Production Sector Climate Risk Analysis in the Philippines

Description

Background

Climate change must be treated as a major economic and social risk, and not just a long-term environmental problem. As such, measures developed need to be integrated into economic planning, and the preparation of sectoral plans and budgets. Climate change will particularly affect the Philippine economy through its impacts on natural resources and agriculture, sectors that are crucial to the country’s economic development and poverty alleviation. Given such impacts, major investments in these sectors may not pay off as planned, which in turn could seriously affect poverty alleviation and socio-economic development.

Objectives

The initiative had three main objectives

  1. To quantify and model natural hazard risk for the Philippines in an objective fashion that represents a scientific and numerical basis to inform weather and climate risk management practices and policy, disaster risk reduction, and risk transfer with particular focus on the agricultural production sector.
  2. To document current mechanisms of risk transfer and risk management in the agricultural sector and identify opportunities to apply more efficient risk transfer schemes, such as those based on parametric indices, which eliminate the issue of moral hazard.
  3. To produce solid and validated climate change impact scenarios that can enable local stakeholders to make informed decisions on adaptive measures to climate change and integrate adaptive measures to climate change with disaster risk reduction.

The results of which would eventually be integrated into economic and operational planning, particularly in agriculture and natural resources management.

Activities

The initiative consisted of three key activities:

  • enhance the availability of reliable data on vulnerability of the agricultural production sector in the Philippines;
  • strengthen institutional and operational structures for more effective risk management at national and sub-national levels, which ultimately could support the transfer of risk on the basis of parametric weather insurance or weather-based mechanisms to protect and fund safety nets for the most vulnerable;
  • provide a cross-cutting analysis of lessons learned in the innovative Special Climate Change Fund (SCCF) project, including the production, packaging and application of risk information, and the role of risk transfer.

Partners

With respect to climate change, most government stakeholders have until now largely focused on mitigation of greenhouse gas emissions, including through the Clean Development Mechanism. Adaptation requires a much broader focus and increased mainstreaming of activity implementation in a more efficient and coordinated institutional framework.

This initiative was therefore led by a cross-sectoral team at the World Bank, in close collaboration with the Philippine Department of Agriculture; the Crop Insurance Corporation (PCIC); the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA); the National Mapping and Resource Information Authority (NAMRIA) and some microfinance institutions. Other partners were also invited to contribute to this initiative, either directly or indirectly.

Timeline

The work started in May 2007 and was completed in early 2009.

Outputs & events

The project delivered five main outputs:

  1. A risk assessment for the agricultural sector, with a primary focus on the rice sub-sector and the key productive regions.
  2. A climate analysis to develop a set of seasonal indicators to monitor crop/rice production.
  3. A field based analysis of local/community vulnerability in regions 2 and 5 of the Philippines.
  4. An analysis of entry points for mainstreaming of risk in macroeconomic and budget planning.
  5. An analysis of rural financial institutions and financial management of financial risk arising from weather calamities.

Reports for the above activities were produced in June 2008 and the findings were disseminated during a mission in September 2008.

Links

Linkages with other ProVention initiatives

The activities around developing risk information for the Philippines were related to the ProVention-supported GRIP project. In addition, the activities for the Global Index Insurance Facility in Madagascar comprised similar efforts to develop risk information for a large island, mainly agricultural based, and vulnerable to significant climate oscillations.

In 2009, ProVention also released a case study that documents experience and challenges in mainstreaming disaster risk into development in the Philippines.