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The Economics of Nature: Using Natural Resource Valuation to Strengthen Conservation and Resilience

Posted on November 19, 2020

A field interviewer from the Visayas State University (VRU) surveys one of the 575 respondents from 7 municipalities in Leyte Island to determine the level of awareness of local residents on the existence of Mt. Nacolod as well as their perception on the value of ecosystem services obtained from the landscape.
Photo by: VSU Research team

How much does the environment cost? Answering this question is quite contentious, given the debate on whether nature can be assigned a monetary value. The contention against the “financialization” of nature is primarily grounded on potential abuse by polluters, especially those with the capacity to pay for their destructive activities even if the damage done is irreparable (Ouma et al., 2018). The discussion on economics cannot be completely ignored in conservation though, given its impact to the livelihood of the community. With more than 17 million Filipinos living in poverty according to the 2019 report of the Philippine Statistics Authority, environmental conservation is often subsumed by issues of survival in many key biodiversity areas (KBA) in the country. Unsustainable, and often illegal, practices have been justified based on meeting socio-economic needs. But how do we set the limit of man’s exploitation of natural resources? Using the socio-economic standpoint, answering this question requires cost-benefit analysis. This canonly be done, however, if the monetary equivalents of ecosystem services are measured.

Determining the socio-economic value of the environment strengthens conservation initiatives in at least three ways. First, it serves as a definitive basis for civil society organizations (CSO) in defining and measuring impacts. Given funding limitations, it is essential for both project funders and project implementers to efficiently allocate resources so that every peso spent results in the highest mutual benefit for the environment and the community. Efficiency in grant giving and utilization, however, may be difficult to ascertain if success indicators are not objectively verifiable. The ability to conduct financial analysis of project interventions vis-à-vis outcomes addresses this concern. Second, it allows the effective integration of poverty alleviation in biodiversity conservation. Addressing grassroots-level anthropogenic threats may require the provision of alternative livelihoods to the community. The success of environment-friendly income generating activities, however, will depend on whether these can sufficiently meet the material needs of beneficiaries. Given that most livelihood projects are still anchored on natural resource exploitation, albeit in a more sustainable manner, creating the business model for these social enterprises will depend on the availability of financial information in all components of the value chain. And third, it facilitates greater appreciation on the importance of protecting the environment, tapping on the Filipino value of frugality. Knowing the monetary equivalent increases the value of the ecosystem, giving stakeholders a better perspective on how much they can lose if degradation is not averted.

Natural resource valuation can also be used as a tool to promote climate actions as it defines the damage cost if mitigation and adaptation measures are not undertaken. Climate change has exacerbated the impacts of environmental degradation, given that natural hazards threatens not only people but also other species (Yokoyama, 2017). The specific challenge though in promoting climate-related interventions is its anticipatory nature. It is uncertain when calamities will happen, and when their impacts will be too much to handle. Hence, knowing how much can potentially be lost from calamities provides greater incentive to act immediately.

Location of Mt. Nacolod in Leyte Island (see red pin) obtained from Google Earth.

Economic value of Mt. Nacolod

The reasons cited have compelled the Foundation for the Philippine Environment (FPE) to support the natural resource valuation of Mt. Nacolod Mountain Range, one of its priority conservation sites in the Visayas. The landscape covers more than 80,000 hectares and spans across the Municipalities of Silago, Hinunangan, St. Bernard, Libagon, and Sogod in the Southern Leyte; and, the Municipalities of Abuyog and Mahaplag in Leyte Province. It hosts 5 major watersheds, sustaining the water supply and food production of communities within its boundaries. Apart from its socio-economic significance, Mt. Nacolod is also home to several endemic and critically endangered flora and fauna. This includes two new species of frogs under the Platymantisgenus, and Cinnamomum cebuense (Cebu cinnamon) previously thought to be endemic in the island of Cebu. This makes Mt. Nacolod a High Conservation Value Area (Flora & Fauna International, 2013; FPE, 2020). The landscape, however, continues to face anthropogenic threats, especially habitat destruction. According to the Flora & Fauna International (2013), pristine forest in Leyte Island has decreased by around 15%, or more than 41,000 hectares, from 2007 to 2010 alone. This is aside from wildlife poaching and agricultural land conversion.

FPE and its implementing partner, South Pacific Integrated Area Development Foundation Inc. (SPIADFI), actively contributed in lobbying to declare Mt. Nacolod as a Local Conservation Area (LCA) by the Provincial Government of Southern Leyte in 2017. Both organizations have also played active roles in the Provincial Management Council (PMC) of the LCA and in the crafting of its 5-year Conservation Management Action Plan (CMAP). Despite the existence of the CMAP, implementation remains weak due to the lack of awareness among residents on the importance of the landscape. Strengthening education and awareness raising among community members, therefore, is urgently needed. However, this entails effective communication of the value of the ecosystem services that residents are currently enjoying, which the natural resource valuation aims to achieve.

Between August 2018 and January 2019, researchers from the Visayas State University (VSU) in Baybay, Leyte headed by Lemuel Preciados conducted a study to measure the monetary equivalents of the ecosystem services of Mt. Nacolod. This included: (1) provisioning services such as crops, timber, animal meat, herbal medicine, and fuel; (2) protective services, particularly property protection against typhoons and biodiversity conservation; (3) regulating services, specifically freshwater for drinking and available water for farm irrigation; and, (4) cultural services through the enjoyment of recreational areas and usefulness for the next generation.

The study employed market-based and contingent valuation methods, including the measurement of the damage-cost avoided, using the benefit-relevant indicators mentioned for each service category to ensure that results reflect the ecosystem’s capacity to support society, making them directly relevant to human well-being.

Based on the analysis conducted, the total annual economic value of the ecosystem services derived from Mt. Nacolod is at PHP944,169,386 as shown in Table 1 below. This includes PHP705,628,784 in provisioning value; PHP89,788,262 in protective value; PHP138,863,293 in regulating value; and, PHP9,889,047 in recreational value. The landscape’s total present value, however, is at PHP5.8 Billion. One of the significant findings of the study is the felt protection from Mt. Nacolod against heavy storms. Residents have recounted how the lush forest cover minimized gustiness and helped reduce the impact of heavy rains, causing only minimal damage to properties during Super Typhoon Yolanda in 2013 and other similar calamities that hit their area.

The study also argues that for every 1 peso invested to improve protection in Mt. Nacolod, an equivalent benefit of 37 pesos may be generated. The said protection, however, may have been hindered by the fact that a significant number of households in the municipalities surveyed do not know that the LCA exists, and that their barangays are part of it. While a reduction of deforestation activities has already been evident in recent years, greater participation among community members in local conservation actions is recommended by the researchers to expand stakeholder support beyond government and CSOs.

Mt. Nacolod hosts a variety of flora and fauna, including new frog species under the Platymantis genus (left) and the native cinnamon Cinnamomum cebuense (right) thought to be endemic to Cebu Island.
Photo taken from: Trigger Species Vulnerability Assessment Final Technical Report, 2017

Strengthening conservation and climate advocacy

Addressing the gaps identified by the VSU study, particularly in line with stakeholder awareness and engagement, is necessary to realize the CMAP. FPE is currently supporting another project with SPIADFI to conduct a more in-depth Knowledge, Skills and Attitude (KSA) Assessment. This will determine the level of appreciation among locals on the importance of Mt. Nacolod, including the protection that they are getting from the landscape against climate-related risks.

With the support of the Knowledge Management Unit (KMU) of FPE, the results of the KSA Assessment will serve as bases in crafting and implementing a communication plan that will advocate for grassroots-level interventions on biodiversity conservation and sustainable development (BCSD) and climate change adaptation and mitigation (CCAM) in the site. The findings of the VSU study will be used as baseline information for the assessment and will be one of the key references in designing appropriate communication strategies.

Moreover, the findings of the natural resource valuation may encourage component local government units (LGU) to support BCSD and CCAM. While concerned municipalities in Southern Leyte have expressed support to the LCA declaration and have integrated the CMAP in their Annual Investment Plans (AIP), participation in the PMC seems to be intermittent, especially among local chief executives. This may be due to the weak sense of urgency to act, leading to the de-prioritization of the environment over ‘more pressing’ development issues. This is aside from the fact that the concerned municipalities in Leyte Province are not covered by the current protection instrument. Monetizing the ecosystem services of Mt. Nacolod will hopefully compel LGUs to allocate more resources towards protection and con- servation, given the potential “return on investment”.

Constituency building is therefore crucial in the months ahead, especially as FPE develops its exit plan for the site, after more than five years of interventions, to focus on other KBAs in the Visayas. This should include advocating for the stronger buy-in of local stakeholders, especially LGUs and households, to sustain the gains of BCSD and CCAM projects, noting that they are the ones who will remain in the area after the termination of external CSO support. Highlighting the monetary value of the landscape may be seen as a strategy for the said advocacy, although it does not intend to reduce the moral significance of environmental conservation down to pure economics. Instead, it is hoped that natural resource valuation can situate the discourse from a perspective of practicality, strengthening the grounds to protect our natural resources under the premise of cost versus benefit.

The resource valuation allowed the LGUs to understand that ecosystem services have equivalent economic value. Water obtained from Mt. Nacolod, for example, is often taken for granted as it can be readily and freely accessed. Through the study, decision-makers are able to better see the worth of these services, strengthening our position to push for conservation. They also plan to use the valuation figures as bases in assigning user fees, especially to lowland communities.

- Beverly Capena, Executive Director of SPIADFI

Center for Conservation Innovations. 2017. Trigger Species Vulnerability Assessment: Securing High Conservation Value Areas in Mt. Nacolod, Southern Leyte Final Technical Report. Hinundayan, Southern Leyte: South Pacific Integrated Area Development Foundation Inc.
Flora & Fauna International (FFI). 2013. Biodiversity baseline assessment in the REDD-Plus pilot and key biodiversity area in Mt.Nacolod Southern Leyte. Bonn and Eschborn: GIZ.
Foundation for the Philippine Environment (FPE). 2020. FPE 2020 Planner. Quezon City: FPE.
Ouma, S., Johnson, L. and Bigger, P. 2018. Rethinking the financialization of ‘nature’. Economy and Space. 50(3), pp. 500-511, Philippine Statistics Authority (PSA). 2019. Proportion of Poor Filipinos was Estimated at 16.6 Percent in 2018. [Press Release].
Preciados, L., Taganas, A., Balbuena, D., Enerlan, W., Catchero, F.,Verdida, C. and Ramada, O. 2019.
Assessing the Socio-Economic Benefits of Biodiversity Conservation: A Resource Valuation Study for Mt. Nacolod in Southern Leyte and Leyte, Philippines. Hinundayan, Southern Leyte: South Pacific Integrated Area Development Foundation Inc.
Yokoyama, J. 2017. Natural disasters and biodiversity: a review of various types of disaster and their effects on biodiversity. In: Nishida, H., Yokoyama, J., Wagstaff, S. J., and Callomon, P. eds.
IUBS DAB Disaster and Biodiversity. Paris: International Union of Biological Sciences.
Written by: Mel Yan
For more stories, please click this link to read the FPE 2020 Annual Report
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