilateral and bilateral development agencies, NGOs and academic experts. The workshop was attended at high level with two Director Generals (from Ministry of Finance and Ministry of Ecology and Environment). On the World Bank side, the event was attended by the ENB Global Director and by the EAP Regional Director.  

It had been envisaged that the activities would contribute to inform the preparation of the post-2020 global biodiversity framework and in particular the policy mainstreaming and the resource mobilization dimensions of the framework. Through the dialogue in these activities the team was able to inform the preparation of the zero draft of the post-2020 global biodiversity framework. The participation of the UK at the Annual Meetings event was instrumental in engaging with that country on follow up action such as a possible collaboration with DEFRA on ecosystem policy modelling. On the finance side, the activity allowed to inform the work of the expert panel on resource mobilization for the post-2020 framework. 

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Last Updated : 06-16-2024