64628 v3 PHILIPPINES T YPHOONS O NDOY AND P EPENG: Post-Disaster Needs Assessment SECTOR REPORTS P O S T- D I S A S T E R N E E D S A S S E S S M E N T i Table of Contents INTRODUCTION 1 PRODUCTIVE SECTORS 5 Agriculture 6 Enterprise Sector 21 SOCIAL SECTORS 35 Housing Sector 36 Education Sector 50 Cultural Heritage 57 Health 59 INFRASTRUCTURE SECTORS 67 Electricity Sector 68 Water Supply and Sanitation Sector 75 Flood Control, Drainage and Dam Management 82 Transport Sector 90 Telecommunications 96 CROSS-SECTORAL ISSUES 101 Local Government 102 Impact on Employment and Livelihoods 109 Social Impacts and Vulnerable Groups 117 Financial Sector 131 Disaster Risk Reduction and Management (DRRM) 145 ii PHILIPPINES TYPHOONS ONDOY AND PEPENG List of Tables Table 1 Damage and Losses in Agriculture Sector Table 2 Needs in Agriculture Sector Table 3 Damage in Agriculture Sector, by Region and by Sector Table 4 Projected Losses from Level 2 Damaged Areas, by Region Table 5 Total Losses in Agriculture Sector, by Sub-Sector Table 6 Crop Losses, by Region and by Commodity Table 7 Rice Production Loss, by Region Table 8 Corn Production Loss, by Region Table 9 HVCC Production Losses, by Region Table 10 Summary of Losses in the Livestock Sub-Sector Table 11 Summary of Losses in the Fisheries Sub-Sector, by Region Table 12 Distribution of Estimated Losses in the Forestry Sub-Sector by Region/Province Table 13 Recovery Costs in Agriculture Sector, by Component and by Commodity Table 14 Needs of the Forestry Sector, by Region Table 15 Damage and Losses in Manufacturing Table 16 Damage and Losses in Wholesale and Retail Trade Table 17 Damage and Losses in Tourism Table 18 Reconstruction and Recovery Needs Assessment in Manufacturing Table 19 Reconstruction and Recovery Needs Assessment for Wholesale and Retail Trade Table 20 Reconstruction and Recovery Needs Assessment for Tourism Table 21 Damage, Losses, Effect on the External Sector and Fiscal Budget Table 22 Summary Financial Needs for Reconstruction and Risk Mitigation for Housing Sector Table 23 Average Physical Damage by Housing Type and Level of Damage Table 24 Average Damage of Household Items by Housing Type and Level of Damage Table 25 Damage, Losses, Effect on the External sector and Fiscal Budget for Housing Sector, by Region Table 26 Housing Reconstruction to Replace and “Build Back Better� Housing Units Table 27 Housing Construction Required to Establish Safe and “Build Back Better� Housing for Families Living Neat Water Hazards in Metro Manila Table 28 Proposed Housing Solutions for the Reconstruction Table 29 Percentage Share of Disaster-Affected Areas in National Statistics, by Type of Facility Table 30 Public-Private Distribution of Enrollment and Schools in Disaster-Affected Areas P O S T- D I S A S T E R N E E D S A S S E S S M E N T iii List of Tables Table 31 Summary of Damage and Losses in the Education Sector Table 32 Summary of Damage and Losses Estimates in the Education Sector, by Region Table 33 Summary of Needs in the Education Sector Table 34 Ownership Structure: Education Sector Table 35 Damage, Losses, Impact on the External Sector and Fiscal Budget for Cultural Heritage Table 36 Needs for Recovery and Reconstruction for Cultural Heritage Table 37 Number and Type of Ownership of Health Facilities in the Affected Areas Table 38 Damage and Losses in the Health Sector, by Regional Distribution and by Type of Ownership (in Php million) Table 39 Recovery and Reconstruction Needs in the Health Sector Table 40 Damage and Losses in Electricity Sector, by Region (in Php million) Table 41 Damage and Losses in Electricity by Sub-sector (in Php million) Table 42 Generation Loss Table 43 Distribution Sub-Sector Damage and Losses Table 44 Foreign Exchange Requirements Table 45 Recovery and Reconstruction Needs Table 46 Financing Needs for Recovery and Reconstruction Table 47 Medium-Term Reconstruction Needs (in Php million) Table 48 Summary of Roads Damage and Losses Table 49 Damage and Losses in Transport Sector, by Region Table 50 Recovery and Reconstruction Needs Table 51 Estimated Costs of Damage in Telecommunications Sector Table 52 Estimated Cost of Repairs Table 53 Estimated Damage to LGU Assets Table 54 Estimated LGU Losses Table 55 Priority Recovery and Reconstruction Needs in the LGU Sector (in Php million) Table 56 Impact on Livelihoods and Income Losses in 2009, by Sector Table 57 Priority Activities to Recover Lost Livelihood Incomes Table 58 Needs in the Financial Sector Table 59 Ranking of Disaster Related Fatalities in the Philippines, 1990-2007 iv PHILIPPINES TYPHOONS ONDOY AND PEPENG List of Figures Figure 1 Philippines: Total Damage and Losses from Typhoons Ondoy and Pepeng for the Enterprise Sector Figure 2 Geographic Distribution of Gross Value Added (Manufacturing, Wholesale and Retail Trade and Tourism) Figure 3a Housing Stock Totally Damaged, by Type Figure 3b Housing Stock Partially Damaged, by Type Figure 4 Comparative Incidence of the Leading Causes of Morbidity in the Affected Areas During the Post-Disaster Period from August to October with the Same Period of the Previous Year Figure 5 Damage and Losses to Water Supply and Sanitation, by Ownership Figure 6 Peak Flood Discharge in Marikina River Figure 7 Damage to Flood Control Infrastructure Figure 8a Sector Share to Total Losses in Income Figure 8b Sector Share to Total Losses in Workdays Figure 9 Total Income Losses, by Region Figure 10 Example of a Risk Mitigation Facility List of Maps Map 1 Damage and Losses in Enterprise Sector, by Region Map 2 Damaged Housing, by Region Map 3 Impact on Informal Livelihoods, by Region P O S T- D I S A S T E R N E E D S A S S E S S M E N T v Acronyms and Abbreviations AADT Average Annual Daily Traffic Bayantel Bayan Telecommunications, Incorporated BHS Barangay Health Station BOM Bureau of Maintenance BPO Business Process Outsourcing BSP Bangko Sentral ng Pilipinas CAAP Civil Aviation Authority of the Philippines CAR Cordillera Administrative Region CBDRM Community-Based Disaster Risk Management CCA Climate Change Adaptation CDS City Development Strategies CIS Communal Irrigation System ckt-km Circuit Kilometers COA Commission on Audit DA Department of Agriculture DECORP Dagupan Electric Corporation DENR Department of Environment and Natural Resources DepEd Department of Education DFON Domestic Fiber Optic Network Digitel Digitel Corporation DILG Department of Interior and Local Government DOH Department of Health DOT Department of Tourism DOTC Department of Transportation and Communications DPWH Department of Public Works and Highways DRM Disaster Risk Management DSWD Department of Social Welfare and Development DTI Department of Trade and Industry DU Distribution Utilities EC Electric Cooperatives ECCD Early Child Care Development ECLAC Economic Commission for Latin America and the Caribbean EO Executive Order EPI Expanded Program on Immunization ERC Energy Regulatory Commission ERS Emergency Restoration Structures GFI Government Financing Institution Globe Globe Telecom, Incorporated GOP Government of the Philippines GSIS Government Service Information System GWh Gigawatt-hours ha hectare vi PHILIPPINES TYPHOONS ONDOY AND PEPENG HFA Hyogo Framework for Action HVCC High Value Commercial Crops IAS International Accounting Standards IASC Inter-Agency Standing Committee IPC Institute of Philippine Culture IPP Independent Power Plant/Producer JMC Joint Memorandum Circular JTWC Joint Typhoon Warning System kv Kilovolt LGC Local Government Code LGU Local Government Unit LGUOU Local Government Unit-Owned Utilities LLDA Laguna Lake Development Authority LRT Light Rail Transit System LWUA Local Water Utilities Administration MDB Multilateral Development Banks MDF Municipal Development Fund MDFO Municipal Development Fund Office MERALCO Manila Electric Company MFI Microfinance Institution MMDA Metro Manila Development Authority mn ha Million Hectares mn MT Million Metric Tons MRT Metro Rail Transport System MSME Micro and Small Medium Enterprises Mt Metric Tons MVA Megavolt-amperes MW Megawatt MWCI Manila Water Company Incorporated MWSI Maynilad Water Services Incorporated NAMRIA National Mapping and Resource Information Authority NCR National Capital Region NDCC National Disaster Coordinating Council NDTN National Digital Transmission Network NEA National Electrification Administration NEDA National Economic and Development Authority NGCP National Grip Corporation of the Philippines NGO Non-government Organization NIA National Irrigation Administration NIS National Irrigation System NPA Non-Performing Asset NPC National Power Corporation P O S T- D I S A S T E R N E E D S A S S E S S M E N T vii Acronyms and Abbreviations NPL Non-Performing Loan OCD Office of Civil Defense O&M Operation and Maintenance PAGASA Philippine Atmospheric, Geophysical and Astronomical Services Administrative PAGASA Philippine Atmospheric, Geophysical and Astronomical Services Administrative PCG Philippine Coast Guard PDF Philippines Development Forum PDNA Post Disaster Needs Assessment Piltel Pilipino Telephone Corporation PLDT Philippine Long Distance Telephone Company PNRC Philippine National Red Cross POW Program of Works RHU Rural Health Unit RMF Risk Mitigation Facility RTIA Road Traffic Information Application SNAP Strategic National Action Plan SPUG Small Power Utilities Group SPV Special Purpose Vehicle TB-DOTS Directly-Observed Treatment Schedule for Tuberculosis Telicphil Telecoms Infrastructure Corporation of the Philippines TOR Terms of Reference TRANSCO National Transmission Corporation UN United Nations VAT Value Added Tax VOC Vehicle Operating Costs viii PHILIPPINES TYPHOONS ONDOY AND PEPENG Introduction The Post-Disaster Needs Assessment carried out in the aftermath of typhoons Ondoy and Pepeng (international name Ketsana and Parma, respectively) presents a quantification of the damage and losses to the economy, the social and economic impacts of the disaster, as well as a recovery and reconstruction strategy to address these. The highlights of the sector-specific analysis and the priorities for reconstruction are highlighted in the Main Report. The sector specific assessments, which informed the report’s conclusions, are presented in the present Volume. The methodology used focused the analysis on both damage and losses and on the economic and social impacts as follows: • Damage (direct impact) refers to the impact (valued at agreed replacement costs) on assets, stock and property. The assessment takes into account the level of damage in terms of whether an asset can be rehabilitated or repaired or if the asset has been destroyed completely. • Losses (indirect impact) refer to flows that will be affected, such as production declines, reduced incomes, and increased expenditures until the economy and assets are recovered. The estimates are quantified at present value. • Economic and social impacts include macroeconomic impacts, poverty impacts, employment and livelihoods impacts, and social impacts. The analysis aims to measure these impacts at the national and sub-national levels. Qualitative research methods (focus group discussions, in-depth interviews and participant observation) were also used to provide an overview of the disaster’s social impact. The assessment of damage and losses provides a basis for determining recovery and reconstruction needs. The assessment of damage provides a basis for estimating reconstruction requirements, while the estimation of losses provides an indication of the reduction or decline in economic activity and in personal and household income arising from the disasters. The two estimates are then combined to establish overall needs to achieve full recovery of economic activities at the macro-economic level and at the individual or household level. Typhoons Ondoy and typhoon Pepeng caused substantial damage and losses, equivalent to about 2.7 percent of GDP. The storms hit regions of the country that account for over 60 percent of GDP (including the National Capital Region, which accounts for about 38 percent of total GDP). The adverse impacts on the productive sectors were largely due to damaged or lost inventories, raw materials and crops. In addition, business operations were interrupted by power and water shortages, damaged machinery, and absent employees, which contributed to an overall reduction in production capacity. As a result, the disaster is expected to have a negative impact on GDP growth in the short term. However, once projected public and private recovery and reconstruction spending are included, the net impact of the disasters on economic activity is expected to result in real GDP growth of 1.0 percent in 2009 and 3.5 percent in 2010 which implies a decline of about 0.4 percentage points in 2009, followed by an increase of about 0.4 percentage points in 2010, over the pre-disaster growth estimates. The poor and vulnerable were inordinately affected by Ondoy and Pepeng, and efforts to help restore their housing and their livelihoods are needed urgently. In urban areas, it is the poor who concentrate in informal settlements in at-risk areas such as floodplains. Similarly, in rural areas, it is the poorest who end up living in dangerous areas such as river embankments. For those living just P O S T- D I S A S T E R N E E D S A S S E S S M E N T 1 above the poverty line, such disasters are likely to push them back into poverty. Indeed, this PDNA estimates that in the most affected areas of Luzon, the incidence of poverty in 2009 could increase by as much as 3 percentage points as a result of Ondoy and Pepeng, and by 0.5 percentage points nationwide. A total of US$ 942.9 million is required to meet recovery needs, and a total of US$ 3.48 billion is required for the reconstruction efforts over the short term (2009-10) to medium term (2011-12). In implementing recovery and reconstruction, and looking beyond the recent disasters to the future, some areas stand out as meriting particular attention. In particular: • Rural Production: Immediate restoration of rural livelihoods before the end of the year is necessary to avoid loss of production during the dry season. • Flood Management: Given its vulnerability to flooding, protecting metropolitan Manila requires institutional changes, comprehensive planning, and investment in both restoration and new infrastructure. • Housing: The vast majority of damage to the housing stock was concentrated in the informal sector which serves mainly low-income families, so building back better means providing better alternatives for informal settlers. • Disaster Risk Reduction and Management (DRRM): The existing DRRM system needs to become more proactive, coherent, and effective. • Local Governance: LGUs should have a key role in implementing the recovery and reconstruction program and future measures to mitigate disaster risk. • Enterprise and Finance: Enterprises need to regain working capital to resume activities and will need access to financing in order to do so. Certain over-arching guiding principles will be essential to moving forward with the reconstruction program. The purpose of these principles is to enhance the effectiveness of recovery and reconstruction efforts, increase transparency and accountability, and ensure that resources are translated into results on the ground. • A transparent, accountable, and results-based recovery and reconstruction program. It will be important to develop comprehensive and straightforward systems for monitoring activities, tracking funds, and evaluating projects and programs, including the provision of regular and transparent reporting against all funding sources. • Community-based, people-centered, and equitable approaches. Community-based, participatory approaches that engage local communities in decision-making, implementation, and monitoring of activities will increase the quality and speed of reconstruction, align projects with real needs, and lower the risk of misuse of funds. • Reduction of future risks. With typhoons being a regular occurrence in the Philippines, integrated disaster risk management plans that take into consideration all likely significant hazards are needed to reduce the impact of future disasters. 2 PHILIPPINES TYPHOONS ONDOY AND PEPENG The reports contained in this second volume of the PDNA present technical notes, by sector, on the derivation of damage, losses, and needs presented in the Main Report. They are the product of joint technical teams comprised of government agencies, local government units, civil society organizations, private sector firms, academia, and international development partners. The reports also present a recovery and reconstruction framework for each sector, which are the backbone of the recovery and reconstruction program outlined in the Main Report. They are intended to inform the debate and discussion on how to refine, budget, and implement the recovery and reconstruction plan. They present possible solutions to assist the challenging policy and program choices to be made going forward. The reports lay out options for action in the short and medium term so that national government, local government units, and the people affected by the disasters can rebuild back better and be more secure from such disasters in the future. The findings, interpretations, and conclusions expressed in the Sector Reports do not necessarily reflect the official views of the organizations involved in the preparation of this volume. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 3 4 PHILIPPINES TYPHOONS ONDOY AND PEPENG Productive Sectors Nonie Reyes “This was the roof of our shoes/slipper factory. We manufacture shoes and slippers which my children sell in the town center. . . So we did not leave our house because the machines/equipments which we use in making shoes and slippers might be stolen. � - A resident of Patay na Ilog (Dead River) in Biñan, Laguna. Agriculture Summary Nonie Reyes Typhoons Ondoy and Pepeng caused a total of Php 3.8 billion in damage and Php 24.8 billion in immediate losses1 in the agriculture, fisheries, and forestry sector. It adversely affected a total of about 480,000 farmers2 in 7 regions of Luzon: Cordillera Administrative Region (CAR), Regions, I, II, III, IV-A, IV-B, and 5. In terms of damages, these were mainly concentrated on the irrigations assets in the crop sub- sector (Php 3.4 billion) and in the forestry (Php 0.4 billion) sub-sector. The crops sub-sector also bore the major brunt of the immediate losses (Php 23.5 billion) followed by the fisheries sub-sector (Php 1.2 billion). By commodity, rice accounted for 87 percent of the immediate losses. Meanwhile, agribusiness losses, defined as the impact of losses in inputs for food processing due to the typhoons, were estimated to reach Php 4.8 billion. Table 1: Damage and Losses in Agriculture Sector (in Market Prices in Php million) Sub-sector Damage and Losses Losses Damage Total Damage and Losses Standing Total Loss - Total Loss - Total Loss - With With With With Crop Scenario 1 Scenario 2 Scenario 3 Standing Standing Standing Standing Crop Losses Crop and Crop and Crop and Only Projected Projected Projected 2010 Losses 2010 Losses 2010 Losses (Scenario 1) (Scenario 2) (Scenario 3) Crop 23,454 28,747 34,819 46,184 - 26,822 32,116 38,187 49,552 Irrigation - - - - 3,368 Livestock/ 71 71 71 71 1 72 72 72 72 Poultry Fisheries 1,205 1,205 1,205 1,205 26 1,231 1,231 1,231 1,231 Forestry 58 58 58 58 369 427 427 427 427 Total 24,787 30,081 36,152 47,517 3,765 28,552 33,846 39,917 51,282 Scenario 1 - Losses only accrue during dry season and all structures are repaired before start of the wet season. Scenario 2 - Losses accrue during dry and wet season in CY2010 Scenario 3 - losses accrue as during dry and wet season in CY 2010 and another dry season. Around Php 13.7 billion was estimated to be needed for the recovery of the sector. This includes PhP 1.4 billion for the restoration of level-13 damaged irrigation systems. About 89 percent of the amount will be sourced from public funds, which may yet decrease as government further fine- tunes its targeting and discriminates among varying degrees of damages in the affected areas. Reconstruction requires Php 2.8 billion of which 85 percent are for restoring level-24 damaged 1 Refers to losses from standing crops and from products of livestock/poultry, fisheries and forestry. 2 Refers to crop farmers both fully and partially affected by the typhoons. This figure was estimated by summing the number of affected farmers per crop each derived by dividing the number of hectares affected by the typhoons per crop by the average regional size of landholding (in hectares) per farmer per crop. 3 Non-structural damages that are easily repaired, such as desilting of irrigation canals 4 Structural damages that will require major repair effort. 6 PHILIPPINES TYPHOONS ONDOY AND PEPENG irrigation systems. About 99 percent of the reconstruction requirements will come from public funds. Given the relative magnitude of the damage and losses, the recovery and reconstruction for the sector should prioritize the rice farming areas, especially in Regions, I, II and III. In order to prevent further losses in coming dry season harvests, rice farmers should be able to plant by December 2009. Level 1 damages in both the National Irrigation System (NIS) and Communal Irrigation System (CIS) must also be addressed by end of 2009 at the latest. The loss in rice production would dramatically increase if possible losses in 2010 are included due to level 2 damages in irrigation infrastructure. It could rise to between Php 30 billion to Php 47.5 billion, depending on when these damages are repaired. This underscores the need for immediate action on irrigation reconstruction. Table 2: Needs in Agriculture Sector (in market prices in Php million) Needs Recovery Reconstruction Total Sub-sector Short-term Medium-term By type of ownership Public Private Public Private Public Private Rice 8,679 - - - 8,679 - Irrigation 1,4005 - 2,4006 - 3,800 - Corn 563 - - - 563 - HVCC 1,331 7 1,331 - - 1,331 1,331 Livestock/Poultry - - 18 - 1 Fisheries 200 200 139 13 213 213 Forestry - - 380 - 380 - Total 12,173 1,531 2,795 13 14,967 1,544 The final cost of recovery and reconstruction will depend on the modalities the Government of the Philippines (GOP) chooses to deliver these programs. These could range from (a) transfers in kind of key production inputs, such as seeds and fertilizers; to (b) the distribution of vouchers through which beneficiaries would be able to purchase commercial inputs at authorized stores, to (c) the cash transfers to beneficiaries conditioned on clear, simple, criteria. Alternative forms of distribution will entail different administrative costs and timeframes for delivery. Moreover, ensuring simplicity as well as transparent and cost-efficient transfer arrangements will be important to effectively address the identified priority set of needs. In addition, prioritization of assistance should take into consideration both the magnitude and intensity of the losses in a given area. Background Although the agriculture, fishery and forestry sector accounts for only about 16 percent of total GDP, it is, nevertheless, crucial to the Philippine economy. It accounts for nearly 40 percent of total employment. About two-thirds of the nation’s 92 million population and three-fourths of the poor depend, at least in part, on the sector for their livelihood. In 2008, the country recorded agricultural export earnings of Php 182.8 billion while agricultural imports reached Php 361.5 billion. The country has been a net importer of agricultural goods since 1995. About 10 percent of the country’s rice 5 Refers to level-1 repairs 6 Refers to level-2 repairs with additional 20 percent for improvements 7 Refers to vulnerable members among HVCC farmers 8 Refers to vulnerable members among livestock/poultry farmers 9 Refers to vulnerable members of fisherfolks P O S T- D I S A S T E R N E E D S A S S E S S M E N T 7 needs is imported. The crops sub-sector accounts for more than 60 percent of the sector’s output while fisheries and livestock/poultry respectively account for about 20 percent and 16 percent. Although the forestry sector’s contribution to production is minimal (about 0.3 percent), its role in sustainable development is paramount. Crops The total area planted in the country is about 12.9 million hectares (mn ha). The cropping pattern is dominated by rice (4.5 mn ha effective area planted/harvested with 3.0 mn ha effective area irrigated), coconut (2.7 mn ha) and corn (2.7 mn ha). The rest is devoted to sugarcane, high value commercial crops (including vegetables, fruit trees, banana), and pasture. Production of rice and corn amounts to about 16.8 and 6.9 million metric tons (mn MT) respectively. Rice production contributes about 19.8 percent of total crop production. Coconut oil and bananas remain the country’s top agricultural exports with a combined share of 37.2 percent. Irrigation has been critical to enhancing food security and improving agricultural productivity. Public irrigation in the Philippines has been the responsibility of the National Irrigation Administration (NIA), which is a government-owned and controlled corporation. The NIA operates 205 National Irrigation Systems (NIS) with a total service area of about 306,377 hectares (ha) devoted mostly to rice farming. This constitutes roughly half of the total irrigation service area in the country. The other half is served by Communal Irrigation Systems (CIS) that are owned and operated by community- based irrigators’ associations (IA) and pump-lift irrigation systems that are owned and operated by the private sector. This brings the total service area to 1.43 mn ha, which is less than half of the total estimated potential irrigable area of 3.13 mn ha in the country. As a result of low investment in operation and maintenance during the past two decades, the gap between the service area and the actual irrigated area has increased considerably. As a result, the NIA is currently in the process of transferring increased O&M responsibilities to the IAs. Livestock/Poultry Livestock and poultry raising are integral to the country’s farming systems of all sizes. In 2008, 1.9 mn MT of livestock meat and 0.76 mn MT of poultry meat were produced. Their total value was estimated at Php 184 billion and Php 131 billion for livestock and poultry, respectively. In terms of contribution to agriculture GVA, livestock accounted for 14 percent while poultry contributed 8 percent. Swine, cattle, carabao and goat, in that order, are the major sources of livestock meat, while in poultry the major sources are chicken and ducks. Chicken ranks first among poultry with a volume of production of 1.3 mn MT in 2008. However, in order to meet domestic supply needs, the country imported 43,758 MT of poultry meat, 49,837 MT of beef meat and 83,014 MT of pork meat in 2008. Fisheries In 2008, the total value of fishery production reached Php 215.5 billion of which 38 percent came from aquaculture, 33 percent from municipal (i.e., small scale) fishing, and 29 percent from commercial fishing. This sector employed a total of 1,614,368 fishing operators nationwide (NSO 2002 census for fisheries) of which 14 percent were in aquaculture activities, while 85 percent and one percent were in municipal and commercial fisheries, respectively. In 2006, the Philippines ranked 10th in the world in aquaculture production, contributing 1.2 percent of total global production of 51.7 million metric tons. This includes production from brackish water fishponds, freshwater fishponds and fish pens and fish cages in fresh and marine waters. Milkfish, tilapia and tiger prawns are the aquaculture species that provide the biggest contribution to the total value of production. 8 PHILIPPINES TYPHOONS ONDOY AND PEPENG Forestry The Philippine upland/forest ecosystem comprises an estimated 50 percent of the country’s total land area and directly supports approximately 30 percent of the population, including indigenous communities. The forest ecosystem provides vital goods and services. These include water, timber and non-timber forest products, fuel-wood, wildlife, recreation, climate amelioration and windbreaks. Forest ecosystems play a critical role in regulating water flow regimes and maintaining species diversity, and in carbon sequestration to mitigate global warming. The forest cover is estimated at 7.2 mn ha or 23.9 percent of the total land area, based on 2002 satellite mapping. In the second quarter 2009, total production from the subsector amounted to Php 1.2 billion in current prices. But more importantly, it also provided ecological benefits to agricultural production, industries, water and power needs. Damage and Losses Initial estimates of the total damage of typhoons Ondoy and Pepeng for the sector amount to Php 3.8 billion, 89.5 percent of which are in National Irrigation Systems (NIS) and Community Irrigation System (CIS). Forestry posted the next highest damage, accounting for about 9.8 percent of total damages, followed by fisheries (0.6 percent) (see Table 3). Region I is where most of the damages to irrigation assets occurred (Php 963 million). It was followed by Region III with Php 935 million, Region II with Php 572 million, CAR with Php 420 million, Region IV-A with Php 259 million, Region V with Php 162 million, and Region IV-B with Php 64 million. Most of the damages to forestry (Php 352 million) were in the CAR, while most damages to livestock took place in Region IV A. About 65 percent of the total damages to fishery assets (Php 26 million) were posted in Region IV-A, followed by Region III (23 percent). Table 3: Damage in Agriculture Sector, by Region and by Sector (in Php million)10 Damage to Damage to Damage to Region Irrigation Total 11 livestock forestry fishery CAR 420 - 352 1 773 I 963 - 14 - 977 II 566 - 3 212 572 III 935 - - 6 941 IV-A 259 1 - 17 277 IV-B 64 - - - 64 V 162 - - - 162 Total13 3,368 1 369 26 3,766 For the forestry sub-sector damages were categorized into (a) forest land; (b) Department of Environment and Natural Resources (DENR) Projects;14 (c) timber crops; (d) agro-forestry crops including fruit trees; e) mangrove; (f) building and (g) equipment/furniture. The estimated total damage is about Php 369 million, of which, Php 254 million (or 69 percent) is due to the damage 10 Totals may not exactly add up due to rounding. 11 For other infrastructure damages, see section of PDNA report on infrastructure. Infrastructure damages on post-harvest facilities are not included. 12 DA-FAO joint assessment team estimate. 13 Includes both NIS and CIS damages and level 1 (Php 1.4 billion) and level 2 (Php 2.3 billion) damages. 14 Refers to project assets damaged. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 9 to forest land, Php 80 million (or 22 percent) is from infrastructure, Php 13 million (3.5 percent) is from timber crops, and Php9.9 million (or 2.7 percent) from DENR Projects. Taken together these four categories account for about 97 percent of the total estimated damages in the sub-sector. The remaining four categories, namely, agro-forestry, buildings, equipment, and mangrove accounted for about Php 12 million or 3 percent of the damages. Total immediate losses amounted to about Php 24.8 billion This, however, could rise to between Php 30 billion to Php 47.5 billion when likely future losses are included. If we assume that repair of irrigation facilities that incurred level 2 damages is completed by the end of this dry season, the projected additional loss is Php 5.3 billion, for a total loss of Php 30 billion (Table 4). If level 2 damages remain unrepaired within the next two cropping seasons, the additional projected loss is Php 6.1 billion, for a total loss of Php 36.1 billion. The additional projected loss rises to Php 11.4 billion if level 2 irrigation damages remain unrepaired within the next three cropping seasons. Total loss would increase to Php 47.5 billion under this scenario. This underscores the need to immediately repair these irrigation systems to prevent a significant escalation of losses, particularly in rice production. Table 4: Projected Losses from Level 2 Damaged Areas, by Region (in Php million) Region Scenario 115 Scenario 216 Scenario 317 CAR 203 250 454 I 258 341 598 II 3,369 3,841 7,209 III 1,261 1,418 2,678 IV-A 96 102 197 IV-B 34 35 69 V 74 86 159 Total 5,295 6,073 11,364 By sub-sector, about 95 percent of all immediate losses are from crops (Table 5). This was followed by fisheries (4.9 percent), livestock/poultry (0.3 percent) and by forestry (0.2 percent). Table 5: Total Losses in Agriculture Sector, by Sub-Sector (in Php million) Losses Subsector Standing Crop Total Loss - Total Loss - Total Loss - Loss Scenario 1 Scenario 2 Scenario 3 Crop 23,454 28,747 34,819 46,184 Livestock/Poultry 71 71 71 71 Fisheries 1,205 1,205 1,205 1,205 Forestry 58 58 58 58 Total 24,788 30,081 36,153 47,518 15 Losses only accrue during dry season and all structures are repaired before start of the wet season. 16 Losses accrue during dry and wet season in CY2010. This scenario was used for the estimation of total losses reported in the PDNA Main Report. 17 Losses accrue as during dry and wet season in CY 2010 and another dry season. 10 PHILIPPINES TYPHOONS ONDOY AND PEPENG Crops By crop, rice accounted for Php 20.4 billion or about 87.1 percent of total immediate losses (Table 6). High Value Commercial Crops (HVCCs) followed at Php 2.03 billion worth of losses (8.7percent) and corn with Php 998 million (4.3 percent). Table 6: Crop Losses, by Region and by Commodity (in Php million) Losses Region Total Rice18 Corn HVCC CAR 1,075 487 717 2,279 I 7,051 18 951 8,020 II 2,751 438 135 3,324 III 8,135 20 136 8,291 IV-A 781 26 54 861 IV-B 122 8 9 139 V 505 0.876 33 539 20,421 998 2,035 23,453 Total (87.1%) (4.3%) (8.7%) (100%) Table 7 shows that rice losses were largest in Regions III, I and II. Region III lost Php 8.1 billion (39.8 percent) worth of rice, followed by Region I (Php 7.1 billion or 34.5 percent), and Region II (Php 2.8 billion or 13.5 percent). Corn losses in CAR and Region II suffered the greatest loss in corn production, where almost 93 percent (Php 925 million) of the total loss in corn was recorded. (Table 8) Table 7: Rice Production Loss, by Region (in Php million) Rice Region Area Affected (ha) Volume (MT) Value CAR 44,888 68,692 1,075 I 133,537 432,236 7,051 II 112,783 171,402 2,751 III 218,644 481,031 8,135 IV-A 17,047 52,238 781 IV-B 16,157 7,221 122 V 37,872 34,484 505 Total 580,928 1,247,304 20,421 All loss estimates for rice use market prices. About Php 1 billion will be added to the estimates if NFA paddy support 18 prices are used. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 11 Table 8: Corn Production Loss, by Region (in Php million) Corn Region Area Affected Volume (MT) Value (ha) CAR 11,495 37,376 487 I 1,186 563 18 II 20,668 31,405 438 III 607 1,361 20 IV-A 1,046 1,732 26 IV-B 484 521 8 V 181 0.876 Total 35,667 72,958 998 Table 9 shows that HVCC production loss was greatest in Region I where Php 951 million or 46.7 percent of total loss in HVCC were recorded. CAR follows with Php 717 million (35.2 percent). Regions II and III suffered almost equal losses in HVCC production, although the area affected and volume lost in Region III is significantly larger. Table 9: HVCC Production Losses, by Region HVCC Region Area Affected Volume Value (ha) (MT) (in Php million) CAR 26,472 69,074 717 I 6,299 44,638 951 II 403 1,070 135 III 1,335 13,260 136 IV-A 536 5,357 54 IV-B 101 886 9 V 1195 832 33 Total 36,341 135,116 2,035 Livestock and Poultry For livestock and poultry, the biggest loss was incurred in Region IV-A amounting to Php 43 million followed by CAR (Php 16 million), and Region I (Php 7 million) (Table 10 ). Table 10: Summary of Losses in the Livestock Sub-Sector (in Php million)19 Region Total Loss Percent Share CAR 16 22.6 I 7 10.3 II 19 4 5.5 III 1 1.6 IV-A 43 60.1 IV-B - - V - - Total 71 100.0 DA-FAO joint assessment team estimate. 19 12 PHILIPPINES TYPHOONS ONDOY AND PEPENG Fisheries Sub-Sector Total losses in fisheries amount to Php 1.2 billion (Table 11). Region I incurred Php 582 million loss in fisheries, while Region III lost Php 533 million. Together, fishery losses in these two regions comprise 93 percent of the total loss. Region IV-A follows with Php 48 million or 4.1 percent of total losses in fishery and CAR with Php 9.0 million (0.8 percent). Table 11: Summary of Losses in the Fisheries Sub-Sector, by Region (in Php million) REGION Total Losses Percent share CAR 9 0.7 I 582 48.3 II20 33 2.7 III 533 44.3 IV-A 48 4.0 IV-B - - V - - Total 1,205 100.0 Forestry Sub-Sector Losses in forestry are expressed as the value of production of goods and services lost. For the purpose of this assessment and given the state of assessment data available from DENR offices, losses are categorized into: a) agro-forestry crops; b) timber crops; and c) CO2 sequestration capacity. The total estimated losses from all three regions are about Php 58 million, of which Php 2.2 million or 3.9 percent is from Region I, Php 10.3 million from Region II (18 percent) and Php 45.0 million (78 percent) from CAR (Table 12). The bulk of the losses are from tree crops amounting to Php 34.6 million or 59 percent, followed by CO2 sequestration capacity at Php 20.3 million (35 percent) and agro-forestry crops at Php 3.5 million (6 percent). Table 12: Distribution of Estimated Losses in the Forestry Sub-Sector, by Region/Province Losses Region Agroforestry CO2 Sequestration Tree Total Crops Capacity Percent Crops (in Php million) (in Php million) (in Php million) I 0 1.0 2.1 2.2 3.9 II 2.9 6.3 1.0 10.3 17.9 CAR 0.5 27.3 17.2 45.0 78.2 Total 3.4 34.6 20.3 57.5 100.0 Agribusiness Losses Losses to agro-industry occurred as a result of losses in inputs into food processing. As a whole, the estimated losses for the agro-industry losses amounted to Php 4.8 billion. These losses reflect those suffered in terms of standing crops. In terms of rice, millers represent the main segment of the affected agro-industry, with losses of around Php 4.6 billion (95.4 percent of the total). With regard DA-FAO joint assessment team estimate. 20 P O S T- D I S A S T E R N E E D S A S S E S S M E N T 13 to corn, derived losses amount to PhP 55 million (1.1 percent), mostly reflecting the high percentage of self-consumption of this crop. Losses to high value crops gave rise to Php 50.2 million losses to processors (1.1 percent of the total), while for processors of livestock products the losses amounted to Php 1.4 million (0.02 percent of the total). Finally, losses in the fishery sub-sector gave rise to derived losses of Php 115.2 million (2.4 percent of the total). Priority Recovery and Reconstruction Needs Given the relative magnitude of the damage and losses, the recovery and reconstruction for the sector should prioritize the rice farming areas. To prevent further losses, rice farmers should be able to plant by December 2009 at the latest so that the dry season cropping is not totally lost in the affected areas. This assumes that the level 1 damage in both the NIS and CIS will be addressed also by the end of 2009 at the latest. For the recovery program, it would only be the cash requirement estimates (derived from the Bureau of Agriculture Statistics cost and returns data) that would be relevant since the non-cash components should already be the counterpart of the farmer-beneficiaries (e.g, family labor, labor paid in kind). For rice, the financing requirement needed by farmers to enable them to fully operate during the dry season totals Php 8.7 billion (Table 13). The bulk of these funds will be used to purchase hired labor (38.4 percent) and fertilizers (47.5 percent). About 6.9 percent will be for food expenses during farming operations and 5 percent for seeds. Around Php 143 million (2.1 percent) of the recovery funds for rice farmers will pay for the interest of their current loans, which will enable them to keep their credit lines open for the coming wet season. Table 13: Recovery Costs in Agriculture Sector, by Component and by Commodity (in Php million) Rice Corn HVCC Total Seeds 337 68 13 418 Fertilizer 3,178 269 3 3,450 Hired labor 2,571 132 323 3,026 Interest payment 142 8 - 150 on crop loan Food expense 461 20 61 541 Other cash 1,990 66 2,252 4,310 expenses16 Total Cash Costs 8,679 563 2,652 11,894 Source: Bureau of Agricultural Statistics, Cost and Returns Survey, 2008. To reconstruct irrigation systems, the National Irrigation Administration (NIA) plans to complete the rehabilitation works in two phases. Phase one will cover Level 1 or short term rehabilitation needs (costing around Php 1.4 billion) which will entail immediate remedial measures to save standing crops. Some preparatory work may be needed. This could include the repair of cut or scoured embankments to allow irrigation water delivery and distribution as well as access for de-silting and other civil work construction even during the wet rainy season. Meanwhile phase two, which covers Level II or mid-term rehabilitation (costing around Php 2.4 billion, which includes 20 percent over the damage estimate for structural improvements), will entail restoration works. Phase two will be taken up after detailed surveys and designs are completed sometime in May 2010. For corn farmers, the recovery program is estimated to cost a total of Php 563 million. The bulk of the money will go to fertilizers (47.7 percent) and hired labor (23.5 percent). Operational food expenses and interest payments are estimated to require 3.5 percent and 1.4 percent of the funds, respectively. 14 PHILIPPINES TYPHOONS ONDOY AND PEPENG Meanwhile, the recovery program of HVCC farmers will require Php 2.7 billion. Hired labor will need 12.16 percent of the cash and food expenses will need around 2.2 percent of the support. Seeds require 5.1 percent of the recovery money to HVCC while fertilizers need 1.2 percent of total HVCC support. Public funds will be used for the recovery and reconstruction programs for rice and corn. Not only are rice and corn farmers among the smallest and most vulnerable in the country, but their output is essential to food security. On the other hand, it is estimated that only half of HVCC farmers can be considered to be small and vulnerable farmers and, thus, eligible for public fund support, which should amount to about Php 1.3 billion. There is still a need for a firm estimate of the recovery financing requirement for fisheries. A rough estimate is that about one-third of total losses or about Php 400 million could cover the recovery needs of the sub-sector, specifically for provision of fingerlings and feeds. However, it was also estimated that only about half of the affected fisherfolks are small-scale fishers and, thus, possibly eligible for public support. The total public funding requirement for the sub-sector is, therefore, estimated to amount to about Php 200 million. Meanwhile, the recovery cost requirements for forestry and livestock/poultry have yet to be estimated. These sub-sectors have more need of reconstruction than recovery assistance. It should be noted that the losses in livestock/poultry are concentrated in Region IV-A. This region will, therefore, be the focus of the recovery program for the sub-sector. Based on analysis of damages reported from the three regions, the needs for each province in the forestry sub-sector were identified and the summary for each region is shown in Table 14. The total need for the three regions is estimated at Php 770 million, of which Php 753 million (98 percent) is for CAR alone, The remaining two percent is shared between Region I with less than two percent and Region II with less than half a percent. The needs of Regions I and II are the same as the total cost of damage incurred. The needs in CAR are the sum of the cost of damage plus an investment designed to make the entire region better prepared for future disasters. This additional need was highlighted by a group of key DENR-CAR officers during their workshop on 30 October 2009 in Baguio City and is estimated to cost some Php 400 million. It should be noted, however, that part of the needs estimate for the sub-sector included about Php 390 million for hazard maps and CLUPs, which are also identified needs of other sectors. Thus, only about Php 380 million are needed for purely sub-sector needs. Public funds will be the major source of financing. Table 14: Needs of the Forestry Sector, by Region (in Php million) Region Cost CAR 753 I 14 II 3 Total 770 These recovery cost estimates do not yet include the attendant administrative and logistical costs. The final total financing requirement will depend on the modality through which recovery assistance will be delivered. For example, government’s direct provision of inputs to affected farmers would entail more costs compared to a voucher scheme, where affected farmers would access their preferred inputs from accredited suppliers or direct cash transfers. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 15 Because of capacity constraints, it may not be possible to attend all needs simultaneously; thus, prioritization may be necessary. The following prioritization criteria are recommended: a) the total number of farmers or hectares affected in a given area, and b) the intensity of the losses suffered as a result of the calamities. As shown in Table 6, the intensity of losses differs among regions and among commodities. In addition, there is a need to determine the number of farmers whose farm lands are still inundated. For them, alternative livelihood support rather than farming assistance would be more relevant. These could come in the form of cash transfers over a limited period of time in order to start a new livelihood activity, food-for-work programs (e.g., repairs of damaged farm-to-market roads, de-silting/ clearing of irrigation passages, etc.), training and capital for alternative livelihood, among others. 21 A final note concerns the rice importation required to compensate the losses in production suffered as a result of Ondoy and Pepeng. At the moment the data are not sufficient to estimate, with some degree of confidence, the total shortfall in the production of rice at the national level. The losses in metric tons of rice for the areas affected by the two typhoons are available (see above). To estimate the total increase in importation needs, however, requires determining how the supply of rice will adjust in the rest of the country as a result of prices and other production incentives. Projections for production are done through observation of the standing crop, and presently, the dry season crop is just starting to be planted. At the moment the GOP has estimated the shortfall in production as 1 million metric tons of rice. Procurement of rice to fill the estimated shortfall in production has already been initiated by the National Food Authority. Implementation Arrangements Activities to ensure a prompt recovery of farming activities will need to be carried out by no later than the end of December 2009. This will ensure that land preparation and planting can still catch up with the start of the dry season, for affected farmers to harvest by May 2010 at the latest. The DA is, therefore, currently distributing fertilizers and seeds sufficient for 1 hectare for each beneficiary but to farmers with totally damaged rice farms only. Not all affected farmers are being assisted. Moreover, given budget constraints (Php 750 million allocated for fertilizers), it is not certain that even all rice farmers with totally damaged farms will be assisted. Given the disruption in the credit market because of the inability of many affected farmers to service their production loans, there is also uncertainty about the extent to which the fertilizers and seeds provided by government can be utilized by the beneficiaries due to lack of operating capital. To ensure a swift recovery of farming activities, it is unlikely that provision of seeds and fertilizers will be sufficient. Other complementary inputs will be required for farmers to ensure that planting, transfer of seedlings, and management of crops are carried out properly. There will be the need to hire labor, rent machinery, advance lease payments, and finance subsistence during the cropping season. In addition, to avoid a complete disruption of the local credit market, it will be necessary to ensure that farmers do not completely default on loans contracted during the previous cropping season. For this purpose, payment of interest on outstanding loans will be necessary while waiting for a repayment of the principal at harvest time. Thus, a full recovery will require developing a program that is more than just the delivery of primary inputs such as fertilizers and seeds. Moreover, the National Irrigation Administration and the LGUs should immediately launch the repair of levels 1 and 2 damaged irrigation systems as soon as possible as not to lose the entire dry season cropping in the affected areas. There are three main ways through which recovery support can be transferred: (a) transfers in kind of key production inputs, such as seeds and fertilizers, (b) distribution of vouchers through which See the PDNA report on social protection where a cash transfer program for the most affected households is proposed, 21 which could farmers whose fields are still inundated. 16 PHILIPPINES TYPHOONS ONDOY AND PEPENG beneficiaries would be able to purchase commercial inputs at authorized stores, and (c) distribution of cash that the beneficiary could use in the interest of his or her own family activities, including farming. Each form of distribution entails different administrative costs. Ensuring simplicity, speed of delivery, as well as ensuring a more transparent and cost-efficient mechanism of the transfer arrangements should determine the choice of distribution mechanism. In most programs for distributing in-kind inputs such as seeds and fertilizers, it is estimated that the administrative costs (managing the procurement, transportation, storage, and distribution) amount to about 20 percent of the cost of the inputs procured. Thus, the current recovery effort may not only be insufficient but may also be more expensive. In addition, support for other types of inputs and for subsistence consumption would in any case require distribution of vouchers or cash. Thus, it might be easier to distribute through a single voucher or cash, based on a per-hectare estimate, the estimated recovery need, except for hired labor and subsistence needs, which should be supported through directed cash transfers. The main advantages of vouchers and cash over distribution of in-kind support are; (i) avoiding excessive administration costs; (ii) flexibility to the farmer/fisher folk to procure inputs based on their specific production requirements; (iii) ensuring that the farmer/fisher folk receive inputs of appropriate quality and quantity. In addition, such a system would promote transparency and would address issues of governance associated with past input subsidy programs. Transfers in cash, vouchers, or in-kind would all require a substantial commitment by LGUs in order to be carried out successfully. The DA, in collaboration with LGUs, has already had experience in the distribution of seeds and fertilizers both in-kind and through vouchers. Unconditional cash transfers to affected farmers based on farm size have not been attempted before. Nevertheless, as the DA is completing the registration of affected farmers and given that this would be an intervention for farmers limited to disaster-affected areas, its implementation could be rather swift building on the current data being used for the government’s input distribution program, provided that the government decides on such a modality as soon as possible, so that the mechanics for the program would be agreed between and among the government (central and local), the concerned financial institutions, the private sector and civil society groups for appropriate monitoring. In terms of financing the recovery and reconstruction program, this can be done through: (1) use of existing resources for on-going programs; and (2) mobilization of new money through grants for technical assistance and loans for recovery and reconstruction efforts. On the use of existing resources, Government has the flexibility to redirect resources of ongoing projects to restore damaged infrastructure. An example would be the rehabilitation and reconstruction of damaged irrigation facilities being funded under ongoing projects. On additional resources for reconstruction, Government’s own resources, as well as grants and loans from bilateral and multilateral financial institutions would need to be immediately mobilized. For example, about Php 3.8 billion is needed to immediately commence reconstruction of affected systems in order to avert further agricultural losses in irrigated rice farms. As such, about US$ 70 million would need to be mobilized out of the calamity fund or overseas development assistance to commence reconstruction efforts for irrigation facilities as soon as possible. In addition, in agrarian reform communities, about Php 1.4 billion (US$ 30 million) would need to be mobilized to commence the reconstruction of damaged infrastructure such as farm-to-market roads, bridges, communal irrigation facilities, postharvest facilities as well as restoration of affected livelihood activities. In the towns around Laguna Lake, where a number of farms are inundated and as a result a number of local infrastructure and livelihood activities were affected, about Php 0.5 billion (US$ 10 million) are needed. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 17 In the financing of these urgent reconstruction needs, it must be taken into consideration that the majority of these infrastructure are devolved to local government units (such as communal irrigation facilities, farm-to-market roads, local flood control, riverbank protection, wastewater treatments,) and, hence, in the reconstruction effort the Government may have to consider waiving the usual NG-LGU cost sharing guidelines, in order to ensure immediate reconstruction of the damaged infrastructure. Also, since a number of livelihood activities have been affected and displaced, the Government may wish to consider establishing a new mechanism for cash transfers, especially for farmers and fishers with inundated farms and displaced livelihoods. Such a cash transfer scheme could be put in place for 3 to 4 months to allow severely affected households with restoring their former livelihood activities. Such a scheme could be implemented by the Department of Social Welfare and Development (DSWD), in collaboration with the Dept of Agriculture and concerned LGUs who will assist in the identification of the affected farm and fishing households. Please refer to the section on social protection in the PDNA Main Report for more details on this proposed cash transfer scheme. Ensuring Sustainability of Recovery and Reconstruction Efforts It is well recognized that adverse climatic events have permanent effects on affected households and farms, the extent of which depends on the speed and magnitude of the relief efforts. The areas affected by Ondoy and Pepeng are vulnerable to such type of climatic events. It is extremely important for the current relief efforts to be successful in helping affected farms to recover in the long-run that further climatic events that may hit the same areas be dealt with as efficiently and swiftly as possible. The current event clearly shows that the institutional response capacity can be substantially improved upon. While the modality of distribution of relief and recovery support to farmers and fisher folk under the actual circumstances is constrained by the current set up in the short term, in the medium term, substantial improvements can be undertaken. In view of the above, to support prompt recovery from future climatic shocks, the best approach is the establishment, before the occurrence of the event, of a farm registry and inventory of agricultural investments that would be supported by a remote sensing system. A farm registry would allow identifying which farms, and their size in hectares, are included in an affected area, the latter in turn identified through a remote satellite-based system. The inventory of investments would also allow to track the location, type and value of infrastructure in the affected area. Linking farmers to bank accounts through the registry offers the opportunity of distributing immediate relief through cash (the least expensive modality) or vouchers (a slightly more expensive and somewhat slower modality compared to cash transfers). If in-kind transfers are retained as the preferred option (most expensive and slowest modality), the registry would allow at least to strengthen the monitoring system, minimize leakages, and simplify the logistic complications of delivering large amounts of fertilizers and seeds to affected farms. The estimated cost of establishing such a registry in the areas of Luzon affected by Ondoy and Pepeng can be estimated in the order of Php 600 million.22 The feasibility and costs of establishing a farm registry and inventory of agricultural investments has been analyzed as 22 part of a study provided to the Department of Agriculture. The analysis positively concludes that the necessary pre- conditions for the establishment of a registry in the Philippines are satisfied and that its potential coverage would be extremely high (about 70 percent-80 percent of existing farms). 18 PHILIPPINES TYPHOONS ONDOY AND PEPENG Recovery Framework: Agriculture, Fisheries, and Forestry Sector Outcomes Baseline Priority Activities to Priority Activities to December 2009 December 2009-onwards Crop sub- Main losses Priority activities for recovery and Priority activities for recovery sectors consisted of partial reconstruction: and reconstruction: Farmers or complete Transfer to affected farmers Restore damages to affected recover loss of standing resources required to cultivate irrigation structures by their pre- crops (rice, corn, affected areas, (including inputs such reconstructing to standards damage vegetables and as fertilizers and seeds transferred that would withstand similar production fruits). in kind or through vouchers; transfer type of climatic disasters. activity. Main damages of cash equivalent to estimated cost Equally important would be consist of silting of purchasing additional commercial the incorporation of technical of irrigation canals inputs, hire machinery, hire labor, design improvements to (level 1 damages), interest payments on previously damaged irrigation facilities and damages existing production loans, and to ensure considerations for to irrigation subsistence requirements). climate change adaptation. infrastructure Preliminary activities would include Preparatory activities for (level 2). registration of affected farmers, long-term reconstruction and including affected hectares. development activities would Identify Emergency and alternative include: (i) identification of livelihood programs for farmers with irrigation infrastructures that inundated farms would be resistant to climatic De-silt obstructed canals to events of similar magnitude reactivate proper water flow. of Ondoy and Pepeng; and (ii) Main capacity development preparation of project design, activities would concern training of feasibility studies and program relevant LGU staff to assist in the of works. distribution of vouchers, cash or Level-2 damages to irrigation in-kind production inputs, such as systems that can be repaired fertilizers and seeds. in the medium term: Php 2.4 Total cash recovery cost: Php 12 billion. billion of which Php 3,450.1 million Indicator of success in the are for fertilizers, Php 418.4 million reconstruction of heavily for seeds and Php 3,025.9 million for damaged irrigation systems: hired labor. Irrigation infrastructure Level 1 damages to irrigation would be rehabilitated and systems that can be repaired within reconstructed with improved a short time frame: Php 1.4 bn. criteria (Kms of canals Indicators of success: and number of structures Repair of damages to irrigation reconstructed) canals: Kms of canals de-silted, to ensure flow of irrigation water to affected farms. Hectares of affected lands cultivated and harvested during the 2010 dry season crop period. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 19 Outcomes Baseline Priority Activities to Priority Activities to December 2009 December 2009-onwards Livestock Main damages Priority activities for recovery and Priority activities for private sub-sector: consisted of reconstruction: sector recovery/reconstruction: Stocks of disappearance or Recovery effort to focus on Region Reconstitution of backyard various death of cows, pigs, IV-A livestock through animal species goats, and poultry Identification of most vulnerable dispersal program are re- livestock/poultry farmers required Livelihood programs to support established. for proper targeting from public heavily affected farmers among sector the most vulnerable Finalization of recovery needs Delivery of vouchers if justified assessment among vulnerable by scale of intervention for farmers recovery Preparation of voucher program Total reconstruction needs: depending on required scale of Php 1 million. intervention for recovery Total recovery needs, still need to be estimated Forestry Priority activities for sub-sector reconstruction: Main focus will be on CAR Sub-projects will focus on reforestation, agro-forestry, replacement of seedlings, and infrastructure required for strengthening sector against future climatic events Total reconstruction needs: Php 380 million Fisheries Main losses Priority activities for private sector Priority activities for private sub-sector consisted of partial recovery/reconstruction sector recovery/reconstruction: or complete loss Identify most vulnerable livestock/ Provision of feeds and of fish stocks in poultry farmers required for proper fingerlings fishponds, fish targeting from public sector Aquaculture structures pens, fish-cages Prepare vouchers to be distributed rehabilitated and reconstructed (aquaculture). to affected fish farmers for the Provision of boats, gillnets, Main damages purchase of feeds and fingerlings fishing gears to marginal consisted of partial fisherfolks to fish in municipal/ or complete open water where there is net destruction of gain in fishery stocks aquaculture Total recovery needs: Php structures 200 million for support to (fishponds, fish- vulnerable fisher-folks pens and fish- Total reconstruction needs: cages) fishing Php 36 million paraphernalia (boats, fish corral, gillnet). 20 PHILIPPINES TYPHOONS ONDOY AND PEPENG Enterprise Sector Summary23 Nonie Reyes The back-to-back devastation of typhoons Ondoy and Pepeng exacted a total of Php 111.4 billion worth of damage and production losses in the enterprise sector across the six regions of the National Capital Region (NCR), CAR, Region I, Region II, Region III and Region IV-A. The bulk of the losses comprised foregone revenues valued at Php 88.9 billion (80 percent of total damage and losses) as a result of production interruptions and inventory losses. Inventory losses with an estimated value of Php 78.7 billion accounted for a substantial portion of the foregone revenues, as establishments had prepared for the anticipated increase in demand for the coming holidays. The remaining Php 22.4 billion (20 percent) represented damages to business premises, including buildings, warehouses, machinery and equipment (see Figure 1). Figure 1. Philippines: Total Damage and Losses from Typhoons Ondoy and Pepeng for the Enterprise Sector P billion 120.0 111.4 89.3 88.9 90.0 77.3 60.0 30.0 22.4 19.0 12.0 9.8 9.1 3.1 2.5 0.6 0.0 Manufacturing Wholesale & Retail Tourism Total Trade Damage Losses Total Damage & Losses Source: PDNA estimates. Wholesale and retail trade was the most affected subsector, with damages and losses amounting to Php 89.3 billion. This was largely on account of Php 77.3 billion worth of inventory and production losses. The remaining Php 12 billion consists of damage to premises and equipment/machines. The manufacturing sector sustained Php 9.8 billion worth of damage to factory sites and machinery, which seriously impacted the sector’s ability to deliver orders; these were particularly high ahead of the important Christmas season. Damage to raw materials and inventory stocks reduced future revenues by a further Php 9.1 billion. Tourism was more mildly affected, with total damages and losses estimated at Php 3.1 billion. Disruption of the transport sector could have generated large revenue losses in the tourism sector, but this was offset by a surge in demand for hotel and restaurant services by families affected by the flooding. The enterprise sector comprises manufacturing, wholesale and retail trade, and tourism. This report benefits from a rapid 23 assessment of damage and losses from typhoons Ondoy and Pepeng conducted for the PDNA by Pulse Asia on 23-30 October 2009. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 21 To help the enterprise sector in these areas recover from these losses will require a mix of financing mechanisms. The sector’s recovery would also be facilitated by a rapid recovery of other sectors producing complementary goods and services (e.g., transport or agriculture). A private sector recovery and management framework is essential to foster preparedness, timely response and effective management of any future disasters. Background The six regions of NCR, CAR, Region I, Region II, Region III and Region IV-A drive the enterprise sector of the country. About 64 percent of the total gross value added of the enterprise sector was produced in these six regions over the period 2002 to 2008. NCR, being the most economically dense region in the country, produces 41 percent of total manufacturing of the national economy, 26 percent of total wholesale and retail trade and 57 percent of tourism. Region IV-A benefits from its proximity to NCR and now plays a leading industrial and export-processing role in the country. Region III is the granary of Luzon, with a large concentration of industrial companies and manufacturers, warehouses, transportation and logistics services attending to a growing population. Almost half of the country’s total population resides in these six regions.24 The enterprise sector in these affected six regions grew strongly for the past few years, making a large contribution to GDP growth. From 2002 to 2008, the enterprise sector in these regions grew by 4.5 percent annually. They contributed 3.2 percentage points to the country’s total enterprise growth, while the remaining regions contributed only 1.8 percentage points. Figure 2. Geographic Distribution of Gross Value Added (Manufacturing, Wholesale and Retail Trade and Tourism) % of national GVA 80.0% 6.5% 16.8% 6.2% 0.3% 60.0% 1.9% 9.8% 2.2% 0.3% 14.8% 3.8% 0.6% 40.0% 7.8% 1.4% 2.9% 56.9% 0.8% 20.0% 40.5% 25.7% 0% Manufacturing Whole and Retail rade Tourism NCR CAR Ilocos Cagayan Valley Central Luzon Calabarzon Source: NSCB Damage and Losses Damage and losses were estimated for enterprises based on an enterprise survey especially commissioned for the PDNA25. The survey, undertaken for PDNAs elsewhere around the globe, allowed an assessment of ex ante and ex post production decision variables. These data were then extrapolated for the affected areas in Luzon (covering NCR, CAR, Regions I, II, III and IV-A) to estimate 24 As of August 1, 2007 (NSO). 25 The survey, undertaken on 23-30 October, is based on a sample of observations across six municipalities and cities in the disaster-affected areas of Luzon, e.g. Marikina, Pasig, Cainta, Dagupan, Sta. Rosa and Tuguegarao. The observations consist of firms, engaged in manufacturing, wholesale and retail trade, and hotel and restaurants, of varying asset size. 22 PHILIPPINES TYPHOONS ONDOY AND PEPENG the total value of damage and losses for each region (Map 1). A separate technique was used for extrapolation for medium and large firms and another for micro and small-sized establishments.26 Map 1: Damage and Losses in Enterprise Sector, by Region The survey provides indications of baseline, damage and loss data, including recovery period and likely sources of financing for recovery. For medium and large enterprises, adjusted data from the Security and Exchanges Commission is used while for small 26 and micro enterprises, extrapolation is based on estimates from literature on the number of firms. Regional estimates were cross-checked with regional GDP data, VAT collection data and insurance claim data. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 23 Manufacturing Sector The manufacturing sector sustained 17 percent of total damage and losses, mostly by medium and large companies and in economically dense regions. Some 16,774 establishments in the manufacturing sector experienced damage and losses due to the flooding. They comprised 23 percent of the total industrial firms in the six affected regions. Almost half of the affected firms were concentrated in the Metro Manila and Region IV-A, which is a leading industrial and export-processing zone for semi- conductors, pharmaceutical products, automotive parts and garments. Region IV-A and the NCR are the top regions in the country which generate high gross value of manufacturing outputs.27 The manufacturing sector in the six affected regions sustained Php 19 billion worth of damage and losses. While the brunt of the flooding was felt most by the medium and large companies, small-scale export- orientated manufacturing firms were also affected. Medium and large companies, about 2,584 of them, incurred 93 percent of the total damage and losses, while small and micro enterprises shouldered the remaining seven percent. There were 3,407 affected micro and small enterprises (see Table 15). Table 15: Damage and Losses in Manufacturing (in Php million) Firms, by type Indicative Number Indicative Recovery Damage Losses of Affected Firms Period (days) Micro 971 63.6 33.4 60.4 Small 307 150 76.8 168.7 NCR Med/Large 964 60 8,925.0 6,220.2 Total 2,242 9,035.2 6,449.3 Micro 491 76.8 0.5 2.4 Small 155 19 0.8 4.3 CAR Med/Large 24 75 10.8 3.1 Total 670 12.1 9.8 Micro 2,208 76.8 3.3 15.1 Small 698 19 5.0 26.6 Region I Med/Large 49 75 22.4 6.4 Total 2,955 30.7 48.1 Micro 727 50.4 1.3 3.1 Small 230 19 1.6 2.1 Region II Med/Large 22 75 9.8 4.3 Total 979 12.7 9.5 Micro 2,665 120 4.2 55.9 Small 842 120 9.3 168.9 Region III Med/Large 484 75 220.5 578.7 Total 3,991 234.0 803.5 Micro 3,721 120 10.6 139.9 Small 1,175 120 23.3 422.2 Region IV-A Med/Large 1,041 75 473.2 1,240.4 Total 5,937 507.1 1,802.5 Micro 10,783 681/ 53.5 276.8 Small 3,407 671/ 116.8 792.8 Total Med/Large 2,584 671/ 9,661.7 8,053.2 Total 16,774 681/ 9,832.0 9,122.8 Source: PDNA estimates. 1/Weighted average of the observations in the survey sample. See latest Annual Survey of Philippine Business and Industry. 27 24 PHILIPPINES TYPHOONS ONDOY AND PEPENG Damage in the manufacturing sector is estimated to reach Php 9.8 billion. This amount includes totally or partially destroyed buildings, office sites, warehouses, equipment and machinery. The damage to physical properties interrupted production schedules of both domestic and export commodities for several weeks. On average, manufacturing firms in the affected areas expect to return to their pre-disaster output levels 67-68 days after Ondoy and Pepeng struck the country. Aside from damage to physical assets, manufacturing experienced Php 9.1 billion revenue losses due to slowdowns in production. Production delays resulted in reduced inventories and, hence, lost orders from both global and domestic buyers. Manufacturing companies had already suffered earlier this year from reduced demand due to the global recession. Aside from flooding and damage to physical assets, interruptions in electricity supply and destroyed raw materials contributed further to the production losses in manufacturing. Nonie Reyes P O S T- D I S A S T E R N E E D S A S S E S S M E N T 25 Wholesale and Retail Trade Sector The wholesale and retail trade subsector sustained 80 percent of total damage and losses in the enterprise sector, largely due to damaged inventory buffer stocks for the Christmas season. Just as companies were building their inventory buffer stocks to meet the high demand anticipated for the Christmas season, Ondoy and Pepeng swamped 40,698 establishments engaged in the wholesale and retail trade. These establishments represent 21 percent of the total number of firms engaged in wholesale and retail trade in the affected regions. As a result, the subsector sustained damage and losses valued at Php 89.3 billion, largely on account of inventory losses estimated at Php 74 billion by medium and large companies. A depletion of inventories, combined with a production slow- down, resulted in a loss of sales estimated at Php 77.3 billion. Damage to physical properties, such as premises, goods and service equipment, totaled Php 12 billion (see Table 16). Table 16: Damage and Losses in Wholesale and Retail Trade (in Php million) Region Firms, by type Indicative Number of Indicative Recovery Damage Losses Affected Firms Period (days) NCR Micro 2,017 94 69.4 125.5 Small 1,043 113 261.2 573.5 Med/Large 3,397 75 7,455.0 11,557.0 Total 6,458 7,785.6 12,256.0 CAR Micro 1,020 105 1.1 5.0 Small 527 82 2.8 14.8 Med/Large 126 82 2.4 96.6 Total 1,673 6.3 116.4 I Micro 4,586 105 6.9 31.3 Small 2,372 82 16.9 90.5 Med/Large 215 82 4.1 164.2 Total 7,173 27.9 286.1 II Micro 1,511 52 2.8 6.4 Small 781 120 5.3 7.3 Med/Large 75 50 7.3 8.0 Total 2,367 15.5 21.7 III Micro 5,535 67 8.8 116.1 Small 2,862 91 31.7 573.9 Med/Large 963 120 1,348.2 20,612.2 Total 9,360 1,388.7 21,302.2 IV-A Micro 7,727 67 22.0 290.6 Small 3,997 91 79.2 1,435.6 Med/Large 1,942 120 2,716.0 41,580.0 Total 13,666 2,817.2 43,306.2 Total Micro 22,396 811/ 111.0 575.0 Small 11,583 1021/ 397.2 2,695.6 Med/Large 6,719 731/ 11,533.1 74,018,0 Total 40,698 861/ 12,041.3 77,288.6 Source: PDNA estimates. 1/Weighted average of the observations in the survey sample. 26 PHILIPPINES TYPHOONS ONDOY AND PEPENG Damage and losses in the wholesale and retail trade subsector were significant as they impacted economically dense geographic areas. In terms of spatial distribution, Region IV-A, Region III and the NCR, accounted for almost all (99.5 percent) of the total value of damage and losses and for the largest number (72.4 percent) of wholesale and retail establishments. Region IV-A and NCR regions are relatively highly agglomerated areas with dense population and economic activities, where wholesale and retail trading abounds to provide industrial and manufacturing firms an “extension arm� in the production chain. Region III, on the other hand, is one of the main granaries of the country. CAR, Region II and Region I accounted for 27.6 percent of the total number of affected wholesale and retail establishments, but only 0.5 percent (or Php 474.0 million) of the total damage and losses. A large number of wholesale and retail trade businesses represent home- based enterprises (or small ‘flea market’- type establishments); their damage and losses are mostly captured in the losses reported by the agriculture, housing and livelihood sectors. Small and micro establishments were hit hard. Except for CAR, all five regions had high concentrations (above 80 percent) of affected wholesale and retail establishments that operated on small or micro scales. Region II and Region I stood out, as 97 percent of the affected establishments are small or micro. The average numbers of days for small and micro establishments to return to their pre-disaster scale of operations are estimated to be 107 and 81 days, respectively, which are noticeably higher than the 73 day recovery period of medium and large companies. Small and micro establishments in wholesale and retail trade were therefore severely incapacitated. While they account for only 4.2 percent of total damage and losses, the resumption of normal operations will take longer for most of them. Medium and large companies, on the other hand, shouldered 95.8 percent of total damage and losses but are estimated to be able to return to their normal operations more rapidly. Nonie Reyes P O S T- D I S A S T E R N E E D S A S S E S S M E N T 27 Tourism Sector The impact of Ondoy and Pepeng on the tourism subsector was less severe and accounted for three percent of the total damage and losses of the enterprise sector. The decline in the number of tourists and commuters due to delays and cancellation of flights, sea travel and disruptions in road transportation could have reduced tourism sector revenues significantly. However, this was offset by a surge in demand for hotel and restaurant services by families affected by the flooding who could afford to stay in hotels or resorts for temporary shelter. Nonetheless, the areas most seriously affected by flooding experienced reduced property values, which create a negative wealth effect to property owners. The tourism subsector lost Php 2.5 billion in revenue losses. Damage to premises and equipment totaled Php 576.0 million (see Table 17). Supply-side factors reduced production of tourism services. In addition to the flooding and damage to equipment, disaster-induced operational constraints, such as reduced labor force and electricity shortages, exacerbated the production slowdown of tourism services. Table 17: Damage and Losses in Tourism (in Php million) Region Firms, by type Indicative Indicative Damage Losses Number of Recovery Affected Firms Period (days) NCR Micro 448 79 15.4 27.9 Small 368 75 92.2 202.4 Med/Large 573 55 400.9 964.6 Total 1,390 - 508.5 1,194.9 CAR Micro 227 150 0.2 1.1 Small 186 52 1.0 5.2 Med/Large 35 75 n/a 53.5 Total 448 - 1.2 59.8 I Micro 1,019 150 1.5 6.9 Small 837 52 6.0 32.0 Med/Large 42 75 n/a 63.9 Total 1,898 - 7.5 102.8 II Micro 336 150 0.6 1.4 Small 276 14 1.9 2.6 Med/Large 9 75 0.4 0.3 Total 621 2.9 4.3 III Micro 1,230 150 2.0 25.8 Small 1,010 75 11.2 202.5 Med/Large 194 64 3.9 150.1 Total 2,434 17.1 378.4 IV-A Micro 1,717 150 4.9 64.5 Small 1,411 75 28.0 506.7 Med/Large 292 75 5.9 225.9 Total 3,420 - 38.8 797.1 Total Micro 4,977 931/ 24.7 127.8 Small 4,088 511/ 140.2 951.3 Med/Large 1,145 631/ 411.1 1,458.2 Total 10,211 691/ 576.0 2,537.3 Source: PDNA estimates. 1/ Weighted average of the observation in the survey sample 28 PHILIPPINES TYPHOONS ONDOY AND PEPENG NCR, which has the highest concentration of affected hotel and restaurant establishments, was hardest hit, accounting for 55 percent of the total damage and losses in the tourism subsector. Region IV-A and Region III accounted for 27 percent and 13 percent of the total damage and losses, respectively. In terms of the size of enterprises, micro enterprises engaged in the tourism subsector were badly hit. Small and micro tourism establishments that were affected by the flooding constituted 89 percent of total number of establishments but their share of total damage and losses was only 40 percent. The average recovery period was highest among micro establishments, at 91 days. Small hoteliers and restaurateurs estimated needing 51 days to return to the pre-disaster situation. Medium and large establishments, which incurred the remaining 60 percent of damage and losses, indicated 61 days. Priority Recovery and Reconstruction Needs The enterprise sector needs Php 66.8 billion for reconstruction and recovery activities. This amount covers Php 64 billion for reconstruction and improvement activities that include the possibility of resettling businesses to safer areas and Php 2.8 billion for working capital. Large and medium enterprises account for 96 percent of these total reconstruction and recovery needs. From a regional perspective, Region IV-A needs Php 32.8 billion (49 percent) for its reconstruction and recovery efforts, followed by NCR Php 17.5 billion (26 percent) and Region III (24 percent). The rest is for regions in northern Luzon. A financing scheme of grants and concessionary loans is needed for micro and small businesses. The financing scheme should be composed of carefully priced and structured Business Disaster Loans, which is a Risk Mitigating Facility (RMF)-backed loan, and grants for the micro and small businesses to accelerate short and medium-term reconstruction and recovery.28 As discussed in the financial sector report, grants should be directed to affected establishments with no productive assets left and with negligible creditworthiness. Small and micro businesses are in the most difficult situation because they are already indebted and likely to have drawn down most of their private (company or personal) savings to finance 70 percent of their damage and losses. None of the affected micro enterprises have insurance cover, while small businesses might have 20 percent. Both businesses— micro enterprises in particular—would have to rely on informal lenders for financing in the absence of targeted policy measures to provide access to cheaper sources of finance. Access to micro-credit has become more limited, as micro-credit providers were also affected by the typhoons after some of their existing clients in the flooded areas became delinquent. Medium-sized companies need a credit line for reconstruction and recovery needs. The credit line should be packaged in the form of Business Disaster Loans that are for a longer term and with a quick processing time.29 This would be accessible to medium-sized companies (as well as small and micro businesses) that sustained only partial damage and losses. The existing Social Security System (SSS) Calamity Loan program only caters to micro enterprises. No concessionary loans should be provided to large companies, since they have other sources of funds to finance reconstruction and recovery activities. Affected businesses can resort to existing government measures that will help early recovery of businesses. The 1997 Tax Code, as amended, provides significant relief for affected taxpayers, which includes Value-Added Tax (VAT) input refund, income tax deductibility of non-insured losses and loss carry forward. Grants and concessionary loans provided by the private sector for enterprises would be facilitated by public sector 28 guarantees of around Php 5.6 billion (see Financial Sector note). P O S T- D I S A S T E R N E E D S A S S E S S M E N T 29 Manufacturing The overall needs of the manufacturing subsector are estimated to be Php 11.1 billion. These needs are divided into (i) provision for working capital, amounting to Php 741.3 million, and (ii) relocation, reconstruction or improvement of damaged premises; machinery and equipment, amounting to Php 10.3 billion (see Table 18). A mix of grants and Business Disaster Loans is needed to encourage a faster resumption of production. Table 18: Reconstruction and Recovery Needs Assessment for Manufacturing (in Php million) Region Reconstruction Recovery Total NCR 7,543.2 207.1 7,750.3 CAR 8.7 0.6 9.3 I 38.6 3.7 42.3 II 8.7 1.5 10.2 III 859.3 164.2 1,023.4 IV-A 1,903.9 364.2 2,268.0 Total 10,362.3 741.3 11,103.6 Of which: public: 138.1 (grants); private (with government guarantees): 933.9; private (without government guarantees): 10,031.6 Relocation activities should consider external economies of scale. When establishments relocate to safer sites, the risk of disturbing the benefits derived by companies from external economies of scale due to spatial clustering of industries becomes a major policy challenge. Locating in economically dense areas provides cost savings and positive synergies to establishments. Every effort should be made to sustain economies of scale through rehabilitation of lifeline infrastructures such as roads, electricity and water. Substantial resources to satisfy the reconstruction and recovery needs in manufacturing should be directed into leading areas. Ninety percent of the reconstruction and recovery needs in manufacturing arise from the NCR and Region IV-A. Wholesale and Retail Trade The recovery needs for the wholesale and retail trade subsector are estimated to be Php 1.6 billion. Micro, small and medium enterprises need financing through grants for micro and/or Business Disaster Loans for working capital. A total of Php 53 billion is needed for reconstruction activities, including improvements on damaged properties and/or relocating to safer grounds (see Table 19). Table 19. Reconstruction and Recovery Needs Assessment for Wholesale and Retail Trade (in Php million) Region Reconstruction Recovery Total NCR 8,326.4 773.9 9,100.4 CAR 74.0 6.2 80.3 I 153.5 18.8 172.4 II 10.2 5.0 15.2 III 14,679.8 238.2 14,918.0 IV-A 29,714.3 540.1 30,254.4 Total 52,958.3 1,582.3 54,540.6 Of which: public: 330.7 (grants); private (with government guarantees): 4,587.1; private (without government guarantees): 49,622.8 30 PHILIPPINES TYPHOONS ONDOY AND PEPENG Accelerating the reconstruction and recovery programs in sectors that are linked with wholesale and retail trade is necessary to boost production. Fast-tracking the recovery in the agriculture and manufacturing sectors, which supply most of the goods and services to wholesale and retail trade subsector (backward linkages), will help boost the production in the trade sector. Similarly, enabling the logistics sectors, e.g., transportation, telecommunication, warehousing, and other support services, such as banks (forward linkages), will also facilitate a faster recovery in wholesale and retail trade. Support for the agriculture and informal sectors can strengthen demand for goods and services provided by the wholesale and retail trade sector. Restoration of livelihood programs in the agriculture and informal sector is essential for providing jobs and incomes to displaced people and those who lost their jobs. Reviving spending power will cushion the negative impact of the devastation on consumer demand. Tourism A considerable portion (59 percent) of the total needs by the tourism sector is for reconstructing damaged buildings, sites and equipment. Reconstruction needs are valued at Php 726.0 million, while recovery needs for working capital amount to Php 508.0 million (see Table 20). Accelerating the recovery and reconstruction of the housing and transportation sectors would feed back positively in reducing operational losses in the tourism sector. Many workers in labor-intensive industries, such as hotels, resorts and restaurants, were not able to return to work because either (or both) the business neighborhood was flooded or they had to attend to their own flooded homes. Rehabilitating housing and transport will allow the workers to return to their jobs more quickly. Lifeline infrastructures (e.g., water and electricity) are critical for enabling hotels and resorts to resume normal operations. This highlights the importance of community-business sector partnerships since the whole community and business operators will both benefit from restoring lifeline public goods and disposing debris. Market communication needs to be integrated into the tourism disaster management plan and the overall disaster management plan of the country. Market communication to complement the overall scheme of reconstruction and recovery efforts is essential since any disaster tends to have longer effects on the tourism sector.30 The tourism industry generally possesses a highly elastic demand per level of perceived risk.31 Even if the typhoon and flooding disasters are localized, their effects tend to spill over to the whole tourism industry. Table 20: Reconstruction and Recovery Needs Assessment for Tourism (in Php million) Region Reconstruction Recovery Total NCR 402.1 264.3 666.4 CAR 21.2 13.7 34.9 I 30.2 18.5 48.8 II 0.7 0.8 1.5 III 93.8 70.6 164.4 IV-A 178.1 139.7 317.8 Total 726.1 507.6 1,233.7 Of which: public: 88.2 (grants); private (with government guarantees): 103.8; private (without government guarantees): 1,041.7 Source: PDNA estimates. 30 Faulkner, Bill, 2003. Towards a Framework for Tourism Disaster Management in Jeff Wilks and Stephen Page (eds.) Managing Tourist Health and Safety in the New Millennium. Oxford, UK: Elsevier Science Ltd. 31 Ibid. citing Gonzales-Herrero and Pratt (1998). P O S T- D I S A S T E R N E E D S A S S E S S M E N T 31 Private Sector Crisis and Recovery Management A Private Sector Crisis and Recovery Management Framework is essential. Businesses are vulnerable, not only to floods but also to disaster-related lifeline impacts (e.g., electricity and water disruption) and disaster-induced operational problems. Commonly, business establishments tend to focus their reconstruction and recovery efforts within their sites, but not on community-wide sources of vulnerabilities, which are mostly offsite. This situation still puts the business community in a vulnerable position, since reconstruction and recovery activities have elements of a public good. Business reconstruction and recovery needs are tied with community-wide loss-reduction activities. Businesses have an important stake in the promotion of a higher level of resistance to disasters in their communities to resume operations more rapidly in the same way as communities benefit from improved public facilities. A Private Sector Crisis and Recovery Management Framework would make the business community understand that “making lifelines and other key elements in the civil infrastructure more resistant to disaster-related disruptions will help reduce losses to individual business by reducing the likelihood of business interruptions.�32 This framework should be integrated with the country’s overall disaster management framework. Implementation Arrangements Developing the Private Sector Crisis and Recovery Management Framework would involve NDCC, the Special National Public-Private Reconstruction Commission, government line agencies and special bodies including the Department of Trade and Industry (DTI), Department of Tourism (DOT) and Bangko Sentral ng Pilipinas (BSP), chambers of commerce and trade associations and civil society. A private organization should be involved in the identification and screening of disaster-affected establishments (see details in the financial sector report). Webb, Gary, Kathleen Tierney, James Dahlhamer, 1999. “Businesses and Disasters: Empirical Patterns and Unanswered 32 Questions.� Disaster Research Center, University of Delaware. Preliminary paper #281. 32 PHILIPPINES TYPHOONS ONDOY AND PEPENG Recovery Framework: Enterprise Sector Priority Activities to Outcomes Baseline Priority Activities to December 2010 December 2012 Achieve 6.2 The manufacturing S 1. creening and segmenting Identification of percent (2009) subsector sustained establishments who will qualify for: “safe� sites to relocate and 1.1 percent P9.8 billion worth of • financing facilities: industrial firms (2010) growth in damage to buildings, – grants and concessionary loans Provision of same or manufacturing warehouses, (intended for small and micro better infrastructures subsector from equipment and enterprises) Market the “safe� the baseline pre- machinery. It also s – pecial credit line, e.g. Business industrial site disaster growth incurred P9.1 billion Disaster Loan Program (intended for Develop and figures of -6.4 worth of revenue medium businesses) implement a Private percent (2009) and losses from damaged i • nterest credits Sector Crisis and 0.8 percent (2010) inventories and other A 2. pproval and disbursement of grants, Recovery Management disaster-induced loans/credits to businesses; approval of Framework operations losses. interest credits. A total of 16,774 R 3. estoration of lifeline infrastructures establishments were (e.g., electricity and water) affected. Financing Needs for Manufacturing: Php 11.1 billion Achieve 0.6 Damage and losses in 1. same as 1 and 2 above) ( 1. (same as # 4 above) percent (2009) the in the wholesale I 2. dentify and implement rapid recovery and 2.2 percent and retail trade programs on livelihood and employment (2010) growth subsector reached in agriculture and informal sector. This in wholesale P89.3 billion. Of which, will restore spending power and will feed and retail trade inventory losses for into wholesale and retail trade. subsector from all establishments I 3. dentify and implement rapid recovery the baseline pre- comprised P72 billion. programs in sectors having “backward disaster growth Some 40,698 linkage� with wholesale and retail trade figures of 2.5 establishments in were (e.g. manufacturing, agriculture) percent (2009) and affected. I 4. dentify and implement rapid recovery 2.9 percent (2010) programs in sectors which have “forward linkage� with wholesale and retail trade (e.g., logistics) Financing Needs for Wholesale and Retail Trade: Php 54.5 billion Achieve 4.8 Damage and losses ( 1. same as 1 and 2–see third column on D 1. evelop and percent (2009) in the tourism manufacturing section) implement a and 3.6 percent subsector totaled P3.1 2. dentify and implement rapid recovery in I Tourism Sector (2010) growth in billion. P2.5 billion the transport and housing sectors which Disaster Recovery private services, apportioned to damage will feed into reducing disaster-induced and Management which includes the to premises and operations (supply-side) losses in the Framework (to tourism subsector, equipment. tourism subsector. be integrated in from the baseline A total of 10,211 D 3. evelop market communication strategy Private Sector pre-disaster growth establishments were to reduce persistence of ‘negative Crisis and Recovery figures of 3.2 affected. perception’ Management percent (2009) and Framework) 3.4 percent (2010) Financing Needs for Tourism: Php 1.2 billion P O S T- D I S A S T E R N E E D S A S S E S S M E N T 33 34 PHILIPPINES TYPHOONS ONDOY AND PEPENG Social Sectors Jerome Ascaño “My husband is a taxi driver in Baguio City and had to keep working. The children were absent [from school] for two weeks because they have no books, notebooks, pencils and clothes.� – Woman from Aguias, Naguillian, La Union Housing Sector Summary Mark Diamante The housing sector was heavily impacted by typhoons Ondoy and Pepeng which left about 220,000 homes completely or partially damaged by floodwaters across Luzon (Map 2). Hundreds of thousands were left homeless, with damage and losses estimated at Php 25.5 billion and Php 8.9 billion, respectively (Table 21). Damages included: (i) damage to the home itself; (ii) household items, estimated as a fraction of the total construction cost; and (iii) damage to home-based informal micro-enterprises. The biggest share of damage is concentrated in the informal sector and consists of makeshift dwellings located in flood prone areas. Mixed and strong material dwellings experienced less total damage but moderate levels of partial damage, while traditional and high-end material homes experienced the least amount of damage. Losses included: (i) the cost of the demolition and rubble removal for destroyed homes; (ii) temporary loss of rental income incurred by owners whose structures were damaged; (iii) the cost of temporary shelter schemes for those made homeless by the floods. Among makeshift and mixed housing, the numbers of renters are high, accounting for most of the loss. Table 21: Damage, Losses, Effect on the External Sector and Fiscal Budget for Housing Sector (in Php million) Damage Losses External sector Fiscal budget Public Private Public Private - 25,453.8 2,221.8 6,650.3 5,629.3 4,203.1 The total financing needs, based on in-city relocation which is consistent with the Government’s preferred housing policy option, are Php 75.7 billion for the period of the PDNA (plus Php 17.0 billion for two further years) (Table 22). Financing is needed in the following areas: (i) technical assistance; (ii) capacity development, (iii) housing repair/risk reduction, (iv) shelter and transitional housing; (v) housing reconstruction and (vi) housing for families living in flood-prone areas. The needs in housing include about 94,000 new housing units related to damage caused by the typhoons. In addition, approximately 83,000 households are currently living in land considered at risk from water-related hazards. Relocation of these households to higher ground is necessary to ensure their safety. Construction under the “build back better� premise will require ensuring improved housing design and construction solutions intended to reduce costs for people being relocated and to ensure their participation. Table 22: Summary Financial Needs for Reconstruction and Risk Mitigation for Housing Sector (in Php) 0-6 mos 7-12 mos 13-36 mos 36-60 mos Total % Technical Asistance 79,900,000 119,850,000 199,750,000 - 399,500,000 0.4% Capacity Building 65,330,009 65,330,009 195,990,028 - 326,650,047 0.4% Housing Repair/Risk Reduction 2,819,172,480 2,819,172,480 1,409,586,240 - 7,047,931,200 7.6% Shelter and Transitional Housing 2,414,427,229 1,810,820,422 1,810,820,422 - 6,036,068,074 6.5% Housing Reconstruction 2,812,226,328 11,248,905,312 42,183,394,920 - 56,244,526,560 60.6% Housing related to Water Hazard (MM) 454,456,400 681,684,600 4,544,564,000 17,042,115,000 22,722,820,000 24.5% Total 8,645,512,447 16,745,762,823 50,344,105,610 17,042,115,000 92,777,495,881 100.0% 36 PHILIPPINES TYPHOONS ONDOY AND PEPENG Map 2: Damaged Housing, by Region P O S T- D I S A S T E R N E E D S A S S E S S M E N T 37 To reduce the impact of future storms, policies and development practices in urban development and housing need to be addressed. The most important initiative is to ensure that LGUs develop comprehensive land use maps that take into account risk-sensitive land use planning. From these maps, it is necessary to phase in and enforce zoning ordinances to ensure housing is not located in areas of eminent danger. National and LGU policies on housing need to be developed to ensure that a coherent program of slum upgrading and urban renewal can be developed in the context of preparing a City Development Strategy (CDS)33. For households requiring relocation due to disasters, programs should always ensure participatory mechanisms leading to consensus-based solutions. It is also necessary to ensure the long-term livelihoods of displaced households through measures such as in-city resettlement close to existing employment; the provision of new, ample income opportunities in housing sites outside metropolitan Manila; and affordable transport and/ or housing facilities for wage earners of resettled households who work in the city. In addition, new and improved financial intermediation practices are needed to ensure that the current willingness to pay among most low-income households is transformed into reliable mortgage repayments. In most cases, targeted subsides will be required to ensure affordability for the poor. In some cases, public- private partnership solutions could be crafted to enable the financing of low-income housing by the private sector, in which case NGO and private sector intermediation (microfinance) would be the preferred modality. Affected Housing and Immediate Relief The housing stock in the affected areas is defined in terms of five types: Vernacular dwellings. Composed of readily available, inexpensive, primarily native materials, these structures housed all Filipinos before the Spanish period, and they are still being widely used by low-income people in villages and rural areas today. Vernacular dwellings work well as a protection against the elements, are 20 sqm in size, and are elevated up to two meters over the ground, as a simple yet effective design against flooding. These pile-dwelling structures feature wooden trunks as their foundation, bamboo and cogon grass for the main body, and rattan strips to bind them together. The roof is made of bamboo, covered by a thick layer of straw, often featuring small openings at the top, creating a natural ventilation system and letting strong wind go through the structure without damaging it. Moreover, their lightness and flexibility make them extremely resilient to earthquakes. The lower floor hosts daily activities, while the upper one has a large bedroom. Usually, the toilet is located near the house. Makeshift dwellings. Usually built by the owners out of second-hand materials, these dwellings are usually found in informal settlements in the cities. On average, makeshift dwellings are 20 sqm in size and feature a main structure of light timber beams and board, covered by overlapping metal sheets. They are very weak, and many of them are located in areas highly prone to flood s, such as riverbanks, waterways, easements, and alluvial plains. Typically, these dwellings are the housing stock for the poor and low-income earners. Sometimes, even salaried income earners, such as government employees and teachers live in these dwellings, as the high land value prevents them from accessing formal housing. It is common that the occupants of these dwellings do not have property title and are therefore at a constant risk of eviction. Mixed dwellings. Most of the lower middle-income residents live in mixed houses of about 30 sqm. They are made of concrete blocks comprising of poorly reinforced concrete pillars at their four corners. Often, these pillars have only a vertical steel bar at their core. The roof is usually made of light timber beams covered by undulated metal sheets. However, their structure and the For more information on City Development Strategies see http://www.citiesalliance.org/ca/cds. 33 38 PHILIPPINES TYPHOONS ONDOY AND PEPENG heaviness of their walls make them very vulnerable to earthquakes. Like the previous housing type, this dwelling is found in flood prone areas, although the slight higher wealth of their occupants allow them to access better land for their construction in comparison with the previous housing unit. They can be in formal or informal settlements. Strong dwellings. The middle class live in houses of about 50 sqm, whose walls and roof are made of reinforced concrete. In many cases, each building features multiple housing units (condominiums) and this housing is found in towns and cities. Given the higher wealth of their households, the majority of them possess legal ownership of their structure, with various yet generally low risk of flood. However, their structural features are normally not strong enough for an earthquake prone country, as beams and pillars have poor metal reinforcement and often do not have any stirrups. High-end dwellings. The last type of housing is used by the wealthiest population, has an average size of 200 sq, and its walls and roof are made of reinforced concrete, although their structural standard is barely sufficient for a country prone to earthquakes. Given the wealth of their occupants, they are usually found in areas with a low risk to floods, but increasingly, due to the skyrocketing urbanization in larger cities, many of these housing units have been built in flood prone areas, to be close to transport corridors or to commercial districts. Ondoy and Pepeng caused damage in about 300 LGUs. The disaster has forced households affected to reside in temporary evacuation centers (about 90,000), move in with relatives or friends, seek shelter elsewhere, or simply return to their provinces. The immediate focus of the national and local government has been to provide shelter and food for those left homeless by the floods. Most evacuation centers were created from existing public facilities, usually school buildings, covered courts, barangay halls, and other public facilities. Private venues, such as churches, also assisted in providing shelter options. Damage and Losses to the Housing Sector Through site visits to the most affected LGUs, it became clear that the main cause of destruction was the location of the dwellings, rather than the building material. All houses in the Philippines are privately owned. There are a few dwellings built by LGUs and central agencies, but as they are all given to families under rent-to-own programs—a type of subsidized mortgage—their ownership can be considered private. The total damages were estimated at Php 25.5 billion, all in the private sector. Housing in affected areas experienced either partial or total damages since flooding varied in severity. Totally damaged homes were classified as those structures that could not be salvaged; partially damaged homes experienced damage to one or more physical features, but can be repaired. This definition is valid for merely economic reasons, related to the estimation of damage and losses, and does not imply that all totally or partially damaged houses could be rebuilt, as many of them are located in flood prone areas34. An average value for each housing type was estimated covering the physical damage to the housing structure and damage to household items (Table 23 and Table 24). According to government figures released by the National Disaster Coordinating council, about 28,000 homes were 34 totally destroyed, while about 190,000 were partially damaged. However, due to the immediate needs of the disaster, data collection was still ongoing at the time of this PDNA. The housing sector team decided to double-check these figures in the most affected local government units, which featured 85 percent of the damaged houses. Based on this further research, figures were eventually updated. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 39 Table 23: Average Physical Damage, by Housing Type and Level of Damage (in Php) Totally damaged Partially damaged Traditional houses 100% 20,000 50% 6,000 Makeshift dwellings 100% 20,000 50% 6,000 Mixed-material houses 100% 112,000 40% 33,600 Strong-material houses 100% 600,000 20% 180,000 High end houses 100% 5,000,000 10% 1,500,000 Table 24: Average Damage of Household Items, by Housing Type and Level of Damage (in Php) Totally damaged Partially damaged Traditional houses 100% 15,000 40% 6,000 Makeshift dwellings 100% 15,000 40% 6,000 Mixed-material houses 100% 100,000 40% 40,000 Strong-material houses 100% 500,000 40% 200,000 High end houses 100% 3,000,000 40% 1,200,000 Traditional housing demonstrated ability to withstand strong winds due to the flexibility and wind permeability of their materials and their correct location: only a few of them are among those that were either totally (two percent) or partially damaged (one percent). Makeshift dwellings represent the majority of the totally damaged housing (78 percent), and a high percentage of those partially damaged (37 percent). Mixed houses, which are made of concrete blocks and metal roof, have suffered less damage because of their slightly better location: they have been only partially damaged (50 percent), whereas a much lower percentage has been totally damaged (17 percent). Only a few concrete houses are among those totally (three percent) or partially damaged (10 percent), as the wealth of their occupants permitted them to access safer areas. Lastly, no high-end homes were totally damaged (0 percent), but a few (1.5 percent) were among those partially damaged. Homes that were washed away lost everything (100 percent of the housing value and 100 percent of the household items value). The physical damage to the partially damaged houses was calculated as a percentage of the construction value (50 percent for traditional and makeshift dwellings, 40 percent for mixed structure houses, 20 percent for reinforced concrete dwellings, and 10 percent for high- end residences. Since those with partially damaged housing were able to recover a portion of their belongings, only 40 percent of their value was taken into account as a physical damage. To capture the real value in such a differentiated housing stock, different unit costs were given for items that can be typically found in each housing type.35 (Figure 3a and Figure 3b). Prevalent in the informal sector, home-based businesses usually occupy the first level of a structure, therefore, in the affected areas these businesses were destroyed or damaged36. Damages in the informal economy were challenging to estimate, primarily, because little baseline data exist on the scope of the informal sector in most LGUs. Data related to enterprises registered under a mayor’s 35 The housing team based these values on information from the 2006 Family and Income Expenditures Survey, interviews with evacuees, and tailored market analysis. Across housing types, common assets included electronics, clothing, furniture, cooking equipment, as well as other assets owned by the occupants, such as cars, bikes, and motorbikes. 36 Sari-sari stores (small convenience stores), tailoring and repair shops, computer centers, and beauty parlors, are some of the common micro-enterprises found in the home. Vendors and tricycle drivers (motorcycle taxis) are also considered in this category, as they store their capital (merchandise in the case of vendors and tricycle in the case of drivers) in their homes. Damages to food goods, sewing machines, tools, and equipment related to income generating activities are considered part of household damages. 40 PHILIPPINES TYPHOONS ONDOY AND PEPENG Figure 3a. Housing Stock Figure 3b. Housing Stock Totally Damaged, by Type Partially Damaged, by Type 3% 2% 2% 1% 17% 10% 37% 78% Mixed ma terial houses 50% Strong ma terial houses High end houses permit were used. Information from several socio-economic profiles of informal settlements was also used to estimate the prevalence of home-based micro-enterprises in communities. A value was given to a home-based business for light and mixed structures only. The figure was averaged from a range of capital investment amounts as reported by local government lending agencies and interviews with informal sector business owners. The estimation of the losses took into account the cost of clearing up, demolishing, removing rubble, transporting to landfill, and debris processing, the cost of temporary shelter scheme, and the loss of rental income. Cost of demolition, rubble removal and processing was estimated at 10 percent of the construction cost. This means that for totally damaged housing the cost was 10 percent of the total value, including construction and household items, whereas for partially damaged housing this 10 percent was calculated on the real physical damage of each housing type defined as per the above explained methodology. The evacuation centers plan to stay open at least for 90 days, and the cost of electricity, water, food, and sanitation facilities (about Php 80 per person per day) is mainly covered by the public sector, with food and clothing donations also coming from the private sector. Victims outside the evacuation centers are being assisted by their relatives (at an average cost of Php 40 per day). When the evacuation centers close, it is likely that some of those made homeless, especially in Metro Manila, will be relocated to areas away from their existing homes. Experience suggests that absent new livelihood opportunities with a similar level of security and remuneration as previous livelihoods, people relocated may choose to return to their previous place of residence. Ensuring community cohesion is maintained is also important. Others who cannot be accommodated through government-supported relocation programs may seek alternative accommodation with relatives, seek shelter on their own, or they may feel they have few alternative options other than rebuild makeshift dwellings in flood prone areas. Losses in rental income are distributed as follows: out of the damaged housing stock, 30 percent of traditional and makeshift dwellings, 50 percent of the mixed houses, 25 percent of those made of reinforced concrete, and 10 percent high end housing were rented out. The duration of such losses was calculated by accounting the time needed to reconstruct each housing (traditional, three months for totally damaged and one and a half for partially; makeshift, three months for totally and one and a half for partially; mixed, eight months for totally and four for partially; concrete, 12 months for totally and four for partially; high end, 18 months for totally and four for partially). The average rental was estimated following direct interviews with the affected population (vernacular Php 500; makeshift Php 500; mixed Php 3,000; concrete Php 6,000; Php high end 100,000). As a result, the total losses were estimated at Php 8.9 billion, of which Php 2.2 billion fell in the public sector and Php 6.7 billion in the private sector. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 41 Additional expenses in the external sector were calculated without considering that many houses should be rebuilt elsewhere; this will be captured by the needs assessment below. The reconstruction of the housing stock, as it was before the disaster, would require an increase in the importation of construction materials (for instance, steel and other building materials, estimated at Php 3.7 billion) and household items (for instance, cars and some electric appliances, estimated at Php 1.9 billion). The total amount of these additional expenses was estimated at Php 5.6 billion. The estimation considered also the effect of the fiscal budget. This included direct government spending from the Calamity Fund that would be likely used for immediate needs beyond relief by the central government (PHP 2.0 billion) and by the LGUs (Php 1.8 billion). In addition, there will be a reduction in tax collection due to fall in utility consumption (Php 120 million), as well as a reduction in taxes due to loss in rental income and consumption (Php 333 million). Therefore the total impact on the fiscal budget would be Php 4.2 billion. (Table 25) Table 25: Damage, Losses, Effect on the External Sector and Fiscal Budget for Housing Sector, by Region (in Php million) Region Damage Losses External sector Fiscal budget Public Private Public Private CAR - 781.6 68.2 204.2 172.9 129.1 I - 2,625.0 229.1 686.0 580.5 433.4 II - 1,597.4 139.4 417.3 353.3 263.8 III - 327.7 28.6 85.6 72.5 54.1 NCR - 6,529.6 570.0 1,706.0 1,444.1 1,078.2 IV-A - 13,574.7 1,184.9 3,546.5 3,002.1 2,241.5 V - 5.4 0.5 1.5 1.2 0.9 XII - 12.4 1.1 3.2 2.7 2.0 Total - 25,453.8 2,221.8 6,650.3 5,629.3 4,203.0 Needs in the Housing Stock Flooding associated with Ondoy and Pepeng totally destroyed 27,602 units and affected about 40,000 houses which need to be rebuilt elsewhere. Taking into account replacement of lost units, reducing “doubling up� of households and secondary relocation caused by new construction it is necessary to rebuild over 93,700 new housing units. The total investment for the units is Php 56.2 billion. The breakdown of the housing types, number of housing units and cost is presented in Table 26. Table 26: Housing Reconstruction to Replace and “Build Back Better� Housing Units (in Php) Number of Housing Units Location Finished Midrise Core Midirise Core Horizontal Service Lot TOTAL NCR+ IVA 8,081 48,487 12,433 6,216 75,217 Other Region 2,150 6,450 6,616 3,308 1,852 TOTAL 4,154 15,702 14,456 7,228 93,741 Total Cost (in Php) Market Rate Self Built Social Housing with Capital Subsidy TOTAL NCR+ IVA 4,848,685,920 29,092,115,520 7,459,516,800 3,729,758,400 45,130,076,640 Other Region 1,290,070,080 3,870,210,240 3,969,446,400 1,984,723,200 11,114,449,920 Total 6,138,756,000 32,962,325760 11,428,963,200 5,714,481,600 56,244,526,560 42 PHILIPPINES TYPHOONS ONDOY AND PEPENG In addition there are about 83,000 houses in potentially catastrophic danger as a result of their location in water hazards in the Metro Manila area. Over the short to medium term it will be necessary to relocate these units to safe ground requiring at least an equal number of units and possibly more if “doubling up� and secondary resettlement is necessary, at an estimated cost of Php 22.7 billion. (Table 27) Table 27: Housing Construction Required to Establish Safe and “Build Back Better� Housing for Families Living Near Water Hazards in Metro Manila (in Php) Unsubsidized Requiring Subsidies to Target Poor Rise Core Mid Rise Core Horizontal Site and Service Total Subsidized Units Water Hazard 0 49,758 24,879 8,293 82,930 Cost per unit (PHP) 600,000 330,000 100,000 Total Cost per Type (PHP) 0 16,420,140,00 5,473,380,000 829,300,000 22,722,820 Overall housing needs. The financing needs of the housing sector were calculated by the PDNA methodology to include the total housing needs as market value as well as replacement of household and livelihood items lost during flooding. The total needs in the short-term have been assessed at Php 21 billion and in the medium-term at Php 49 billion. It is evident that the needs identified cannot be covered by a government sponsored or facilitated program. The assessment identified three distinct stakeholders: (i) vulnerable groups displaced by flooding from the two typhoons that do not have the financial means to recover without assistance from a well- structured low-income housing program; (ii) the large number of households located in danger areas who need to be relocated to reduce life threatening conditions; (iii) other families living in informal settlements—with substandard access to services and in over-densified areas with no proper access roads. The first two groups identified in this needs assessment require priority action, while the third and largest group requires a longer-term strategy of urban renewal and slum upgrading. The vast majority of houses destroyed were in unsafe locations, and approximately 20 percent of all partially destroyed houses are also in unsafe areas and will need to be relocated. Of the remaining affected houses, 60 percent will be repaired and have vulnerability reduction measures. The remaining 20 percent will be only repaired. For the houses which will remain on their original sites (80 percent of partially damaged houses) a better warning system and evacuation plan will need to be implemented. This approach seeks to optimize scarce resources and be progressive by targeting the poor and vulnerable groups. The calamity is superimposed on a housing deficit in the Philippines estimated to be 3.7 million in 2010. In Metro Manila alone, the total backlog has been projected to reach close to 500,000 units (Urban Development and Housing Final Report, HUDCC). The causes for the proliferation of slums and the housing deficit in Manila are well understood by local experts. The magnitude of the calamity in the housing sector can be managed as a catalytic event towards improving affordable housing supply and land use planning. If handled as “business as usual� the housing problems that already exist, particularly those related to housing of the poor, will be exacerbated. Key Polices on Reconstruction Land Use. One of the most important factors contributing to the grave magnitude of the calamity is current land use pattern, practice, and policy. Current legislation already prohibits the settlement on land deemed to be dangerous. However, enforcement has not been effective37. In the short run As of 30 October 2009, in Metro Manila alone 82,931 families are considered to be residing in land deemed to be 37 dangerous due to proximity to a waterway. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 43 it is not feasible to relocate this large population. However, measures need to be taken before the next typhoon season to ensure the safety of the most vulnerable households. It is necessary for the municipalities affected by the flood to update their land use plans. It is also urgent to establish a program to complete relocation in the medium-term. Households already displaced due to the total destruction of their houses by the typhoons should not be permitted to return to land that is clearly unsuitable for housing. Land should not be left idle and vulnerable to illegal resettlement. Alternative land use such as parks, sports facilities, plant nurseries, urban forests, and urban agriculture among others are options for these plots of land. Relocation Policy. An equally important consideration is whether relocation will take place “in city� close to where the affected population was residing, or “off city�/“near city�, some distance from they were residing making it necessary for families to find alternate livelihood or face high transportation costs and commuting time. The principal motivation for off-city relocation is in the expediency of the process as well as minimizing the immediate financial considerations related to the cost of land. Nevertheless, the effectiveness of off-city relocation throughout the world is not encouraging. Given hardships encountered by families a high proportion of resettled families tend to return to the location from which they were displaced. As reported to the PDNA team, the experience with off- or near-city resettlement in the Philippines follows this global trend and has low reported retention rates. Absent immediate alternative given a shortage of land, in the short term the need for some near-city relocation may be inevitable. In these circumstances, it would be important to carry out an independent and participatory socio-economic cost-benefit evaluation of the Philippine experience. Such an assessment would provide insight into the effectiveness and social impact of “near city� relocation. Such an analysis would permit an objective assessment of feasible short-, medium-, and long-term options for resettlement. The PDNA team is sensitive to the needs expressed by HUDCC to commit itself to in-city relocation as the first relocation option. Given the costs and complexities of in-city relocation, it is necessary to develop new and efficient solutions to achieve cost-effective urban rehabilitation. In-city relocation has been strongly supported by international developement and partners in other countries and is considered good practice as exemplified by ongoing work in Brazil and in India. In the case of the Philippines, the feasibility of this approach will be defined by the level of commitment and effort by all stakeholders. The PDNA team has estimated the financial needs based on an in-city relocation strategy. This approach will require effective identification and mapping of land suitable for housing including land where high density informal housing can be found. The advantage of working on land currently used for informal housing includes low relative cost, the opportunity to promote proper urban form and an environment conducive to upgrading. By relocating affected areas to areas which already require upgrading, a secondary beneficiary population will be identified expanding the benefits of the reconstruction. This is critical in building a constituency for promoting in city relocation. The practice of off-city relocation should be considered as a second option and requires not only the participation but also the consensus of the beneficiaries. Furthermore, for the government to be able to avail itself of ODA to support housing development programs, it will be necessary to ensure compliance with relevant safeguard policies of international development partners covering relocation. Housing Solution. Four different types of houses will be used under the “building back better� philosophy for low and lower middle-income housing: 44 PHILIPPINES TYPHOONS ONDOY AND PEPENG • Vertical housing units built under commercial scheme with finishing. This type of housing is targeted to lower middle income households. It is important to ensure a viable solution for this segment of the income distribution which would otherwise compete and displace the poorer households from core housing. • Vertical “sweat equity� core housing, prevalent style for NCR and other urbanized areas. This will no more than five stories, permitting densification while also allowing households to lower their cost by volunteering approximately 1,000 hours of work and by receiving core housing requiring finishing. • Core horizontal housing built under the proven models of various NGOs in collaboration with local and national government entities. This housing will require “sweat equity� from each household and will produce a core house of no less than 26 square meters in a well planned and serviced site. • Self built horizontal housing on an improved lot targeting the poorest households. It will provide them with a safe solution and will focus on improving the quality of housing from a locational perspective as well as on ensuring sustainable services. It is expected that midrise housing solutions will be built in brownfield sites ensuring the orderly densification of urban areas while horizontal solutions would be primarily greenfield solutions expanding the urban area where appropriate. For this purpose, it is critical that an inventory of land available and suitable for brownfield and greenfield development be conducted as one of the first steps to reconstruction. Given the scarcity of land suitable for development in the NCR and Region IV-A, in-city relocation will require significant use of medium-rise housing as the predominant housing solution. Outside these two regions, the horizontal housing solution will predominate. In NCR and IV-A it is expected that 60 percent of the reconstruction housing solutions for the informal sector will be core medium-rise condominium buildings. These midrise condominiums are expected to be built following the general principles that have made programs like Habitat for Humanity successful. For regions other than NCR and IV-A, the horizontal solution is expected to be applied to replace approximately 30 percent of the affected houses. Depending on the ability and willingness to pay of the affected households, the balance of the medium-rise building (10 percent) could be produced through commercial practices with finished interiors. Table 28: Proposed Housing Solutions for the Reconstruction (in Php) Land Type Housing Type Unit Cost NCR and IV A Other Regions Brownfield Finished Mid Rise 600,000 10% 10% Brownfield Core Mid Rise 330,000 60% 30% Greenfield Core Low Density 220,000 20% 40% Greenfield Serviced Lot 100,000 10% 20% Housing Design. The physical design should be conceived in a participatory manner to ensure input from beneficiaries. For example, in Taguig City the 26 sqm footprint of low-income, medium-rise housing features sufficiently high ceilings to have expandable loft space. These units need to have windows on two opposite sides to have cross ventilation. Self built horizontal housing design can also consider this feature. Site and services self built housing will leave freedom to the households among different designs. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 45 Site Development Standards. Current site development standards and practice are resulting in cluttered urban spaces that do not provide adequate access for emergency vehicles and enough public spaces to enable recreation – especially for children and the elderly. It is proposed that new housing address this deficiency and include amenities necessary for physical and mental health. Best practices from the Philippines or other countries can be considered but should be adapted to local conditions. Whichever the housing solution selected, it will need to fit into an overall community development initiative that should ensure households are integrated into their new environment as members of a neighborhood and a community. A key aspect of this integration will be a practical induction didactic program which will enable members of the household to bond with their new community, as well as begin to organize themselves in the case of the vertical housing solutions as condominium organization. Periodic monitoring and technical assistance to the associations will be provided. Overall Financing Needs and Implementation Strategy Financing Recovery and Reconstruction. The reconstruction would have six major financing sources: (i) national government contributions, including capital subsidies as well as in the form of public land; (ii) local government equity through land and other contributions; (iii) beneficiary equity as monthly or weekly payment by the households and their “sweat-equity;� (iv) direct private sector investments; (v) donations and subsidies from NGOs; (vi) loans and grants from international donors; (vii) cross subsidies from the retail income derived from the proposed commercial development schemes; (viii) loans and grants from international donors. Household Contribution. It is estimated that households renting houses in the Metro Manila slums are paying Php 500-2,000 on a monthly basis. This willingness and ability to pay of the households should be recognized and incorporated in to a sustainable financing strategy. The ability to pay could be designed to include overseas remittances in addition to wages. Those could strategically be used to improve the borrowing capacity of a significant number of households. It is also essential to keep in mind that, while repayment to government entities has had very limited success repayments for housing involving Habitat for Humanity and other NGOs have performed well. Therefore the effectiveness of the repayment of mortgages is probably affected more by institutional design rather than necessarily by ability to pay. Targeted Housing Subsidies. Targeted housing subsidies should be provided to ensure reconstruction takes place and is financially viable. It is estimated that housing subsidies would vary between 30-60 percent of the value of the housing. Housing subsidies may come from diverse sources including the national and local governments as well as charitable organizations and NGOs. The minimum proposed housing subsidy could be equivalent to the per-household investment currently being allocated by NHA. The targeted subsidies should be in the form of capital subsidies, not interest rate subsidies, to minimize distortions in the housing finance market and so as not to crowd out the participation of public and private financial institutions. Retail business rents. To the extent possible the midrise housing will be mixed use and will encourage commercial and light industry to be based in the ground floor units facing open access streets. Average rental costs for a 27 sqm area range from Php 4,000–8,000 per month. The rents are expected to finance part of the total building cost depending on location and feasibility of the use of commercial space. It is also possible that the tenants of the building will choose to collectively rent commercial space to establish their retail and service establishments. 46 PHILIPPINES TYPHOONS ONDOY AND PEPENG Private Sector Investment. Under some circumstances, it may be possible for development of housing to take place through viable public-private partnerships (PPPs) as well as other direct investments38. This would enable win-win arrangements where the poor can relocate while enabling the private sector to develop land owned by the national or local government, thus covering the costs of significant improvement to the housing and livelihood of the poor. Loans and grants from international donors. There are existing donor-funded programs for pro-poor and low-income housing in the Philippines that can be tapped to supplement local resources for the reconstruction program. In addition, it is possible to develop new programs to address the specific reconstruction needs. It is evident that the economic damage and losses cannot be included directly into an implementable needs analysis. It is therefore necessary to define a financial plan which focuses on: (i) technical assistance; (ii) capacity building; (iii) housing repair/risk reduction; (iv) shelter and transitional housing; (v) housing reconstruction; and (vi) housing for families living in area of influence of water hazards. The total financing needs are Php 75.7 billion for the PDNA period (and Php 17.0 billion for an additional two years, for a total of Php 92.8 billion); the breakdown is presented in Table 22. Technical assistance is required to enable the government to develop and implement a housing reconstruction strategy in the context of a functional slum upgrading and housing policy. This will require establishing the knowledge and information to scale up low-income housing programs. Parallel to the technical assistance it is necessary to ensure capacity is established within the national and local governments, as well as specialized agencies and NGOs to design and manage urban upgrading programs of the magnitude required for reconstruction. Housing repair and risk reduction measures are important and need to be undertaken to ensure safe housing. While it is difficult to envision viable implantation of such a program the needs assessment recognizes the financial requirement to make it possible. An area which requires more work by all stakeholders is the recognition of a viable program of temporary/transitional housing. The large numbers of families who lost their houses are being absorbed into the already crowded housing stock. The needs assessment includes resources for a modest program to enable families to avoid unsafe housing conditions through transitional housing. The transitional housing program would allocate Php 40 per person per day until a permanent housing solution is provided. It is estimated that one-third of the displaced families would be placed in permanent housing every year, enabling the transitional housing program to conclude in three years. The families living in water hazard areas would not go through transitional housing and are expected to be provided permanent housing within five years. Republic Act (RA) 7279 or the Urban Development and Housing Act (UDHA) exempts the private sector from paying taxes 38 on socialized housing projects. This is to encourage the private sector to participate in developing socialized housing sites by making it a viable project for the private sector. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 47 Recovery Framework: Housing Outcomes Baseline Priority Activities to Priority Activities to December 2010 December 2012 Establish a post As outlined in sector Design information system to enable Transitional housing system disaster shelter and report. tracking of post disaster displaced be in place and begin to transitional housing families; provide support to existing contract as families are able program shelter initiatives to enable them to to be placed in permanent handover to a transitional housing housing units. program; institute and initiate a program of transitional housing Financing needs: Php 1.8 billion Main output is a transitional housing system, in cooperation with international agencies Financing needs: Php 4.2 billion Undertake Post As outlined in sector One hundred percent of land plots Eighty five percent of Ondoy and report. required for resettlement In Metro new housing solutions in Pepeng housing Manila and outside Metro Manila affected Municipalities reconstruction identified and surveyed; Risk Sensitive completed and occupied; 90 initiative Land use plan with implementation percent of damaged houses guidelines prepared; Resettlement reconstructed and repaired. plan presented and agreed; 25 percent of land area required with Financing needs: legal agreement to proceed with Php 42.2 billion clearing and construction; New pilot midrise housing solutions completed in at least 5 Metro Manila affected LGUs; Traditional new horizontal response completed in at least 10 LGUs outside Metro Manila; repairs to 30 percent of damaged houses in Metro Manila and 40 percent outside Metro Manila; Land Plots for Relocation identified and attaining legal clearance to proceed; National Slum Upgrading Strategy completed; Survey of informal settlements entered into live data base completed. Financing needs: Php 14.1 billion Establish a housing As outlined in sector Design and establish a national Implementation of program repair risk reduction report. program of post disaster repair and including awareness program risk reduction. campaign Financing needs: Php 5.7 billion Financing needs: Php 1.4 billion 48 PHILIPPINES TYPHOONS ONDOY AND PEPENG Outcomes Baseline Priority Activities to Priority Activities to December 2010 December 2012 Program on As outlined in sector Survey of informal settlements Resettlement plan presented sustainable housing report. entered into live data base and reach consensus – 60% for families living in completed. of land plots required for water hazard areas resettlement for houses in Resettlement plan presented and danger areas reach consensus – 35% of land plots required for resettlement for houses Construction of Housing in danger areas solution for at least 15,000 additional families Construction of Housing solution for at least 5000 families Financing needs: Php 4.5 billion Financing needs: Php 1.1 billion Establish the As outlined in sector Design/adaptation and delivery of Design/adaptation and capacity to design report. courses in urban management, land delivery of courses in urban and implement use planning, slum upgrading, etc. management, land use large scale urban planning, slum upgrading, reconstruction and Financing needs: Php 200 million etc. upgrading programs Financing needs: Php 200 million Establish the As outlined in sector Preparation and delivery of TA to Final preparation and knowledge, report. produce and establish: housing implementation of polices information and reconstruction sector strategy; and completion of systems: policy framework national slum upgrading strategy; housing reconstruction for successful urban transport corridor and informal sector strategy; national upgrading settlements study; informal slum upgrading strategy; settlement geographic information transport corridor and system; housing sector PDNA informal settlements preparation system; climate change study; informal settlement adaptation program for urban geographic information areas; inventory of land suitable for system; housing sector PDNA relocation; national data base on preparation system; climate slums; national program to produce change adaptation program CLUP at municipal level for urban areas; inventory of land suitable for relocation; Financing needs: Php 130.7 million national data base on slums; national program to produce CLUP at municipal level Financing needs: Php 196 million Total financing Php 25.4 billion Php 50.3 billion needs P O S T- D I S A S T E R N E E D S A S S E S S M E N T 49 Education Sector Summary Mark Diamante Over a million schoolchildren and 21,000 day care workers and teachers have been affected or displaced by typhoons Ondoy and Pepeng. A total of 3,417 schools, 36 colleges and universities, and about 2,800 day care centers were affected or damaged. The affected or displaced children suffered either (i) disruptions in their schooling, (especially those who were moved to evacuation centers or whose schools were transformed into evacuation centers); or (ii) were relocated and, along with children in their host schools, were made to go through multiple shifts thus cutting down their time on task for learning. Many of the school children and teachers lost their school supplies and textbooks. Children aged between 3 to 5 years of age were also affected. Their key duty bearers, the local government units and local social workers were absorbed in responding to affected families and to urgent relief operations. Efforts should be made to restore education for the affected/displaced children because it is both life-saving and life-sustaining and gives the children a sense of normalcy, stability and structure. Total damages and losses in the education sector are estimated at Php 2.7 billion. Total damage is valued at Php 2.5 billion and includes the following assets: (i) school buildings and furniture; (ii) computer and equipment, and (iii) educational materials. The public sector share of the overall damage is approximately ten times higher than the private share. Estimated losses totaled Php 230 million and include the following costs: (i) demolition and rubble removal and (ii) repairing the schools that were used as temporary shelters after Ondoy and Pepeng. The proportion of public to private is four to one in the case of the losses. The total recovery and reconstruction needs are estimated at Php 3.5 billion, of which Php 417 million are required for recovery and Php 3.1 billion for reconstruction. Of the total Php 3.5 billion financing needs for both recovery and reconstruction, Php 2.8 billion will be sourced from the public sector and Php 695 million from the private sector. The policy agenda for this sector is to give top priority to the immediate repair and rehabilitation of damaged learning facilities. In addition, resilience should be built into repair and reconstruction activities in order to ensure continuity of education in disaster situations. In the long run, there is a need to strengthen the capacity of the partners of government to advocate for the integration of disaster-risk reduction as well as its integration in the regular education programs. Background The majority of the disaster-affected areas, such as NCR, Region IV-A, Region III, and Region V, are major educational centers in the Philippines with a high concentration of elementary, secondary, and higher educational institutions. Combined NCR, Region III, Region IV-A, and Region V account for 39 percent, 41 percent, and 48 percent of the total elementary, secondary and tertiary enrollment, respectively. Two main reasons explain the high enrolment rate in some of the disaster-affected areas such as Region I, Region III, Region IV-A, and Region IV-B: (i) the quality of education, reflected in above-average scores 50 PHILIPPINES TYPHOONS ONDOY AND PEPENG in national examinations for the elementary and secondary level; and (ii) unproblematic physical access to schools. These areas also receive over half of the total educational materials distributed to elementary school pupils. Forty six percent of elementary schools, 49 percent of secondary schools, and 61 percent of tertiary educational institutions are located in the disaster affected areas. Fifty two percent of total elementary teachers and 57 percent of total secondary teachers are assigned to these areas. The distribution of enrollment, schools and teachers in the affected areas disaggregated by level of education (elementary, secondary and tertiary) is presented in Table 29. Table 29: Percentage Share of Disaster-Affected Areas in National Statistics, by Type of Facility Level Enrollment Schools Teacher Elementary 53 47 52 Secondary 44 49 57 Tertiary 62 61 — The public sector plays a dominant role in the delivery of basic educational services while the private sector plays a central role in higher education (see Table 30). Table 30: Public-Private Distribution of Enrollment and Schools in Disaster-Affected Areas Enrollment Schools/ Institutions (percent) (percent) Level Public Private Public Private Elementary 92 8 89 11 Secondary 80 20 60 40 Tertiary 34 66 38 62 Immediate and Ongoing Recovery Efforts After Ondoy and Pepeng, the Department of Education (DepEd) identified the location of damaged schools; assessed the status of the facilities; started to plan for the relocation of schools situated in disaster-prone areas; and initiated to implement quality improvements to damaged schools that cannot be relocated. Priority was also given to minimizing the length of school interruption and to implementing alternative learning modalities for children. Although DepEd started to distribute 467,676 spare books, more than 11 million textbooks were damaged or lost. Difficulties were also experienced in replacing damaged furniture, equipment and computers. Government agencies, international donor, charitable organizations, and NGOs immediately responded by providing educational packages to affected day care centers; school supplies to primary and secondary school-aged children, teachers’ packs, library books, and recreational materials and by financing the cleanup of flooded facilities. Private businesses also donated food, water, books, blankets and some construction materials to disaster-affected schools. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 51 Damage and Losses Assessment Ondoy and Pepeng cumulatively affected a total of 3,417 elementary and secondary schools; 36 colleges and universities, over 2,800 day care centers, 884,626 school children and 21,000 day care workers and teachers. Most of the schools were partially damaged, with damages affecting mostly classrooms. Other types of damages include: (i) books and other instructional materials; (ii) school supplies of children and teachers; (iv) equipment and computers; (v) clogged restrooms; (vi) damaged roofs, ceilings, and gutters; (vii) broken glasses, collapsed building foundations, and damaged furniture. Total estimated damage and losses totaled Php 2.7 billion of which the overall damage is valued at Php 2.5 billion. Damage and losses pertaining to the public sector are estimated at Php 2.2 billion. The remaining Php 600 million represents the total damage and loss incurred by the private sector. Since the bulk of the damaged facilities are elementary and secondary schools, the central government’s share of the total damage is almost equal to the whole amount. The cost of damaged schools is Php 1.3 billion; furniture accounts for Php 56 million; equipment for Php 59 million, textbooks for Php 739 million; and computers for Php 53 million. The estimated losses totaled Php 230 million, of which Php 180 million pertains to the public sector, and the remaining Php 50 million to the private sector. As in the case of damage estimate, the loss is fully borne by the central government. The local governments’ share is negligible. (Tables 31 and 32). Table 31: Summary of Damage and Losses in the Education Sector (in Php million) School Type Damage Losses Public Private Total Public Private Total Elementary 1,620.9 200.3 1,821.2 147.7 18.3 166.0 Secondary 228.0 152.0 380.0 20.8 13.8 34.6 Tertiary 120.8 193.7 314.5 11.1 17.9 29.0 Total 1,969.7 546.0 2,515.7 179.6 49.9 229.5 Table 32: Summary of Damage and Losses Estimates in the Education Sector, by Region (in Php million) Region Damage Losses Total CAR 268.9 104.0 372.9 Ilocos 673.9 14.0 688.0 Cagayan Valley 211.7 46.0 257.7 Region III 374.9 57.8 432.7 NCR 423.2 1.0 424.1 Region IV-A 446.3 5.1 451.4 Region IV-B 4.2 0.4 4.6 Bicol 112.6 1.2 113.7 Total 2,515.7 229.5 2,745.2 52 PHILIPPINES TYPHOONS ONDOY AND PEPENG The estimated losses experienced in the education sector are mainly attributed to the cost of demolition and rubble removal as well as repairing the schools used as temporary shelters. On the other hand, the cost of recruiting and training substitute or temporary teachers, the cost of cleaning flooded school facilities, and the cost of renting temporary school facilities are negligible. The cleaning tasks were assumed by administrators, teachers, parents, and community volunteers. Priority Recovery and Reconstruction Needs Total recovery cost is estimated at Php 417 million and total reconstruction cost at Php 3.1 billion. Thus, the total recovery and reconstruction cost are estimated at Php 3.5 billion. The bulk of it, Php 2.8 billion, is for recovery and reconstruction of elementary education. Table 33: Summary of Needs in the Education Sector (in Php million) Recovery Reconstruction Total School Type Short- Medium- Short- Medium- Short- Medium- Term Term Term Term Term Term Elementary 319.1 0.27 971.2 1472.2 1,290.3 1,472.5 Secondary 66.7 0.06 202.5 307.2 269.2 307.3 Tertiary 31 0.01 42.7 64.3 73.7 64.3 Total 416.8 0.34 1216.4 1843.7 1,633.2 1,844.1 There is an immediate need to repair and rehabilitate damaged learning facilities. The main activities should focus on: (i) immediate cleaning, repair, and rehabilitation of damaged schools, early child care development (ECCD) centers, and college and university facilities; (ii) replacement of damaged instructional materials, equipment and lost school supplies; (iii) repair and rehabilitation of damaged water and sanitation facilities; (iv) review of construction standards and development of relocation guidelines; and (v) assessment of pre-schools, elementary and high schools in high risk areas; and (vi) planning for long-term solutions, including relocation. These activities may continue into the medium-term. Resilience should be built into recovery and reconstruction activities in order to ensure continuity of education in disaster situation. To achieve this outcome, short-term activities estimated at Php 297 million should entail: (i) creation of alternative/temporary learning spaces for affected/displaced children; (ii) provision of alternative delivery modes or alternative learning systems; and (iii) provision of ECCD packages. Psychosocial and health services for children and teachers should be integrated in the educational response through the provision of psychosocial care and counseling and the training of school officials; these activities are estimated at Php 17 million. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 53 A safe and secure learning environment should be put into place to promote the protection and well- being of students. In the short run priority should be given to: (i) engaging students in emergency and transition educational activities that promote disaster preparedness, risk reduction, health and hygiene protection; and (ii) delivering disaster preparedness training for college students and school officials. The estimated cost is Php 49.8 million. In the medium term, the training of teachers and day care workers on disaster risk reduction and minimum standards for education in emergency should be pursued with a focus on day care centers and schools located in disaster-prone areas. Table 34: Ownership Structure: Education Sector (in Php million) Recovery Reconstruction School Type Public Private Public Private Elementary 262.2 65.6 1954.7 488.7 Secondary 54.7 13.7 407.8 101.9 Tertiary 16.7 4.2 85.6 21.4 Total 333.7 83.5 2448.1 612.0 Total damage is heavily accounted for by public assets, most particularly public elementary and high school buildings. Total losses likewise follow the same pattern. Region I accounts for a relatively higher proportion of total damage, while the CAR accounts for a relatively high proportion of total losses. The public proportion of reconstruction financing needs is four times higher than private financing needs. The recovery financing needs will be heavily sourced from the private sector. Implementation Arrangements Within the current institutional framework the DepEd takes responsibility for cleaning, repair, rehabilitating and relocating elementary and high schools. The Commission on Higher Education (CHED) plays an important role in coordinating similar efforts affecting higher educational institutions. Donor agencies, the private sector, and NGOs can support the government, through DepEd, in: (i) providing continuous education during and post-disaster situations; (ii) extending psychosocial and health services to children and teachers; (iii) providing a safe and secure learning environment that promotes the protection and well-being of students; and iv) providing technical assistance in enhancing capacity of government partners on disaster preparedness and disaster risk reduction. 54 PHILIPPINES TYPHOONS ONDOY AND PEPENG Recovery Framework - Education Priority Activities to Outcomes Baseline Priority Activities to December 2010 December 2012 Reconstruction: Total damage and Priority Activities Priority activities Repair and losses of typhoons • Immediate cleaning, repair, and continuing rehabilitation “Ondoy� and rehabilitation of damaged schools, Financing needs: Php of damaged “Pepeng� are valued colleges, universities, and ECCD facilities. 1.8 billion learning at Php 2.7 billion. • Replacement of instructional materials, facilities, The Department of damaged computers and other materials and Education reports equipment. equipment. that 3,417 schools • Repair and rehabilitation of damaged were damaged water and sanitation facilities. (2,914 elementary • Review of construction standards and and 503 high schools) development of relocation guidelines which includes the Assessment of pre-, elementary, and high loss of instructional schools in high risk areas and suggest materials, school long-term solutions, including relocation. equipment, and Outputs/ Indicators computers. Thirty • Construction standards manual six (36) colleges and • Relocation guidelines universities were also • Rehabilitation and repair of 2,950 adversely affected. schools, ECCD centers, colleges and Approximately 2,800 universities day care centers have • Instructional material and equipment also been affected or replaced damaged. • Rehabilitation and repair of at least 1,500 damaged water and sanitation facilities. Financing needs: Php 1.2 billion Recovery: Approximately 2,800 Priority Activities: Replacement day care centers, • Delivery of library materials for at least of damaged 140,322 preschool 40 percent of affected schools. learning and children, 2,914 • Provision of ECCD packages for at least instructional elementary and 503 40 percent of the day care centers. materials high school libraries Outputs/ Indicators: were affected. • Delivery of ECCD packages to 1,123 day care centers • Delivery of 100-Book Library to 2,914 elementary schools • Delivery of 100-Book Library to 503 high schools Financing needs: Php 53.3 million Continuity of Ninety eight (98) Priority Activities education even schools were being • Respond to the needs of c. 560,000 during disaster used as evacuation affected schoolchildren and over situation. centers. Over a 14,000 day care workers and million pre-schoolers teachers. and schoolchildren • Alternative/ temporary learning and 25,000 day care spaces established for affected/ workers and teachers displaced children have been displaced • Provision of alternative delivery by typhoons “Ondoy� modes/ alternative learning system and “Pepeng� and • Provision of ECCD and teachers’ subsequent flooding. packs. Outputs/ Indicators • Construction of at least 300 alternative/ temporary learning spaces. • Delivery of 75 ECCD packages and 225 100 Bk-library sets • Delivery of students’ packs to c. 430,000 elementary and high school pupils. • Delivery of 13,200 teachers’ packs. • Provision of alternative delivery mode modules to at least 5 percent of affected elementary and high school children. Financing needs: Php 297 million P O S T- D I S A S T E R N E E D S A S S E S S M E N T 55 Priority Activities to Outcomes Baseline Priority Activities to December 2010 December 2012 Psychosocial Continuing education Priority Activities and health during disaster • Provision of psychological care to services for situation is a priority targeted students. children and for this sector. The Outputs/ Indicators teachers training of 28,906 • Delivery of psychosocial care to integrated in affected teachers at least 40 percent of targeted the educational and day care workers students response. in psychosocial care • Training of c. 3,400 day care and counseling is a workers and teachers on basic priority concern. psychosocial care. Financing Needs: Php 17.1 million Safe and Clean, safe, and Priority Activities • Training of secure learning secure learning • Engage students, administrators, about 5,000 environment environment is teachers, and parents in emergency trainers for that promotes highlighted by the education and transition teachers the protection destruction of water educational and day care and well-being and sanitation • Disaster preparedness training for workers on of learners facilities in schools colleges and universities, PTAs, and disaster and and learning centers. NGOs. disaster risk Main Outputs/ Measurable Indicators reduction • Training of c. 3,400 teachers/ and minimum day care workers on transitional standards for educational activities, disaster risk education in reduction and minimum standards emergency on education in emergencies . Financing Needs: • Training of 64,000 college students Php 0.3 billion on disaster preparedness. Financing needs: Php 50 million TOTAL Php 1.6 billion Php 1.8 billion 56 PHILIPPINES TYPHOONS ONDOY AND PEPENG Cultural Heritage p The tropical storm Ondoy and ty hoon Pepeng affected a number of cultural heritage assets, such as theatres, museums, historical churches, shrines, archaeological sites, cultural landscapes, and historic landmarks. The potential of cultural heritage assets as both elements and tools for local o s socio-economic devel pment has been widely demon trated. Their role in reducing poverty and m supporting economic growth of local communities has been integrated in the develop ent agenda. Assessing damage and losses to cultural heritage assets is a site-specific exercise. Their variety requires site-by-site assessments and a unit cost approach cannot be easily applied. Therefore, to estimate their damage, losses, and needs, the PDNA team did substantial efforts to establish a close collaboration with the gov rnment agencies since the very early stages of the process.39 More than e ti 100 sites were considered, and damage was reported from 45 of them (Table 35). The estima on of losses took into account the income loss from tickets and donations (religious sites earn most of their funds through donations gathered during weddings, which are likely to drop for at least one year). The impact on the external sector was assessed through projected increase in imports for restoration works needed, whereas the projected impact on the fiscal budget featured reduction in fiscal flow due to the unavailability of these assets until their complete restoration. Table 35: Damage, Losses, Impact on the External Sector and Fiscal Budget for Cultural Heritage Damage Losses Total External Fiscal Region Public Private Public Private Public Private Sector Budget Total 279,810,912 - 25,567,260 - 305,378,172 - 4,582,095 3,950,985 I 33,381,442 - 3,050,174 - 36,431,616 - 546,644 471,353 CAR 8,394,327 - 767,018 - 9,161,345 - 137,463 118,530 II 19,586,764 - 1,789,708 - 21,376,472 - 320,747 276,569 III 2,798,109 - 255,673 - 3,053,782 - 45,821 39,510 NCR 61,558,401 - 5,624,797 - 67,183,198 - 1,008,061 869,217 IV-A 153,896,002 - 14,061,993 - 167,957,995 - 2,520,152 2,173,042 V 55,962 - 5,113 - 61,076 - 916 790 XII 139,905 - 12,784 - 152,689 - 2,291 1,975 t Involved local authorities included the Pro ected Areas and Wildlife Bureau of the Department of Environment and 39 natural Resources, National Commission for Culture and the Arts, Philippines Chapter of the International Council on Monuments and Sites, Department of Tourism, Intramuros Administration, and local Universities. Ad hoc training was carried out; afterward, the various agencies collected data through their channels and peripheral offices. Initially the analysis focused on the assets of international significance inscribed on the UNESCO World Heritage List and its Tentative List, and after that it was expanded to comprise sites of national and local significance. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 57 The needs for recovery and reconstruction (Table 36) comprised the estimation of immediate needs (such as emergency rescue, temporary storage of artifacts in alternative locations, and temporary site roofing). It also included the needs to ensure a complete restoration of the assets affected by Ondoy and Pepeng, reduce their vulnerability through retrofitting measures and better preparedness (plans to move the artifacts to safer locations in case of flood warning). Given the current capacity of m the local govern ent, it is reasonable to estimate that complete reconstruction will require at least n three years, eco omic resources being available. Table 36: Needs for Recovery and Reconstruction for Cultural Heritage (Php) Recovery Reconstruction Total Region Short term Medium term Short term Medium term Short term Medium term Total 15,340,356 14,061,993 167,886,547 153,896,002 183,226,903 167,957,995 I 1,830,104 1,677,596 20,028,865 18,359,793 21,858,970 20,037,389 CAR 460,211 421,860 5,036,596 4,616,880 5,496,807 5,038,740 II 1,073,825 984,340 11,752,058 10,772,720 12,825,883 11,757,060 III 153,404 140,620 1,678,865 1,538,960 1,832,269 1,679,580 NCR 3,374,878 3,093,638 36,935,040 33,857,120 40,309,919 36,950,759 IV-A 8,437,196 7,734,096 92,337,601 84,642,801 100,774,797 92,376,897 V 3,068 2,812 33,577 30,779 36,645 33,592 XII 7,670 7,031 83,943 76,948 91,613 83,979 58 PHILIPPINES TYPHOONS ONDOY AND PEPENG Health Summary Vincent Kho Typhoons Ondoy and Pepeng had significant effects on the health of the population living in the most affected areas: Regions I, II, III, IV-A, CAR and NCR (Table 37). The immediate health-related concerns focused on: (i) the treatment of injuries caused by the storm; (ii) the provision of continuous basic health services; (iii) the prevention and treatment of disease outbreaks; and (iv) management of short and longer-term psychological effects among the affected populations. An equally critical priority is restoring the health system that was damaged to be able to continue the provision of health services. Table 37: Number and Type of The estimated total damage and loss wrought by the Ownership of Health Facilities in storms amounts to at least Php 5.8 billion, of which the the Affected Areas public and private sector shares total Php 2.15 billion and Php 3.66 billion, respectively. Within the public Region Government Private I 40 78 sector, damages to national government owned facilities II 39 53 amounted at Php 1.16 billion; while Php 0.54 billion are III 61 152 related to local government-owned health facilities. The IV-A 67 206 CAR 37 20 NCR, followed by the Region I accounted for most of NCR 53 189 the damage to both types of public facilities. Losses are Total 297 698 estimated to be Php 860 million for both the private and Source: Bureau of Health Facilities Services, Philippine public sectors. (Table 38) Department of Health. List of Licensed Government and Private Hospitals and Other Health Facilities as of December 31, 2007. Table 38: Damage and Losses in the Health Sector, by Regional Distribution and by Type of Ownership (in Php million) Damage Loss Public Private Public Private National Local CHD I 359.10 180.19 1,021.36 - - CHD II 52.94 * 100.27 - - CHD III 3.03 37.04 75.89 - - CHD IV-A * 36.75 69.60 441.03 418.62 CAR * 27.32 51.74 - - NCR 751.84 265.03 1,925.85 - - Total 1,166.91 546.33 3,244.71 441.03 418.62 Source: Philippine Department of Health, Philippine Health Insurance Corporation, Local government unit reports * - No figures reported Restoration of the health system would start with the reconstruction of facilities that sustained the most damage and losses in terms of infrastructure and equipment. Facilities were prioritized according to their: (i) capacity to resume regular services; (ii) level and extent of service provided; and (iii) scale of services provided to the general population and catchment areas they serve. The P O S T- D I S A S T E R N E E D S A S S E S S M E N T 59 estimated financing needs for recovery and reconstruction of public sector facilities is estimated at Php 2 billion. Although private sector needs cannot be determined, precisely they have been estimated on the basis of public sector data at Php 3.17 million. The Government is encouraged to develop a policy to implement standard building codes, highlighting minimum criteria for both public and private health facilities located in hazard-prone geographical areas, as well as address crucial health requirements in existing disaster plans. Background The Philippine public healthcare system was highly centralized, with the Department of Health (DOH) having sole ownership and responsibility for all health facilities, personnel and programs in the country. In the early 1990s, the approval of the Local Government Code (LGC) of 1991 (or the Devolution Law) granted local government units (LGUs) administrative autonomy from the national or central government. While LGUs became independent implementers of all health programs, DOH retained its oversight of, and took primary responsibility for, priority health programs that had national impacts, such as the Expanded Program on Immunization (EPI), the Directly-Observed Treatment Short Course for Tuberculosis (TB-DOTS) and the prevention, treatment and control of other endemic diseases like Hansen’s Disease, Malaria, Schistosomiasis, Filariasis, etc. In so doing, DOH took the responsibility of providing for all the essential logistical and technical requirements to run these programs. In disaster-settings, the DOH is responsible for subsidizing emergency health programs which are related to the above-mentioned diseases and are heavy in logistics. The national government operates tertiary (medical centers) and specialty hospitals (heart, lung and kidney) throughout the country. Provinces usually own and operate tertiary and/or secondary level hospital facilities (i.e. provincial and district hospitals) while municipalities or cities operate their own health facilities (mostly community hospitals, and rural health units (RHUs)). Barangays are responsible for health stations (BHSs), although some of the larger cities also operate secondary or tertiary level hospitals. In the private sector, there are counterpart hospital and health facilities that are being run as private enterprises by corporations or individuals. Their revenue derives primarily from patient fees, directly or through insurance schemes such as PhilHealth. Immediate Response Health facilities were severely affected by the heavy rains and the subsequent flooding. Infrastructure became inaccessible due to submersion or isolation; equipment and medical supplies were damaged or rendered useless; and health services severely disrupted. Immediate relief operations concentrated on ensuring the safety of health personnel and patients in affected facilities and areas either through rescue, transfer to other facilities and/or the provision of essential supplies of food, water, clothing and medical supplies. Water testing was undertaken in strategic sites, including evacuation centers, while water disinfectant was distributed to the evacuees and tetanus toxoid injections were given to all those who suffered injuries. The relief effort also concentrated on ensuring that displaced people in and out of the evacuation centers were adequately treated for acute diseases caused directly or indirectly by the typhoons as well as to continue service to regular patients. Portable toilets were set up in the evacuation centers and water supply trucks were deployed to affected areas. The DOH sent out emergency and regular health teams that included medical, psychosocial, public health, nutrition and water, sanitation and hygiene staff to all affected areas and evacuation centers to attend to the needs of the evacuees. Volunteer doctors, nurses and aides were also deployed together with the health teams. Health promotion campaigns via TV, radio, newspapers, and the internet were scaled up and health education materials were distributed in the evacuation sites. 60 PHILIPPINES TYPHOONS ONDOY AND PEPENG Figure 4 shows the leading causes of morbidity reported in the affected areas during the post- disaster period as compared to the number of cases in the same areas during the same period last year. It is notable that there was an increase in the number of leptospirosis, typhoid and influenza cases. This increase is due to the congestion in the evacuation centers, in households and the loss of adequate shelter for the evacuees. Leptospirosis cases dramatically increased due to the prolonged flooding in some areas that forced people to regularly traverse through infected flood waters to resume their normal activities. Thus those with open wounds or breaks in their skin who waded in the flood waters became more susceptible to contracting the disease. Figure 4 Comparative Incidence of the Leading Causes of Morbidity in the Affected Areas During the Post-Disaster Period from August to October with the Same Period of the Previous Year. 85 ,4 11 12,000 9 12 5 9, 10,000 43 7, 8,000 2 92 6,000 4, 6 4,000 12 8 4 4 69 1, 8 2,000 28 13 14 0 0 a he a ue sis r id nz ar ho ro ng i e . D p pi flu De Ty os e W In pt ut Le Ac 2008 2009 Source: Reports coming from the different DOH Centers for Health Development in regions I, II, II, IV-A, CAR and NCR from the period September 27, 2009 to November 11, 2009. No data reported for influenza during the same period in 2008. Damage and Losses Damage Twenty percent of total health facilities in the affected areas suffered partial disruption or damage estimated at Php 5.8 billion with an approximate 60-40 split between the private and public sectors, respectively. Within the public sector, most of the damage and losses were in the nationally-owned health facilities, as DOH tertiary and specialty hospitals are mainly concentrated in highly urbanized areas such as Metro Manila which was highly affected by the disaster. Damage was mainly caused by rainwater and mud. Health facilities with basement floors suffered more damage since they were hosting diagnostic facilities, electrical closets, power generators, laundry facilities, and autoclaves. Most of the pharmacies that were located on the first floor were similarly affected. CAT scans, laboratory and radiologic equipment were also damaged or destroyed and transport vehicles like ambulances and service vehicles were submerged in the flood waters. Some hospitals and frontline health service units such as rural health units were able to continue operations despite the flooding. However, it took more than a week to clear the water level before resuming operations. The hardest hit facilities are still encountering difficulties in resuming normal service delivery. Losses Losses included costs incurred for: the direct provision of basic health services to affected populations, treatment of injuries, disease surveillance in the affected areas, public health information campaigns, environmental health measures, vector control, transport of patients, salary of staff assigned to the different health and emergency response teams, medical equipment and supplies, revenue losses, medium to long-term psychological care, and treatment of different diseases (i.e. acute respiratory illness, diarrhea, febrile illnesses, influenza-like illness, pneumonia P O S T- D I S A S T E R N E E D S A S S E S S M E N T 61 and leptospirosis). Direct costs were also incurred for clearing operations; to operate fire trucks and water tanker deployment for health facility cleaning, hauling of waste materials, draining and flushing of water and waste water systems. Medical records were either soaked or damaged in water or became irretrievable. Hospital admission and emergency room logbooks were either lost or soaked in water. Records for reimbursement of members’ claims from PhilHealth were also compromised in a number of the hospitals. Priority Recovery and Reconstruction Needs The total recovery and reconstruction needs in the health sector amount to Php 5.2 billion, the bulk of which (Php 4.2 billion) is for reconstruction related activities (see Table 39). Table 39: Recovery and Reconstruction Needs in the Health Sector Recovery Reconstruction 991.6 million 4.2 billion The health sector post-disaster recovery and reconstruction strategy is four-fold and entails: the resumption of normal service delivery; recovery from the negative health impacts; making the health sector better prepared for disasters, and; reconstruction of health facilities that were damaged and destroyed by the typhoons. Resumption of normal service delivery Recovery should focus on the need to provide short-term health interventions that would bring back and ensure continuous functioning of the health system to provide basic health services and prevent and manage the health consequences of disasters. Surveillance systems should be in place during and after the occurrence of disasters to closely monitor the health situation and prevent or provide timely information for the appropriate response to disease outbreaks. Public health information campaigns should be undertaken to timely communicate essential health-risks. Recovery from the negative health and nutrition impacts Disaster-related health impacts on the population should be minimized by providing continuous health services. Focus should shift from general emergency distributions to targeted services aligned with specific needs of different population groups. Particular attention should be given to provide reproductive health medicines and supplies for pregnant women, lactating mothers and newborns; supplementary feeding programs for children under five would also be necessary40. Unfavorable living condition in evacuation centers, especially poor hygiene, coupled with lack of dietary diversity will most likely lead to a higher incidence of disease. Special attention should be given to the chronically ill whose pre-existing conditions are further aggravated by the disasters: in particular the disabled and the elderly. The worst affected area in terms of vulnerability to health and nutrition is likely to be Laguna Region (Region IV-A) due to the high population densities. Reconstruction of health facilities Reconstruction would include the construction and repair of all damaged health facilities to bring them back to the level of functionality prior to the disasters. The Government has already developed criteria for prioritizing the health facilities for immediate reconstruction. The criteria are These programs play an important role in minimizing the risk of malnutrition and in doing so increase resilience to 40 disease. 62 PHILIPPINES TYPHOONS ONDOY AND PEPENG as follows: (i) ability of the health facility to resume normal operations after the disaster; (ii) level and extent of health services being provided to the public; and (iii) extent of catchment population and area being served. Thus, for hospitals, DOH has identified the following facilities for priority in the reconstruction phase: Amang Rodriguez Medical Center, Marikina City, Metro Manila; Region I Medical Center, Dagupan City, Pangasinan; Treatment and Rehabilitation Center, Taguig City, Metro Manila; Rogaciana Mercado District Hospital, Sta. Maria, Bulacan; Pasig City General Hospital, Pasig City, Metro Manila. The costs of infrastructure and equipment damaged by the typhoons in these hospitals were some of the highest in their areas and hospital category. The government was able to cost-out retrofitting expenses for nationally-owned health facilities. It was recognized that reconstruction should include replacement cost and those components in the design that would improve the facilities’ ability to withstand and endure similar disasters in the future. It would also be beneficial in the long run that all hospitals and medical facilities follow international safety standards. This would make hospitals and medical facilities more resilient not only in minimizing the effects of disasters but also in serving the health needs of the population within its vicinity. The total reconstruction need for the public sector is approximately Php 1.7 billion. It is estimated that health facilities already prioritized for reconstruction would comprise about 30 percent of all affected facilities and would entail an initial cost of approximately Php 513.97 million. The rest of the hospitals and rural health facilities must also be repaired to make them operational at a minimum level and to ensure the delivery of basic health services. As an example, in Marikina City alone, only two out of 16 health centers were operational after the disaster. There is likewise a need to set the criteria for prioritizing the reconstruction of health centers as they provide the frontline health services to the population. Approximately 20 percent of the rest of the health facilities would initially require assistance in the amount of Php 359.8 million. The short-term reconstruction need would require at least Php 873.8 million. The reconstruction needs for the private sector are more difficult to quantify since there is no readily available data to determine the extent of the damages incurred. Estimates indicate that approximately Php 1.65 billion would be needed initially to enable the hardest hit facilities to recover from the effects of the disaster. Priorities per facility would vary based on the owner’s ability to finance needs and as to the availability of external financing that would be able to provide adequate support and greater flexibility. Improving health systems for better disaster response There is an opportunity to improve the resiliency of facilities by increasing both physical structures as well as strengthening the health system to be able to cope with or mitigate the effects of future disasters. As seen in previous disasters, medical priorities have shifted from focusing on individual patients to whole populations. Existing capacities of the facilities were not prepared. Hospitals, in particular, need to have a plan and strategy to quickly free-up capacity and deliver health care in alternate care sites. In like manner, health personnel (e.g. primary care physicians and other frontline health workers) assigned to disaster-prone and/or high-risk areas must undergo emergency preparedness and response trainings and should be consulted in disaster preparedness planning efforts. It has also been proposed that the government construct facilities that can serve as warehouses where additional medical equipment and supplies are available to health facilities that may be affected by disasters. There would be a need to review what medicines, medical supplies and other items are needed in these facilities and in what quantities as preparation for any emergency. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 63 The longer term objectives of the recovery and reconstruction should focus on improving the capability of health providers, and the functionality of the health system. Both recovery and reconstruction in the health sector should have a holistic approach, which would include interventions to ensure adequate pharmaceuticals, blood and other supplies, improved health information systems, adequate staffing supply and capabilities, functional referral systems (among public & private facilities), quality of service of health facilities, health financing buffers of the families, as well as formal and informal engagements /collaborations with community groups and healthcare organizations. Health manpower should not only be increased but quality of services must be improved. Hospitals should constitute a network and be able to provide cross-support to each other in emergency situations. At this scope the government should facilitate the drafting of a cooperation agreement in which health facilities, LGUs and communities can collaborate and coordinate their efforts. Ideally in this framework for cooperation not only the costs to build the system should be included, but also the cost of developing procedures and guidelines necessary for disaster planning, mitigation, training and response. A stronger collaboration between the government and private sector in health monitoring and provision of services during times of disaster would minimize the morbidities and mortalities commonly associated with disasters. Improving the health of people would definitely make it easier for them to go back to their productive lives prior the disaster. Implementation Arrangements The national government would be able to utilize funds to address the needs of some of its health facilities but would need additional support to fund all its requirements. Development partners that have existing projects with the government may be able to quickly address part of those needs by re-aligning or reallocating existing project resources or through additional financing mechanisms. The DOH may be able to use some of these funds to assist LGUs in the form of performance grants. The LGUs may also benefit from the previously-mentioned measures within existing projects that they may be recipients of. However, for LGUs that are not part of existing projects, financial assistance through instruments to be offered by national financing institutions may be explored. The DOH would require technical assistance in the following areas: • use of a standard tool for damage and loss assessment and the procedures entailed in its implementation, • collaborate with the private sector in the use of the aforementioned tool and procedure, assessment of the health human resource implications of such disasters and how to plan for it, • costing and tracking of future disaster relief efforts both within and outside of the Department • possibility of harmonizing, integrating or creating an interface between the different existing • information systems within the Department including that with the LGUs and private sector, developing disaster preparedness, mitigation and response agreement with the private sector and LGUs. 64 PHILIPPINES TYPHOONS ONDOY AND PEPENG Recovery Framework: Health Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 100% of all public health The extent of damage Priority Activities – All other facilities facilities would have in infrastructure and would have been fully been reconstructed and equipment in the public – Reconstruction of reconstructed and refurnished sector amounts to Php 1.7 hospitals and medical refurnished. billion. facilities that have been considerably damaged: – Financing Needs: Php Php 514.972 million 840.08 million – All other facilities to undergo repairs: Php 359.78 million – Main proposed measures and technical assistance: development of a policy on “disaster resilience� in construction design; assessment on the possible harmonization of different existing information systems, including from LGUs; review of current disaster preparedness and development a disaster response plan. Outputs: – All previously identified health facilities for prioritization would have undergone repair and reconstruction that includes “disaster resiliency� and are able to provide 100% of their previous health services. – All policy and development capacity measures in place by the end of 2010. Financing Needs: Php 873.75 million for the reconstruction P O S T- D I S A S T E R N E E D S A S S E S S M E N T 65 Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 All private health facilities The extent of damage - Priority will be given - All other hospitals would would have access to soft in infrastructure and to hospitals and medical have access to easy credit. loans equipment in the public facilities which have a sector amounts to considerable amount of - Financing Needs: c/o local Php 3,244.71 million. damaged infrastructure and banking sector and/or other equipment, high number of IFIs services offered and large number of population being - All other facilities would served. Following the same have been fully reconstructed formula in the public sector, and refurnished. the initial need would be Php 1.65 billion. - Financing Needs: Php 840.1 million - Output: a facility is made available for privately- owned and operated health facilities to address their financing needs in the reconstruction phase TOTAL FINANCING NEEDS Php 873.75 million for the Php 840.08 million for the public sector public sector Php 1.65 billion for the Php 840.08 for the private private sector sector An estimated amount of Php 991.6 million is required for the immediate recovery phase before the end of 2009 over and above the previously mentioned figures. This would address the needs of most LGU- and privately-owned health facilities to bringing back services to what it was before the disaster but for which additional financing is more difficult to access. The cost estimate is 30% for public and 70% for private health facilities. 66 PHILIPPINES TYPHOONS ONDOY AND PEPENG Infrastructure Sectors Pete Templo “At five pm, I was watching TV when we got a text message from the dam managers telling us they were going to release water. I went to the dike to see the water level. I had never seen it so high. We went to the gas station along the highway. They offered us a small room to stay.�– Woman from Rosales, Pangasinan. Electricity Sector Summary In the electricity sector, the major damages and losses caused by tropical storm Ondoy were in the distribution networks of the Manila Electric Company (MERALCO) covering the NCR, and in Region IV-A. Damages caused by typhoon Pepeng on the other hand were most severe in Region I, followed by the CAR and Region II. Total damages and losses amounted to Php 1.6 billion, of which Php 713 million and Php 879 million were for damages and losses, respectively. By sub-sector, only the transmission and distribution networks experienced damages. The main causes of damage to the transmission lines were strong winds and soil erosion from floods. In the distribution utilities (DUs), damages were mainly caused by high winds, flooding, debris and fallen vegetation. Economic losses were mainly due to lost revenues from unserved electricity demands caused by the power outages. During and immediately after the typhoons, the main priority of the transmission company and the DUs was the timely restoration of power supply within the capabilities and safety requirements of their networks. The work ranged from full replacement of damaged infrastructure to the use of temporary or make-shift structures. Line-bypasses and re-routings were made to connect inaccessible customer locations. To date, power supply has been fully restored. Reconstruction works are ongoing with completion targets set for before the end of 2010. The risk of work slippages beyond 2010 and into the medium-term is minimal. Total financing needs for reconstruction amount to Php 713 million in the short-term. Since the sector has essentially recovered and there are no foreseen major obstacles to full reconstruction, the transmission company and DUs have adopted a “forward-looking� approach with respect to future typhoon preparedness. In 2008, the National Transmission Corporation (TRANSCO) recommended an overall tower-strengthening program, particularly in the country’s critical high-wind zone and a Terms of Reference (TOR) was developed for consulting services to provide TRANSCO with a comprehensive investment plan to ensure that the company was better prepared to deal with typhoons in the future. It is recommended that the TOR be discussed by TRANSCO with the new private concessionaire of the transmission system, the National Grid Corporation of the Philippines (NGCP), which is now responsible for upgrading the grid. A similar TOR should also be developed and implemented for the distribution networks, particularly the Electric Cooperatives (ECs). Background The power generation capacity in the Philippines totals 15,681 megawatts (MW). During 2008, total electricity generation reached 60,821 gigawatt-hours (GWh). The privatization of National Power Corporation (NPC)-owned plants and NPC Independent Power Plant/Producer (IPP) contracts continues. Of the total electricity generated, 22 percent were generated by NPC plants, including the off-grid power plants owned and operated by NPC’s Small Power Utilities Group (SPUG); 46 percent by the NPC IPPs; and 32 percent by IPPs that sell their power directly to distribution utilities (DUs) and directly-connected customers.41 The Luzon, Visayas and Mindanao grids are currently operated, managed, maintained and being upgraded under a 50-year concession contract with the NGCP. The grid comprises a total of 19,778 circuit kilometers (ckt-km) of transmission lines, 24,814 megavolt-amperes (MVA) of substation capacity, and 1,081 MVA-reactive (MVAR) capacitors and 1,175 reactors distributed throughout http://www.doe.gov.ph/EP/Powersituationer.htm. 41 68 PHILIPPINES TYPHOONS ONDOY AND PEPENG the country.42 Besides the large industrial electricity consumers that are connected directly to the national grid, electricity to end-users is supplied by 145 DUs. The DUs are comprised of 120 ECs, 17 Private Investor-owned Utilities (PIOUs) and 8 Local Government Unit-Owned Utilities (LGUOUs).43 Non-coincident peak demand in 2008 totalled 9,054 MW.44 The path of typhoons Ondoy and Pepeng affected most of the island of Luzon, specifically Regions I, II, IV-A, CAR and the NCR. The bulk of the power generation sources and load centers are located in Luzon which contains more than 70 percent of the country’s installed power generating capacity and maximum demand. It also houses almost 80 percent of the total substation capacity of the national grid. During and immediately after the typhoons, the affected power supply networks – NGCP, DUs and ECs – undertook emergency measures to ensure the safety of affected populations. Power supply was restored by a combination of permanent structures and temporary installations, including emergency restoration structures (ERS). To date, all power supply has been restored except in areas that continue to be flooded or have been permanently damaged by landslides. Efforts are ongoing to complete reconstruction of damaged facilities. Damage and Losses The total damage and losses caused by the two typhoons in the electricity sector are estimated to reach Php 1.6 billion (see Table 40).45 The region that was hardest hit includes NCR, comprised of Metro Manila and its surrounding provinces and is within the franchise area of the MERALCO. MERALCO’s damages and losses in distribution-related revenues total Php 615 million. The balance of damages and losses in NCR stem from tropical storm Ondoy damages to NGCP’s transmission assets that connect to the MERALCO grid, and lost power generation and transmission revenues in the MERALCO franchise area. Besides NCR, the next hardest hit area was the Ilocandia provinces (Region 1). In Region IV-A the effects were mostly in electricity outages at the power generation plants. Table 40: Damage and Losses in Electricity Sector, by Region (in Php million) Region Damage Losses Total I 114.9 143.1 258.0 II 28.2 98.8 127.0 IVa 26.9 218.6 245.5 CAR 68.1 65.8 134.0 NCR 475.0 352.2 827.2 Total 713.1 878.5 1,591.7 Overall, the distribution subsector accounted for more than half the total damage and losses in the electricity sector. This was followed by losses in the generation subsector (see Table 41). The damage and losses in each sub-sector are as follows. 42 2009 Transmission Development Plan, Consultation Draft, National Grid Corporation of the Philippines, Vol. 1, September 2009. 43 Distribution Development Plan 2008-2017, Electric Power Industry Management Bureau, Department of Energy, August 2009. 44 http://www.doe.gov.ph/EP/Powersituationer.htm. 45 Damages are the total or partially destroyed assets caused by the typhoons. Losses refer to the unrealized or reduced revenues from power supply interruption or reduced electricity demand caused by the typhoons. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 69 Table 41: Damage and Losses in Electricity, by Sub-sector (in Php million) Sub-sector Damage Losses Total Generation 480.6 480.6 Transmission 124.8 123.3 248.1 Distribution 588.3 274.7 863 Total 713.1 878.5 1,591.7 Generation Sub-Sector The generation sub-sector fared well during the typhoons in that there were no damages to the power plants. However, four generating plants – Ilijan, Sta. Rita, San Lorenzo and Casecnan – with a total capacity of 2,954 MW (one fourth the total installed capacity in Luzon), incurred losses of up to Php 199 million due to forced outages or plant shut-downs caused by low system demand. In the case of Casecnan, its loss of Php 56 million was caused, not by reduced electricity demand but by the emergency shutdowns ordered by the National Irrigation Administration (NIA) due to critical elevations reached at the Pantabangan dam.46 There were also other generating plants that did not have forced outages but incurred combined losses of up to Php 225 million due to a 60 GWh reduction in electricity demand (Table 42). Table 42: Generation Loss Unserved Energy Generation Loss (Gwh) (in Php million) Ilijan 21 68 Sta. Rita 25 102 San Lorenzo 7 28 Casecnan 7 56 Other generating 64 225 plants Total 125 481 Transmission Sub-Sector Unlike the generation sub-sector, NGCP reported that the national grid encountered damages in 42 transmission line structures and 26 substation equipment in the 230 kilovolt (kV) and 69 kV systems in La Union, Benguet, Mountain Province, Pangasinan, Batangas, Cavite, Laguna and Quezon. Transmission line damages varied. Some experienced no damage to the transmission asset itself, though soil erosion that exposes or weakens tower foundations poses threats to the integrity of these structures. Some transmission lines suffered partial structural damages while others were completely damaged and require replacement. Total damages to the national grid amount to Php 35 million. Due to these damages, 6 GWh of energy was lost during transmission interruptions. This has cost NGCP Php 8 million in lost revenues. When adding the reduced energy demands at lower voltages in the power distribution level, total revenue loss to NGCP amounts to Php 123 million. Source: Department of Energy, Electric Power Industry Management Bureau. 46 70 PHILIPPINES TYPHOONS ONDOY AND PEPENG Distribution Sub-Sector The DUs affected by typhoons Ondoy and Pepeng include two PIOUs, i.e., MERALCO and Dagupan Electric Corporation (DECORP), and 18 ECs, with a total non-coincident peak demand of 5,410 MW, equivalent to more than 80 percent of the peak demand of 6,674 MW in Luzon. Total damage in the sub-sector reached Php 588 million, of which 77 percent (Php 453 million) took place in the MERALCO franchise area. Fifteen of MERALCO’s 114 substations and 215 out of 683 distribution lines were affected by the typhoons. On the other hand, according to NEA, damages in the ECs total Php 131 million, broken down as follows: 60 percent from transformers; 33 percent from distribution circuits; and seven percent from metering equipment. Unserved energy demand from power outages totalled 114 GWh. As a result, DUs lost a combined total of Php 275 million in lost revenues from distribution, supply, metering and other DU related charges. Total damages and losses in the distribution sub-sector total Php 863 million (see Table 43). Table 43: Distribution Sub-Sector Damage and Losses Damage Unreserved Losses Damage & Losses (in Php million) Egy (GWh) (in Php million) (in Php million) PIOUs - - - - Meralco 455 66 160 615 Decorp 2 4 6 8 ECs 131 48 108 239 Total 588 118 275 863 Impacts on the External Sector and Fiscal Budget The damage and losses in the electricity sector will not have an effect on the fiscal budget. NGCP and the PIOUs are private companies that have the capacity to access funds from commercial sources. ECs on the other hand have accepted financing support from NEA at concessional or market rates. Nevertheless, the sector will have a sizeable foreign exchange requirement equivalent to 41 percent (Php 293 million) of its total reconstruction cost. High voltage towers, poles, transformers and meters are still mostly imported. It is expected that the reconstruction requirements would be funded as shown in Table 44. Table 44: Foreign Exchange Requirements (in Php million) Sub-sector Foreign Local Total Generation - - - Transmission 106 18 125 Distribution 186 402 588 Total 293 420 713 P O S T- D I S A S T E R N E E D S A S S E S S M E N T 71 Priority Recovery and Reconstruction Needs During and immediately after the typhoons, the focus of the sector was to restore power services as early as possible. The aim was to: (i) maintain customer service; (ii) adhere to performance standards set by the power companies themselves, in addition to their mandate and obligations by regulation of the Energy Regulatory Commission (ERC); and (iii) minimize lost revenues from unserved electricity demands. The overall objective in the sector, particularly in the transmission and distribution sub- sectors, is the restoration of interrupted power supply and reconstruction of damaged infrastructure caused by typhoons Ondoy and Pepeng. Generation Sub-sector Among the three sub-sectors, power generation was the first to recover, given that plant outages were caused not by technical damages or constraints, but rather by extraneous factors or external effects from the other sub-sectors. Sta. Rita and San Lorenzo are IPPs that are exclusively under bi- lateral power contract with MERALCO. Their plant shut-downs were due to the reduced electricity demand of MERALCO at the time. Ilijan, an IPP under contract with NPC, also shut-down its plant due to reduced electricity demand in the grid. In the case of Casecnan, its shut-down was by order of NEA due to critical elevations reached at Pantabangan. As a result, there were no more recovery needs in the generation sub-sector at the time of writing. There were no damages in the sub-sector and thus, there are no reconstruction needs either. Transmission Sub-Sector NGCP has fully recovered to-date. Rapid power restoration was made possible by a combination of using ERSs and by-pass lines, re-routing of transmission lines in inaccessible areas and reconstruction of permanent structures whenever possible. The average restoration work on a transmission line section that was damaged by the typhoons is slightly more than three days, i.e., 80 hours. At present, NGCP is completing Php 87 million worth of repairs and reconstruction work on the damages affected by Pepeng, and Php 10 million worth in areas affected by Ondoy. These works are equivalent to 78 percent of the total Php 125 million estimated damages in the transmission system. There are no more recovery needs in the transmission sub-sector. NGCP has its own performance standard to complete tower reconstruction within three months from the time of damage, thus all works are expected to be completed within 2010, unless there are unexpected delays caused by right-of-way problems. At present, there are no reconstruction needs foreseen from the damages of Ondoy and Pepeng over the medium-term, i.e., beyond 2010. Distribution Sub-Sector Power supply has been fully-restored in all DUs, except in customer areas and dwellings that continue to be flooded, and in uninhabitable areas caused by soil erosion and landslide. With regard to the ECs, their capacities for full recovery were enhanced by NEA’s emergency response program, named Operation Kapatid (Brotherhood), which encouraged unaffected ECs to deploy manpower and lend equipment, materials and supplies to the ECs affected by the typhoons. To date, full reconstruction work is still ongoing in the DUs. However, all work is expected to be completed by end-2010. In the past, there were slippages and delays in effecting full reconstruction of damaged infrastructure, especially in the ECs. In such cases, the common rationale was due to financial constraints. Today however, the risk of slippages is minimal due to the following: (i) ECs are accessing 72 PHILIPPINES TYPHOONS ONDOY AND PEPENG financial assistance from NEA in the form of concessional and non-concessional loans; (ii) ECs are aware that early completion of full reconstruction would make them more prepared for future typhoons; and (iii) there are regulatory pressures to control system losses, as applicable to all DUs including PIOUs. Almost half of the repair and reconstruction works in the affected ECs have been completed. There are currently no other recovery needs in the distribution sub-sector and it is expected that there will be no reconstruction needs from the damages wrought by Ondoy and Pepeng after 2010. Summary of Recovery and Reconstruction Needs All recovery and reconstruction needs of the three sub-sectors, i.e., generation, transmission and distribution, are expected to be met over the short term, by end-2010 (see Table 45). The total amounts to Php 713 million. Although there are possibilities of slippages in the reconstruction schedules of NGCP and the DUs, the risk that completion delays extend beyond 2010 is perceived to be minimal. Table 45: Recovery and Reconstruction Needs (in Php million) Needs Reconstruction Total (Private) Subsector Short-term Short-term Generation - - Transmission 124.8 124.8 Distribution 588.3 588.3 Total 713.1 713.1 Sector Strategy Since the sector has effectively recovered and there does not appear to be any major obstacles to full reconstruction, the sector, particularly the transmission and distribution sub-sectors, are already adopting a “forward-looking� approach in terms of possible enhancements and risk-mitigation measures for future typhoons. NGCP is currently looking into tower design improvements such as the use of tubular, rather than angular, supports, and the need to stock-up on spare towers and ERSs. Similarly at the EC level, NEA is looking into pole design improvements and the possibility of increasing spare part inventories of the ECs. Moving forward, the strategies in the transmission and distribution sub-sectors are to: (i) improve transmission and distribution network infrastructure in order to be more resilient to future typhoons, and to ensure the safety of localities; and (ii) enhance disaster management systems that will minimize power supply interruptions, in consideration of the welfare of the population. A study by the TRANSCO in 2007 established the increased incidence of super typhoons. TRANSCO has reviewed its design standards for wind resistance of its transmission towers and lines, compared to those in Japan and in other countries similarly prone to super-typhoons. The study found that many transmission lines built between 1960 and 1980 had much lower design standards, capable of withstanding wind speeds of only 165–180 km/hr – significantly below the wind speeds of the recent super-typhoons. Based on this review, TRANSCO adopted a standard of 270 km/hr in Zone I for the Bicol-Visayas corridor and 240 km/hr for other typhoon-prone areas. As a result of its study, TRANSCO recommended an overall tower-strengthening program, particularly in the country’s critical high-wind zones. The government agreed to the need for a strengthening P O S T- D I S A S T E R N E E D S A S S E S S M E N T 73 program and improved capability to respond to emergencies in the transmission system. A TOR was put together for consulting services to provide TRANSCO with a comprehensive investment plan to ensure that the company is better prepared to deal with typhoons. It is recommended that the TOR be proposed by TRANSCO for implementation by the new private concessionaire, NGCP, which is now responsible for upgrading the grid. Considering that the ECs experienced damages and losses of similar magnitude to NGCP, it is also recommended that a similar TOR for distribution utilities be developed by NEA/DOE. The scope of TOR could also include the smaller PIOU networks. The consultant’s work would eventually determine the investment and financing needs in the distribution sub-sector, and especially for the ECs. The TRANSCO TOR was earlier estimated to cost around US$ 500,000. There is no cost estimate yet for the DU TOR. Implementation Arrangements For the transmission sub-sector, it is proposed that TRANSCO pursue implementation of the TOR by NGCP. For the distribution sub-sector, it is proposed that NEA/DOE/ECs coordinate this undertaking. Recovery Framework: Electricity Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 Generation Sub-sector: o There were no damages o There are no further o None in this sub-sector. priority activities to Complete power be undertaken in restoration o Lost revenues totalled the generation sub- Php 481 million from sector. unserved electricity demand of 120 GWh due to reduced electricity demands and a hydro- dam emergency shut- down. Transmission Sub-sector: o Total damages in o Power supply has o The priority focus has Complete restoration of transmission system been fully restored. shifted to “preparedness� power supply, and repair caused by strong winds All repairs and for future typhoons. and reconstruction of and soil erosion from reconstruction damaged infrastructure floods reached Php 125 works are expected o The main output of million. to be completed by the study would be a year-end 2010. comprehensive investment o Lost revenues totalled plan to ensure that the Php 123 million from Financing needs: company is better prepared unserved electricity Php 125 million to deal with typhoons. caused by transmission line damages and reduced electricity demand of directly connected customers. Distribution Sub-sector: o Total damages in o Power supply has o The priority focus has Complete restoration of distribution systems been fully restored. shifted to “preparedness� power supply, and repair caused by strong All repairs and for future typhoons. and reconstruction of winds, debris and felled reconstruction damaged infrastructure vegetation, and flooding works are expected o The main output of reached Php 588 million. to be completed by the study would be a year-end 2010. comprehensive investment o Lost revenues totaled plan to ensure that the Php 275 million from Financing needs: DUs, especially the ECs, unserved electricity Php 588 million are better prepared to deal caused by distribution with typhoons. line damages and disconnected customers. o Financing needs: TBD Total Php 713 million 74 PHILIPPINES TYPHOONS ONDOY AND PEPENG Water Supply and Sanitation Sector Summary Jonathan Cellona The water and sanitation sector was not spared the damage wrought by the recent typhoons. Total value of damage and losses in the sector is estimated at Php 1.14 billion, where damages alone amount to Php 372.5 million and losses to Php 768.6 million. Approximately 65 percent of the total damages were sustained by the public sector in 11 provinces, with 35 percent of total damages sustained by the private sector. Almost all private sector damages (99 percent) occurred in Metro Manila. In terms of losses, 67 percent was sustained by the private sector, all in the Metro Manila area. Taken as a whole, the region that suffered the most damage in water supply facilities was the NCR at 48 percent followed by CAR at 30 percent. The recovery and reconstruction needs of the sector would require total financing estimated at Php 161.5 million, where Php 24.4 million will be needed in the short-term and Php 137.1 million in the medium-term. Priority needs are categorized into the following key activities: (a) facility-related restoration and reconstruction works on damaged components of the system; (b) policy measures to facilitate immediate reconstruction such as flexible emergency financing support and streamlined project approval and procurement processes; (c) project preparatory activities and studies; and (d) capacity development on disaster management. Meanwhile, there is a need to formulate a policy on emergency financing, including an inventory of existing funds available for water supply, project approvals and procurement. There is also a need to establish an integrated sector framework by implementing Executive Orders (EO) 12347 and 27948, including the establishment of a common financing architecture that may be tapped by water service providers. Background Pre-Disaster Conditions Based on the WHO-UNICEF tracking of the millennium development goals (MDGs) for water and sanitation, there are varying estimates on the extent of water supply coverage nationwide. As of the 2006 population, drinking water coverage was 93 percent, up from 83 percent in 1990. Access to piped water systems in the affected areas is as follows: Region I – 25 percent, Region II – 19 percent, Region III – 43 percent, Region IV-A – 52 percent, CAR – 61 percent and NCR – 75 percent. The water supply providers within the areas affected by typhoons Ondoy and Pepeng include the public and private sectors. In terms of service connection, the most dominant providers outside Metro Manila are the water districts, followed by the two concessionaires of Metro Manila LGUs, and a few private providers. Executive Order 123 of 2002 Reconstituting the National Water Resources Board 47 Executive Order 279 of 2004 Instituting Reforms in the Financing Policies for the Water Supply and Sewerage Sector 48 and Water Service Providers and Providing for the Rationalization of LWUA’s Organizational Structure and Operations in Support Thereof P O S T- D I S A S T E R N E E D S A S S E S S M E N T 75 In terms of sanitation, the country is suffering from a severe state of water quality deterioration with only 35 percent of water bodies nationwide able to support life systems. Access to sanitation in the country was estimated by the WHO-UNICEF JMP at 78 percent in 2006, up from 58 percent in 1990 where only four to five percent were connected to sewerage systems. Except for the two concessionaires of Metro Manila, most water supply providers focus only on water supply services. LGUs are mandated to provide essential services such as water supply and sanitation services. About 97 percent of its investments are for water supply and only three percent for sanitation and wastewater treatment. Immediate as well as on-going relief and recovery efforts The affected water utilities reported partial damages. Although operations were not totally interrupted, immediate restoration activities were undertaken. Damaged pipelines were provided with temporary connections in order to restore water supply service immediately. Replacement parts and motors for booster pumps were immediately procured. Generator sets were cleaned and put back into operation. Most of the water utilities have incurred losses due to humanitarian activities, such as the provision of free water to evacuation areas, flushing and cleaning of major government facilities and offices, and delivery of water to interrupted areas through bulk water supply. With respect to wastewater facilities, cleaning of the facilities was undertaken after the flood water had subsided. Operations were restored once the facilities were cleaned since no considerable damage was incurred. Checking of the wastewater network was also done throughout the service area. Hauling of solid waste has increased due to the debris, garbage and silt that were brought about by the typhoon. Collection of garbage was also temporarily put on hold in many areas since flood water had not yet subsided. The private sector was also mobilized to speed up the cleaning campaign of solid waste. Damage and Losses Total Estimated Damage and Losses Total value of damage and losses in the water and sanitation sector is estimated at Php 1.1 billion. More than 50 water supply systems managed by the various water supply service providers (composed of water districts, private concessionaires, and LGU-managed systems) were damaged by the two typhoons. The total damages sustained by the water and sanitation sector amount to Php 372.5 million, while combined losses amount to Php 768.6 million. The NCR where Metro Manila is located sustained the heaviest damages and losses amounting to Php 939 million. This is followed by the CAR with total damage and losses of Php 88 million. Baguio City suffered damage to its sewerage system as well as its district’s intake structures, dams, transmission pipelines and the Santo Tomas impounding reservoir which had heavy siltation. Many rural water supply systems in the CAR were also affected by landslides and mudslides. The private sector, more specifically the two Metro Manila concessionaires, sustained substantial damage and losses from both water supply and sanitation operations. With regard to ownership, the public sector incurred more damage and losses (Php 322.5 million) than the private sector (Php 30 million) in sanitation and solid waste management (Figure 5). Urban areas experienced significantly more damage and losses in both the water supply and sanitation subsectors of Php 1.1 billion than rural areas with only Php 50.0 million. 76 PHILIPPINES TYPHOONS ONDOY AND PEPENG Figure 5. Damage and Losses to Water Supply and Sanitation, By Ownership (in Php million) Regarding water supply, damages to facilities include booster pump stations, transmission and distribution pipelines, sedimentation basins, electrical equipment, generator sets, flow meters, business area buildings and service vehicles that were submerged in flood waters. Some of these facilities could not be reactivated immediately, including booster pump stations the replacement or rewinding of which took time. In other areas, generator sets that were submerged in water could not be operated during power outage and this decreased the supply of water to its customers. Manila Water Company, Inc. (MWCI) reported the highest damages by a single water service provider, amounting to Php 78 million. Losses in general were incurred due to increased non-revenue water used to supply free water to evacuation areas and for cleaning activities. Losses also resulted from less volume of water sold to customers because of disruption of service while damaged equipment was being fixed and power supply was not yet fully restored. On sewerage, there were three wastewater systems that were damaged: two are in Metro Manila operated by MWCI and Maynilad Water Services Inc. (MWSI), and the other is the LGU-managed system of Baguio City. The Magallanes Sewage Treatment Plant (STP) located in Pasay City, Metro Manila stopped operations while it was submerged in flood waters. The Baguio City facility sustained damages on the wastewater network. Total damages for sewerage were estimated by the service providers at Php 33.4 million of which Php 3.6 million was incurred by public utilities and Php 29.8 million by private utilities. On solid waste management, damages on collection and disposal facilities were estimated at Php 135.2 million with Metro Manila LGUs incurring the most. Most of these damages were sustained by collection trucks and solid waste management equipment that were submerged under flood waters. Losses are estimated at Php 178.4 million which was incurred by the public utilities for higher transport cost. The highest damages and losses were also incurred in NCR. Impact on External Sector and Fiscal Budget The water supply sector uses imported goods that are available locally for its operations such as pumps, motors, generator sets, pipes and other spare parts. Demand for these goods and equipment has increased to replace and restore damaged facilities. Labor for repair and replacement of facilities has likewise increased providing employment, albeit short, to many workers. On the downside, P O S T- D I S A S T E R N E E D S A S S E S S M E N T 77 most of the facilities and structures are funded by internal cash generations of the service providers or loaned through public or government financing institutions including the Local Water Utilities Administration (LWUA). Delays in repayment and even restructuring of loans from Government Financing Institutions (GFIs) and the private sector may be expected. This will concomitantly have an impact on the fiscal position of the national government, especially since these loans carry an implicit national government guarantee. With damages in water facilities, downstream industries which utilize water as raw material or important component of their products may also have experienced a slowdown in their operations. Policy Measures to Implement Priority Recovery and Reconstruction Needs The importance of the water supply and sanitation sector is more pronounced in disaster prone countries, such as the Philippines, given its role in providing basic needs to affected areas. Service providers had to respond very quickly and bring back services to their beneficiaries and to avoid further losses. However, there are cases where recovery of utilities in past disasters has taken an inordinate amount of time. Such experiences reveal several factors contributing to obstacles to reconstruction and recovery within a short timeframe, including: (a) the lack of flexible emergency financing support; (b) lack of capacity to streamline procurement and auditing processes; and (c) lack of streamlined government approvals and bureaucracies. The challenge to immediately restore water and sanitation systems depends to a large degree on these factors, which would require policy reforms and guidelines for emergency work. Priority Recovery and Reconstruction Needs Short-term Needs There is a need to restore services in affected areas by reconnecting and providing affected people with potable water supply. The immediate restoration would minimize further losses to service providers resulting from a reduction of sales, a slowdown in operations, and an increase in non- revenue water. Immediately after the typhoons, most of the water supply service providers initiated restoration and temporary repairs on most of the damaged water supply and wastewater facilities. Partial restoration was undertaken in order to supply water to customers. As most of the damaged facilities of water supply systems are pumping stations, generators, and other motor-driven facilities, immediate repair or replacement as well as cleaning should be undertaken to put them back into operation. Pipelines damaged by landslides or mudslides need replacement/realignment and have to be properly secured (i.e., deeper soil cover, cement encasement, anchor blocks, etc.). For heavily damaged components such as dams and other intake structures, the service providers should start immediate planning and project preparation activities for their restoration, including feasibility studies and detailed engineering designs. Project preparation should also include the review and enhancement of existing standards to be resilient to disasters. Likewise, emergency response guidelines and requirements should be reviewed since water supply and sanitation has always been a basic infrastructure for relief. Medium-Term Needs In Metro Manila, temporary rationing was established in extremely damaged areas through water tankers or fire trucks. These were also used to transport bulk water in emergency and resettlement areas. However, the majority of service providers outside Metro Manila do not have water tankers that can be mobilized in times of calamity. In view of recurring disasters and to be able to reach unserved areas, water providers should at least have a water tanker for bulk water supply. 78 PHILIPPINES TYPHOONS ONDOY AND PEPENG There is a need to revisit various components of the water supply and sewerage system and based on the experience of water providers, options to mitigate and protect against recurrence should be planned and implemented. Among others, well pumping stations that were damaged may opt to replace vertical turbine pumps with a submersible type pump and motor. This may entail a simple design review or changes in specifications. The cost of changing the type of pump may be significant to some service providers and may take a longer time to implement. However, this would ensure that the pump and motor will never be damaged by any flooding. In cases where the submersible type of pump and motor is not applicable, due to the size of the well casing, it would be necessary to elevate the base of the pump and motor. This would entail revising the design of the pump base or the entire pumping station. The Magallanes STP needs to be rehabilitated and upgraded. MWCI has plans of expanding the capacity of the treatment plant but cannot implement it without interrupting the operations of the plant. With the damage incurred during the typhoon, it is now imperative for them to rehabilitate and expand the STP as well as upgrade its facilities. This would need a very detailed study on the how to upgrade the facilities and expand the capacity, considering the limited area of this STP. New technological advancement in wastewater treatment may be needed in the design. It may take a few months to undertake a study and detailed engineering and a few years for construction work. The proposed STP of MWCI in Marikina City, Metro Manila, will be located beside the Marikina River. The area was completely submerged in very high water during the typhoon. Although this project is still in the design stage, there is a need to adjust the design to take into consideration the unusually high level of water in the river. A change in location may not be possible since there are very few open areas in Marikina that are large enough to accommodate the size of the sewage treatment plant. In addition, this would entail additional cost in terms of project preparation and detailed design. Moreover, the sewerage network would need re-configuration if the location was altered. The implementation schedule might need to be revised, to take account of the changes in the design and its impact on other components of the project. At present, the proposed project should be designed such that facilities are protected from the high level of water from the Marikina River. This may entail the construction of a buffer wall or elevating the site by backfilling it to a level that will not be reached by flood waters. Such revisions will entail additional costs that were not part of the original budget. Another proposed project of MWCI is the STP in Taguig City, Metro Manila. The proposed location of the treatment plant is in the Bay Breeze subdivision. The site is in one of the low-lying areas in this city. Although the original plan considered elevating the plant site, there is a need to further elevate the treatment plant to make it more resilient to flooding. MWCI may need to revise the terms of reference for this project which will entail additional cost. Delay in the implementation schedule is also foreseen due to the additional work needed. Only one project is foreseen to require more time to rehabilitate. The Santo Tomas reservoir of Baguio City Water District needs to be thoroughly evaluated and studied since there are many factors to consider in its restoration program. First are the landslide/mudslides that caused heavy siltation of the reservoir. There is a need to study what measures can be undertaken to prevent the landslides from posing a danger to this facility, especially in the future when such heavy rains may again trigger landslides in the area. De-silting of the reservoir is a major task and not many construction companies have the equipment or skill to undertake it. Capital expenditures for this task may not be within the capacity of the water district if funding will solely be from internal cash generation. Additional funding may be sought from the LWUA, but would entail time in the processing of such loans. There would be a need to prepare a program of work which will be the basis for loan processing and approval by LWUA. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 79 In addition, there may be a need to evaluate the feasibility of repairing the damaged lining of the reservoir which causes seepage. There is also a need to determine the possible causes of why the polyethylene lining has ruptured. Appropriate solutions can then be implemented in the future. Financing Needs Since water supply and sanitation is a basic need, most of the recovery and reconstruction have started immediately after the typhoons. Most of the system damages have already been restored and the systems are back to their normal operation. Likewise, reconstruction planning and redesigning of major damaged components have already started. However, there are still remaining activities that the service providers have to implement, including the enactment of policies as well as the immediate purchase of goods needed to respond to disasters. The total cost to implement the short- and medium-term needs for recovery and reconstruction is estimated at Php 161.5 million, broken down as follows: Table 46. Financing Needs for Recovery and Reconstruction (in Php million) Recovery Reconstruction Total Sub-Sector Short- Term Medium-Term Short- Term Medium-Term Short- Term Medium - Term Water Supply 1.4 7.9 4.2 35.5 5.6 43.4 Sanitation 9.8 12.2 9.0 81.5 18.8 93.7 WSS Total 11.2 20.1 13.2 117.0 24.4 137.1 Private 10.1 18.1 11.9 105.3 22.0 123.4 Public 1.1 2.0 1.3 11.7 2.4 13.7 Note: Assumptions were based on the activities/programs to restore the systems, excluding immediate works that have already been implement- ed. Sanitation estimates include the reconstruction of the sewerage systems and solid waste collection and disposal facilities. Implementation Arrangements The immediate restoration activities including project preparation will be implemented by the responsible water service providers. Meanwhile, the national government should start working on the policies related to implementation of the reconstruction to avoid further losses of service providers. 80 PHILIPPINES TYPHOONS ONDOY AND PEPENG Recovery Framework: Water Supply and Sanitation Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 Water Supply • Damages to various Facility-related Facility-related • Restore potable, components of the • Cleaning and drying of • Desilting of impounding safe and reliable system which are facilities reservoir water supply mainly on dams, • Replacement of burnt • Repair of ruptured to consumers pumps and motors. out spare parts, damaged polyethelene liner in disaster • Higher revenue pumps and motors • Reconstruction of affected areas losses of water • Repair/replacement of damaged small and proposed service providers generator sets impounding dams resettlement due to decrease in • Repair and restoration of • Replacement of vertical areas sales, reduced water damaged pipelines turbine pumps with production and Policy submersible type of higher non-revenue • Policy measures to pumps and motors water facilitate immediate Policy reconstruction such • Establishing an as flexible emergency integrated sector financing support and framework by streamlined project implementing EO 123 approval and procurement and 279, including processes the establishment of Preparatory activities a common financing • Conduct of studies to architecture or review and update mechanism technical specifications Capacity development of water supply facilities • Provide trainings on to make them disaster water and sanitation resilient disaster response and • Php 5.6 million management • Php 43.4 million Sanitation Sewerage • Damages to • Detailed engineering • Retrofitting of wastewater study for the upgrade, Magallanes STP • Restore treatment plants rehabilitation and • Construction of operational were on motor- expansion of the proposed redesigned efficiency of driven components Magallanes STP STPs wastewater and were flood- • Redesign of proposed facilities and related such as other STPs in Metro enhance design of scouring, siltation, Manila existing program etc. for wastewater • Loss is almost nil treatment Solid Waste • Restore and • Damages and losses • Repair of fleet of • Improve collection increase solid are accounted for in collection vehicles and route, increase waste collection waste collection equipment collection efficiency efficiency • Losses in disposal • Plan to improve better • Php 93.7 million facility is nil solid waste collection and disposal • Php 18.8 million Total Estimated Php 24.4 million Php 137.1 million Financing Needs P O S T- D I S A S T E R N E E D S A S S E S S M E N T 81 Flood Control, Drainage and Dam Management Summary Nonie Reyes Typhoons Ondoy and Pepeng were extraordinary events that overwhelmed the flood management and drainage infrastructure in Metropolitan Manila, Central and Northern Luzon, respectively, as the probability of occurrence of the two typhoons exceeded the infrastructure’s design capacities. While the damage on flood management infrastructure within Metropolitan Manila was limited compared to the massive investments made, Ondoy exposed serious weaknesses in the overall flood management and drainage arrangements. Damage occurred on sections of overtopped flood walls, while the flood waters caused some damage to a number of hydraulic structures. The total damage to the flood management and drainage infrastructure in Metropolitan Manila is estimated at Php 238.0 million. Meanwhile, Pepeng caused destruction and damage to flood embankments in rural areas, especially along the Agno, Laoag, Cagayan, and Bucao Rivers. Although the floods generated by the typhoon exceeded the design level of the embankments, which was bound to lead to flooding, the typhoon also exposed the vulnerability of infrastructure resulting, in particular, from lack of maintenance. Many sections of embankments were breached and others were damaged to such an extent that future protection cannot be guaranteed. The total damage to flood embankments along the four rivers has been estimated at Php 479.0 million. The overall estimated damage caused by Ondoy and Pepeng is Php 716.9 million. Most of the damage occurred in Region I and the Metropolitan Manila, while the damage in Region IV-A was negligible. Direct losses were not estimated since these have been taken into account by other sectors. Several medium-term activities are proposed during the three-year time frame from 2010 to 2012. Priority activities to be undertaken in Metropolitan Manila include: (i) the implementation of an urgent program of rehabilitation and improvement of key flood management and drainage systems to return the infrastructure at least to full design conditions; (ii) the further development and implementation of a comprehensive monitoring and warning system, as well as a flood forecasting system; (iii) the development and implementation of appropriate institutional arrangements for the management of water within the overall catchment area, including the Marikina and Pasig Rivers, and Laguna Lake; and (iv) preparation of a comprehensive update of the 1990 master plan to prioritize future developments aimed at increasing the safety against flood events up to a level appropriate for Metropolitan Manila, including Laguna de Bay. The total estimated funding requirements for this medium-term program are Php 5.5 billion. For Central and Northern Luzon, a program of river bank strengthening is proposed, initially focusing on severely damaged sections that have to be reconstructed before the 2010 flood season starts. The total estimated project cost is Php 2.5 billion. The medium-term priorities need to be complemented by broader institutional and policy developments. Before proceeding with large capital investments, the update of the master plan with a clear development objective, an overall infrastructural and institutional development plan that is prioritized, and feasibility-level cost estimates. In addition, coordination among relevant institutional agencies should be enhanced until institutional arrangements for overall water management are strengthened, for example through a single water management agency. The time frame for a priority program of staged infrastructural improvements is estimated to be around 20 years and the cost is estimated at not less than Php 50-75 billion. 82 PHILIPPINES TYPHOONS ONDOY AND PEPENG Background Many areas in and around Metro Manila are designated as flood prone, with insufficient protection against frequent and long-lasting inundation. This especially includes areas around the Marikina River and some of its tributaries, and those adjacent to Laguna de Bay. Prompted by the widespread inundations of 1972, the government launched a major flood mitigation program, constructing several strategically located pumping stations, two floodgates, and four conveyance drainage channels during the 1970s. By 1980, construction of the Manggahan Floodway began, linking the Marikina River to Laguna de Bay to divert floodwaters of the Marikina River towards the lake and to use the lake as a temporary retarding basin in times of intense rainfall and river flows within the basin, and to protect the core area of Metro Manila from flooding of the Pasig River. The flow of water out of Laguna Lake has been regulated through one outlet only, the Napindan Channel, which has a capacity that is much lower than the Manggahan Floodway and is a serious constraint to the ability to control Laguna Lake water levels. In any case, there would be limits to the release of water from Laguna Lake through the Napindan Channel, as the Pasig River has a limited capacity and also has to convey water from the Marikina and San Juan Rivers. Since its completion in the late 1980s, the Manggahan Floodway has kept floods, except for short- duration ones, away from the western parts of Metro Manila, and as such has been successful. However, it has exacerbated the annual fluctuation of the water level of Laguna Lake, which now has close to three million people living along its fringes. Moreover, the flood design capacity in the Marikina River system is for a 30-year return period, which is much less than the flood intensity resulting from Ondoy. The existing infrastructure that is expected to protect Manila and populated areas around Laguna Lake is incomplete and has not been properly maintained—silt and uncollected solid waste clog rivers and drains further restrict the flow of water resulting in reduced capacity to protect people and infrastructure. As a result, the impact of the floods generated by Ondoy had severe consequences for people living near the Marikina River, those in other low lying areas with insufficient drainage capacity, and those living adjacent to Laguna Lake. Flood protection infrastructure in rural areas is expected to protect life and public and private properties in populated areas (villages and municipalities) along rivers and streams, as well as areas of economic value, such as irrigation schemes. Typical design parameters in the Philippines for rural flood protection embankments aim to contend with river flooding with a return period of 10 to 30 years, which is a relatively low level of protection given the high probability of flooding in many rural areas. Prior to Pepeng, sections of embankments had already become vulnerable in many places mostly due to disrepair. Damage and Losses Damage caused by Ondoy Ondoy was unusual in that the resulting flood volumes were statistically associated with a historical occurrence of once in 180 years, resulting in river flows and inundation of urban areas that were well above the existing drainage and river capacities. The rainfall resulted in flows in the Marikina River estimated at about 5,500 m3/sec, while the design flow capacity of the river is around 3,000 m3/sec, which corresponds to a flood with a return period of 30 years. During Ondoy, the flow rates exceeded the design flow for over four hours which resulted in excessive flooding of areas especially along the Marikina River (Figure 6). The flooding was worsened by the reduced carrying capacity of both higher- and lower-order drains and rivers due to lack of maintenance(i.e., insufficient dredging of silts and cleaning of solid waste), and encroachment of riverbanks, drains and floodways. The latter also P O S T- D I S A S T E R N E E D S A S S E S S M E N T 83 put people living along these structures at risk. In many areas the flooding receded within one or two days, but there are still areas that currently remain flooded, especially around Laguna de Bay. Figure 6: Peak Flood Discharge in Marikina River Hours starting 8:00 am, 26 Sept. 2009 Rainfall Intensity, mm/hour 3 6 9 12 15 18 21 0 10 20 30 40 Hourly rainfall (mm/hr) @ Science Garden, QC 50 60 Station, converted based on 448 mm in 12 hours 70 80 (used in prelim. SWATCH hydrologic model with 90 applied area reduction factor = 0.6.) 100 Max hourly rainfall abt 90 mm/hr at 1AM. 6000 Peak flood discharge computed 5,770 cu.m/s at 12NN Discharge, cubic meters/sec 5000 4000 3000 Level of 30-yr “design-basis flood� 2000 1000 0 0 3 6 9 12 15 18 21 Hours starting 8:00 am, 26 Sept. 2009 Source: National Hydraulic Research Center, University of the Philippines As a result of Ondoy, the water level of Laguna de Bay increased in one day from about 12.5 m to 13.9 m, which is 1.4 m above the average maximum water level and was among the highest historical levels recorded. The water level receded to around 13.5 m during the month after Ondoy, but went up again due to additional inflows from the lake’s catchment area. Estimates suggest it will take a further two to four months for the excess volume of water in the lake to drain out, depending on the carrying capacity of the Napindan Channel Hydraulic Control Structure (NHCS). Within Metro Manila, the actual damage to flood management infrastructure Metro Manila was limited compared to the substantial initial investment cost. There was overtopping of flood walls that caused localized damage, while the flood waters caused some submergence damage to pumping stations and hydraulic structures. The data on damages were obtained from the Department of Public Works and Highways (DPWH) and the Metro Manila Development Authority (MMDA). Some damage may have existed prior to Ondoy, but the assessment team found it difficult to validate this. The total damage to the flood management infrastructure in Metro Manila is estimated at Php 238 million. Damage caused by Pepeng Pepeng caused destruction and damage to flood embankments, especially along the Agno, Laoag, Cagayan, and Bucao Rivers. The typhoon either breached or damaged many sections of embankments. For example, in Pangasinan, 36 sections of various flood control projects were affected resulting in an aggregate of 3.77 km of dikes breached and partially damaged dike sections with a total length of 3.0 km. The assessment team received information on breached and damaged sections from the National Disaster Coordinating Council (NDCC), which had compiled the information from data provided mainly by DPWH. The assessment team visited the Agno River Basin to validate the information provided and found that the damage estimates include substantial costs to improve the infrastructure. The division was about 30 percent for actual damages and 70 percent for needed improvements. This ratio was used for other river basins as well. In light of this, the total damage to flood embankments along the four rivers has been estimated at Php 479.0 million. 84 PHILIPPINES TYPHOONS ONDOY AND PEPENG Questions have been raised about the role of spillway releases from the San Roque Dam. A major dam such as San Roque changes the hydrological conditions in the downstream river, usually with less flooding, increased sedimentation brought about by downstream tributaries, and greater occupation of flood-prone areas within villages, municipalities, and cities. This typically increases the impact of incidental high spillway releases in a river with reduced carrying capacity. Stronger monitoring and flood warning forecasting systems and better management of the dam during the flood event could have perhaps reduced downstream flooding to some extent. Because of the significant rainfall and rapid water level rise behind the dam, the dam operators had little choice but to release large volumes of water from the spillway to avoid damage to—or even destruction of—the dam. PAGASA rainfall records from the flooding events indicate that very high rainfall and damages were reported in those areas without spillway releases. Overall Damage and Losses The overall estimated damage is Php 716.9 million. Most of the damage occurred in Region I and NCR, while the damage in Region IV-A was negligible (Figure 7). Direct losses were not estimated, as these have been taken into account by other sectors. Figure 7: Damage to Flood Control Infrastructure 250 200 Damage (in Php million) 150 100 50 0 CAR I II III NCR IV-A V Priority Recovery and Reconstruction Needs Given the vulnerability of Metro Manila to flooding, additional protection is critical and will require institutional reform, comprehensive planning, and investment in both restoration and new infrastructure. The imperative policy choice is to determine an acceptable level of risk and protection, as this will determine the economic feasibility of subsequent engineering and financing choices. In the medium term, the existing flood management and drainage system should be restored to a fully operational condition, accompanied by funding for regular maintenance and the establishment of real-time monitoring and early warning systems. A new institutional structure, building on the existing framework—with responsibility for managing floods and drainage in the entire catchment area of Metro Manila including Laguna de Bay, and with the authority and means to enforce agreed policies and plans―would greatly facilitate future flood management. A risk assessment study for the entire basin is needed to update the existing master plan and to prepare a comprehensive development program. Longer term, as part of the development program, additional investment will be needed to retain water upstream, facilitate the flow of water through the system, and maintain Laguna de Bay at a pre-determined level as informed by the risk assessment. This would be expected to include a new floodway to link Laguna de Bay to Manila Bay. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 85 Metro Manila and Surrounding Areas Even with a fully operational flood management and drainage system, the rainfall generated by Ondoy would have resulted in flooding in significant parts of the city. The rainfall was so severe that the drainage and river system could not cope with the sudden volume of water. Nevertheless, the impact of Ondoy was so damaging and lasting that it has renewed focus on a number of issues: • Deforestation in the upper catchment of the Marikina River, resulting in erosion; • Accumulation of eroded material in the lower reaches of the river system, causing silting of rivers and streams, which is exacerbated by large deposits of solid waste in the rivers and streams; due to a lack of regular river cleaning, the carrying capacity of the river system has been substantially reduced; • Reduced absorptive capacity of the soil due to rapid, unplanned urbanization that increases short-duration flood events; • Inadequate flood management infrastructure resulting in an insufficient level of protection of Metro Manila that is the country’s main engine of economic growth; • Flawed land use and urban planning, resulting in both legal and illegal settlements in high-flood, disaster-hazard areas; • Inadequate maintenance of existing flood management infrastructure, including drains and flood warning systems; • Groundwater extraction causing land subsidence; • The potential for climate change and sea level rise to exacerbate the problem of flood management and drainage; and • Fragmented institutional arrangements for flood management. Medium-term Needs Several medium-term activities are proposed for Metro Manila during a three-year time frame from 2010 to 2012. The total estimated funding requirements are Php 5.5 billion. Until revised institutional arrangements are established, the proposed activities would be mainly implemented by MMDA in close cooperation and coordination with DPWH, Laguna Lake Development Authority (LLDA), and other agencies. • As an urgent activity, return the existing key flood management and drainage systems within Metro Manila to fully operational condition (e.g., through de-clogging of drainage channels and outlets); dredging and improvement of the Pasig and Marikina Rivers and their tributaries, as needed, and repairs to control structures to get the flood management system back to design standards; and, enabling a more effective discharge of the floodwaters. Current design parameters for river floods relate to a rainfall event of once in 30 year occurrence. This is about half or one-third of the level of occurrence that an area such as Metro Manila requires, considering the large public and private developments that have taken place since the design parameters were established. However, the proposed works will, as a minimum, protect the population and economic, private, and public infrastructure against lower-level floods (Php 3.7 billion); • Secure sufficient funds (and emergency maintenance equipment) for regular maintenance. Maintenance funds will have to be generated by MMDA, with financial support from LGUs and central government. It is expected that most of the maintenance works will be tendered out, but there may be a requirement for MMDA to have certain pieces of modern emergency machinery and equipment to be able to respond quickly to urgent maintenance needs. (About Php 1.2 billion should be sufficient to procure emergency maintenance equipment); 86 PHILIPPINES TYPHOONS ONDOY AND PEPENG • An asset management system should be developed to establish system-specific operation and maintenance (O&M) needs that aim to ensure sufficient funds are available for dedicated use by MMDA for all O&M needs to be met. Asset management systems determine in a systematic way the maintenance and related budget needs, both annually and over the longer term, and monitor in a transparent manner the actual versus planned maintenance expenditures, which could also be easily publicly disclosed. The results of the asset management plan (i.e., a fully costed maintenance plan) can be used as part of the annual budget request. (The development of the asset management system is estimated to cost Php 75.0 million); • Reestablish and/or develop real-time monitoring and early warning systems to provide the necessary lead time for crucial decisions. Development of Management Information System (MIS) and appropriate flood forecasting systems (Php 250.0 million); • Establish one management agency responsible for flood management and drainage in the entire catchment area, including Laguna de Bay, i.e., establish a single water management agency. The agency needs a clear mandate related to planning, implementation, operation, and maintenance (Php 125.0 million for the set-up and equipping of such an agency); and • Carry out a risk assessment study for the entire basin area and update the master plan of the early 1990s to come up with a comprehensive development program, rather than ad hoc projects that are not fully coordinated and integrated (Php 100.0 million). In terms of rural flood infrastructure, a medium-term program of river bank strengthening along rivers in Central and Northern Luzon is proposed to improve protection of people in villages and municipalities and economic, private and public infrastructure. The urgent focus would not only be on destroyed and damaged embankment sections, but also on nearby sections that have weakened as a result of insufficient maintenance over time. The program should embrace the concept of �building back better� to increase the flood return period to a desirable level of around 50 years, although this may vary by river basin. It would strengthen the embankments and improve their structural integrity, which may involve lining with Reno mattresses or other suitable protection materials. The estimated cost of this project is Php 2.5 billion. The program should be considered as the first phase of a program to strengthen river flood embankments, as there are many embankments that require improvements. The main implementing agency for the project would be DPWH, with cooperation from LGUs, as needed. Besides infrastructural developments, the program would also focus on flood mapping, development of emergency response plans, installation of early warning systems, updating and development of flood forecasting systems, and conducting awareness programs. Moreover, it is proposed to carry out a study on developing River Basin Councils and River Basin Organizations to streamline the water and flood management of entire river basins. Table 47: Medium-Term Reconstruction Needs (in Php million) Public Sector Needs Recovery Reconstruction Total Sub-sector Short- Medium- Short- Medium- Short- Medium- term term term term term term Flood Control, Drainage and Dam - - - 8,050.0 - 8,050.0 Management P O S T- D I S A S T E R N E E D S A S S E S S M E N T 87 Long-term Needs The medium-term needs are necessary but not sufficient to ensure an acceptable level of safety for Metro Manila. Depending on the government’s policy direction with regard to flood protection levels, additional developments would be determined by the updated master plan. Rather than pursuing uncoordinated capital investment initiatives in the short-term, it would be important to complete the master plan with a clear development objective, an overall infrastructural and institutional development plan that is prioritized, and feasibility-level cost estimates. To guide the process of developing and the implementing the master plan, institutional coordination among the main agencies responsible for water management in the area (MMDA, DPWH, LLDA, LGUs, etc.) is necessary until a single water management agency is established. Another required reform would be to move from project-based to program-based initiatives to ensure that short- to medium-term priorities are informed by and consistent with long-term objectives. For example, current proposals to develop a ring-dike around Laguna de Bay and dredging of the lake may not turn out to be priorities in the long-run once the results of an updated master plan have been completed. The types of projects that may be included in a long-term development program include: • Upstream cascade of dams or retaining basins to capture flood water; • River improvement to increase flow capacities, including river straightening to increase velocities and flows; • Additional dikes to protect low-lying populated areas linked to additional pumping stations; • Additional outlet capacity from Laguna Lake to maintain the lake at a pre-determined level; • Upper catchment rehabilitation and management; • Development of flood mapping and emergency response plans, linked to the overall development program. Conduct regular awareness campaigns. Based on flood mapping, appropriate land use and urban zoning can be prepared based on flood risks. The time frame for a priority program of staged improvements is estimated to be 20 years with costs at approximately between Php 50 and Php 75 billion. There are a number of safeguard issues related to certain developments, including the issue of land acquisition and resettlement of people. Such safeguard and other issues should be taken into account during the updating of the master plan and the assessment and prioritization of project proposals. 88 PHILIPPINES TYPHOONS ONDOY AND PEPENG Recovery Framework: Flood Management and Control Priority Activities to Priority Activities to December Outcomes Baseline December 2010 2012 The outcome for the o The actual damage o Priority activities to o Priority activities to be medium term is to caused by Ondoy to be undertaken to undertaken to achieve the improve the safety flood management and achieve the desired desired outcome: for Metro and operational drainage infrastructure outcome: for Metro Manila (i) continue the performance of within Metro Manila Manila (i) commence program of rehabilitation existing flood was limited, but a program of and improvement of management and Ondoy exposed rehabilitation and priority flood management drainage systems by serious weaknesses improvement of key and drainage systems; (ii) returning them as a in the overall flood flood management implement the agreed minimum to original management system. and drainage institutional development design conditions. systems; (ii) develop arrangements; and (iii) o Damage to flood and implement a complete the master plan embankments comprehensive update. caused by Pepeng in monitoring and Central and Northern warning system; (iii) o For Central and Northern Luzon was localized, develop appropriate Luzon continue the program but exposed the institutional of river bank strengthening. vulnerability of the arrangements for infrastructure caused the management o The combined financing especially by lack of of all flood and needs for both the priority maintenance. control systems activities up to December within the overall 2010 and to December 2012 catchment area; are Php 5.5billion for Metro and (iv) commence Manila and Php 2.5 billion the update of the for Central and Northern master plan that will Luzon. prioritize the need future developments to increase the safety against flood events up to an appropriate level. o For Central and Northern Luzon commence a program of river bank strengthening, initially focusing on severely damaged sections that have to be reconstructed before the 2010 flood season starts. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 89 Transport Sector Summary Noni Reyes Damage and losses due to typhoons Ondoy and Pepeng were greatest on road infrastructure, while the reported impact on other modes of transport was minimal. In low-lying areas in Metro Manila and Northern Luzon, and communities around Laguna Lake, many roads were flooded – in some places, impassable for extended periods. Along mountainous and difficult terrain, most prominently in Benguet, severe damage was caused by landslides, rockfalls, and destructive water flow, which led to the closure of certain corridors and costly damage to structures. Several bridges along major rivers and waterways were washed away. Economic losses resulted from increased vehicle operation costs and travel delays as roads were closed and/or alternate routes had to be taken. Roads damage and losses were estimated to reach Php 7.5 billion, comprised of Php 2.6 billion damage for national roads, Php 3.9 billion damage for local roads, and Php 1 billion in transport losses. The DPWH and LGUs prioritized road clearing and creating detours, which mostly involve earthwork, to immediately allow movement of passenger and goods traffic. In the case of Bued Bridge in Pangasinan, a temporary steel structure was installed by DPWH within three weeks. However, in many sections with serious damage to structures, more permanent interventions have yet to be designed and undertaken. Sections with damaged structures that have been opened to traffic need to be closely monitored through regular inspection for safety risks. Regular advisories to the public on road conditions in critical areas would help inform travel plans. Major risks to transport infrastructure were exposed by the typhoons. In difficult terrain, like in the Cordillera region, new permanent structures would have to be designed for greater reliability, such as those for slope protection, embankments, bridges, drainage, etc. This could increase the cost of road projects, thus the need to consider alternative options, including perhaps the study of new alignments or routes. Existing alignments would also need to be re-investigated in terms of vulnerability to the surrounding geology or hydrology, so that remedial measures can be identified. Reconstruction requirements are estimated to be about Php 2 billion in the short-term and Php 9.8 billion over the medium-term. The issue of sustainable financing for disaster response needs to be studied. Moreover, to enable immediate response of DPWH and LGUs in times of disaster, a dependable source of emergency financing for immediate restoration works would need to be put in place. Background The road network in the Philippines comprises national roads managed by the DPWH, local roads supervised by different LGUs, and several tollways. Except for barangay roads for which a complete inventory is still being undertaken, the road network can be generally categorized as fair to good relative to its condition, with maintenance activities for national and local roads undertaken depending on the availability of funds. The road network serves as the primary means of transportation of people and goods in the country. National Roads The national arterial roads consist of 15,663 km of roads that provide access to important centers and areas vital for regional development and emergencies. It consists of the North-South Backbone 90 PHILIPPINES TYPHOONS ONDOY AND PEPENG (5,246 km), East-West Laterals (2,965 km), and other roads (7,452 km). About 84 percent of the national arterial roads are paved, of which around 45 percent needs to be rehabilitated. The national secondary roads (NSR) complement the national arterial roads, and consist of 13,987 km. Only 61 percent is paved, of which 39 percent needs to be rehabilitated. There are 7,543 bridges along the national roads consisting of 6,165 concrete, 565 steel and 818 timber/bailey bridges. Other Transport Infrastructure The local road network is estimated to be about 172,000 km, the large majority of which is around 120,000 km (69 percent) of barangay or village/farm-to-market roads. The rest are provincial roads (18 percent), city roads (8 percent), and municipal roads (5 percent). Of the provincial roads, approximately 9,345 km are paved and 21, 465 km unpaved, and 115 km unknown. By surface condition, 64 percent is considered good to fair, 21 percent poor to bad and 15 percent unknown. There are also about 8,399 km of city roads, 4,859 km of which is paved. By surface condition, 53 percent is considered good to fair, while the rest are poor to bad, or unknown. In addition, there are six tollways operating in the country: North Luzon Expressway (NLEX) (84 km), South Luzon Expressway (SLEX) (77 km), Metro Manila Skyway (10km), Manila-Cavite Expressway (7 km), Subic- Clark-Tarlac Expressway (SCTEx) (94 km), and Southern Tagalog Arterial Road (STAR) (42 km). In addition to road infrastructure, the Philippines also has a network of airports, water ports, and railway transports. The Civil Aviation Authority of the Philippines (CAAP) oversees six major airports located along the affected provinces, which have no reported significant damage according to the Department of Transportation and Communications (DOTC). There are nine major ports located in the affected provinces namely: Aparri Port (Cagayan), Bataan Port (Bataan), Batangas Port (Batangas City), Brookes Point Port (Palawan), Calapan Terminal Port (Oriental Mindoro), Port Irene (Cagayan), Legaspi Port (Albay), Virac Port (Albay) and Tabaco Port (Albay), which have not reported damages to the DOTC. The DOTC reported that there were no damages on the Metro Rail Transport System (MRT). Minor damage and revenue losses were reported for the two Light Rail Transit System (LRT) lines. Immediate and Ongoing Relief and Recovery Efforts DPWH District Engineering Offices and Provincial Engineering Offices of affected LGUs have been implementing the following relief and recovery measures for roads: Types of Damage Immediate Relief and Recovery Efforts Landslide Immediate removal of landslides Eroded/washed out shoulder materials Backfilling of shoulder with the required materials Eroded or collapsed embankment Backfilling with the required materials Sand bagging to prevent erosion Collapsed/eroded bridge approach Sand bagging Backfilling Provision of warning/precautionary signs Road slip/road cut Provision of warning/precautionary signs Construction of detour roads Clogged drainage structures Clearing of debris Washed out bridges Construction/installation of temporary bridges like Bailey Bridge P O S T- D I S A S T E R N E E D S A S S E S S M E N T 91 Damage and Losses Based on the data provided by DPWH and LGUs, through the Department of Interior and Local Government (DILG), the most common type of damage on national and local roads include: landslides, eroded/washed out shoulder materials, eroded or collapsed embankment, eroded slope protection/abutment protection, collapsed/eroded bridge approaches, road slip/road cut, clogged drainage structures, washed out bridges, damaged road and bridge settlements, and damaged culverts.49 Similarly, the estimated costs of damage were prepared by DPWH District Engineering Offices and submitted to the DPWH Bureau of Maintenance (BOM), and by the Provincial Engineering Offices of LGUs. Program of Works (POW) that were prepared by the different District Offices of DPWH and Provincial Engineering Offices accompanied the damage estimates, and a small sample of these POWs was provided. Often the estimated costs were based on higher standard of design or higher level of improvement, than the condition prior to the typhoon. In some instances, damage from a previous typhoon or some other disaster, was reported not to have been actually addressed, and as such the current estimate of the required intervention reflects damage accumulated over time not only from the current typhoons but also from earlier occurrences. In more severely affected regions, where there is a higher number of badly damaged structures, it was observed that some minor damages were no longer included in the reports, and attention was focused on more massive damages requiring more capital-intensive works. Damages on national and local roads were estimated to be about Php 2.6 billion and Php 3.9 billion respectively. These include damages on the pavement, bridges, shoulders, slope protection, drainage and other appurtenant structures. (Table 48) Table 48: Summary of Roads Damage and Losses (in Php million) Damage Losses Total National Local 2,596.7 3,920.4 994.7 7,511.8 The province of Benguet suffered the greatest damage to road infrastructure with a total estimate for national and local roads of about Php 1.1 billion. This covers the Baguio-Bontoc road (Halsema highway), and the three access routes to Baguio City. Pangasinan, where many bridges were damaged, including Bued Bridge, reported an estimated damage cost of Php 1 billion, and La Union reported damage estimate of Php 729 million. By region, Region I, CAR and Region III reported the highest estimates of damages for both national and local roads. (Table 49) Transport losses were estimated as the increase in vehicle operating costs (VOC) when road-users have to use an alternate route or incur travel delays because of inaccessibility to or damage to the roads infrastructure. In the case of tollways, transport losses were estimated as losses in revenue as a result of lower utilization of the facility during and after the typhoon. The estimation of losses for National Roads was calculated using a worksheet developed by the DPWH-Feasibility Studies-Project Management Office (PMO-FS). The major parameters in estimating transport losses are the following: Average Annual Daily Traffic (AADT) acquired from Road Traffic Information Application (RTIA) of DPWH Planning Services, Summary of Traffic Data; VOC by Road Relevant sector reports provide additional information on drainage systems. 49 92 PHILIPPINES TYPHOONS ONDOY AND PEPENG Condition 2008 Level from DPWH PMO-FS; and pavement condition. In the computation of Losses, three cases were considered, that were deemed the most common cases that occurred during the disaster: (a) Road or Bridge Closure with Alternate Route: (b) Road or Bridge Closure without Alternate Route, and (c) Road or Bridge with One-Lane Passable. Table 49: Damage and Losses in Transport Sector, by Region Region Damage and Losses CAR 1,805.91 NCR 142.0 I 2,177.7.0 II 599.0 III 1,2234.2.0 IV-A 804.6.0 IV-B 157.1.0 V 508.1. NLEX 82.8 Total 7,511.8 In the absence of readily available traffic data for Local Roads which is an important parameter in computing for transport losses, it was estimated that transport losses at local roads in a given province was 20 percent of losses along the National Roads in that province, taking into account likely ratios of traffic and VOCs based on road condition between national and local roads. Impacts on the External Sector and Fiscal Budget As in typical construction activities, the restoration and reconstruction in the roads sector will require items of work with a foreign cost component such as rebars, cement, asphalt, equipment and fuel. Based on data from completed projects, the foreign components of these items could be as high as 50 percent of project cost. Thus, for short-term measures, the foreign cost components could be as high as Php 1 billion, while for medium-term measures, they could reach about Php 5 billion. The national roads program managed by the DPWH is funded under the national budget. The fiscal requirement of short-term measures to be implemented by DPWH is estimated to be in the order of Php 780.0 million and of medium-term measures, Php 3.9 billion. Priority Recovery and Reconstruction Needs Because the roads network is laid out over a large geographical area, it is prone to disasters like typhoons or floods, and the severity of the damage could vary widely from one location to another. It is important to plan and prioritize the recovery and reconstruction activities in order to first restore economic activities in the affected areas, then to rebuild the damaged structures to a permanent condition with a design benefiting from a better understanding of the geology and hydrology at the site and making use of recent development in technology, and eventually to ensure that vulnerability to similar disasters in the future is significantly reduced. This set of activities would be made up of short-term, medium-term and long-term measures. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 93 Table 50: Recovery and Reconstruction Needs (in Php million) Recovery Reconstruction Total Region National Local National Local National (Public) Local(Public) Total 779 1,176.2 3,895.2 5,880.8 4,674.2 7,057 Grand Total 1,955.2 9,776 11,731.2 The financial requirement for short-term activities, some of which have already been implemented, is estimated at between 25-35 percent of the estimated cost of damage or replacement, or as high as Php 2 billion. These activities can normally be completed over a short period, not exceeding six months. Road safety inspections in critical areas should be regularly conducted to ensure that partially damaged roads and detours, and other temporary structures where traffic is allowed can still adequately provide capacity. Precautionary measures should be adopted and strictly enforced to avoid accidents. As a public service, up-to-date information on the conditions of roads should be disseminated widely for the benefit of travelers and businesses. Based on the concept of “building back better�, the main objective of medium-term activities or measures is the replacement or reconstruction of assets that were totally or partially damaged by the disaster. These measures would bring the conditions of roads assets to the pre-disaster level or a higher level, as necessary. The structures include pavement, bridges, slope protection, embankments, shoulders, drainage structures, and foot bridges. The financial requirements for these measures are estimated at around 150 percent of the estimated cost of damages, or as high as Php 9.8 billion. Some of the major sections and related facilities along the national roads that would require more detailed studies and significant investments are as follows: Bued bridge in Pangasinan, Baguio-Bontoc Road (Halsema Highway) in Benguet, Marcos Highway, Naguilian Road and Kennon Road in Benguet, Manila North Road, Santa, Ilocos Sur (seawall/shore protection), Manila East Road in Siniloan and Famy, Laguna (subjected to extended flooding), Marikina-Infanta Road, and Bongabon-Rizal Road in Nueva Ecija. The objective of the long-term measures is to mitigate the risks of future disasters. These recommended measures include the following: detailed engineering studies with a detailed assessment of geological, hydrological, structural and other relevant aspects; assessment and upgrading of standards, codes and specifications with follow-up activities to ensure adoption at local levels; strict enforcement of upgraded codes, standards and specifications; quality standards for the implementation of reconstruction activities; appraisal of various alternate alignments or routes along critical areas; risk assessments for existing infrastructure in critical areas, and identification of remedial measures; inclusion of disaster risk-management measures in new projects, mainstreaming disaster risk management in DPWH/LGU projects, and capacity-building activities; capacity-building in LGUs and transport agencies/firms in general for collection of data on damage and economic losses; and capacity-building in DPWH, LGUs, and other transport firms/agencies for disaster response for immediate restoration activities. It is quite important to assess whether the responsible agencies in the field, like DPWH Regional/ District Offices or local engineering offices of LGUs, have sufficient financing resources to respond to the immediate requirements in a post-disaster scenario. Concessional loans from a government institution are available for LGUs for emergency activities, but there is preference for grants for major capital investments. Additional studies may have to be undertaken in coordination with oversight 94 PHILIPPINES TYPHOONS ONDOY AND PEPENG agencies to come up with recommendations on sustainable sources of emergency financing. Field offices could benefit from explicit guidelines and protocols for financing, procurement, and implementation to enable them to respond appropriately and urgently to disasters in the future. Such guidelines/protocols should facilitate emergency response without sacrificing controls for accountability and quality. Sharing of international experience on financing emergency response at national and local levels could help government in identifying options. Implementation Arrangements Implementation of the short and medium-term measures involving civil works is the responsibility of DPWH and LGUs. Likewise, capacity-building activities would benefit DPWH and the LGU engineering offices, and would need to be spearheaded by them, and in the case of LGUs the support of DILG would be important. Reviewing and updating guidelines and protocols for emergency works, on financing, procurement and implementation, would require consultation among line and oversight agencies. Policy discussions on new sources of emergency financing should also involve oversight agencies. Recovery Framework: Transport Sector Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 Damaged roads National and Civil works Civil works and bridges are local roads restored to allow and bridges Clearing of roads obstruction, Preparation of detailed design for safe, economical, suffered construction of detours or single- reconstruction of damaged roads and expeditious damaged from lane passage; restoration of roadway, and bridges, slope protection, movement of destructive shoulder and slope protection work, drainage, etc. persons and goods water flows bridge approach, abutment protection with improved which caused and scour protection works; installation Implementation of reconstruction reliability in case flooding, of temporary bridges projects for roads and bridges, of disaster landslides, taking into account available rock fall, Financing needs : Php 2 billion technology for stronger slope erosion, protection, increasing hydraulic scouring, etc. Safety and public service capacity of various structures, etc. Economic losses resulted Regular safety inspections on damaged Financing needs : Php 9.8 billion mainly from structures which are open to traffic and increased public advisories on road condition Capacity-building vehicle operating Project preparation Institutionalize data collection of costs and damage and losses after every travel delays. Prepare plans for implementation of disaster in LGUs and transport reconstruction of structures totally or agencies/firms; strengthen agency significantly damaged; Identification capacity for restoration and of funding sources for reconstruction reconstruction activities projects Long-term measures Policy Prioritize activities for the long-term Start consultations on sustainable and prepare implementation plans: sources of emergency financing, and on detailed engineering with more guidelines/protocols on implementation intensive geologic and hydrologic of restoration activities to facilitate studies; review existing alignments timely response with adequate controls on geology and hydrology issues; mainstream disaster risk management; upgrade codes, standards and specifications, etc. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 95 Telecommunications Summary Dave Llorito The typhoons and related flooding caused extensive damage to telecommunications infrastructure—including fixed lines, mobile networks, and broadband (Internet) networks, resulting in temporary network outages in some areas. These outages were caused by a combination of: loss of power; damage to on-site power plants such as batteries/rectifiers and generators; transmission problems, such as damage to cables and loss of alignment of microwave links; and damage to buildings used as cell sites. Other factors included the difficulty of mobilizing technical and other staff in affected areas. Flood damage disproportionately affected the fixed line network – primarily in NCR, Region II, and Region IV-A, and, to a lesser extent in Region I, Region III, Region IV-B and Region V – disturbing fixed broadband internet (DSL) connection and some private data networks. Damage to cell sites reduced the availability of mobile coverage, particularly in NCR and Region IV-A. Telecommunications service interruptions affected residential consumers, businesses, government offices, banks, internet service providers and the Business Process Outsourcing (BPO) industry (including call centers). The latter is concentrated in the NCR and is one of the biggest users of telecommunications services. However, the BPO industry did not report significant problems since they activated information/network back-up/disaster recovery procedures. As is often the case in natural disaster situations, there was a surge in telecommunications traffic – particularly for mobile, Short Message Service (SMS) and social networking websites – in the immediate aftermath of the typhoons. The industry acted quickly to restore services, particularly for mobile telephony and SMS, to minimize potential revenue losses, as well as to assist businesses, government departments and communities. The industry also activated corporate social responsibility programs, such as free calls and SMS-based donation facilities, to assist affected communities. Some carriers allocated funds directly to community rebuilding efforts. Eighty percent of telecommunications infrastructure was repaired almost immediately due to robust disaster recovery and business continuity facilities. About 97.5 percent of damaged infrastructure is expected to be repaired by end-November 2009. The remaining infrastructure is unlikely to be restored due to changes in demand. Restoration of mobile networks was relatively fast, though repairs to fixed lines were slower for logistical reasons. The total estimated cost of repairs and restoration, based on information available,50 is Php 193 million. The main costs to the industry have been: replacement of plant and equipment, plus rebates and discounts to clients. However, some of these costs will be covered by insurance. Overall revenues in the industry have reportedly increased, relative to usual levels for the third quarter, due to increased demand for services, including for emergency communications and special services such as e-payments (donations, funds transfers). As a result, the costs of repairing and restoring services were noted to be manageable and the need for external funding or subsidies has not been raised as an issue by service providers. In fact, the industry has contributed to reconstruction and community support efforts in other sectors. From PLDT, Smart, Globe, Eastern Telecoms and Bayantel, and from data provided by the National Telecommunications 50 Commission. 96 PHILIPPINES TYPHOONS ONDOY AND PEPENG Background Telecommunications infrastructure includes (a) transmission networks or “backbones�, e.g., terrestrial, fibre-optic, microwave or satellite networks, and (b) access networks, such as fixed line (copper wires), mobile (base stations). These networks deliver a combination of voice telephony and data and internet services to end-users, using different technologies.51 The main services affected by typhoons Ondoy and Pepeng were fixed lines, mobile, and broadband internet. In terms of transmission networks, there are three major Philippine nationwide backbones: Philippine Long Distance Telephone Company’s (PLDT) Domestic Fiber Optic Network (DFON), Telecoms Infrastructure Corporation of the Philippines’ (Telicphil) National Digital Transmission Network (NDTN), which is managed and majority owned by Bayan Telecommunications, Inc. (Bayantel) and Globe Telecom Inc.’s (Globe) broadband network. DFON and NDTN are primarily fiber-optic networks. Digitel Corporation (Digitel) also operates a backbone network in Luzon. The following provinces rely on satellite transmission: Batanes, Quirino (Region II), Bataan (Region III), Palawan, Marinduque, Oriental Montoro (Region IV-B), Catanduanes (Region V). For Access Networks, the total number of installed fixed lines in the Philippines is about 7.45 million, of which 4.89 million are subscribed (active). A total of 1.35 million fixed line subscribers use dial- up Internet. About 48 percent of installed lines or 54 percent of subscribed lines are in the NCR. PLDT, including its subsidiary, Pilipino Telephone Corporation (Piltel), and Digitel are the main fixed line service providers in the affected areas; Globe, Bayantel and Eastern Telecoms have small fixed networks, for DSL service. The total number of fixed lines in the affected regions is about 2.9 million, or 80 percent of the country’s total; of these the majority is in Metro Manila. Fixed line service is generally limited to the larger cities and towns. There are about 68 million mobile phone subscribers as of end-2008. About 53 percent reside in the NCR, about 20 percent in the rest of Luzon and the rest about evenly split between Visayas and Mindanao. Approximately 10,000 of these cellular phone subscribers are also subscribers of mobile broadband services, although the number of users is probably higher since at least 25 percent of mobile phones owned in the country today are Internet capable. Mobile network coverage is much more extensive in the typhoon-affected areas. PLDT (Smart), Globe Communications (Globe, Touch Mobile), Digitel (Sun Cellular) and Bayantel all offer mobile phone service.52 . The latest available coverage map or Global System for Mobile communications (GSM) service indicates that population coverage for the whole country is about 99 percent. This includes virtually all of the typhoon/flood affected areas (excluding some local “blind spots� or areas with weaker signals). Thus, the majority of households, government workers, and businesses in the affected areas rely on mobile phone coverage. The total number of mobile base stations (BTS) by service provider is not available. Dial-up and fixed broadband internet is available to fixed line subscribers. There are also 586,000 wired broadband (mainly DSL) subscribers as of end 2008,53 approximately 50 percent of whom are in NCR, 25 percent in the rest of Luzon, and the remainder split between Visayas and Mindanao.54 There are an estimated 563,000 subscribers to wireless Broadband (Smart Bro), linked to SMART’s 51 Voice telephony over fixed lines or mobile networks; basic data (SMS) over mobile phone networks; narrowband Internet (dial-up) over fixed lines: fixed broadband (high-speed) Internet (DSL) over fixed lines; broadband wireless or WiMAX; or mobile Internet (GPRS, EVDO, or 3G over mobile phone networks). 52 Smart, Globe and Digitel follow the GSM mobile standard, while Bayantel offers “fixed-wireless� service using the CDMA standard. 53 NTC data as of October 2009. 54 Interviews with carriers. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 97 mobile network, as of end-2008. Approximately 60 percent of these subscribers are in the NCR, with another 20 percent in the rest of Luzon. Mobile broadband (e.g. 3G) is available primarily in NCR. Satellite internet services are used in some areas where there is no other type of fixed, wireless, or mobile broadband available. Internet users in the affected areas are primarily institutional, including large corporations, internet cafes, government offices, and public high schools participating in the government’s plan to provide internet access to schools nationwide. Damage and Losses Damages can be categorized by supplier and end-user. The former includes physical damage to hardware, transmission equipment, repeaters, cellular sites, including buildings, on-site power plants including batteries, rectifiers, and generator sets. Other damage was associated with the loss of power supply. On the user side, damage centered mostly on fixed lines and customer premises equipment (phones, computers). Much of the damage from the typhoons took place on the customer side, since most clients, particularly residential, do not have backup, business continuity and disaster recovery facilities. The BPO banking industries do have such business continuity facilities in place and were less adversely affected than other users. In terms of infrastructure statistics, the combined flood and structural damage from Ondoy and Pepeng can be summarized as per Table 51. Table 51: Estimated Costs of Damage in Telecommunications Sector Voice or Phone DSL or Broadband Private Data Mobile Total Lines Internet Network (Value, Damage Value Damage Value Damage Value Disruption Value Php M) (lines) (Php M) (lines) (Php M) (lines) (Php M) (percent (Php M) REGION coverage) NCR 167,887 78.70 62,700 20.90 2,970 12.38 29% 20.63 132.60 I 8,130 3.81 6,900 2.30 90 0.38 40% 2.40 8.89 II 12,195 5.72 10,350 3.45 135 0.56 40% 3.60 13.33 III 6,775 3.18 5,750 1.92 75 0.31 40% 2.00 7.40 IV-A 35,612 16.69 13,300 4.43 630 2.63 25% 4.38 28.13 IV-B 200 0.09 100 0.03 10 0.04 10% 0.10 0.27 V 1,800 0.84 900 0.30 90 0.38 20% 0.90 2.42 Total Damage 232,599 100,000 4,000 29% Total 109.03 33.33 16.67 34.00 193.03 Sources: NTC, Interviews with carriers to provide aggregated data for PLDT, Smart, Globe, Eastern Telecoms, Bayantel. Note: Some discrepancies might occur during conversion of Peso value to damage values. The table includes fixed wireless broadband and mobile wireless broadband services, both of which use the mobile network infrastructure. The damage from Ondoy and Pepeng affected all seven regions of Luzon. As a result, all segments of telecommunication infrastructure and services experienced momentary service disruption and substantial damage at the height of the storms. Water and flood damage was caused primarily by Ondoy, and structural damage was mostly caused by Pepeng. Flood damage mostly affected wired service segments (fixed lines and fixed broadband or DSL) in these areas. Flood damage from Ondoy mostly affected the NCR and the nearby provinces of Bulacan, Rizal, Cavite, Batangas, Laguna and Quezon55 – following the path of Ondoy. Some structural damage was experienced from Ondoy, affecting the areas already affected by flood damage – mostly in the regions of NCR, Region III and Region IV-A. However, most of the structural damage to the NCR and most of the provinces of Bulacan, Rizal, Cavite, Batangas and Laguna are part of “greater Metro Manila�. 55 98 PHILIPPINES TYPHOONS ONDOY AND PEPENG telecommunication infrastructure was caused by the strong winds of Pepeng. Damage from Pepeng was mostly experienced in Northern Luzon – in the regions of Region I, Region II, and Region III. Some structural damage was experienced in NCR and Region IV-B from Pepeng, but this was less serious than the flood and structural damage caused by Ondoy. Financial losses associated with this damage included: (a) direct repair and service restoration costs, (b) foregone revenues from service interruption (though this trend was quickly reversed with the post-disaster surge in demand); and (c) costs of rebates for customers affected by the disaster, particularly for broadband, private data network, and mobile services. The increased demand for telecommunications services appears to have positively impacted industry revenues in the very short term. For example, PLDT reported third-quarter growth, and Smart (PLDT’s wireless subsidiary) reported that revenues from voice calls and text messaging rose 12 percent on September 26, when Ondoy struck. With regard to medium-term financial outlook, the industry is expecting some degree of downturn in consumption after the impact of the disaster is felt by consumers. As a result, some carriers have begun planning initiatives to encourage consumers to maintain their regular use of telecommunication services; some have stepped up customer service/marketing and corporate social responsibility in part to mitigate this risk. Priority Recovery and Reconstruction Needs The biggest concern for telecommunications service providers immediately after the Ondoy and Pepeng typhoons was ensuring the continuity of service, as service disruption from floods and structural damage could significantly affect revenues. Given the robust disaster recovery and business continuity facilities, however, all carriers were able to immediately repair and restore a major portion of their service facilities in areas where disruption was significant to severe. As a result, more than 80 percent of services were already restored to full operational efficiency in the immediate aftermath of the disaster. And due to the significant reliance of recovery and restoration efforts on communication facilities, particularly when dealing with relief operations, consumption of telecom services actually surged above what is typical for the fourth quarter of an average year. At least 90 percent of the damaged infrastructure was repaired and restored relatively quickly compared to services in the transportation and energy sectors (reported as a week to within two weeks), with 95 percent eventually repaired and restored in about a month after the typhoons,56 and a 97.5 repair and restoration targeted for end-November 2009. The quick resolution of service disruptions was attributed to the presence of robust disaster recovery and business continuity facilities by all carriers, having prepared for such calamities after the Taiwan earthquake of 2006.57 The remaining 2.5 percent might no longer be restored due to the following reasons: (a) about 1 percent of the affected facilities involve clients who have decided to shift to other service providers during the height of the restoration efforts; (b) another 1 percent of the affected facilities involve clients who have decided to move their location or facilities due to the damage afflicted by the typhoons; (c) the remaining 0.5 percent of the affected facilities appear to involve clients who are shifting to a different technology platform for their telecommunication needs (such as shifting from an on-site VPN facility to an outsourced VPN facility). These new technology platforms are being treated as an entirely new requirement. Interview with carriers. 56 Which saw major disruptions in all service platforms of all major carriers, with restoration lasting for more than 2 weeks 57 to more than a month. “Taiwan Earthquake Paralyzes Asian Communication,� Chosun Times, December 26, 2008, retrieved November 11, 2009, http://english.chosun.com/w21data/html/news/200612/200612280011.html. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 99 Accordingly, nearly 100 percent of the affected telecommunication facilities will have either been restored by end-November or will not require restoration. As such, the telecommunication industry itself does not appear to have any post-disaster restoration needs. Total cost of repair and restoration projected after full recovery is summarized in Table 52. Table 52: Estimated Cost of Repairs (Php million) DSL (Fixed Private Data Region Fixed Lines Broadband) Networks Mobile Grand Total NCR 76.73 20.38 12.07 20.11 129.28 I 3.72 2.24 0.37 2.34 8.66 II 5.57 3.36 0.55 3.51 13.00 III 3.10 1.87 0.30 1.95 7.22 IV-A 16.28 4.32 2.56 4.27 27.42 IV-B 0.09 0.03 0.04 0.10 0.26 V 0.82 0.29 0.37 0.88 2.36 Total Repair and Restoration 106.31 32.50 16.25 33.15 188.21 Sources: NTC and carrier interviews. *Mobile: includes fixed wireless broadband and mobile wireless broadband services, both of which use the mobile network infrastructure. None of the carriers have reported any need for additional financing to cover repair and restoration efforts other than what they have incurred so far. One reason for this is that the cost of disaster repair and recovery were already allocated in the carriers’ budget for the year and the existence of robust disaster recovery and business continuity has kept un-budgeted repair and restoration costs at an insignificant level. Moreover, the additional revenues generated from the surge in the use of telecommunication services during the disaster covered any unexpected costs of repair and restoration. Implementation Arrangements Repairs are being undertaken by the telecommunications operators who have the necessary technical expertise and financial resources. Public funding is not being sought and the carriers interviewed do not anticipate requesting any additional support from the government or other sources. However, as with the carriers’ previous marketing promotion efforts, it is expected that there will be significant coordination with the government and other third-party sectors, particularly with local community leaders and non-government organizations (NGOs). All carriers have reported that they already have a network of contacts in place for such coordination efforts with the respective sectoral representatives. 100 PHILIPPINES TYPHOONS ONDOY AND PEPENG Cross-Sectoral Issues Pete Templo “ I decided to look for a job after the floods. Fortunately, my previous employer took me in even though business was down and she really didn’t need me. That job gave me self-respect.� –A Woman from Bustos, Bulacan. Local Government Summary The estimated damage to assets of LGUs58 totaled Php 294.2 million, and was calculated based on LGU estimates for the costs of: 1) repairing partially damaged assets; and 2) reconstructing/replacing totally damaged assets. However, this amount does not include significant damages in Pasig, Manila and Cainta. The estimated losses experienced by LGUs totaled Php 41 million. This was calculated based on estimates reported by LGUs of the: 1) reduced own-source revenue collections resulting from the disasters; 2) costs of restoring the functions of offices whose operations were disrupted due to the disasters; and 3) higher operational costs for operating offices in the period following the storms. Flooding was the main cause of damage to LGU assets, followed by damage caused by landslides and strong winds. The main objectives of the recovery and reconstruction efforts for LGUs are to: 1) fully restore operations to pre-disaster levels; and 2) strengthen the capacity of LGUs to mitigate the risks to assets and operations from future disasters. At present, LGUs have been utilizing their Calamity Funds, which is a statutory appropriation of 5 percent of the total annual local government budget to finance urgent reconstruction costs. However, it is uncertain whether these funds will be sufficient to cover more expensive assets that would need to be repaired or replaced in the short- and medium-terms. The experience with Ondoy and Pepeng also revealed key weaknesses in disaster risk management. A two-pronged post-disaster strategy for the local government sector is suggested: 1) the extension of targeted financial assistance to the most heavily affected LGUs to support the rapid restoration of their operations to pre-disaster levels; and 2) the provision of technical assistance to LGUs in disaster-prone areas to implement disaster-management measures that will better protect LGU assets and operations going forward. In terms of financial assistance, the heavily affected LGUs would benefit from a concessional loan facility, which would allow them to rapidly repair damaged equipment and facilities and replace destroyed assets to their pre-disaster state. In terms of technical assistance, LGUs located in identified high-risk areas would benefit from a capacity building facility that would strengthen their ability to mitigate the risks of damage to LGU assets and operations due to natural disasters. Damage and Losses A wide range of service delivery responsibilities and revenue-raising powers in the Philippines are statutorily devolved to the local level. This assessment focuses on damage and losses suffered by local government units. It encompasses assets (such as municipal halls, community-level facilities, vehicles, heavy equipment, office furniture, and IT systems) and economic flows (such as local taxes and local revenue generating activities) that are not covered by other sectors of the PDNA (particularly transport, education, health, water supply, solid waste management, flood control, and agriculture). Baseline data were not available mainly due to: (i) the limited database of physical LGU assets maintained by the Department of Interior and Local Government (DILG); and (ii) the initial focus of data collection carried out by the NDCC after Ondoy and Pepeng which took into consideration only the key sectors of the economy and excluded the impact of the storms on LGU assets and operations. LGUs in the Philippines consist of three layers. These are (1) the provinces and independent cities, 2) component cities 58 and municipalities, and 3) the barangays, which is the basic unit of government. 102 PHILIPPINES TYPHOONS ONDOY AND PEPENG To address the gap, DLIG later circulated an information form that solicited basic data on the damage and losses of physical assets and economic flows of LGUs in the affected regions. Over 90 LGUs out of the 600 located in the affected areas engaged in the assessment. Data indicate that approximately one-third of the LGUs that reported damage suffered substantial damages and losses (exceeding Php 1 million) while the majority of the LGUs reported relatively minor impacts. The assessment also showed that LGU assets and economic flows were not affected to the same extent as other sectors of the local economy (such as housing, transport, and agriculture). Sample field visits and phone interviews confirmed that although assets and operations were affected by the storms, all LGUs were able to restore basic operations and services within a short time-frame (ranging up to one week, in most cases). Although information was collected from the majority of the affected LGUs, it should be noted that: (i) several large LGUs (namely, the cities of Pasig and Manila in Metro Manila, and the municipality of Cainta in Rizal) did not submit data or were unable to estimate costs, leading to a considerable underestimation of LGU damages and losses59; (ii) there is a significant variability in the estimates since the costs for damage and losses were self-reported by the LGUs; (iii) in numerous cases LGUs reported damaged assets and affected operations but did not estimate the resulting costs. The estimated damage to LGU assets totaled Php 294.2 million. This was calculated based on the estimates of the costs of: (i) repairing partially damaged assets; and (ii) reconstructing/replacing totally damaged assets. Sub-classifications were specified for the three categories to guide LGUs in reporting data.60 (Table 53) Table 53: Estimated Damage to LGU Assets (in Php million) City Municipality Province Total Facilities 39.8 86.7 1.2 127.7 - Prov/City/Muni Halls 1.4 6.3 0.4 8.0 - Market / Slaughterhouse 1.4 13.0 0.8 15.2 - Barangay Facilities 19.5 32.7 - 52.1 - Other Facilities 17.5 34.7 - 52.0 Public Documents 6.2 1.7 - 7.9 Vehicles 24.9 3.8 - 28.7 - Light passenger vehicles 10.9 0.6 - 11.4 - Medium passenger vehicles 7.0 1.8 - 8.8 - Trucks and buses 7.0 1.4 - 8.9 Equipment 118.7 10.3 0.9 129.9 - Office Equipment & Furniture 12.0 2.7 0.1 14.7 - IT Equipment & Software 59.6 4.3 0.8 64.7 - Heavy Equipment 47.1 3.3 - 50.4 Total 189.6 102.5 2.1 294.2 Flooding was the main cause of damage to LGU assets, followed by damage caused by landslides and strong winds. Damage to facilities and equipment took up the majority of the estimated damage 59 By way of comparison, Marikina, a relatively large and highly affected city in Metro Manila, accounts for 56.5 percent of the total reported LGU damages. 60 Sub-classifications include: public documents; information systems; equipment, furniture, and fixtures; transport, machineries, and equipment; and public buildings and other infrastructure. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 103 to LGU assets, with each accounting for over 40 percent of total damage broken down as follows: (i) damages to facilities were concentrated on barangay facilities, which includes barangay halls, multi-purpose buildings, day care centers, and covered courts followed by convention centers, administration buildings, and sports complexes; (ii) the damage to equipment was concentrated on IT equipment and software as well as heavy equipment, which includes bulldozers, backhoes, and other construction equipment. Since key LGU offices are commonly located in the town centers (or poblacions) on higher and safer ground, the damage to LGU infrastructure was somewhat minimized. The major damage to LGU assets took place in the villages/barangay, where schools, farm-to-market roads, and smaller barangay facilities are located. A relatively small number of LGUs reported severe damage to public documents due to flooding. Various measures were undertaken to recover official documents ranging from drying them using electric fans and heaters, to gathering data from other sources or requesting copies from national agencies such as the National Archives and the Commission on Audit (COA). Cities accounted for almost two-thirds of the estimated damage to LGU assets. Municipalities accounted for the vast majority of the remainder while reported damage to provincial assets was minimal. Notably, Php 189.6 million in damages to city assets were concentrated in only nine cities. In contrast, Php 102.5 million in damages to municipal assets was dispersed among 82 reporting municipalities. The estimated losses experienced by LGUs totaled Php 41 million. This was calculated by considering: (i) reduced own-source revenue collections resulting from the disasters; (ii) costs of restoring the functions of offices whose operations were disrupted due to disasters; and (iii) higher operational costs of business continuity in the period following the storms. The costs of restoring the offices operations include the clean-up costs after the flooding as well as the immediate replacement of basic supplies. (Table 54) Table 54: Estimated LGU Losses (in Php million) City Municipality Province Total Revenue Reduction 13.4 16.6 1.4 31.4 - Tax Revenue 7.7 8.1 1.0 16.7 - Other Income 5.7 8.5 0.4 14.6 Higher Costs 1.6 7.6 0.4 9.6 - Additional operating costs 0.1 1.6 0.4 2.0 - Restoration costs 1.5 6.0 - 7.5 TOTAL 15.0 24.2 1.8 41.0 The reduction in tax revenues and other local income was estimated to be Php 31.4 million, which comprised more than three-fourths of the total losses. These estimates were mainly based on (i) actual losses in revenues due to disruption in operations of economic enterprises (such as public markets and slaughterhouses) as well as (ii) interruptions in the collection of taxes and fees in the weeks after the storms. Since LGUs quickly restored their revenue-raising capacity, these losses are mainly short-term in nature. However, LGUs whose housing sectors and local economies were severely affected are expected to see a further reduction in their own-source revenues in the coming fiscal year and in the medium- term as a result of the erosion of local tax bases; real property tax, local business tax, and various business licenses and permits are among the main sources of local revenues. Although all LGUs 104 PHILIPPINES TYPHOONS ONDOY AND PEPENG depend on fixed fiscal transfers from the national government for 70-90 percent of their annual income, those LGUs that are more fiscally self reliant (e.g., Metro Manila and surrounding provinces) are more likely to experience considerable pressure on their budgets in the next fiscal year due to lower local revenue collections. Because of the weak capacity of LGUs to anticipate local revenues and the idiosyncratic impact of the disasters on the local economy, medium-term economic losses resulting from revenue collection have not been forecasted in this PDNA. There is an immediate need to repair partially damaged facilities and to repair/replace the equipment in order to ensure the full restoration of LGU operations. The short-term costs estimated for rebuilding partially damaged facilities is Php 89.7 million while the estimated medium-term cost for reconstructing totally damaged facilities is Php 37.8 million, out of a total reconstruction cost of Php 300.9 million. Given the peculiarities of LGU facilities which are different in size, location, and design it is not possible to estimate the costs for ‘building back better’; the estimation of needs, thus, only covers reconstruction expenditures to return to the pre-disaster situation. (Table 55) Table 55: Priority Recovery and Reconstruction Needs in the LGU Sector (in Php million) Recovery Reconstruction Total Short-term Medium- Short-term Medium- Short-term Medium- term term term Physical Assets - - 263.1 37.8 263.1 37.8 - Facilities - - 89.7 37.8 89.7 37.8 - Public Documents - - 7.9 - 7.9 - - Vehicles - - 29.1 - 29.1 - - Equipment - - 136.4 - 136.4 - Economic Flows 10.0 - - - 10.0 - - Revenue Reduction - - - - - - - Higher Costs - - - - - - Total 10.0 - 263.1 37.8 273.1 37.8 In terms of reconstruction needs, while the overall impact of the disasters on LGU assets analyzed here is relatively small, the damages to physical assets are still substantial and LGUs have to incur significant costs to repair and reconstruct these assets. The main objectives of the reconstruction efforts for the local government sector are: (i) to fully restore operations of the affected LGUs to pre-disaster levels; and (ii) to strengthen the capacity of LGUs to mitigate the risks to assets and operations from future disasters. At present, LGUs have been utilizing their Calamity Funds, which is a statutory appropriation of 5 percent of the total annual local government budget, to finance urgent reconstruction costs. However, it is uncertain whether these funds will be sufficient to cover more of the expensive assets that need to be repaired or replaced in the short- and medium-terms. Ondoy and Pepeng also revealed key weaknesses in disaster preparedness and response for which longer term investments are necessary. In terms of recovery needs, while the fiscal operations for some LGUs may have not yet been fully restored to pre-disaster levels, these have at least been restored to a basic level of functionality. The costs reported by LGUs to restore the operations of various offices are estimated at Php 7.5 million. This is a relatively small amount and the LGUs already used their Calamity Funds to cover these immediate restoration costs, as well as various emergency needs related to relief operations and the restoration of basic services. As a result, these costs do not need to be included in the estimate of recovery needs. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 105 A greater concern over 2010 and onwards is the impact of Ondoy and Pepeng on local property markets and local economies, which may have adverse effects on LGU local revenue mobilization. Hence, the primary recovery needs of LGUs are closely linked to the recovery efforts for key sectors of the economy, particularly housing, transport, agriculture, commerce, and livelihoods. The specific recovery strategies and policy measures for these sectors will serve as the critical interventions to accelerate the recovery of the local government sector. A two-pronged post-disaster strategy for the local government sector should consider the following components: (i) the extension of targeted financial assistance to the most heavily affected LGUs to support the rapid restoration of operations to pre-disaster levels; and (ii) the provision of technical assistance to LGUs in disaster-prone areas to implement disaster risk reduction measures that will better protect LGU assets and operations in the future. Financial Assistance The heavily affected LGUs would benefit from a concessional loan facility, which would allow them to rapidly repair damaged equipment and facilities and replace destroyed assets. Access to these soft loans should be carefully targeted and strictly restricted to LGUs that suffered significant damage to assets stemming from the storms. The loan facility should provide flexibility to allow LGUs to borrow not just for capital assets but also for non-capital assets that were damaged, including furniture, computer systems, and office equipment. The concessional loan facility would support both: (i) the short-term reconstruction needs of LGUs to repair and replace needed assets in order to fully restore LGU operations (up to 2010) and (ii) the medium-term reconstruction needs of LGUs to rebuild facilities that were destroyed by the storms. Technical Assistance LGUs located in identified high-risk areas would benefit from a capacity building facility to strengthen their ability to mitigate risks of damage to LGU assets and operations due to disasters. The technical assistance could include: (i) training and advisory services to assist LGUs in identifying solutions for reducing the vulnerability of day-to-day government operations (including protecting public documents and information systems from flood damage); to strengthen LGU capacity to prepare for and rapidly respond to disasters; to capacitate LGU staff to conduct post-disaster needs assessments; and to strengthen LGU asset management, which would allow them to maintain up-to-date and accurate baseline data of existing assets; as well as (ii) grants funds to assist LGUs in enhancing/ retrofitting LGU facilities to make them more resilient to disasters (such as improving the drainage systems of facilities); and assist LGUs in acquiring equipment and IT systems that can enhance their capacity to mitigate disasters. The estimated cost for this technical assistance is Php 10 million. In addition, the national government may reconsider the policies regarding the LGU utilization of the Calamity Fund in order to allow: (i) more flexibility in its usage for disaster-risk mitigation (including mitigation and preparation activities); and (ii) the potential pooling of funds among LGUs for disaster preparation and response activities, which is included in proposed legislation RA 8185. In order to expedite the delivery of assistance to local governments during disaster situations, the national government may also consider developing a common assessment methodology for rapid sectoral damage, losses, and needs recovery assessments that could then be utilized by LGUs, which could then be validated by the Regional Disaster Coordinating Councils. 106 PHILIPPINES TYPHOONS ONDOY AND PEPENG Implementation Arrangements Financial Assistance Given the existing institutional framework of the LGU credit market61, the Municipal Development Fund Office (MDFO) would be the natural conduit for the proposed concessional loan facility for affected LGUs. It would not be advisable for the Land Bank of the Philippines and the Development Bank of the Philippines to engage in concessional financing for LGUs because this would compromise their existing role as market-based lenders. In contrast, MDFO has extensive experience in channeling funding from development partners (such as the World Bank and Asian Development Bank) to LGUs through loans and grants. However, the central government would determine the most appropriate arrangements for channeling funds for concessional loans to help affected LGUs address reconstruction needs, particularly given the concurrent needs for LGUs to finance sector-specific infrastructure (e.g., transport, water supply, etc.) damaged during the storms. Technical Assistance The national government needs to determine the appropriate agency that will be responsible for supporting disaster-risk management at the local government level. Since DILG is responsible for the general supervision of local governments and the formulation of policies and programs to address local emergencies, it is a possible candidate to assume this role. However, it is up to the national government to make this determination. Nonetheless, there is clearly a need for a well-coordinated and focused effort to assist high-risk LGUs in building capacity to mitigate the risk to LGU assets and operations from disasters. The credit market for local governments has been limited to two major government financial institutions: the Land 61 Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP). LGU loans from these two banks are provided on market-based terms. The Municipal Development Fund Office (MDFO), which is an office under the Department of Finance, is a relatively smaller LGU credit institution and focuses mainly on providing concessional loans to smaller and less creditworthy LGUs. Furthermore, MDFO currently administers the Disaster Management Assistance Fund (DMAF), which is a lending window that LGUs can access for initiatives related to disaster management. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 107 Recovery Framework: Local Government Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 LGU operations o Estimated o Extension of targeted o Extension of targeted financial fully restored to damages financial assistance to assistance to the heavily affected pre-disaster levels. reported the heavily affected LGUs LGUs through concessional loans by LGUs through concessional for the repair and replacement of totaled loans for the repair and damaged cross-sectoral assets. Php 294.2 replacement of damaged o Measurable indicator: full million, cross-sectoral assets. restoration of the value of damaged focused o Measurable indicator: full and destroyed assets. mainly on restoration of the value of o Estimated total financing need of Facilities damaged and destroyed Php 37.8 million. and assets. Equipment. o Estimated total financing need of P263.1 million (although a substantial portion of this amount will be covered by LGU Calamity Funds for relatively weakly affected LGUs). Stronger LGU o Extension of technical capacity to assistance to high-risk LGUs mitigate risks from through capacity building future disasters. measures that strengthen their ability to mitigate the risks of damage to LGU assets and operations. o Estimated total financing need of Php 10 million. Total financing Total financing needs: Php 273.1 Total financing needs: Php 37.8 million needs million 108 PHILIPPINES TYPHOONS ONDOY AND PEPENG Impact on Employment and Livelihoods Nonie Reyes Summary The typhoons that hit the Philippines in succession affected the livelihoods and incomes of households. Because of the damages and losses suffered by the productive sectors, a total of 172 million workdays were lost, which resulted in losses amounting to Php 50.4 billion of incomes in 2009. (Table 56) Table 56: Impact on Livelihoods and Income Losses in 2009 by Sector NCR CAR Region I Region II Region III Region IVA Total Number of Workdays Lost Industry 17,372,748 440,890 5,372,973 3,010,399 8,770,340 4,173,690 39,141,040 Micro 12,685,170 381,022 4,847,139 2,790,565 7,529,258 4,056,258 32,289,412 Small 4,687,578 59,868 525,834 219,834 1,241,082 117,432 6,851,628 Commerce 39,025,619 733,967 22,002,401 2,089,996 30,654,396 5,710,751 100,217,130 Micro 28,495,583 634,319 10,553,681 1,937,374 11,574,936 5,550,083 58,745,976 Small 10,530,036 99,648 11,448,720 152,622 19,079,460 160,668 41,471,154 Agriculture - 5,963,825 5,581,500 4,989,185 8,802,310 716,330 26,053,150 Firsheries 2,676,888 49,086 726,246 1,031,130 236,520 180,954 4,900,824 Total 59,075,255 7,187,768 33,683,120 11,120,710 48,463,566 10,781,725 170,312,144 Wage Losses (000 Pesos) Industry 6,829,575 132,787 1,409,599 662,047 2,574,270 1,353,403 12,961,681 Micro 4,986,794 114,756 1,271,647 613,701 2,209,988 1,315,323 10,512,209 Small 1,842,781 18,031 137,953 48,346 364,282 38,080 2,449,472 Commerce 15,341,751 221,056 5,772,330 459,632 8,997,678 1,851,825 32,644,273 Micro 11,202,183 191,044 2,768,758 426,067 3,397,475 1,799,725 19,785,254 Small 4,139,568 30,012 3,003,572 33,565 5,600,203 52,100 12,859,019 Agriculture - 888,610 836,109 606,086 1,258,290 132,901 3,721,996 Firsheries 716,041 7,314 108,792 125,262 33,811 33,572 1,024,791 Total 22,887,367 1,249,767 8,126,830 1,853,027 12,864,049 3,371,701 50,352,741 Needs (000 Pesos) Industry 5,172,049 100,738 1,069,916 502,672 1,952,802 1,028,205 9,826,383 Micro 3,789,963 87,215 966,452 466,413 1,679,591 999,645 7,989,279 Small 1,382,085 13,523 103,464 36,259 273,212 28,560 1,837,104 Commerce 11,618,335 167,703 4,356,935 348,985 6,782,234 1,406,866 24,681,057 Micro 8,513,659 145,194 2,104,256 323,811 2,582,081 1,367,791 15,036,793 Small 3,104,676 22,509 2,252,679 25,173 4,200,152 39,075 9,644,264 Agriculture - 675,344 635,443 460,626 956,301 101,005 2,828,717 Firsheries 544,191 5,558 82,682 95,199 25,696 25,515 778,841 Total 17,334,575 949,343 6,144,975 1,407,481 9,717,033 2,561,591 38,114,998 Across the sectors, commerce sustained the biggest loss in employment and incomes in 2009, which amounted to Php 32.6 billion, representing 64 percent of total incomes lost. Losses in industry and agriculture amounted to Php 13 billion and Php 3.7 billion, respectively. Among the affected regions, losses were concentrated in the NCR and Region III. Total income losses in NCR were estimated at Php 22.9 billion, while for Region III it was at Php 12.9 billion. Together, these two regions account for about half of affected wholesale and retail trade establishments, most of which are workers in home- based and small or micro enterprises. This suggests that, in terms of livelihoods lost, informal workers, especially those in the trade-related sector, suffered the biggest losses. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 109 Of the total Php 310.9 million in total needs, Php 300.9 million is estimated to be needed for reconstruction. Temporary emergency solutions are needed to partially restore the livelihoods of those affected through public works programs and direct food or cash transfers. However a disaster- prone country such as the Philippines requires a concerted effort to mitigate the impact of future disasters on household livelihood and incomes. Developing a comprehensive recovery strategy for productive livelihoods is needed to better orient investments at recovering from natural disasters, while also reducing the risks of future income losses due to similar shocks. Pre-disaster Situation Unemployment and underemployment in the Philippine labor market are high averaging at 7.4 percent62, higher than most countries in East Asia (3.8 percent) and Southeast Asia (5.7 percent) (ILO, 2009a). The working age population grew at an annual rate of 2.7 percent between 2001 and 2007 but employment generation barely kept up, increasing annually by only 2.0 percent.63 Youth account for more than 50 percent of the unemployed, with a high degree of unemployment even among the college educated. Internal migration patterns from rural to urban areas compound problems of finding jobs in densely populated areas such as Metro Manila (which has a population of more than 11 million, 2009 NSO), which resulted in high concentration of informal jobs in these areas. Informal workers account for a third of total employment with half of the informal sector workers almost evenly split between agriculture (48 percent) and the service sector (45 percent). Of the 35 million Filipinos who are employed, nearly half is employed in the services sector and one-third in agriculture, which now accounts for only 34 percent of employment64. Industry and services are concentrated mainly in NCR and Region IV-A (region around NCR) which together account for about half of GDP from the industry and services sectors. Filipino households are highly dependent on wage income which accounts for 45 percent of an average household’s resources. This reflects the extent of their vulnerability to falling incomes in the face of crisis. Real wages have not been able to keep up with general price increases since 2001. Between 2003 and 2006, the average real family income declined by 3.7 percent. Remittances are a reliable source of financial support received by three out of five households (a quarter of them under the poverty line), and they account for 11.5 percent (abroad) and 3.3 percent (in-country) of total household income. The recent food price crisis and the global economic crisis further depressed the incomes of households by reducing earnings and employment. Remittances from family members (abroad or in country) reported a decline since employment opportunities diminished. Urban areas reported higher increases in unemployment and job losses. The NCR, Region IV-A and Region III suffered more than the other regions because they hold about half (46 percent) of employment in the industry and services sectors. (Map 3) 62 Estimates from independent research groups show that unemployment is higher and estimated at above 20 percent in 2008 (Pulse Asia, 2009; Social Weather Stations, 2009a). Their definition of unemployment is different to the government’s official definition in two aspects: (1) unemployment is measured based on the adult labor force population, i.e., those who are at least 18 years old in contrast to the 15 years old and above used in government estimates; and (2) it does not use the “availability for work� criterion used in the government’s definition. For more details, see National Statistics Office (www. census.gov.ph), Pulse Asia (2009), and Social Weather Stations (www.sws.org.ph). 63 Data from various rounds of the Labor Force Survey 64 Source: NSO, 2009 Labor Force Survey Results. 110 PHILIPPINES TYPHOONS ONDOY AND PEPENG Map 3: Impact on Informal Livelihoods, by Region P O S T- D I S A S T E R N E E D S A S S E S S M E N T 111 Post-Disaster Impacts The assessment of losses estimates the impact of the disaster on employment and income of the affected persons and households involved in productive activities. It is calculated on the basis of the damage and losses estimated in each of the productive sectors (agriculture, industry and services) using a standard methodology. Natural disasters have an overall adverse socio-economic impact. They constitute a major threat to employment since they deplete productive assets and generate losses of income. About 170 million workdays, equivalent to about 664,000 one-year jobs, were lost due to the disasters’ effect on people’s livelihoods. This represents about four percent of total employment prior to the disaster in the affected six regions in Luzon. Total lost income due to the disaster amounted to Php 50.3 billion. This income loss affected particularly workers of the informal economy with family-based livelihoods. If left unaddressed, the damages and losses sustained by the various sectors in the affected areas will continue to weigh in on workers and households incomes in 2010. Results of interviews with microfinance institutions around Luzon validate significant livelihood income losses in their localities. The Microfinance Council of the Philippines reported 164,588 clients across 20 microfinance institutions (MFIs) were affected by the typhoons. Because of damages to their own properties, MFIs are struggling to keep operations afloat, much less serve micro- enterprises who have lost their livelihoods. Some cooperatives, like TAO Management Service & Multi–Purpose Cooperative in Pasig, were unable to provide credit to members with the little capital they have and because few members are making payments at this time. Across the sectors, commerce sustained the biggest losses in employment and incomes in 2009 (Figure 8a and 8b). Commerce represents about 65 percent of total lost income, amounting to Php 32.6 billion. The temporary closedown of some firms and home-based enterprises because of the flooding and damages to property and firm equipment reduced production in the wholesale and retail trade subsector by about four percent of its gross value added in 2009. The manufacturing industry incurred the second biggest loss in terms of incomes and employment, losing about 150,000 work-years due to the disaster and about Php 13.0 billion in incomes. Income losses in the agriculture sectors amounted to about Php 3.7 million, equivalent to about 7 percent of total income losses and 11 percent of workers’ lost incomes in the commercial sector. Average wages in agriculture in the affected regions are lower than the legislated minimum wage in these areas by 20-40 percent. Income losses in the agriculture sector in 2009 were results of flooded and silted farms, (part of which will recover in the next season and part are now made unproductive), fish ponds that overflowed, and livestock that drowned in the flood. The impact of damages to agricultural lands is expected to cause additional employment and income losses to workers in the sector in 2010, if left unaddressed. Figure 8a: Sector Share to Total Figure 8b: Sector Share to Total Losses in Income Losses in Workdays 112 PHILIPPINES TYPHOONS ONDOY AND PEPENG The biggest loss in incomes is concentrated in the NCR and Region III. Total income losses in NCR were estimated at Php 22.9 billion and at Php 12.8 billion for Region III. These two regions command 33 percent of the national output and about 28 percent of the total employment in wholesale and retail trade. Together, they also account for about half of affected wholesale and retail trade establishments, most of which are workers in home-based and small or micro enterprises.65 This suggests that, in terms of livelihoods lost, workers in the in the trade-related sector in these two regions suffered the biggest losses. (Figure 9) Figure 9: Total Income Losses, by Region (in Php million) Informal sector workers are those who have been affected the most. The workers and micro- employers in the informal sector are the most vulnerable to shocks provoked by exceptional natural events, especially the small traders and vendors, food-related producers, service providers, the self- employed agricultural workers and all those relying on survival livelihood activities. The post-disaster socio-economic situation further increased their vulnerability in terms of limited opportunities. In commerce, which incurred the biggest income losses, about 60 percent are self-employed. Recovery Needs Out of the Php 50.4 billion estimated losses in livelihood incomes, Php 38.1 billion needs to be recovered in some form of emergency and livelihood assistance to support affected workers and households. Of the total estimated livelihoods losses, small and home-based enterprises can refinance about 24 percent, or Php 12.3 billion, of their losses on their own. Based on the results of the survey conducted among different types and sizes of enterprises66, 13 percent of micro- entrepreneurs can recover lost incomes from remittances and loans/gifts from relatives, while another 11 percent will seek to refinance their losses from moneylenders. The government is already addressing the post-disaster situation and has made available relief assistance, mostly food for affected individuals, amount to Php 352.8 million.67 Developing a strategy for productive livelihoods helps to better orient investments at recovering from the damages and losses caused by typhoons while also reducing the risks of future income losses due to similar shocks. This strategy should address individual and community-level risks in productive livelihoods in an interrelated way. It is underpinned by a program that aims to generate immediate incomes for priority target groups and increases employment opportunities for the displaced. This 65 See also the PDNA report on the enterprise sector. 66 Rapid assessment on the impact of the disaster on enterprises, commissioned for the PDNA. See also the PDNA report on the enterprise sector. 67 NDCC Update Situation Report No. 47, 11 November 2009. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 113 program amounts to Php 15.0 billion.68 It should be complemented by policy measures that facilitate the livelihood recovery response to future disasters. ( Table 57) Table 57: Priority Activities to Recover Lost Livelihood Incomes (in Php million) Activities Year 1 Year 2 and 3 COMPONENT A – Short-term, targeting priority groups Immediate emergency job creation through labour-intensive schemes (cash/ food for work) generating five million working days equivalent to six months of 3,290.0 - work for 70,000 people (materials, wages, technical assistance, supervision and administration) Restoration of productive livelihood assets of micro-entrepreneurs (materials (@ 940.0 - US$ 200/beneficiary), technical assistance, supervision and administration) Restoration of productive assets of women entrepreneurs (materials (@US$ 200/ 470.0 - beneficiary), technical assistance, supervision and administration) COMPONENT B – Medium-term, targeting geographical areas Labor-based investment in socioeconomic and productive infrastructure through labor-intensive schemes for public works (cash/food for work) generating 10 million 940.0 5,640.0 working days equivalent to six months of work for 140,000 people (materials, wages, technical assistance, supervision and administration) Support to job-seekers through employment services and provision of skill-training 385.4 220.9 Support to micro entrepreneurs for the scaling up of local micro enterprises 366.6 329.0 Capacity development of local partners including associations of producers, 51.7 32.9 workers and micro-entrepreneurs, and business service providers Support to local micro finance institutions to improve quality of service and 643.9 1,217.3 performance Support for enhancing the preparedness of local authorities for livelihood recovery 51.7 32.9 in view of future disasters COMPONENT C – Medium-long term initiatives at policy level Support to interrelated national policies and financial mechanisms facilitating livelihood recovery response and the development of the financial sector and 145.7 145.7 business development services Support to labor-related institutions that enhance employability, social protection 84.6 79.9 and other aspects of labor administration in post-disaster situations TOTAL 7,369.6 7,698.6 Component A: Generating emergency employment and income support for priority target groups Public works programs provide short-term income support to families of unskilled workers who have temporarily lost their jobs, while also delivering basic services. The government through the DSWD implemented a cash-for-work program to provide temporary employment to affected families participating in the clearing operation. So far, the program hired 1,808 individuals in NCR and RegionIV-A and paid out Php 1.9 million in wages. The goal of this component is to respond to priority needs, avoid deterioration of the socio- economic situation and provide the most affected people (such as the displaced) with emergency job opportunities and income. This would include developing a mechanism that the government can easily tap in times of disasters to respond more swiftly and mitigate the impacts of sudden income losses. Main activities to be implemented are: (i) emergency temporary jobs (cash/food for work) for 68 Though not possible to calculate in detail, recovery and reconstruction activities in the other sectors covered by the PDNA are expected to generate sufficient livelihood incomes to close the remaining needs gap. 114 PHILIPPINES TYPHOONS ONDOY AND PEPENG priority groups; and (ii) assistance to restoring lost productive livelihood assets for priority groups (e.g., micro-entrepreneurs) through cash transfers. With regard to job creation, an estimated Php 4.2 billion would be required to implement a public works program for the duration of the reconstruction phase (Table 56). The labor intensive nature of public works would cover 210,000 workers (one worker per household) in the affected regions whose incomes have been severely reduced because they lost their livelihoods or jobs. The work would include the first six months of rebuilding and reconstructing damaged infrastructure69. The wage would be set at 75 percent of the average monthly wage of unskilled workers in the non-agriculture sector70, in line with the existing wage rate of the cash-for-work program of the government. Food for work activities targeting highly vulnerable households would be carried out in circumstances where food is scarce and wages low or market mechanisms are not operating. The program would also account for implementation costs for data collection to identify beneficiaries, monitoring, and general administration. This usually takes up about 10 percent of total project cost. Component B: Applying local economic recovery measures to increase employment opportunities and facilitating reintegration of displaced people targeting specific priority areas. The goal of this component is to consolidate initial recovery and contribute to creating conditions that promote increased employment among the affected population at the local level. Main activities to be implemented include: (i) labor-based investment in socio-economic and productive infrastructure in combination, using participatory approaches71; (ii) support to job-seekers through employment services and provision of skill-training; (iii) support to micro entrepreneurs and scaling up local micro enterprises; (iv) support to micro entrepreneurs and capacity development of local partners including associations of producers, workers and micro-entrepreneurs, and business service providers; (v) support to local micro finance institutions to improve quality of service and performance; and (vi) support for enhancing the preparedness of local authorities for livelihood recovery for future disasters. Component C: Supporting active employment policies, social protection schemes for the poor and the application of decent working conditions. In addition to providing affected people with the emergency assistance to recover their livelihoods in the form of public works and cash transfers, it is essential to ensure that livelihood risk reduction measures are taken by the most vulnerable groups, particularly in high risk areas which are prone to the effects of the next cyclone season. This not only holds for infrastructure and basic services. It is also needed in terms of focusing on people’s livelihoods with a view to increasing their resilience – ensuring better preparedness to cope with the impacts on their livelihood and be ready to quickly re-establish normal working conditions. The goal is to progressively create an enabling environment through active employment policies and contribute to the transition to sustainable, long-term development through productive employment and decent work. Main activities to be implemented: (i) support to interrelated national policies and financial mechanisms; (ii) support to the establishment of regulatory frameworks for the development of the financial sector and business development services; (iii) support to labor-related institutions that enhance employability, social protection and other aspects of labor administration in post-disaster situations. 69 See the PDNA reports on the various infrastructure sectors 70 Department of Labor and Employment, 2008 Wage Survey 71 See also the PDNA report on social protection for broader community-based recovery activities P O S T- D I S A S T E R N E E D S A S S E S S M E N T 115 All these measures focus primarily on the workers and small entrepreneurs in the informal sector, in view of the toll they have paid as a result the recent disasters, and also in consideration of their increased vulnerability to natural hazard risk and the lack of appropriate risk coping instruments. In this sense, the crisis provoked by the disaster represents an opportunity to improve local economic efficiency and growth. The economic growth implications of such a comprehensive post-disaster livelihood recovery approach cannot be underestimated. Temporary humanitarian solutions are certainly essential to partially restore the livelihoods of the priority groups, but they need to be accompanied by more transitional, medium-term, measures to bring people back to their pre- disaster welfare levels and ensure the sustainable recovery of jobs and micro income-generating activities lost. 116 PHILIPPINES TYPHOONS ONDOY AND PEPENG Social Impacts and Vulnerable Groups Introduction An assessment of the social impacts72 of the typhoons was Evangeline Pe conducted in urban communities in Metro Manila73 and rural communities in affected areas of Luzon74. In Metro Manila the assessment was carried out by the Institute of Philippine Culture (IPC) with the support of civil society organizations75 active in the barangays visited. Research in affected areas of Luzon was carried out by a joint team comprised of staff from the DSWD, World Bank, and the UN76. The team used qualitative methods of data collection to carry out the assessment including participant observation, in-depth interviews and Focus Group Discussions. Findings from the assessment are presented based on the three key areas of enquiry: (i) socio economic impact with specific emphasis on the livelihood and coping strategies of vulnerable groups, (ii) social relations and cohesion, and (iii) governance. Socio-economic impact Livelihoods have been severely disrupted. In rural areas, farmers and agricultural laborers were particularly hard hit. A near total loss of crops and livestock was reported across all sites visited and land has become temporarily, and in some cases, permanently, unusable. In the coastal areas visited yields from fishing dropped significantly. Migration to another barangay, to Manila or abroad was not considered a feasible option. The main coping strategy adopted was to take on temporary work. This is particularly challenging in rural areas where there are few opportunities to earn an off-farm income. More diversified livelihood strategies in urban areas indicate a greater potential for households to recover. This is particularly true where families have varied sources of income. The most severely affected households in urban areas were those that relied on a single home-based business as both equipment and inventory were often lost. Government assistance currently being provided to re-establish these households and micro-businesses is limited. Sources of credit regularly used prior to the storms often became unavailable. Where households are able to borrow, they frequently use loans to cover basic expenditures and to pay back other loans. Households have had to further reduce expenses by cutting down on food. There are reports of children being taken out of school and of older children working. With few assets and no land to sell many of the most vulnerable households fear they may not be able to recover. 72 The findings presented in this report are preliminary, a full social impact report with the detailed information collected in specific sites is currently under preparation. 73 Municipalities and barangays visited in Metro Manila and Rizal were: Kasiglahan Village 1 (San Jose, Montalban), Doña Imelda (Quezon City), Camacho (Nangka) and Marikina Heights (Marikina City), Maybunga (Pasig City), Southville, Caingin (Sta Rosa City) and Malaban, Santa Cruz (Laguna). 74 Municipalities and barangays visited in Northern and Southern Luzon they were: Botolan, (Zambales), Rosales and San Fabian (Pangasinan), Santa (Illocos Sur), Naguilian (La Union), Baliwag, Bustos, San Ildefonso (Bulacan), Cabanatuan City and Palayan City (Nueva Ecija), Puguis, La Trinidad (Benguet). 75 These included Partnership of Philippine Support Service Agencies, John J. Carroll Institute on Church and Social Issues, Community Organizers Multiversity, Urban Poor Associates, Community Organization of the Philippines Enterprise, Community Mortgage Program, church parishes, Philippine Business for Social Progress and Homeless People’s Federation. 76 The social assessment also benefitted from some preliminary information collected by various IASC Clusters during their initial rapid fields assessments (including National Capital Region, Regions I, III, IV-A). P O S T- D I S A S T E R N E E D S A S S E S S M E N T 117 Social relations and cohesion The family is the main source of support. In the majority of cases the immediate family remained together, with no instances of dependents being sent to stay with relatives. Families played a key role in providing cash, accommodation and food. Financial support provided was used for basic household expenditures but was insufficient to re-establish livelihoods. Remittances from overseas are not a viable coping strategy for the poor and vulnerable households in the community. Ondoy and Pepeng have not had a significant impact on intra-household relations, with both gender and intergenerational roles remaining unchanged. There were relatively few instances of collaborative behavior in rural areas, in contrast to the situation in urban areas. The exception was indigenous communities where resources where pooled to carry out rituals to re-establish a sense of normalcy after the disaster. Formal homeowners and neighborhood associations in Metro Manila played an important role in the distribution of relief goods. There were no significant reports of increased insecurity in the areas visited. Governance Previous experience of moderate flooding resulted in households being reluctant to leave in spite of warnings in some areas. The readiness of local governments to respond to the flooding varied significantly. Emergency preparedness plans were not systematically implemented. Relief was provided in all areas visited but with variable quality and promptness. This was linked to the fact that relief was provided through a number of sources with no minimum standards adhered to across sites. While there were no reports of groups excluded from assistance there were a number of unmet needs (including non-food items, hygiene products, shelter as well as basic health services, education, water and sanitation and psycho-social support). There were reports of political influence in the allocation of relief, with the provision of assistance being personalized in a number of instances. Communities visited have not yet been consulted on their needs for relocation and restoration of livelihoods. This has created a great deal of uncertainty regarding the process. There was mixed response to relocation. Communities in urban areas, those highly dependent on their place of residence for income and indigenous groups were the most reluctant to move. Rural communities were more open to relocation. All stressed the importance of being able to pursue viable livelihood strategies in any new area of residence. Capital was systematically considered the key input needed to resume income generating activities. To help households and communities recover more quickly, several short-term interventions are proposed: (i) cash transfers to help the most vulnerable re-establish their households (Php 1.1 billion), (ii) community block grants to establish basic services and other public goods not supported by the other sectors (Php 315 million); (iii) trauma counseling for severely affected individuals (Php 160 million). Any relocation of households or communities needs to include a systematic process of consultation and take into account groups with particular needs. This applies in particular to indigenous communities whose collective attachment to ancestral land means a strong preference for remaining in their current areas of residence. Furthermore, the specific protection needs of women, children, the elderly and people of disabilities will require consideration when planning for temporary relocation and permanent resettlement sites. In this regard, building capacity of relevant local and central government institutions in disaster preparedness and monitoring the longer term impacts would be important steps to improve the response to future disasters. 118 PHILIPPINES TYPHOONS ONDOY AND PEPENG Socio-Economic Impacts ‘We left everything. Nobody helped us. We saved ourselves, we saved our children� – Woman in Tent City 2, temporary relocation center in Botolan, Zambales. Livelihoods Livelihoods have been severely disrupted. Farmers and agricultural laborers were particularly hard hit. Ondoy and Pepeng hit immediately before harvest time. The near total loss of crops and livestock was reported across all sites visited. Almost without exception land was made temporarily unproductive. Damage to irrigation systems was reported both in Zambales and Santa. Both of these factors significantly reduce the likelihood that farmers will be able to plant again in time for the next agricultural season. Riverside areas are particularly affected. Where severe flooding has caused shifts in the course of the river, public land sometimes used to grow vegetables has been lost. Fisher folk (outside the Laguna area) diversified their livelihood strategies prior to the floods. Nearly all communities visited had taken up farming due to decreasing catches since the 1990’s. The coastal areas visited are subject to recurrent flooding and sea surges. There was, therefore, a system in place to secure boats and fishing equipment prior to Pepeng. Yields from fishing dropped significantly following the flooding.77 More diversified livelihood strategies in peri-urban and urban areas indicate a greater potential of households to recover. This is particularly true of families with two distinct sources of income and where one of the members as a salaried job. There were, however, reports of small businesses in the Metro Manila area closing temporarily and sending workers home (Marikina, Rizal), as well as of domestic workers and construction workers losing their jobs due to prolonged absences. The most severely affected households in urban areas were those that relied on a single home-base business for income (sari-sari stores, eateries, shoemaking, rug making, street vendors and tricycle drivers for example). In the majority of cases, both equipment and inventory was lost. The ability of these households to recover is further hampered by very limited access to credit and in some cases by pre-existing debt. With households drastically reducing expenses those small businesses that continue operating (shoe sellers, tricycle drivers and sari-sari stores) reported reduced income. There are also indications of store owners not being able to compete with the influx of relief goods in some areas of Manila. Capital was considered the key input to be able to restore lost livelihoods. There is a strong preference for returning to one’s previous occupation. Some households outside Metro Manila did indicate that they would be willing to take-up alternative livelihood activities, for which they would also need new skills. Participants often expressed concerns about whether they would be able to pursue their current livelihood strategy in the relocation sites being envisaged. Coping strategies “I asked help from the barangay, hoping that they could provide me with maybe 3 or 5 roof sheets, but nothing came along. I picked up whatever was lying around, and fashioned it into a kubo (makeshift house). I also picked up a bed and cushion, and some clothes. We have no forks and spoons. I went to Gabaldon Elementary School, to look for some forks and spoons, and some kaldero (pot used for cooking rice). For now we have a small kubo, and we all just squeeze in. We need to bear with the situation, and we can only rely on our child (for income). But that should not be the case, so I pick up waste, recyclable materials, so that I can earn some money to be able to buy rice and coffee� – Woman in Natividad, Naguilian (San Fernando La Union). Fisher folk in the Laguna area reported a temporary increase in fish catches immediately following Ondoy. 77 P O S T- D I S A S T E R N E E D S A S S E S S M E N T 119 Temporary work There is limited government assistance focused on public employment and livelihood restoration currently being provided in the sites visited. The only scheme specifically mentioned by the communities was the Self-Employment Assistance–Kaunlaran (SEA-K)78 in two peri-urban/urban sites.79 In addition, there were reports of a Cash for Work scheme implemented by a private foundation in one of the neighborhoods visited in Metro Manila. The main coping strategy adopted is, therefore, to take on temporary work where available. This is particularly challenging in rural areas where there are few opportunities to earn off-farm income and limited skills beyond those used in farming and fishing. The extensive damage to fields also means that opportunities for daily agricultural work are now few and far between. Temporary work in construction was the most commonly mentioned occupation by men in rural areas. The number of days of work a month could, however, be as few as five80. Where they could not resume their former work (often selling fish or vegetables, owning sari-sari stores, working as manicurists) women most commonly took in laundry or started domestic work. Data from Metro Manila indicates that, unlike in rural areas, a few new livelihood opportunities have opened up. They mostly benefit men, as in the case of water transport in lakeside communities, pangangalakal (buying and selling scrap material), construction work and auto-repair. Households suffered significant reductions in income. The daily income of temporary work reported in communities visited outside Metro Manila varied between Php 50 to Php 150 (for daily agricultural work such as weeding) and between Php 100 and Php 300 in Manila. Where no other sources of income are available both men and women have taken up hazardous work (collecting and loading sand from river banks or waste picking). It is important to note that for some communities in Metro Manila, the poor state of roads means that they have to incur increased transport costs to get to work (up to a third of their daily wages in the case of Sta. Rosa). Migration to another barangay, to Manila or abroad was rarely considered an option. In the two instances where migration was mentioned as an alternative, the interviewees in question had either relatives abroad or had themselves been overseas workers. The majority of participants in the discussions clarified that they would have nowhere to stay if they moved elsewhere and that renting would be too expensive. In addition they clarified that they had no connections that could help them find a job. Debt “We are not allowed to default (on loan), we all pitch in to be able to pay the loan… During these times of difficulty, we sacrifice on food. We eat fish paste and moringa. We forego pork, sometimes we also forego sugar, coffee and soft drinks. We do not like to have a bad credit record… We limit our food to vegetables, and skip meat. We also do not buy clothes. For our children, their daily allowance is reduced from Php 10 to Php 2. We also forego their milk… Also, instead of replacing the damaged roof sheets and walls, we resort to patching the house.� Owners of small businesses, invariably women, borrowed regularly before Ondoy and Pepeng. Loans were most commonly sought from informal lenders to purchase supplies. Prior to the flooding, loans 78 SEA-K is DSWD’s microfinance strategy for poor individuals with entrepreneurial skills by providing non-collateral, interest-free seed capital, payable within 1-2 years. 79 San Ildefonso, Bulacan and Palayan City, Nueva Ecija 80 Regular off-farm work was only observed in one of the sited visited in Santa where the construction of a nearby road provided work for a period of six months to a small group of men. 120 PHILIPPINES TYPHOONS ONDOY AND PEPENG were taken out on a rolling basis, every six months. They were paid weekly (or daily in Metro Manila) with an average interest of 20 percent and a Php 50/daily penalty for defaulting on payment. Loans taken out by owners of sari-sari stores and home-based business ranged from Php 1,000 to Php 5,000. Access to credit from micro-finance institutions was limited across field sites. Micro-credit institutions were present in only six of the barangays visited outside Metro Manila. Moreover they only reached a reduced number of business owners in each of these sites. The conditions of the loans were more favorable. Interest charged ranges from 5 to 10 percent with no penalty incurred for late payment. In exceptional cases micro-credit organizations were able to extend additional credit to their members even though they might have lost all assets. This was provided if they had a good credit record. The main impact of the flooding was to close off sources of credit (usually informal lenders) for the most affected households. While borrowing terms remained unchanged, the loss of assets used as collateral meant that those families whose houses were severely damaged were no longer able to borrow. In one of the urban sites visited, women clarified that loans from informal lenders are often preferred in cases of emergency as the cash is immediately made available. There is no application and no approval process which can be lengthy in the case of micro-credit institutions. Where households are able to borrow they are using part of the loans to cover basic household expenditures. Loan repayment is a priority expense for all borrowing households. This was the case even in the instances where there is no penalty for late payment, since future ability to borrow depends on a good credit record. In rural areas the debt burden for non-titled farmers seems particularly heavy. In addition to the loans previously taken out for small business activities, there are additional loans with land-owners to purchase seeds and other inputs for planting. These are usually paid back after the harvest. With the loss of crops these loans are now pending payment (accruing interest) and farmers will have to borrow further for the next harvest. Where affected households are still able to borrow, they are taking out additional loans to repay pre-existing debt. With few assets and no land to sell it is difficult to envisage how the majority of rural households would be able to recover without additional cash injections. Negative coping strategies Even where temporary work is available the reduction in income (and often the need to repay pending loans), means that households have had to drastically reduce expenses. Communities in rural areas and in Metro Manila reported limiting the number of meals, as well as the quantity and diversity of food eaten81. In some areas, there is heavy reliance on relief (rice, noodles, and sardines). Affected families that have either moved out of temporary relocation centers or living in municipalities that did not set up temporary relocation sites are particularly hard it. Participants in the discussions were often using shrimp paste as a flavoring for rice and have stopped buying pork and vegetables altogether. One of the participants in the discussions in Santa, Ilocos Sur described it as follows: “We eat water cabbage, snails, and whatever might be available�. Children are dropping out of school or attending classes irregularly in some areas. This is particularly true where families have been relocated further away from the school and can no longer afford transport and food costs. Distance from the school seems to a key factor determining school attendance. Even in rural areas and among highly indebted communities children continued to go These findings are corroborated by the preliminary information collected as part of the UN Emergency Food Security 81 Assessment. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 121 to school if they could walk there and could come home for lunch. Among better-off families82 there were reports of young people having to abandon vocational training as families could not afford to pay the second semester fees. For those families who were planning to send daughters abroad (as nurses for example) this meant that an important source of income for the family has been, at least temporarily, closed-off. This trend was also observed in the Metro Manila. There, college seniors unable to pay tuition costs were taking on work to contribute to the household income and/or to save for tuition costs. In addition, there were reports in the areas visited of children and young adults taking up work in the collection and trading of scrap material. Social Relations and Cohesion Across all areas visited, the immediate family was the main source of financial support for basic household needs. In both rural and urban areas, relatives played a key role in providing cash, accommodation, and food in the aftermath of the floods. In the majority of cases the financial support received from relatives was limited with some variation between Metro Manila and other areas in Luzon. The size of reported contributions from family varied between Php 500 and 700 outside Manila and between Php 1,000 and 10,000 in Metro Manila. In all cases these were one-off contributions. The explanation often provided was that relatives in nearby areas had themselves been affected and/ or were equally poor. In all sites visited (with one exception) the financial contribution received was not sufficient to re-establish lost small businesses or to re-start farming. There were consistent reports across rural and urban areas of financial contributions from families being spent on basic household needs (including food, medicine, and water). The general trend observed was that very few people in the communities visited had relatives abroad. Because of the investment involved in going to work overseas households with this type of support tended to be better-off. Remittances from overseas do not appear to work as a coping strategy or insurance mechanism for the poor or vulnerable houses in the community. In some cases these relatives were not able to help substantially.83 A more common strategy in peri-urban areas was for one of the spouses (invariably the man) to have a salaried job in the closest town and to regularly send cash home. Intra-household relations do not appear to have significantly changed as a result of Ondoy and Pepeng. While women are taking on additional work outside the home, there is no evidence that gender roles within the household are changing. This is equally true of rural areas, where women often seem to have more temporary work opportunities than men. For example, where women are now working away from home (as domestic workers) child-care responsibilities are handed over to older siblings or to female neighbors, even though the fathers might not currently have a job. Women continue to be the ones taking out and managing loans from informal lenders and micro- finance institutions. Where support networks (female family members, neighbors for example) are not available this could result in an increased work-load for women. During the rescue and immediate aftermath of the floods, men tended to take more risks, staying behind to secure the house and returning sooner to determine damage and start repairs. Women and children were evacuated first. They were also the last to return home from temporary accommodation centers, which could place them at increased risk.84 Inter-generational relations also remain unchanged. There is a greater sense of urgency among youth to get employed or start a small business. In Metro Manila young people participating in the discussions referred to the role they played in the rescue of elderly relatives, neighbors, and younger 82 Titled farmers in rural areas for example. 83 In fact in one instance relatives in the US had recently lost their jobs and were themselves in financial difficulties. 84 There were no reports of gender-based violence or violence/abuse of children in the sites visited during the PDNA exercise. The IASC Protection Cluster assessment has collected some reports of incidents of gender-based violence in evacuation centers, relocation sites and areas at risk. 122 PHILIPPINES TYPHOONS ONDOY AND PEPENG siblings. This is often linked to an increased sense of responsibility and confidence in their ability to take on bigger tasks (in and outside the home). In the vast majority of cases families tend to remain together. The exceptions noted were where men worked in nearby areas prior to Ondoy and Pepeng. In these cases while they went home briefly to provide immediate support they have now returned to resume their jobs. Secondly, where families are still in relocation centers there were instances reported where men have returned to the barangay of origin to start rebuilding makeshift housing. In these cases women and children remain in the temporary relocation site where they continue to receive relief assistance. There were no reports of children being sent to live with other relatives, as a result of the floods. In addition, in the areas visited there were no reports of separated children in the communities visited. However, the IASC Protection Cluster preliminary protection assessment indicates that more than 100 children could be currently missing.85 Community cohesion There were few instances of formalized collaborative behavior in rural areas, in contrast to the situation observed in urban areas (including Metro Manila). Critical support was provided by neighbors during the height of the floods and in its immediate aftermath. In a few instances, affected families also turned to their better-off neighbors for small emergency loans (Php 500 for basic needs outside Metro Manila). Following that, however, communities in rural areas rarely reported instances where the community worked together (before or after Pepeng). Indigenous communities in La Trinidad (Benguet), were the exception. In this case, the community pooled resources to carry out the necessary rituals to re-establish a sense of normalcy. Ritual plays a key role in maintaining community cohesion among indigenous groups. These require the slaughtering of animals and are primarily aimed at cleansing community members who have been in contact with the dead. These will have to take place before livelihood activities can be resumed. Members of the community who have suffered heavy losses reported that they have never doubted the readiness of their neighbors to support them in the performance of these, often costly, rituals. In addition, there were very few cases of community based organizations active in rural areas. Only two instances of more systematic cooperation were observed across the sites visited (San Fabian and Zambales). They appear to be linked to the presence of a strong barangay leadership and/or to the presence of NGOs.86 The situation is different in urban and peri-urban areas, where collaborative behavior was more commonly found. This took the shape of frequently sharing food among neighbors, taking turns to monitor news on coming storms, pooling resources to ensure the cleanliness of temporary accommodation sites, and taking care of neighbors’ children. In Metro Manila, there were reports of young people in particular providing support to relatives as well as neighbors and peers in cleaning, collecting garbage and repacking and distributing relief goods. More systematic forms of collaboration tended to take place in areas that are regularly flooded such as Laguna. In addition, formal homeowners and neighborhood associations in Manila played an important role in the distribution of relief goods. Their primary role was the identification of the affected households and the distribution of relief stamps. 85 The IASC protection assessment collected some reports of children being placed in institutions as families are no longer able to deal with the burden of care. The results of the assessment are expected to be available shortly. 86 In San Fabian, women members of a local micro-credit association took turns in taking care of each other’s children. The same community reported instances where families had shared relief goods to better meet the needs of individual families. Hygiene products had been exchanged for rice, for example. Secondly, in one of the relocation areas visited in Rosales, the community had organized itself into “clusters� used for the distribution of relief goods. Building on this structure, the families at the site formed a committee to decide on the allocation of relief when this was not sufficient to be shared equally. The committee took on the additional role of communicating with the Municipal Social Welfare and Development staff on the living conditions in the relocation sites. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 123 While there were no direct reports of increased criminality in the areas visited outside Metro Manila, family members took direct actions to avoid property theft. Often participants in the discussions referred to the fact that they had nothing left to be stolen, which explained why there had been no increases in petty crime. In all areas visited men had returned to their houses as soon as possible to safe-keep any materials or assets that could be salvaged. There were reports of looting in some areas of Montalban (Metro Manila). A sari-sari store owner recounted that in one instance thieves had: “sinisisid yong baha para makapasok sa tindahan at magnakaw� (dived under water to rob the store). In the aras visited by the PDNA team there were no reports of inter-personal violence (including gender-based violence or violence against children) in the communities visited. In one of the relocation areas visited in Zambales, there were some reports of tensions between non-indigenous (�lowlanders�) and indigenous groups (“highlanders�). This was explained by the indigenous community as a manifestation of long-standing prejudices held against them by “lowlanders�. Indigenous leaders explained that they tried to ignore these comments and attitudes. Interestingly the flooding was seen by these indigenous groups as a lesson from God (Abo) in how people should learn how to live together. “Tanda lang ito ng kung paano natin aayusin ang ating sarili lalo na sa harap ng Panginoon�. (This is a sign of how we should put ourselves in order in the eyes of our creator).87 Governance “The councilors informed all houses about the coming storm. We tied the roofs of houses down. Before the storm arrived we were able to evacuate the family to the center. My husband and brother- in-law went back to our house. All of us here did the same thing. There are meetings to plan what to do, and everyone follows the plan. Every year this happens to us. We also know that there is already a center, and what the LGU provides. The evacuation center is in the town hall, where most people went. Some went to the Santa High School, while others went to their relatives.� Woman in Dam May, Santa (Ilocos Sur) “The time Pepeng came, we were at home; we live beside the river. The water rose, but we did not know this. By 7pm we slept; by 9pm the water reached its peak. It was at 8pm when my husband woke me up; I told him the water won’t reach our place (Di yon darating ditto.) When it dawned upon me that it was for real, I woke up my grandchildren, and children; the books floated. My children and grandchildren ran already, but we stayed behind. The water rose from knee high, to waist high to the neck. We were lucky that a teacher called the Municipio to request for rescue. They came to fetch us, they had a number of trips. They brought them (the children) to church. We stayed behind. We had raised our things to a higher level. We thought that that would already be ok, it was only later that we found out that the whole house got washed away.� Woman in Naguilian Emergency preparedness and relief Previous experience of flooding influenced households’ reactions to flood warnings. In areas where moderate flooding had previously taken place (Zambales, Pangasinan and Metro Manila for example) families had often been reluctant to leave their houses even when warned of the upcoming typhoon. In Metro Manila participants explained this to the team by saying that the flood warning had been “Signal N.1 lang� (only signal one). On the other hand, in areas that had previously experienced This was in contrast with the findings of discussions with indigenous groups in La Trinidad who related that events such 87 as flooding are natural. These are accepted when the community fails to read the omens sent by ancestors. A specific example recounted by the community was that of a young boy who kept seeing a black bird shaking his head at him for a few days. Taking it as a sign to the family the grandfather got all family members to leave the village. The land-slide that hit the village happened the following night. 124 PHILIPPINES TYPHOONS ONDOY AND PEPENG severe flooding (Palayan City, Bulachan and Santa) households were more like to evacuate immediately when warned. There were reports of families in these areas bringing their own food and stoves to evacuation centers and occasionally their livestock. The extent to which municipalities and barangays were prepared and ready to respond to the flooding varied significantly. Although some of the municipalities and barangays have emergency preparedness plans, these were not systematically or consistently implemented. In Northern and Southern Luzon, the range of responses can be illustrated by the examples from Santa, Ilocos Sur, and Naguilian, in San Fernando, La Union. In Santa, the respective roles of the municipality and of the barangay were clearly defined. A public warning was issued three days before the typhoon. Frequent rounds were also made by emergency teams the day before the typhoon hit to evacuate the more reluctant community members. In the case of Naguilian, no emergency preparedness plan was in place. The lack of a flood warning/monitoring of the rising river water meant that a significant number of families were caught unaware. This partly explains the large number of casualties reported in this area. 88 Rescue assistance was provided by the municipalities in all visited. There were consistent reports of the emergency services being overwhelmed. Rescue capacity was limited with a number of reports of affected people being stranded up to a few days waiting for the water to subside. Basic relief assistance (food) was provided in all evacuation centers. Food assistance received was considered sufficient and adequate in the vast majority of cases outside Metro Manila. Where food had been insufficient there tended to be consensus among groups interviewed that it had been provided on a “first come first served basis�. While it was not enough for everyone there was no sense that distribution had been inequitable. The standard of support to affected households varied depending on the municipality’s capacity to respond and the individual donations received. It ranged from individual family tents in a well maintained site with public lighting (Tent City 1, Zambales), to the provision of damaged roofing sheets in Naguilian. Where temporary relocation centers were established, there were delays reported in the assistance provided to affected families. The longest time-lag observed was in Rosales, where families whose houses had been destroyed stayed approximately two weeks in makeshift housing built from scrap material, before they were moved to evacuation sites. IASC Cluster assessments have reported that in the majority of evacuation centers and communities, vulnerable individuals and those who have specific needs such as children, women, persons with disabilities, older persons or persons with serious/chronic medical conditions are not being identified, which may render the provision of special assistance more difficult. Also, not all relocation sites have infrastructure available that are accessible to persons with specific needs which may make it difficult for these groups to access water, sanitation and other public facilities, as well as distributions. In Metro Manila, there were reports of assistance not reaching the “interior� areas of the neighborhoods for several days. The varying standards of support is linked to the fact that relief was provided by a number of sources - government (DSWD), civil society organizations, UN agencies, private sector, individual donors and faith based organizations. While participants in the discussions were extremely grateful for the relief received there were reported unmet needs across all areas visited. This was true of affected people in temporary relocation sites and of those that had returned to their homes. Common concerns were inadequate shelter, water and sanitation facilities, lack of appropriate medical care, and of essential non-food items (cooking utensils and stoves). There are also no distributions targeting the specific needs of extremely vulnerable persons or persons with specific needs such as assistive devices, specific In Metro Manila, some of the participants in the discussions indicated that they had received no early evacuation 88 notice from Barangay officials. There were contradictory accounts from Barangay officials in some of the areas (KV I and Maybunga for example), with reports of households refusing to leave in spite of the warnings. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 125 medical consumables in majority of sites.89 The bulk of the relief support was food and there were few instances of non-food items being provided. Sanitary towels for women were provided in only one of the sites by an international NGO. In addition, conditions in temporary relocations centers in Metro Manila were reported to be particularly poor. Participants in the discussions reported overcrowding, lack of electricity and water, closed washrooms, and lack of food. While there were no reports of gender-based violence or violence/abuse of children in the sites visited, the IASC Protection Cluster assessment has collected some reports of incidents of gender-based violence in evacuation centers, relocation sites and areas at risk. There were instances of trauma reported among both children and adults. There were reports of adults still unable to resume their work following the flooding due to trauma. Children were reported to have nightmares and to refuse to go to school when it rains. The majority of participants in the discussions were eager to share their experiences of the floods. Relating their experiences, especially regarding the loss of their homes and livelihoods, was very emotional. Often MSWD workers and barangay captains and councilors providing relief assistance had themselves been affected. This was felt to limit their ability to respond. No debriefing or counseling sessions had been organized in any of the sites visited. While the DSWD team reported their intention of carrying these out they were over-stretched with the relief effort. There were no reports of particular groups being excluded from the distribution of relief in either relocation areas or within communities. There was an isolated report in Zambales from a member of the IP community of not receiving adequate relief assistance. This was not, however, corroborated by other community members interviewed. Indigenous groups in La Trinidad did not report discrimination in the access to relief assistance. Local government was considered responsive to their needs. It was noted that key officials (including the Governor and the Mayor) are members of indigenous communities. Although in most sites visited people expressed general satisfaction in the way in which relief goods were distributed in three of the areas visited there were concerns expressed about the undue involvement of elected local officials in the distribution of relief. There was a sense among some of the interviewees that the distribution of relief had been highly personalized and used by political figures to promote their image as caring politicians. The view was expressed that relief goods should have been sent directly to affected families without the need for media coverage, for example. In Metro Manila there was an isolated report by an interviewee in Quezon City of affected people being asked to what electoral precinct they belonged to prior to the distribution of relief. Her response was: “Pag ganyan lang din kayo, layas kayo dito!� (If that’s what you want get out of here!). Recovery and rehabilitation “What we want in our minds and in our hearts is houses that are forever not for temporary. You understand? They told us they were giving us a house but when?� – Woman in Rosales90 “Sana mayroon nang puhunan para mawala na isip namin sa nangyari sa amin at simulan na namin mag-isip ng recovery� - “ I wish we could have access to capital so that we could stop thinking about the disaster and start thinking about recovery� – Woman in Rosales, Pangasinan Given that all the LGUs visited are still dealing with the immediate relief effort, it is not surprising that communities reported that they had not been consulted on their needs for relocation and Handicap International’s Rapid Assessment Report, October 2009 89 Speaking in English. 90 126 PHILIPPINES TYPHOONS ONDOY AND PEPENG restoration of livelihoods. In a number of cases there was little expectation on the part of the community that any support would be provided by the municipality. As mentioned above there was a strong preference to return to one’s previous occupation. When consulted, affected families were clear that capital was the most needed input. This was found consistently across all sites visited. Very limited or no information was provided to affected communities on the plans for relocation. This was true even of those municipalities such as Zambales, where there are concrete plans for re- housing severely affected households. In some cases, households in temporary relocation sites had heard about the possibility of a house being provided by the municipality. In Zambales, the families had also been informed about the site for relocation. However, in none of these areas, was there a functioning system for the regular dissemination of information to communities. It was unclear to affected people how they could obtain information about the process and the time-frame for relocation (or express their agreement or disagreement with the municipality’s proposals). This seems to have generated a high degree of uncertainty regarding the relocation process. There was a mixed response to the thought of relocation across rural and urban areas. In rural areas, families were more likely to be willing to move, provided that they were able to continue with their current livelihoods. Fisher folk in coastal areas, for example, clarified that they would be willing to move to higher ground but would wish to maintain their boats and a small structure on the beach to be able to continue fishing. Indigenous groups, however, were extremely reluctant to move. Although recognizing the danger of living in their present locations communities in La Trinidad expressed a strong desire to remain on their ancestral land. They hope an engineering solution could be found to make the area safe. They strongly wished to be consulted and to participate in the design of any relocation/housing plan. In urban and peri-urban areas there was also great reluctance to move. This reaction was more common in areas that had seen regular but moderate flooding. There is a sense among these communities that they can adapt to recurrent floods and remain in the same area, close to their source of income and social networks. Where livelihoods are precarious, even severely affected families are willing to take considerable risks to return to their previous locations. This was also true in the areas where local government has issued an order to prevent households from returning to river-banks. 91 The vast majority of municipalities visited had plans to establish a core shelter program to respond to housing needs (at the cost of approximately Php 70,000 for a 200 m2 house). There were a number of reported gaps in the budget to be able to address the needs of all the families whose houses had been completely destroyed. This was the case in Zambales, for example, where funding had been secured for half the affected households. In other cases, such as San Fabian and Santa, only the purchase of the land could be ensured with municipal funds while the cost of the core shelter program would be requested from national government through the DSWD. There were no firm commitments of additional funding for reconstruction at the time of the field visit. Recommendations To help the most vulnerable households and communities recover more quickly, a package of several short-term interventions to be implemented using a community-based approach is proposed: • The vast majority of relief was provided in kind leaving a number of unmet basic needs among affected groups. In addition, household needs vary significantly across sites and family circumstances. In a number of already highly indebted areas, households are now borrowing to This was the case in Naguilian with households who make their living from collecting and loading sand from the river 91 bed. They had returned to the area immediately after the flooding to continue working. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 127 purchase food, medicine and to pay utilities. The most vulnerable households (and those unable to participate in other income generation activities such as unskilled reconstruction related jobs) would greatly benefit from targeted cash transfers to meet their most pressing household expenses. The cash transfer program of Php 1 billion would target households whose homes were severely damaged in affected areas92. The design and implementation of any cash transfer program should take international best practice in this area into consideration.93 • There is widespread uncertainty regarding the relocation process. Where they can, households are keeping a presence in the relocation site while already starting to rebuild makeshift housing, often in locations at risk. There are budget shortfalls for the implementation of relocation programs in all sites visited. While the core shelter programs will need to be expanded, it will also be important to strengthen and systematize the processes of consultation with affected communities. In addition to the cash transfers mentioned above for households most pressing needs, reconstruction and relocation can be further supported through community block grants to establish basic services in new sites and support livelihood restoration with a focus on highly vulnerable groups. • There are clear indications of trauma among children and adults in the most affected barangays. No psycho-social interventions had been undertaken in the areas visited at the time when fieldwork was conducted. The areas where there has been significant loss of life would need be prioritized for immediate support (by the Department of Health and DWSD teams) to ensure that the most affected individuals can begin to recover. Additional assessments are necessary provide crucial information to plan the support provided to vulnerable groups for restoration of livelihoods and/or relocation as follows: • Indigenous communities are reluctant to leave their current areas of residence due to their collective attachment to their ancestral lands. Additional information on their specific relocation and livelihood needs is required to effectively plan recovery activities in relevant regions. • Temporary relocation sites likely to be in place until the resettlement process is completed would benefit from significant improvements. In addition to the establishment of basic services, planning and upgrading of these sites will need to take into account the protection needs of women, children, persons with specific needs and other vulnerable groups. A rapid assessment of these sites by the Government of the Philippines (GOP) Relief and Rehabilitation Committee is expected to provide important information on the additional features and services needed at these locations. • Building the capacity of the GOP Relief and Rehabilitation Committee at central and local levels in disaster preparedness and monitoring of longer term impacts would be important steps to improve the response to future disasters. This can include: (i) reviewing emergency staffing plans of relevant institutions, (ii) creating and implementing a training program for coordinated disaster response (including for family tracing and reunification), (iii) revising minimum standards for disaster response, and (iv) establishing a roster of trained personnel to be deployed in disaster situations. 92 The estimates collected by the Housing sector indicate that 28,000 households had their home totally destroyed by flooding. A transfer size of Php 5,000 provided as a lump-sum (rather than recurring monthly payments) to targeted households would help families cover regular expenses as well as replace basic household items lost during the flooding. This is also expected to reduce the administrative and logistical burden of administering the program. 93 Additional details regarding livelihood restoration support (including in kind assistance where relevant) are provided in the Agriculture and Employment for example. 128 PHILIPPINES TYPHOONS ONDOY AND PEPENG Social Impact Assessment - Recovery Framework Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 The most There are a number of gaps Provide the most affected affected reported in the in-kind relief communities with a communities and assistance provided to affected comprehensive rehabilitation households are populations. The needs of package with the following three able to recover vulnerable households are highly components: basic assets and variable (depending on the specific • Household re-establishment meet urgent impact of the disaster on their grants targeted to the most needs without livelihoods, family composition, vulnerable households (Php resorting to pre-existing debt burden). A 1.1 billion) negative coping number of cases of highly indebted • Establish a process of strategies. households were identified during consultation and of sharing the social impact assessment. information on rehabilitation The social impact assessment and relocation options identified a high level of uncertainty available to communities. regarding the relocation process. Develop community Affected communities have little development sub-projects, or no information regarding including investment plans at the municipal level. in economic and social There is reluctance to relocate to infrastructure, following the areas where no viable livelihood Kalahi-CIDS approach (Php alternatives seem available. 315 million) The social impact assessment • Trauma counseling conducted identified cases of trauma among by DSWD/DOH for the most children and adults in all sites affected households in visited. The limited response 7,500 barangays. Counseling capacity in severely affected areas sessions will take into meant that no stress-debriefing account the specific needs of or counseling sessions have taken particular groups (children, place. elderly, sick/disabled) (Php 159.6 million). In addition, labor intensive public works programs (and additional skills training required) will be costed in the Livelihoods and Employment sector report. Livelihood There is limited information Rapid assessment of the specific restoration and available on the specific relocation/ relocation and livelihood /or relocation livelihood needs of Indigenous restorations needs of indigenous interventions Groups. Preliminary consultations communities completed by are informed indicate a strong reluctance to leave December 2009 with main by a solid their current areas of residence findings informing interventions in understanding (due to collective attachment to relevant regions (Php 2.7 million) of the specific ancestral lands). Assessment of protection needs of needs carried out in temporary vulnerable relocation sites by GOP (with groups a focus on the prevention of violence against women, children and other vulnerable groups). The findings of this assessment will inform the measures planned under the housing sector, to improve temporary relocation sites. (Php 11.2 million) – See PDNA report on the housing sector. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 129 Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 Future Insufficient numbers of staff with Review the emergency Php 100 million emergency limited specialized training in preparedness staffing plans of (covers costs for response emergency response limited the relevant agencies (including the technical assistance activities effectiveness of the emergency DSWD) and identify additional and training needs effectively response in some of the areas training needs of central, regional only –i.e. no recurrent coordinated visited. and municipal staff. costs) by relevant Create and implement a training central and local program for disaster response government aimed at central, regional, agencies (in the provincial and municipal staff context of the (with a focus on disaster prone GOP Relief and regions and municipalities Rehabilitation and including protection in Committee) emergencies). Revise minimum standards for disaster response (including minimum numbers of staff based on the expected case load, core functions and skills required at municipal level, and evacuation center management). Establish a roster of trained personnel to be deployed in disaster situations as reinforcement to municipal and regional teams. Php 60.8 million (covers costs for technical assistance and training needs –i.e. no recurrent costs). Disaster response Monitor the impact of effectively the response to Ondoy monitored and Pepeng through: and corrective (a) follow –up social action taken impact assessment at as appropriate (i) six months, (ii) one with active year, (iii) two years, involvement of (iii) three years. (Php local institutions 14.4 million) (b) three rounds of community report cards in five affected regions. (Php 4.7 million) Php 1.8 billion Php 1.6 billion Php 119.1 million 130 PHILIPPINES TYPHOONS ONDOY AND PEPENG Financial Sector Summary Jonathan Cellona The financial sector assessment focuses on: (i) the status of the banking and insurance sectors, as the most pertinent for financing the post-disaster recovery and on (ii) the reconstruction financing needs of the private sector, with a view toward setting up mechanisms to minimize financing gaps in the aftermath of future catastrophes. Overall, the direct damages sustained by the financial sector have been limited: starting with capital markets, the Philippines Stock Exchange suffered no physical losses, nor did its Manila brokers, although the extent of damage to its regional brokers remains unknown. While trade volumes did fall first by 50, and then by 25 percent during the two days before typhoon Ondoy struck, this was the only perceptible impact. Leasing appears to be similarly unaffected, with the largest leasing company in the country reporting only six small leases being affected, all of them requiring only short-term restructuring. Finally, it also appears that the losses or damages suffered by the banking sector have not been significant enough to impair its operations or its robustness, as the total volume of loans that reportedly may need to be restructured represents only 0.8 percent of the total loans outstanding in the country.94 The banking sector could play a leading role in providing financing for the recovery and reconstruction of the private firms affected by the typhoons since: (i) existing borrowers largely appear to be able to return to productivity without new finance and (ii) there is a high degree of liquidity in the banking sector. • Facilitating lending to affected enterprises. By using Multilateral Development Banks (MDB) funds to partly guarantee the new portfolio of loans to Micro Small and Medium Enterprises (MSME) damaged by the typhoons, the government could entice a small number of carefully chosen private banks to use their own funds to cover these financial needs. Loans should be carefully priced and structured to be affordable (e.g. between 8 percent and 13 percent p.a., for a 3 to 5 year term) for the vast majority of MSMEs. By adding a second loss cover95 from an international private sector bank, or an IFC/DEG/FMO-type development institution, it should be possible to at least double the volume of funding flowing to impacted businesses, compared to an approach where only government funds are disbursed. The estimated financing required from the government/MDBs to design, fund and manage such a Risk Mitigation Facility (RMF) amounts to Php 5.6 billion96. • Grants to affected enterprises. There is also a role for grants to play, in assisting MSMEs that have no productive assets left and negligible creditworthiness. These payments should be distributed by microfinance institutions (MFIs), thus increasing their exposure to new micro-entrepreneurs. Total funding for this grants program could be around Php 614 million. Financial needs are highly dependent upon other assessments carried out by different sectors, in particular Disaster Risk Management, Commerce and Industry, and Housing. 94 This is partly because banks’ lending levels are low – with only 51 percent of banking assets invested in loans; this means that Php 2.8 billion of assets in the banking system currently remains un-lent. 95 See appendix for description and graph of how such a Risk Mitigation Facility could work. 96 Consisting of Php 5.6 billion for 75 percent of the (50 percent first loss cover, plus Php 25 million for an initial study and then management of the RMF (incl. training of partner bank staff). P O S T- D I S A S T E R N E E D S A S S E S S M E N T 131 • Facilitating lending to LGUs. While the housing sector assessment makes the case for LGU-finance for low-income housing, this section focuses on how to facilitate private sector lending to LGUs for this purpose. Since the degree of guarantee required is expected to be far lower than for disaster- struck MSMEs, we assume 15 percent is required on a Php 10.6 billion portfolio, coming to a total government/MDB contribution of Php 1.6 billion.97 • Insuring against future disasters. The Disaster Risk Management section clearly shows the importance of lessening the impact of such disasters in the future. Given the importance for the private sector to manage the LGU Catastrophe Insurance Pool, the cost linked to such management is addressed in this section. Hiring a highly reputable and proven team and covering their costs for 18 months until the Pool is self-financing, is estimated to cost around Php 60 million. While no concrete measures are put forward to help increase finance of the consumer retail sector, we do recommend that a study be conducted to explore what measures might be taken, most of all to encourage more micro-housing loans in the impacted areas. This set of interventions is relatively short-term in nature and certainly in terms of spending, as they all aim to serve as catalysts for systems that become self-financing relatively rapidly. As can be seen below, the total government/MDB funding required, all of which should be disbursed within 18 months of the programs starting, is estimated at Php 7,899 million of which 7,758 million is already accounted for in the enterprise and housing sector reports leaving a total of Php 141.6 million separately accounted for in this section. Background Situation prior to Ondoy & Pepeng98 Main Concerns Main Strengths and/or Opportunities Banks still have an overhang of NPAs left from the Asian • Financial sector not significantly impacted by typhoons; Crisis, and are thus reluctant to go into sectors they consider of higher risk Banks in the Philippines all still process SME loans similarly • Banks are very liquid, and generally keen to grow their to corporate loans, i.e., too slow and expensive MSME portfolios – but they are not comfortable with this type of risk • The banking sector is thus very well placed to lead private sector reconstruction financing, if they can affordably share the risk The private insurance sector is too small and fragmented • There is plenty of room for the private insurance sector to be counted on for overall catastrophe risk coverage. to grow, and existing successes in micro-insurance could be replicated. Overall, the global financial crisis has had a very limited impact on the banking sector in the Philippines, which puts the sector in a strong position to lead the financing of a large part of the private sector’s post-disaster reconstruction requirements. Most of the rated Philippine banks have adequate resilience to ride out the current economic downturn. Fitch rating outlooks are therefore stable. Philippine banks have reasonably good LGUs are generally not considered high risk and real estate portfolios are far more palatable to banks. 97 This section is largely based on the summary of the banking sector provided by Hasnah Omar, Senior Financial Sector 98 Specialist at the ADB, and also on “Stress Test on Philippine Banks�, Fitch Ratings, August 2009. 132 PHILIPPINES TYPHOONS ONDOY AND PEPENG capitalization with an average reported core Tier 1 capital adequacy ratio of 11 percent at end-2008 for the 11 large banks rated by Fitch. Loan growth has yet to be affected by the global financial crisis. Total loans outstanding (net of inter-bank) posted a double-digit growth of 21.5 percent as of end December 2008 compared to the preceding year; this was the highest credit expansion since 1997. Corporate loans still accounted for more than half of the banking system’s loan portfolio at 57.9 percent. Nevertheless, the banking sector’s loan to asset ratio is a very low 51 percent as of June 2009, probably still reflecting the unresolved situation with Asian Crisis Non-Performing Assets (NPAs). Asset quality exhibited a fairly rapid improvement over the past several years. However, the level of problem assets is still high. The banking industry has begun to steadily increase provisioning for bad losses despite posting very high levels of reserves relative to non performing loans (NPL). The Philippines’ banking sector still suffers from the fact that many banks have not effectively divested their overhang of problem assets acquired during the 1997 crisis. Philippines banks have opted to off-load their NPL assets to Special Purpose Vehicles (SPVs), this deferred loss then being amortized over a period of ten years. This on-going NPL challenge inevitably has a negative impact on banks’ appetite for credit risk. Prudential supervision for the banking sector has been strengthened over the past several years with the International Accounting Standards (IAS) fully adopted. However, complicating the Bangko Sentral ng Pilipinas’s (BSP) efforts is the fact that supervisors do not have immunity from prosecution for decisions taken in the line of duty, which inhibits sound decision-making.99 The massive liquidity in the banking system, the relatively low returns available from treasury bills over the last few years, together with decreased margins in corporate banking all mean that banks are keen to increase their MSME portfolios, but still very uncomfortable with that type of risk, and with the methodologies needed to conduct such banking profitably. The sections below outline an approach that could help the banks to overcome these hurdles and lead the financing of MSMEs impacted by the typhoons. Insurance Sector Situation prior to Ondoy & Pepeng100 It is not at all clear that the private insurance sector in the Philippines is in a position to grow sufficiently rapidly to cover most of the catastrophe risk that is thus far uninsured. The insurance sector in the Philippines is considered a medium-sized market, despite being much less developed than some of its immediate neighbors.101 According to the Insurance Commission, the 2007 non-life insurance coverage for typhoons amounted to Php 500.7 billion, and for flooding totaled Php 454.1 billion, i.e., 7.5 percent and 6.8 percent of 2007 nominal GDP, respectively. The country stands out for its highly fragmented insurance market, with over 150 insurance companies (though the top three held 72% of the sector’s assets, according to 2005 figures).The 99 Other regulatory/prudential barriers to lending include: (i) very costly and time-consuming real-estate collateral registration and liquidation procedures; (ii) unreliable land titles; (iii) inefficient, un-centralized and expensive (non- vehicle) moveable collateral registration; (iv) limited alternative dispute resolution mechanisms (i.e. only a very small disputes court); (v) BSP Examiners’ tendency to still focus overly on collateral coverage; (vi) on-going insistence that banks use audited financial statements and income tax returns, which are largely falsified (though small businesses are temporarily exempt). 100 Sources: “The Philippines Insurance Market� Reuters, July 2008; the IFC’s Financial Sector Review, 2007; and “Insurance Environment�, Marsh Philippines, 2006. 101 Business Monitoring International in 2008 gave the Philippines an IBER (Insurance Business Environment Rating) of 51.4. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 133 insurance sector has relatively few barriers to entry. Both segments are open to participation by foreign groups. The Philippine insurance industry is highly dependent on foreign reinsurers because local industry demand for reinsurance exceeds indigenous capacity. The Insurance Association estimates that only about 12 percent of enterprises actually have a form of coverage. The number of households insured is below 2 percent. Not only is the private sector under-insured, but government-owned housing is also inadequately insured against natural disasters, as are government-owned utilities. The low penetration rates indicate that there is obviously room for growth, especially in the event of an economic upturn and improvements to the tax regime. Insurance for micro-enterprise is fairly developed in terms of life and loan insurance, as very many MFIs offer such insurance automatically as part of their micro-loans. However, non-life insurance is still burgeoning, though CARD MBA has played a leading role in developing such insurance at the micro level, and ensuring that much of it is re-insured. Other MFIs are now interested in replicating the CARD MBA model, though it is unclear yet if any outside assistance would be necessary to ensure this is done successfully. Given the fragmented and under-developed nature of the insurance industry, the recommendations below focus on how to help manage an LGU-led catastrophe insurance pool. However, the private insurance sector, and particularly micro-insurance, should also be supported. Damage and Losses102 Banking Sector Data obtained on damage and losses to the banking sector does not currently differentiate between private and government financial institutions (GFIs), but given that the share of GFIs’ assets compared to total banking assets in the Philippines is only around 1.6 percent, it is safe to assume that virtually all the damage and losses that are reported have been borne by the private sector. An overview of the impacts on the financial sector is provided here. It important to note, however, that for the overall estimates of damage and losses, any apparent losses incurred in the banking portfolio and through insurance claims are already captured and computed in the productive and social sectors. So far, there is no data available from the BSP on the average size of defaulted loans, nor on the location of the defaulted loans and breakdown of overdue loans by size or sector of borrower. However, accessible data indicate that the impact on deposits has been minimal, except for an initial scare when depositors in branches closed by the floods feared for their savings. Currently, all customers are either being served by their own banking unit, or a neighboring one. The BSP indicates that a total of 169 banks have described themselves as being affected by the floods, with a total of 681 banking units103 impacted (as of November 10th 2009). By November 10th, only 5 banking units remained out of commission. There were 277 ATMs affected, but by November 6, 2009, only 21 remained non-operational. Banks are largely insured against damages to their physical properties (i.e., branches, ATMs, computers, etc.) Of the 169 banks affected, 55 banks have provided BSP with estimates of loan volumes needing restructuring; these unverified amounts totaled Php 17.9 billion. The other affected 114 banks did not report the amount of losses. Since the total portfolio of these particular banks amounts to Php 26.5 billion we assume relatively small losses, valued at 25 percent of their loans to be restructured, All damage and losses related to the financial sector are already reflected in other relevant sectors. 102 349 units linked to universal/commercial banks, 98 to thrift banks, 173 to rural banks, and 61 to cooperative banks. 103 134 PHILIPPINES TYPHOONS ONDOY AND PEPENG totaling Php 6.6 billion. This would give a total volume of loans needing restructuring of Php 24.5 billion, i.e. 22 percent of all losses to private enterprises.104 To put things in perspective, this is only 0.8 percent of total loans outstanding to the Philippine banking sector as of June 2009. Based both on discussions with banks and leasing companies, and on the results of the enterprise survey commissioned for the PDNA, it would appear that the damage to borrowers is largely manageable, and that payments should be back to normal within 3-6 months. None of the banks (commercial and rural) or leasing companies that we talked to had more than a handful of borrowers that might be in long-term arrears due to the floods. Even the CARD Group, with between 80,000- 100,000 microfinance clients affected by the typhoons (this is estimated by PinoyME to represent over half of all Philippine microfinance borrowers [from major MFIs] impacted), estimates that virtually all of those clients will simply need a 4-week moratorium, not even a restructuring of the loans. The PDNA enterprise survey showed that, of those that did say they would have difficulty in making their loan payments, only 14 percent stated that they had no hope of paying back their loan (conversations with the banks would suggest that even this figure is exaggerated). In our discussions with two of the largest leasing companies (Orix Metro and BPI Leasing), they counted a total of only 8 small clients that have requested restructuring or moratoria, none of them for periods longer than 3 months. In other words, only a very small proportion of the loans in need of restructuring are expected to become write-offs. Insurance Sector The latest estimate (November 11th, 2009) of the Insurance Commission suggests that insurance claims related to the two typhoons are surprisingly low, amounting to Php 8.2 billion (Php 7.0 billion from non-motor, Php 1.2 billion from motor insurance), consisting of 11,160 claims (4,194 non- motor, 6,966 motor). This represents only 0.9 percent of the total (P 954.9 billion) non-life insurance cover for flooding (Php 454 billion) and for typhoons (Php 501 billion) that was issued in 2007, and only 9.2 percent of all losses incurred by enterprises due to the two typhoons, according to latest World Bank estimates. We have asked for clarification to verify the accuracy of these reported figures. The Insurance Commission is not aware of any insurance companies being in any sort of financial difficulty following these claims. On the side of microfinance institutions who issue their own insurance to their clients, (probably the largest provider of insurance is the CARD Group – of a total of over 1,000,000 clients), they estimated up to 100,000 clients that are affected (most of these did not have flood/typhoon insurance). Their main insurance company, CARD MBA (re-insured in part through Pioneer) will be paying claims of between Php 35-40 million, and they assured that they can cope with the same sort of disaster again. Policy Responses to the Disaster The BSP has offered very timely and significant regulatory relief to all banks in the affected regions. According to the banks’ requests, existing loans of borrowers in affected areas will be excluded from the computation of past due ratios (for loans maturing up to Dec. 2010), provided that these borrowers are restructured or given relief.105 The BSP provided further relief by reducing the general As per the most recent calculations of the Commerce and Industry team, total losses to enterprises amounted to Php 104 111.4 billion, while the needs (recovery requirements) totaled Php 66.9 billion. 105 Under Section 306.4 of the Manual of Regulations for Banks (MORB), “Restructured loans whose terms of payment have not been complied with and which have become past due shall be governed by the provisions of Sec. 322,� which requires the downgrading in classification of the loan to a lower category. For example, if a loan is unclassified before the restructuring (which requires a 0% allowance for losses), it P O S T- D I S A S T E R N E E D S A S S E S S M E N T 135 loan loss provision for restructured loans of borrowers in affected areas to one percent from five percent (also up to December 2010). Furthermore, the penalties for delays in the submission of supervisory reports due between September 30 and November 30, 2009 were suspended. For Thrift, Rural and Cooperative Banks with HQs in affected areas, there is also a non-imposition of penalties on legal reserve deficiencies, provided these deficiencies were not pre-existing. With respect to its rediscounting facilities, which the banks use to finance their own lending to their clients, the BSP now allows banks to restructure rediscounted loans with the BSP. The interest rate is set at the rediscounting rate and the loans can be for up to five years in maturity, but banks cannot pass on the funds at more than 6 percent above the rediscount rate to borrowers. The government is currently considering the “Disaster Risk Management Bill�. While Section 17 of this Bill calls for the granting of “one-year, no-interest loans� by government financing or lending institutions to the most affected section of the population following a disaster, global practice would suggest caution in this regard. This could lead to a great number of entities in these areas abandoning existing bank loans for these quasi-grants, damaging the banking industry106. In these instances, explicit cash grants, as discussed in other sections of this report, would be more advisable. No particular measures have been taken by the leasing industry. Also, no known policy action has been taken in the insurance sector, except for a survey by the Insurance Commission of non-life insurers of loss claims. Priority Recovery and Reconstruction Needs Banking None of the banks or leasing companies interviewed believed that the typhoons have created a situation where a significant numbers of their borrowers will be unable to repay their loans in the medium-term. The BSP reacted rapidly and prudently to accommodate requests for short-term loan repayment, moratoria and loan restructuring requests to address the impact of the typhoons on the banks’ portfolios. Nevertheless, the sector assessment shows losses to enterprises of almost Php 90 billion, while the theoretical demand for mid-rise housing for the displaced families is estimated at over Php 20 billion. Thus, there is clearly a large need for private sector financing going forward, as these figures are significantly larger than what MDBs and the GOP are capable of providing on their own. Most of the house rebuilding that needs to take place following the typhoons is low-income housing. This is a sector where some LGUs have shown an ability to co-finance impressive complexes, as shown in the housing sector needs assessment. For construction on the scale required here, no LGUs will have the necessary financing. It would be desirable for local and/or international banks to provide financing to the LGUs, but this will only happen if loans obtained, or notes issues, are under- written, perhaps by the equivalent of an IFC, DEG or ADB. The required investments in recovery and reconstruction of private enterprises is the area where will be classified as at least “loans especially mentioned�, (which requires a 5% allowance for losses) under Appendix 18 of the MORB. 106 Other important questions include: Who would oversee the program? How will the program ensure that bribes are not given to obtain such quasi-grants? How will they be accounted for on bank balance sheets? Any such measure that may be both unnecessary, and damaging to the financial sector, should in our opinion not be mandated by law, but simply remain an ad-hoc option depending on the circumstances. 136 PHILIPPINES TYPHOONS ONDOY AND PEPENG the private banking sector can play its most natural role in leveraging government/MDB funding, using the latter to share the risks and thus access the huge unused liquidity in the banking system (Php 2,815 billion, i.e., 49 percent of banking sector assets are parked in treasury bills or other low- interest options). Agriculture is a sector that Philippine banks are traditionally very wary of. Furthermore, the vast majority of damages to the agricultural sector have been to rice growers, a sector that banks generally avoid as it is politically sensitive, involving price controls and subsidies. Financing the damages to the agricultural sector, therefore, would be extremely challenging to achieve through the banks. There are many sections of the population that will not be able to afford to repay the financial assistance they require – including families that have lost their homes and/or their breadwinner(s), and also some micro-enterprises that have lost all their assets. These groups should be assisted through grants or cash-for-work schemes that are best not financed by the banking sector. Implementation Arrangements Channeling relief grants to destitute micro-enterprises Given the desirability to maintain a clear distinction between grants and loans (thus minimizing impact on credit culture), grant payments are best not funded nor assessed by the banks, but merely distributed by them. These loans should be offered to a relatively limited number of eligible enterprises. Eligibility criteria could include: (i) having business activities exclusively in impacted areas, (ii) being able to demonstrate that the majority of the earning assets have been lost, and (iii) requiring financing less than Php 50,000. Furthermore, it would be sensible to assess the business that the micro-entrepreneur plans to re-build – if it is a business with very poor prospects, the managers of the grant scheme could be empowered to specify that the grant be used for the micro- entrepreneur to engage in economic activities that contribute to disaster-proofing (e.g. solid waste management, drain building or clearage, dredging, reforestation, etc.) According to the Pulse poll, 11 percent of micro enterprises and five percent of small businesses cannot repay their loans. Based on that, around 10,800 micro-enterprises107 and 350 small businesses could be eligible for such grants. Assessing loan applications and attributing payments should ideally be conducted by an NGO or other type of MFI. All such funds should be disbursed into bank accounts of participating banks, who have agreed to charge minimal fees for the remittance, and to open accounts free of charge and with very small minimum balances (e.g. Php 500). This will help the micro-entrepreneurs to demonstrate their cash flows to the bank, and thus increase the likelihood of being creditworthy in the future. Assuming that all grants are of Php 50,000, this would require a pool of Php 557.5 million and, assuming a five percent cost of distribution, another Php 56.6 million for the selected MFI to ensure proper selection of grantees and rapid disbursement. Risk sharing facilities to support financing of MSMEs For those MSMEs that are not entirely destitute after the typhoons (i.e. those that can still earn some income and relatively quickly return to previous levels of revenues), it makes sense to offer ‘special’ loans. Loans should be for longer terms, and more easily and rapidly accessible. This allows the government/MDB funds to be leveraged by being used to guarantee the use of the private banks’ own funds. Also, the possibility that a substantial part of these guarantee funds are never drawn upon, and may thus represent less of a burden on the tax payers and/or an opportunity to use this Based on preliminary figures that will need verification before assumptions and budgets are finalized. 107 P O S T- D I S A S T E R N E E D S A S S E S S M E N T 137 funding to guarantee SME lending more broadly after the impacted MSMEs have been financed. These funds would only be for MSMEs who can demonstrate they were damaged by the typhoons. Furthermore, at least initially, only MSMEs with no existing formal loans would be prioritized, and only if or when it is clear that there is enough funding and capacity to extend loans to banked MSMEs who have been impacted, would the risk management facility (RMF) be extended to that group. The government in partnership with MDBs and other contributors to the RMF would identify banks willing to commit to significant levels of investment in typhoon-stricken MSMEs (e.g. minimum Php 500 million portfolio of commercial or thrift banks, Php 250 million for rural banks). Finally, if the capacity and the RMF facility still allow it, the RMF could also be used for MSMEs seeking to invest in disaster-proof measures (building walls, gullies, elevating premises, relocating to higher ground, building/cleaning drains, etc.). The degree of risk borne by the RMF would have to be higher than normally considered desirable due to: (i) the low risk appetite of Philippine banks in general, and (ii) the need to rapidly disburse to a large number of MSMEs despite the banks distrust of this sector. It is assumed that 75 percent of each loan would be guaranteed by the facility.108 IFC’s experience is that such RMFs work best when they have the following attributes: (i) managed by a reputable private sector firm, or private sector-oriented development institution; (ii) must guarantee all loans of a particular type, not allowing the partner bank to “cherry-pick�; (iii) should be a portfolio guarantee, i.e. all loans can be approved independently by the partner bank, and are only verified post-fact, and in batches, by the managers of the RMF; (iv) these facilities should be bank specific, thus keeping volumes manageable, and giving the partner banks more comfort that client information will not be shared. Assuming that the government/MDB does not charge for its share of the guarantee, and that the private sector international bank or development organization charges very little (e.g. around 2-3 percent might be feasible) for their share of the guarantee due to the low risk, the added cost to the interest rate for the borrower should be reasonably low. There could be something like a 2-year ramp up period, to ensure all MSMEs affected had had the chance to figure out if they need a loan, and to have it processed, after which the ramp-down period to the end of this project could be five years, if this was determined to be the maximum loan duration. Given such a high level of guarantee, the government/MDBs should have much more leverage to dictate a long minimum duration, no fees for pre-payment, and an interest rate cap. Banks would be enticed to use the guarantee through the imposition of a commitment fee, and also a portfolio volume minimum below which the RMF would be revoked. As explained earlier, based on current data we assume that the total portfolio of financing to impacted MSMEs would be Php 15 billion, which would be financed by private banks, willing to do so because they only need to take on 25 see Annex A for a more detailed description of this type of RMF. The government/MDBs, by taking 75 percent of the 108 first loss (together with the private local bank taking the other 25% of the first losses), e.g. for the first 50 percent of the facility, can attract a private sector international bank, or a private sector-oriented development organization such as IFC/ADB/DEG, to cover 37.5% (i.e. 75% of the second loss 50% of the portfolio) percent of the portfolio on a second loss basis - these proportions and amounts are of course indicative, and could change as circumstances warrant. Assuming that, of the Php 66.9 billion of estimated financing needs on the part of all affected enterprises, only 75% will be interested in taking a loan. Of that Php 50.2 billion seeking bank financing, we further assume that 30% are the needs of the MSMEs. Of the Php 15 billion (rounding down for the sake of simplicity) required by MSMEs, in this scenario, the local partner banks fund all of the Php 15 billion; however, MDBs take responsibility for Php 5.63billion of the risk (i.e. for the first Php 7.5 billion of the portfolio, any loan that defaults e.g. over 6 months is refunded 75% to the bank by the MDB guarantee). Because of the relatively high degree of comfort that loans above this Php 7.5 billion threshold are unlikely to default, an IFC/FMO/DEG could be amenable to providing a second loss guarantee for a further 37.5% of the portfolio. 138 PHILIPPINES TYPHOONS ONDOY AND PEPENG percent of the risk (as an example, specifics may well change). The government/MDBs would in this scenario provide Php 5.6 billion to a joint guarantee, with an international private bank or a private sector-oriented IFI contributing the same amount also. These funds sitting in the RMF should be used to generate more revenues via interest on ultra-secure, international-grade AAA investment options. Some partner banks, especially rural banks, may also require fresh financing, as they lack the spare liquidity of most of the large commercial/universal banks. However, with such a RMF in place, such banks would be able to find private financing, given that the risk borne by the banks is so limited. The cost of managing this facility would be covered 50 percent by the government/MDBs in the first year, after which interest accrued on the guarantee facility would amply suffice to cover these costs for the entire 7.5 year period of the project remaining (costs go down after the ramp-up period). The costs for this six month period are estimated at Php 20 million. In the first instance, however, there will be a need for a far more detailed assessment of the financing needs of MSMEs in affected areas, in terms of volume and type, together with the selection of the partner banks that would be permitted to operate such RMFs – this may require another Php 5 million. Reconstruction of low-income housing Assisting LGUs to obtain financing for the construction of new low-income housing stock for those displaced by the floods is a priority. One way to encourage private sector banks and/or housing construction groups to finance the LGUs would be for the government/MDBs to under-write the LGUs’ requests for funding (either from banks, or from capital markets). Given relative stability of real estate asset values and relative ease with which they can be repossessed, the level of guarantee needed to encourage private housing finance (say, 10-20 percent of the entire portfolio) should be much lower than is needed for private enterprise financing; We assume a need for around 35,000 new houses for displaced families, with an average cost of around Php 600,000, but that only 50 percent of those displaced families will want to inhabit the new housing and are able to make the required payments. This yields a total financing requirement of Php 10.6 billion, of which LGUs are assumed capable of financing 25 percent. Financing the remaining Php 7.9 billion may then only require a first loss guarantee of some Php 1.575 billion (15 percent of the total portfolio) by the government/MDBs to attract sufficient private sector finance. It should be clear that such funding can only be used to build housing outside of zones that have been categorized as having a high flood risk. Insurance Sector The requirements of the insurance sector, especially as they pertain to the catastrophe insurance to cover such events in the future, are well covered in the Disaster Risk Management section. It is clear that there is a crucial role for LGUs to play in establishing a Catastrophe Insurance Pool, and this would be best done by having such a Pool managed by a recognized private sector insurance group. The current section will simply focus on a few aspects of this development of the insurance sector that are particularly related to the private sector. One sensible measure would be to make catastrophe insurance mandatory for housing loans and for business capital investment loans. Banks will understand that it is in their own interest to insure the assets that they are partly relying on for repayment – once all banks are forced to include such insurance, no bank will be at a disadvantage once it ensures its clients have this protection. The vastly increased volumes of insurance policies may allow policy premiums to drop considerably. In any case, it will be crucial to ensure that premiums are not so high as to significantly reduce the P O S T- D I S A S T E R N E E D S A S S E S S M E N T 139 level of demand for mortgages or business equipment loans.109 It is important to note that such mandatory insurance should only be put in place once it is clear that adequate and affordable policies have been made available by private insurance companies and/or an LGU Catastrophe Insurance Pool, otherwise such a measure could have a negative impact on access to finance. Expanding the range of banks able to offer insurance products would be very beneficial. The BSP is already considering to allow rural and thrift banks to distribute insurance products. No further costs would be required for this. However, it would be important to ensure that the studies on the viability of mandatory insurance also look at what further measures should be taken to encourage the cross- selling of other insurance products by banks. The Disaster Risk Management section details the vital plans for an LGU catastrophe insurance pool, financed by the LGUs and initially also supported by an MDB contingent loan. The Disaster Risk Management assessment rightly points out, inter alia, that to ensure that both re-insurers and the LGUs are attracted to this pool, it is best managed by a reputable private sector insurance group. Ensuring that there are funds available to pay for this management, during the interim period until the pool is self-sustaining, is something that could fit under the financial sector initiative, as this is likely to be performed by an insurance group. Pending preparation of more detailed projections, we assume that this task requires a management team of one senior international specialist and six local notaries/accountants, costing around Php 40 million per year. Furthermore, we assume that the government/MDB would have to pay 100 percent of the annual cost during the first year and 50 percent in the second year, for a total requirement estimated at Php 60 million. Policy and Regulatory Issues There are concerns from a medium-term perspective related to (i) the amendment to the Agri-Agra Law110, which requires 25 percent of bank lending portfolios to be destined for the agricultural sector (given the severe losses in this sector); and to (ii) the re- approved SME Magna Carta, which stipulates that 10 percent of banks’ lending portfolios should go to MSMEs. Offering few alternative compliance measures, these laws are likely to force banks to lend more to those sectors, even if they do not have the capacity to do so prudently or cost-effectively. This is likely to create higher NPLs than would otherwise be the case, with the consequence of reducing banks’ capital adequacy and, equally importantly, perpetuating the myth that lending to these sectors is inherently risky and unprofitable. As mentioned above, the banking sector is also negatively impacted by the fact that BSP Examiners do not have immunity from prosecution for decisions taken in the line of duty. We would recommend that the international community enter discussions with the GoP to further examine the potentially negative impact of these laws and regulations, and seek to make improvements. As it stands, however, we have not budgeted any specific new expenses for such analysis and policy work. Other Options to be Assessed Further 109 The Disaster Risk Management sector has already identified a budget for the studies required to assess the feasibility of this measure, and developed draft TORs. This study will also cover the precise catastrophic events that should be covered. 110 The law defines agricultural credit as production or other types of loans for acquisition of work animals, farm equipment and machinery, seeds, fertilizers, poultry, livestock, feeds and other similar items; acquisition of land authorized under the Agrarian Reform Code of the Philippines and its amendments; construction and/or acquisition of facilities for production, processing, storage and marketing; and, effective merchandising of agricultural commodities stored and/or processed by the previously cited facilities. Source: Department of Agriculture, Agricultural Credit Policy Council, “The Agri-Agra Law: A Review of its Performance,� 18 September 2003. 140 PHILIPPINES TYPHOONS ONDOY AND PEPENG The following interventions have emerged too late to be included in the budget, but would require minimal investment to be investigated further, potentially enabling important progress to be made: T • his section so far only focuses on how to facilitate housing finance for LGUs. Whilst the private banks will already be willing to finance valuable houses that have only be partly damaged by the floods, many owners of (mostly micro/small) houses that have been largely or entirely destroyed also require financing, and are unlikely to have access. A study of how micro-housing loans could be supported could be of great benefit to this section of the population. T • he microfinance community has requested that the international community explore the possibility of supporting the establishment of an emergency liquidity facility, such as the one that was created by the IDB and other partners for Latin America back in 1993. A • lthough it appears that the insurance needs are so vast that it will require government involvement at some level, the successfully burgeoning micro-insurance sector in the Philippines could also be an important part of the solution to under-insurance in the country. A study of how external assistance could allow interesting pilots by CARD MBA, Malayan Insurance and others to be replicated on a far broader scale would be sensible. Table 58: Needs in the Financial Sector (Php Million) Recovery Reconstruction Total Public Private Public Private Managing RMF 1.1 - 24.0 - 25.0 Managing MF 2.4 - 54.2 - 56.6 grants Managing Catastrophe - - 60.0 - 60.0 Insurance Pool Total 3.4 - 138.2 - 141.6 Financial Sector needs reflected in enterprise and housing sector reports: Enterprise RMF (236.3)* 630.0 (5,388.8)* 14,370.0 15,000.0 loans Funding MF grants 23.4 - 534.1 - 557.5 Guranted for LGU - - (1,575.0)* 10,600.0 10,600.0 housing finance RMF = Risk Mitigating Facility * public sector guarantee component of overall private sector financing P O S T- D I S A S T E R N E E D S A S S E S S M E N T 141 Recovery Framework: Financial Sector Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 Distribute grants to o According to o Procurement of organization o None, project should be over 11,000 micro- 2004 NSO figures, (either MFI or NGO) to complete in 2010 (although or small borrowers there were 431K determine which enterprises there is a chance of project who have lost all micro- and 44K qualify as having lost all creeping into Q1 2011) productive capacity small enterprises in significant productive assets affected regions – over 37,000 MSEs assessed o Based on Pulse in under a year (MDB Reps to data, 11% of micro- do spot checks); and 5% of small o Approve the grants, and enterprises say disburse them through they have no hope automatic payments to of repaying their grantee’s bank account in loans participating banks; over o This would mean 11,000 grants disbursed that 10,800 micro- in under 12 months, with and 350 small less than 5% of sample borrowers may well cases challenged by MDB need these grants appraisers; regain productivity. o Financing required: - (For grants: Php 557.5 million already accounted for in the Entreprise sector) - For management: Php 56.6 million - TOTAL accounted for in this section: Php 56.6 million. By acting as catalyst o Current World Bank o First step would be a far more o On-going lending to affected and risk-sharer, estimate is that the detailed assessment of the MSMEs, until two years after ensure 15bn PHP financing needs of financing needs of MSMEs the start of lending; is disbursed by private enterprises in affected areas, in terms of o For the following 5 years, private banks to impacted by the volume and type, together core notary staff ensure that 30,000 MSMEs in typhoons amount with the selection of the only eligible loans are being affected areas, 75% to 66.9bn PHP partner banks who would get claimed and reimbursed; of whom should be o Assuming that the such RMFs ; back on track with needs of MSMEs o Reach framework agreement their pre-typhoon represent 30% of with co-guarantor, i.e. loan payments after this volume, and international private bank 2 years, and over that only 75% or private sector oriented 50% surpassing pre- of that demand development org. (IFC/DEG/ typhoon revenue actually seeks loans, FMO); levels. total volume to o Design RMF and sign up be lent to affected partner banks; MSMEs would be o Procure management firm for 15bn PHP the RMF; We believe that by o Management firm trains providing a 50% first partner bank staff to analyze loss to 75% of the and process the right loans 15bn PHP portfolio correctly; (i.e. 5,625 mn PHP), o Lending to affected MSMEs the government starts in second half of 2010; could get local o Financing required: partner banks to - For study: Php 5 million fund the entire - For management: Php 15bn PHP, and take 20 million 25% of the risk. An - (Govt. share of RMF: Php IFC-type IFI, would 5,625 million – reflected take the remaining in the enterprise sector) half, i.e. the second loss part, of the TOTAL accounted for in this 75% portfolio section Php 25 million guarantee. 142 PHILIPPINES TYPHOONS ONDOY AND PEPENG Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 Enabling over o 35,000 families o Thorough study of housing o Continue follow-up with 10bn PHP in LGU have been needs of the displaced that partner LGUs to ensure that financing of low- displaced (of which also assesses preferences the housing being financed, income housing, by 50% will be willing and capabilities of LGUs and way it is rented out, is under-writing LGU’s and able to make (incl. availability of land), according to the Agreements; credit rent payments and broad guidelines on o This facility may take up to ten for new housing possible financing from the years to free up the needed costing Php 600K/ private sector with such land and build the necessary unit; underwriting housing – by the end of the o Reach Agreements with the project, the partnering LGUs participating LGUs on the risk should have built at least sharing approach, pricing, 17,500 new low-income etc. housing units, and disbursed o Identify a bank or two willing over 10bn PHP for this to invest in LGU low-income purpose. housing, and help finalize TOTAL accounted for in this agreements between them section: Php 0 and the LGUs; o Follow-up with partner LGUs to ensure that the financed housing and rental methods, accord to the Agreements; o Financing required: - For study: see housing section - Govt. under-writing: Php 1,575 million both already costed in the housing sector) - TOTAL accounted for in this section: Php 0 Enabling the o As demonstrated o The design and set-up of o The Cat. Insurance Pool establishment of an by the Disaster the Cat. Insurance Pool is management continues LGU Catastrophe Risk Management described in the Disaster Risk indefinitely, but only requires Insurance Pool with Group, there is Management section; Php 20 million of government/ private re-insurance a desperate lack o Procure and hire a reputable MDB funding in year two, and thanks to Pool of catastrophe private entity to manage none thereafter, as the Pool being managed by insurance in the the Cat. Insurance Pool that becomes self-financing; a reputable private Philippines; manages to attract private entity sector re-insurance; o Financing required: - For management: Php 60 million TOTAL: Php 60 million GRAND TOTAL Php 7,899 million (including REQUIRED: costs covered in the housing and enterprise sector) Php 141.6 million to cover costs to the final sector accounted for in this section. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 143 Annex A. Description of the Risk Mitigation Facility As described in the main text, the example we are using is of a risk mitigation facility where the government/MDB covers 37.5 percent of the total risk of the entire portfolio which, combined with the local partner bank’s 25 percent of the first loss risk, equals to an over-all first loss coverage of 50 percent of the entire portfolio. (Figure 10) Figure 10: Example of a Risk Mitigation Facility Local Private Intl. Bank or IFC/DEG type Second Loss of 7.5bn Bank’s risk coverage: 5,625 m PHP PHP (50 percent) risk (37.5% of total portfolio) cover 3,750m PHP Govt. / MDB risk coverage: 5,625 mn PHP (37.5% of total First Loss of 7.5bn (25%) portfolio, but also 50% of first PHP (50 percent) loss) This means that any loan that is in arrears beyond the agreed length of the time would have 75 percent of the value of the interest and principal still outstanding paid, by the RMF, to the partner bank that holds that loans. Any loan that is within the first Php 7.5 billion of losses, would be reimbursed using the government/MDB contribution to the guarantee. If the first loss is exhausted, i.e. if losses to this portfolio amount to more than Php 7.5 billion, then the second loss gets used, i.e. the funds committed by the international private bank or the private- sector oriented development organization get used to reimburse 75 percent of the outstanding interest and principal to the partner bank. T • hroughout the existence of this RMF, the partner bank (using these hypothetical figures) finances all the loans up front, and bears 25 percent of the risk in both the first loss and the second loss. A • ll loans of this type are automatically covered by the guarantee, the bank does not have the option of excluding some loans to flood-affected MSMEs, hoping to reduce costs if they are particularly low risk. C • laims should be made at limited intervals, e.g. quarterly, and RMF staff will verify that the loans being claimed for truly are eligible for this cover. 144 PHILIPPINES TYPHOONS ONDOY AND PEPENG Disaster Risk Reduction and Management (DRRM)111 Introduction The geographical location of the Philippines in the tropics and in the so-called “ring of fire� makes it one of the most disaster-prone countries in the world. It ranks in the top 10 countries worldwide with respect to incidence and human impacts of disasters112, and it is ranked among the top 20 countries likely to be most affected by climate change.113 Up to 60 percent114 of the total land area of the country is exposed to a range of hydro-meteorological and geo-physical hazards, and 23 provinces face significant risk to four or more hazards115. Settlement patterns make 74 percent of the population vulnerable to disasters116, with many areas subject to shocks from repeated severe weather events. Over the last couple of decades, on average, around 1,000 people die as a result of natural disasters each year, and the adverse effects of natural disasters also have significant implications for the country’s economic development. Over the period 1990 to 2008, the Philippines incurred an estimated annual average of Php 28 billion in direct damages which is equal to 0.7 percent of GDP per annum (Table 59). This is on top of the losses in human lives and to the social and environmental assets of communities.117 The full extent of the impact is greater as losses (particularly private sector losses) have not been fully accounted for in the past. Table 59: Ranking of Disaster Related Fatalities in the Philippines, 1990-2007 Hazard Event Number Killed Damage (US$ millions) Typhoon 36,936 5,989.5 Earthquake 9,580 519.5 Flood 3,003 1,230.3 Volcano 2,996 232.0 Source: Center for Research on the Epidemiology of Disasters, 2009 Institutional Framework for Disaster Risk Reduction and Management The legal and institutional framework for DRRM is currently oriented toward emergency response. Over the past 20 years, there have been numerous efforts to update the now-outdated DRM legal bases (Presidential Decree Nos. 1 of 1972 and 1566 of 1978), with a view to shifting the emphasis from a reactive to a proactive mode that focuses on disaster prevention, preparedness, and mitigation activities required to reduce risk. Although several efforts (DBM and DILG118 Joint Memorandum Circular (JMC) No.2003-1) have been made to allow the use of local calamity funds for disaster preparedness and mitigation activities, these have not yet led to significant change at the local level. In the absence of legal reforms, it will be difficult to encourage more widespread action. Therefore, priority should be placed on finalizing and passing the long-awaited DRR/M Law and aligning it with other relevant policy and legislative reforms (e.g., the proposed National Land Use Law). 111 Both concepts (Disaster Risk Reduction and Disaster Risk Management) encompass prevention as well as mitigation and preparedness. In this document they are used interchangeably. 112 Center for Research on the Epidemiology of Disasters, 2009 113 Dasgupta, Susmita, et.al. 2009. “Climate Change and the Future Impacts of Storm Surge Disasters in Developing Countries,� Center for Global Development. 114 Philippine Country Risk Profile, GFDRR. 115 This is the result of the vulnerability screening conducted under the technical assistance “Supporting Local Government Capacities to Manage Impacts of Natural Disasters in the Philippines� supported by GFDRR. The provinces were identified using historical data gathered from different government agencies such as PHIVOLCS, MGB, DA, and DPWH, among others. 116 Op cit. 117 NDCC, 2009. 118 Department of Budget and Management and Department of the Interior and Local Government, respectively. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 145 Impetus for enacting a DRRM bill and other legislation has gained momentum, with increasing recognition of the country’s increased exposure to climate change risk and heightened awareness created by the Ondoy and Pepeng disasters. In October 2009, the Philippine Climate Change Law (Republic Act 9729) was passed, and efforts to formalize the Strategic National Action Plan (SNAP) are underway. The SNAP is the Government-led multi-stakeholder response to the Hyogo Framework for Action (HFA).119 It identifies several priority actions, ranging from establishing sound policies to concrete DRRM programs and projects that are aimed at building the country’s resilience to natural disasters. The SNAP has strong local and national government support through a consultative process with various interest groups. However, both the SNAP and the proposed law could benefit from better integration of the climate change adaptation (CCA) and disaster preparedness agenda. In the aftermath of Ondoy and Pepeng, the Government formed a Special National Public Reconstruction Commission (SNPRC) to work with a Philippine Disaster Recovery Foundation (PDRF) established by the private sector (Executive Order (EO) No. 838). The function of the Commission is to liaise with appropriate partners to plan, generate funds, and implement and monitor the identified needs for rehabilitation and reconstruction in relation to damages incurred from Ondoy, Pepeng, and Frank. The SNPRC is supported by a secretariat comprised of the National Economic Development Authority (NEDA) and NDCC. The Government is currently preparing an Administrative Order which will further define the institutional roles and responsibilities of the various members. The mandate for overall policy and coordination for disaster risk management (DRM) lies with the NDCC (Section 2 of PD 1566). The Secretary of National Defense heads the NDCC, which comprises heads of 18 departments/agencies as members. It is through these NDCC member-agencies that the disaster preparedness, prevention, mitigation and response functions are carried out. NDCC acts as adviser to the President on disaster preparedness programs, disaster operations, and rehabilitation efforts undertaken by the Government and the private sector; coordinates all disaster management efforts; and is responsible for the allocation of disaster-related resources in the country. The Office of the Civil Defense (OCD) functions as NDCC’s permanent secretariat. OCD has a staff complement of 267, which performs functions related to policy, planning, and coordination with stakeholders and development partners for both man-made and natural disasters, in addition to its legal mandate of civil defense. At the regional level, OCD is composed, on average, of only around eight staff performing this wide range of duties. On average, the OCD has been receiving an annual budget of Php 90 million over the last five years. This budget does not include capital outlay. At each level of Government - regional, provincial, city, municipal, and barangay - NDCC operates through a network of Disaster Coordinating Councils (DCCs). In the aftermath of a disaster, NDCC collects data on damages through the DCCs and compiles requirements for support from the Calamity Fund. In response to needs identified at both the national and local levels, NDCC mobilizes its member-agencies to strategize a coordinated response; deploys civil and military defense personnel and equipment needed for immediate rescue operations to assist affected local governments; and prioritizes the allocation of the national Calamity Fund to affected local governments. 119 Building the Resilience of Nations and Communities to Disasters accessed on November 20, 2009, at http://www.unisdr.org/eng/hfa/docs/Hyogo-framework-for-action-english.pdf 146 PHILIPPINES TYPHOONS ONDOY AND PEPENG Among the member-agencies that comprise NDCC, there are four core agencies (DPWH, DSWD, DOH, and DND-OCD/AFP)120 that have the responsibility to address relief and rehabilitation requirements. At least 50 percent of the national Calamity Fund is channeled through these agencies to assist identified priority communities or sector institutions (e.g., hospitals, roads). The general appropriations prescribe the level of resources for the typical scale of calamities faced on an annual basis. Only those disasters that occur at national scale trigger the release of the national Calamity Fund. When necessary, a call for additional budgetary allocations may be made to meet costs in excess of the national Calamity Fund. Local governments have the primary responsibility for dealing with disasters. Under the Local Government Code, the local governments serve as the first-line of defense. They are expected to prepare contingency plans, invest in prevention, preparedness and mitigation measures, establish a DCC (with participation from civil society), and set aside five percent of their total income as a calamity fund. They may also budget additional human and financial resources from their annual budget to disaster risk reduction actions and establish permanent in-house capacity to manage disaster risk on a full time basis. Needs Assessment for DRRM The Ondoy and Pepeng disasters highlighted weaknesses in the current DRM framework121 and underscored the need to accelerate mainstreaming of DRRM into policies and programs at the local and national levels as well as in different development sectors. While the specific disaster preparedness, mitigation and prevention actions will necessarily differ across affected local governments and national government agencies, the sectoral assessments contained in other sections point to the importance of addressing both structural and non-structural needs over the short (December 2010) to medium-term (December 2012). The main structural needs relate to safe housing, flood control systems, and rural infrastructure. A number of cross-sectoral/intra-regional priorities have been identified, such as comprehensive watershed and river basin management for Metro Manila, Laguna Lake environs, Agno and Magat, and the Cordilleras. In addition to these, a number of non-structural needs must be addressed in order to ensure the sustainability of the reconstruction program, as well as reduce the possibility of incurring impacts of this magnitude in the future. The following section describes the broad cross sectoral non-structural needs that should be addressed in the short to medium term. The proposed actions are intended to lay a sound policy and institutional framework for: i) ensuring the sustainability of the reconstruction program to be undertaken by the Government and ii) avoiding repeated damages and losses by adopting “build back better� strategies that emphasize the importance of prevention, preparedness and mitigation. In order to align the identified measures with the Government’s reform agenda, the non-structural needs have been classified according to the key action areas laid out in the SNAP. 120 Respectively the Department of Public Works and Highways, Department of Social Welfare and Development, Department of Health, and Department of National Defense – Office of Civil Defense/Armed Forces of the Philippines. 121 Many of which had already been identified in “The National Assessment on the State of DRM in the Philippines� (ADB and UNDP, 2008). P O S T- D I S A S T E R N E E D S A S S E S S M E N T 147 Establish a sound legal and institutional foundation for DRRM at national and local levels Enact the DRRM Law to enable a shift in focus toward risk reduction. Efforts are underway to enact a DRRM law. The Senate passed its version of the DRRM Bill (SB No. 3086) in September 2009, while the House of Representatives has completed its second reading of its own version of the DRRM Bill (HB No. 6985), with a bicameral conference targeted to take place in December. The DRRM Bill has the potential to transform the policy and institutional environment towards more comprehensive risk reduction and management. However, further refinements are needed to ensure that the bill embodies the fundamental DRRM principles of: • Establishing a strong foundation for introducing sound institutions, practices, and processes; • Identifying essential tasks and assigning responsibilities and accountabilities; • Identifying minimum acceptable actions commensurate to the type and level of risk; and • Encouraging actors/agencies to take actions based on evaluation of risks to meet stated intentions. In line with these principles, the Bill should: (a) strengthen the links between DRRM and development planning; (b) clearly delineate functions among agencies performing advisory, oversight, and service delivery tasks, notably national and local governments, quasi government bodies/public corporations, and the citizenry; and (c) institutionally link DRRM with climate change adaptation (CCA) in the coordination of strategies, priorities, and resources. Formalize the SNAP. The NDCC has proposed an Executive Order (EO) to adopt the SNAP into a formal government document that can provide the official guiding framework for DRRM. Formalizing the SNAP would signal the Government’s strong commitment to implement a 10-year “roadmap� on DRRM, in line with global good practices, and create an enabling environment for reform, including the steps outlined below. The SNAP would also establish a basis for mobilizing further funding support from development partners to accelerate and scale up the implementation of a long-term DRM program. Mainstream DRRM into local governance, planning, and budgeting systems. Ondoy and Pepeng affected a total of 37 provinces. Many of the local governments affected by these storms are among those that are historically at high risk to various forms of natural hazards. Efforts to develop the capacity of local governments (which are, by law, convention, moral obligation, and proximity, the “first responders�) to prevent, prepare, mitigate, and respond to natural disasters should be scaled up, in line with the reform efforts outlined in the SNAP and the draft DRRM bill. Across all LGUs, DRRM should be integrated with local development planning to make local physical and development plans risk-sensitive (as in, e.g., Albay and Makati). Doing so will require that DRRM principles and processes are factored into existing efforts to harmonize planning and budgeting processes (DILG, NEDA, DBM, and OCD JMC No. 1 2007). Priority should be given to ensuring that guidelines for mainstreaming DRRM into existing planning and budgeting should emphasize integration with the ongoing rationalization and harmonization process based on the JMC rather than introducing stand-alone DRRM plans as currently proposed in the draft DRR/M bill. Standalone plans, as currently proposed there, may undermine/weaken mainstreaming efforts. Most local governments will require not only technical assistance to identify and address their specific risks, but also funding to implement corresponding measures such as retrofitting of physical assets, relocation, or upgrading of DRRM-activities and facilities to effectively reduce their risks. The necessary DRRM measures (commensurate with local hazards) will need to be reflected across the full spectrum of the local planning system - land use plans, development plans and programs, ordinances, and budgets. 148 PHILIPPINES TYPHOONS ONDOY AND PEPENG In the particular case of Metro Manila, these disasters highlight the need to address adverse impacts that cut across multiple local governments in a more systematic manner. This includes the need for synchronizing land use planning and development actions across contiguous LGUs that lie within a common watershed or river basin. Strengthen Community-Based DRM (CBDRM) to deal with disasters on the ground. Community- based DRM systems are the most efficient approach to reducing disaster risk at the local level. Local knowledge about vulnerabilities, hazards, and traditional coping capacities is needed to assess the actual disaster risk and identify feasible interventions - prevention, mitigation, preparedness, and recovery. However, the capacity of communities must be strengthened to empower them to act on their own, as external assistance may not be available during an extreme event. Broad participation is important for a successful and efficient CBDRM system. Other stakeholders, such as the regional or local staff of national line agencies, the private sector, civil society representatives, and vulnerable groups themselves must be actively involved. CBDRM is most effective if linked to the national DRRM system - the laws and standards according to which local actors should act. In addition, as natural hazards do not recognize community boundaries, close cooperation with other communities is important, especially in cases where common resources such as watershed or river systems are involved. Establish a system for gathering data on damages, losses, and needs and tracking expenditures. The PDNA process revealed the presence of data gaps and inconsistencies in the current approach for reporting damages and losses. Accurate monitoring and reporting is an essential input to risk reduction efforts. Data from the estimation of damages and losses by local governments provides valuable planning information, with which to quantify the impact and identify the nature of disasters, design appropriate responses, identify sources of financing, and monitor the use of funds. Likewise, expanding the coverage of data gathering efforts to the private sector and other public sector entities such as government-owned and -controlled corporations and local government enterprises is also necessary to allow a more accurate assessment of the needs, match funds to identified needs (e.g., calamity funds and extra budgetary resources), and establish the fiscal and macroeconomic impact of natural disasters. The NDCC has prepared a country-specific disaster assessment methodology adapted from the Economic Commission on Latin America and the Caribbean (ECLAC) methodology. However, the methodology needs to be fully tested and rolled out, and may also need to be updated to take into account recent lessons of experience. A review of the current system of data collection and compilation is needed to ensure that accurate information can be provided to decision makers who are responsible for planning and coordinating relief, recovery, and reconstruction programs as well to identify prevention and mitigation measures. A key priority is to allow tracking of expenditures across levels of government and from various sources (private, agencies, local). This information is essential for determining resources to build back better. Promote strict compliance with existing risk reduction policy and legislation. Mechanisms for speeding up the implementation of key legislation, e.g., the Solid Waste Management Act and the Clean Water Act, should be put in place to enable local governments to take essential risk reduction measures. Compliance with these policies is uneven, e.g., less than 10 percent compliance with the Solid Waste Management Act. As a means of accelerating local action, the Government has proposed to put in place a matching fund to support the implementation of the Act. Funds have been set aside under the 2010 budget to incentivize local action and support inter-local cooperation (planning, managing, monitoring, and financing) among local governments with shared facilities. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 149 Over the medium term amendments to other key pieces of legislation will also be necessary (e.g., the proposed land use law). In addition, environmental regulation and impact assessments should be reinforced to ensure a strong link to comprehensive hazard-scape mapping, and should be strictly enforced to reduce/prevent risks associated with proposed locations of infrastructure projects. Identify, assess, and monitor disaster risks and enhance end-to-end, multi-hazard early warning systems Assemble lessons learned from Ondoy and Pepeng and their associated flooding and landslide events. To be able to transform adversity into opportunities, stakeholders from both the public and private sectors should sit together to determine prospects for long-term actions to prevent the magnitude of human and economic costs incurred from Ondoy and Pepeng. The assessment could include drawing up a picture of the physical extent of the floods and landslides with associated damages, as well as the extent to which control measures (e.g., pumps and dikes) and warnings, as well as the corresponding measures to remove people from harm’s way, actually worked on the days Ondoy and Pepeng battered the Philippines. The private sector foundation established in response to these disasters has began a series of consultations with private sector actors. Similar measures are planned by the SNPRC. Fast track the preparation of hazard and/or risk maps in high-risk LGUs. Despite the face that many of the affected LGUs had contingency plans in place, many were not sufficiently prepared for Ondoy and/or Pepeng. This was also due to inadequate integration of DRRM parameters into land use and development plans and programs. As a result, many local governments did not have adequate zoning ordinances, building codes, and standards to mitigate these risks, Successful risk reduction programs require accurate and timely information on the nature and location of hazards, as well as the ability to translate this information into comprehensive risk reduction and contingency plans, taking into account the level of exposure and vulnerability. NDCC is currently preparing multi-hazard maps for at least 27122 provinces (jointly being implemented by OCD, PHIVOLCS, PAGASA, MGB, and NAMRIA123) through the ongoing Hazards Mapping and Assessment for Effective Community-Based Disaster Risk Management Project. To be more useful to communities and local governments, these hazard maps could be prepared at a scale of 1:10,000 (currently 1:50,000) to improve accuracy at community level. As this would add to the cost and technical requirements, in the short term efforts should be made to speed up implementation by boosting the capacity for preparation and utilization of these maps. In the long term, a national spatial data infrastructure that can be accessed and used by stakeholders at the local and national levels could be created to capture and maintain the relevant information across all scientific agencies. Other fundamental data include administrative maps and census data. NEDA and NAMRIA are jointly supporting this initiative to establish the risk exposure of local governments. External support, especially in the form of satellite and aerial mapping and photography, could help facilitate the preparation of these maps. 122 The provinces included in this multihazard mapping project are: Surigao del Sur, Surigao del Norte, Benguet, Cavite, Pampanga, Aurora, Bohol, Leyte, Southern Leyte, Ilocos Sur, Abra, Laguna, Quirino, Zambales, Catanduanes, Northern Samar, Eastern Samar, Antique, Zamboanga del Sur, Ilocos Norte, Isabela, Rizal, Nueva Vizcaya, Cagayan. Agusan del Sur, Iloilo, Zamboanga Siguguey, and Benguet. 123 Respectively Office of Civil Defense, Philippine Institute of Volcanology and Seismology, Philippine Atmospheric, Geophysical and Astronomical Services Administration, Mines and Geosciences Bureau, and National Mapping and Resource Information Authority. 150 PHILIPPINES TYPHOONS ONDOY AND PEPENG As noted above, a comprehensive risk assessment is required for Metro Manila. Previous plans and studies (e.g., Metro Manila Earthquake Impact Reduction Study124 ), should be updated to incorporate more recent information (e.g., the Metro Manila Climate Change Study).125 Likewise, the 1999 Metro Manila Physical Framework Plan - a policy document that guides the allocation and utilization of natural and physical resources - should be updated building on the risk identification and assessment methodologies discussed above. The updated framework document would serve as a basis for coordinating efforts within the metropolitan area as well as for identifying and delineating the responsibilities of local governments and the Metro Manila Development Authority (MMDA), rationalizing resources and prioritizing actions among the players. Strengthen the risk modeling and forecasting capacities of scientific/technical agencies. Currently, the primary basis for risk identification is from various historical data. While these data are both useful and necessary for planning purposes, given that weather-related disasters account for 70 percent of damages recorded in the Philippines, and given the uncertainty brought about by climate change, better use of scientific information for modeling risk and forecasting hazardous events is needed. On average 20 typhoons and tropical storms are recorded annually. Investing in additional capacity (e.g., Doppler radars) is a priority126. Through PAG-ASA, the procurement of Doppler radars to improve its forecasting capacities has been initiated. The expeditious acquisition of this and other necessary equipment required for climate change modeling should go a long way toward improving the use of scientific information in planning risk reduction measures. Forecasting capacity must be matched on the ground with preparedness and local-level early warning activities, otherwise it will be a purely academic exercise. Truly “end-to-end� forecasting and early warning systems are necessary to save lives and reduce losses. Use knowledge, innovation, and education to build a culture of safety and resilience at all levels Provide DRRM information in a form that is useful for communities and local governments. Within municipalities, the primary role in identifying risk reduction measures lies at the community level. It is at this level that early warning systems, evacuation plans, and search and rescue efforts become operational. Ensuring that vulnerable communities have the necessary information to plan their efforts is an essential challenge. Numerous barangays were affected by Ondoy and Pepeng. Many others require similar preparation for managing and dealing with disaster impacts. DRRM resources (studies, tools, and resources) should be made available in a form that is useful at the local and community level. The nature of interventions required by each community varies. Some require more technical expertise than others, so a hierarchy of support systems at each level of government is needed. Municipalities may seek support from scientific and technical agencies of the national government or academic institutions within their reach. They may also seek support from provinces and cities that have in-house technical capacity and use GIS-based hazard and vulnerability mapping. The DRRM bill seeks to establish a DRRM Institute that will provide the necessary capacities across sectors and local governments. DRRM curricula can likewise be introduced in the education system as a way to build a culture of safety and resilience at an early level. The NDCC, DILG, the LGU Leagues, and the Commission on Higher Education can work collectively to harness existing DRRM expertise and know-how to serve as foundation for the planned systematic build-up and transfer of knowledge to local governments and other critical stakeholders. 124 Earthquake Impact Reduction Study of Metro Manila and 125 These studies have led to the identification of the hazards, namely earthquake, climate change, and flooding and their potential social and economic impacts on Metro Manila. 126 To this end the Philippines is receiving assistance from Australia and Japan. P O S T- D I S A S T E R N E E D S A S S E S S M E N T 151 Provide basic training on DRM to all agencies responsible for implementing DRM-related services. The Government has rightly identified the need to introduce DRRM concepts among the oversight and sectoral agencies. As these agencies are tasked to provide technical assistance to lower levels of Government, it is important that such knowledge is in place, particularly among agencies that exercise oversight function over local governments, e.g., DILG, and among those engaged in the provision of crucial services and infrastructures, such as DPWH and DOH, among others. In addition, the government should seek to integrate DRRM into school curricula, and operations of health and day care centers. School-aged children need to be oriented on practices to allow them to protect their lives while in school premises and elsewhere. Building a culture of resilience should start early, hence, the need to incorporate them into school curricula. Complementary to this, day-care centers and health facilities should integrate DRRM into their services to promote better response in times of calamities. Reduce underlying disaster risks Fast track risk finance options to pool and transfer risk. Over the years, a system of national and local disaster risk financing institutions has been developed to provide post-disaster funding. The key elements of the existing risk financing system include: (i) a National Calamity Fund, (ii) local Calamity Funds, (iii) Government Service Insurance System (a government-owned insurer providing catastrophe insurance coverage for government-owned assets), (iv) a crop insurance scheme, (v) private donations from charities, and (vi) indemnity payments from private insurance companies. Despite this, there is a shortage of post-disaster funding experienced by many segments of the economy, including homeowners, LGUs, government agencies in charge of disaster relief and reconstruction, as well as centrally and locally owned utilities. In addition, there is concern that the fiscal implications of disasters are likely to rise in the future, which will further increase the burden on government over time. To address these shortcomings, a risk finance strategy is necessary to rationalize the distribution of the financial burden between the public and private sectors through a range of options to expand risk reduction and risk transfer mechanisms. Two important options are currently being considered: a catastrophe pool that would allow local governments to build up reserves to manage medium risks by providing immediate liquidity to its members when a significant disaster occurs, thus reducing the burden on national government; and a contingent financing option that would provide immediate liquidity when a national calamity is declared, as well as backing up the catastrophe pool in its early years. Other risk finance and transfer schemes that would benefit the private sector, including housing and SMEs, are also being explored, together with the option of establishing regional catastrophe financing pools with other countries in the Southeast Asia region. Countries that have already established their own risk finance instruments which have proven to be effective include members of the Caribbean Catastrophe Risk Insurance Facility and the Turkish Catastrophe Insurance Pool. Provide affordable financing to LGUs for priority risk reduction investments. Investments related to DRM are considered public goods. As such, there is a need to encourage LGUs to improve preparedness and invest in priority mitigation and prevention measures by providing access to additional and affordable financing. For low-income LGUs, matching grants or other incentive programs can be designed to encourage and assist with major DRRM investments. Existing facilities, such as the Disaster Management Assistance Fund (DMAF) established by the MDFO, which currently offers limited funding on concessional terms, could be further expanded by tapping additional resources from the Municipal Development Fund (MDF) or through injections of additional government or international financing. Funding windows set up by GFIs could also be complemented by matching funds from the national government to accelerate the uptake of loans for DRRM- related investments. Technical assistance to determine and design these investments and to build implementation capacity will also be needed to ensure the timely provision of DRRM services and infrastructure investments. 152 PHILIPPINES TYPHOONS ONDOY AND PEPENG Introduce risk–sensitive technologies. Ondoy and Pepeng have exposed the weakness in the design, construction and engineering standards employed by local governments. There is an urgent need to revisit current standards and methodologies to make them responsive to the various risks faced on the ground, and to ensure that local governments incorporate this guidance in local ordinances. Moreover, there is a need to ensure that critical infrastructure, such as schools, health centers, local government halls, and other lifeline services are protected from hazards and continue to function amidst disasters. In the long-run schools should cease to be evacuation centers and community/ social welfare centers, and even the barangay halls, be used instead. Financing for full-fledged evacuation centers is not likely to be available to most LGUS. Strengthen disaster preparedness for effective response at all levels Prepare for a wide range of hazard scenarios. It is essential to strengthen local contingency planning through a more comprehensive policy that ensures that search and rescue capability, evacuation procedures, and relief services take into account the worst-case scenario. Such plans should be broad-based and include local government, civil society, the business sector, volunteer groups, and other humanitarian organizations. In addition, basic emergency facilities, training, and regular testing of emergency response systems should be required in high-risk LGUs. Fail-safe backup plans are also needed to avoid repetition of the Ondoy/Pepeng situation where damaged infrastructure (e.g., communications) vital to the response and rescue efforts was rendered inoperable. Integrate early warning systems, reporting, and monitoring across all levels of Government. Information generated at the national level by the scientific/technical agencies on the projected scale/magnitude of impending disaster should be processed and transmitted in a timely manner to local governments which rely on such information to guide actions and to allow feedback from the ground. Access to early warning systems should likewise be increased by improving affordability, simplifying technologies and ensuring capacities to integrate solutions across levels. It is crucial that such information is processed to guide appropriate actions, especially at the community level. In addition, the different communication platforms should be integrated between public and the private sectors to increase functionality and reliability. For example, call centers could be allowed to receive calls related to disasters and direct them to appropriate channels. Widen membership of disaster coordinating councils. As the scale of disasters can overwhelm local governments with limited resources, expanding the membership of the disaster councils is a strategic way to augment existing capacity and resources. For example, institutional linkages to radio, television, and print media at the national and regional level should be strengthened to improve the flow of information and early warnings. The utility of mass media in emergency communication was illustrated during Ondoy and Pepeng. All forms of media (radio, television, cell phone, web) became focal points for channeling appeals for rescue. Given the extent of the media’s reach, giving them a role as permanent members of disaster coordinating councils should be encouraged. Local governments often co-opt or coordinate with other volunteer groups and other private sector groups during disasters. Joint plans or support systems should be established between neighboring or clustered (metropolitan) LGUs, such as regional branches of the LGU Leagues, such that when one member of the league is unable to cope with a disaster, other able members can extend assistance to replace or augment local resources. Estimates of needs for the short and medium-term horizons. The requirements for the short- and medium-term are estimated at PHP955 and Php 835 million, respectively, and are mostly non- structural interventions that aim to build the knowledge and capacities among crucial sectors and local governments. They focus mainly on the range of activities that includes ex-ante preparation P O S T- D I S A S T E R N E E D S A S S E S S M E N T 153 and mitigation that are envisaged to reduce, not just the economic damages and losses, but also mortality from natural disasters. Many of these interventions have already been planned and/or initiated by the members of the NDCC, with support from many development partners. However, there is a need for need immediate action and effective implementation of these efforts to achieve the desired outcomes of reducing the vulnerability of the local governments and their communities to increasing scales of natural disasters. Recovery Framework: Disaster Risk Reduction and Management Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 A clear legal Current law does not • Enact the DRM Law to • Expansion of the and institutional provide for DRRM in line enable a shift in focus use of the Philippine framework for with the SNAP. SNAP has towards DRRM disaster damage and disaster risk not yet been formalized • Issue an Executive Order loss methodology reduction (DRRM) or submitted as GRP formalizing the Strategic to gather data in all is established to commitment to HFA. National Action Plan sectors and across accelerate reforms Guidelines on • Design and roll out the levels (PHP20 million) and actions at all Mainstreaming DRRM exist, Philippine disaster damage • Expansion of capacity levels but need to be disseminated and loss assessment building for risk- and adapted methodology (Php 20 sensitive planning Civil society organizations million) among high risk LGUs and local governments • Capacity development (Php 75 million) are actively engaged in for risk-sensitive planning • Expansion of CBDRM promoting CBDRM, albeit in among high risk LGUs (Php interventions (Php 150 selected areas. 25 million) million) • Harmonize, disseminate and adapt guidelines across levels (PHP5 million) • CBDRM in high risk communities (Php 50.0 million) Disaster risks at Many LGUs in the country • Fast-track preparation of risk • Expand hazard all levels of local face multiple hazards, maps for LGU CLUPs (Php 27 mapping for LGU governments are but do not have access million) CLUPs (Php 50 million) identified and to technical information • Doppler radars (Php 600 • Develop tools for assessed to provide on hazards and risks million) integrating scientific foundation for to guide planning and • CC Risk models for extreme information across appropriate DRRM decision-making. Shortage weather events (Php 10 NG agencies (Php 100 policy, plans, and of manpower is seen as million) million) programs a problem of technical • End to end early warning • Early warning agencies doing the mapping. systems in high risk systems in high risk communities (Php 50 communities (Php 150 million) million) 154 PHILIPPINES TYPHOONS ONDOY AND PEPENG Priority Activities to Priority Activities to Outcomes Baseline December 2010 December 2012 DRRM knowledge Extensive DRRM knowledge • Develop appropriate DRRM is systematically has been produced at tools for localized planning disseminated across both global and national and decision-making (Php 5 sectors and levels of levels, but this has yet to million) government be translated into more • Revisit land use, guidelines practical information for related to settlement/ use by local governments zoning and construction/ and their communities. engineering (Php 5 million) Currently, there is no • Integrate DRRM in education system for transferring and health (costed in other knowledge and skills to sectors) local governments and for • Training for LGU frontliners testing or monitoring the in high risk LGUs (Php 20 effectiveness of these DRRM million) capacity development programs Underlying risks are The government finances • Establish a CAT pool to • Retrofit and /or reduced through the bulk of DRRM needs. mobilize LGU financing for upgrade priority improved access to Limited financial resources medium to large events (Php sectors and critical funds that support constrain investments in 15 million) lifeline infrastructure ex-ante and ex-post preparedness, prevention • Introduce contingency (costed in other DRRM initiatives and mitigation. In addition, funds, reinsurance, bonds sectors) the costs of recovering from and other risk transfer • Increase the role or reconstructing after large mechanisms (Php 10 million) of private sector in disaster events may go • Develop incentives or insurance provision unfunded because of fiscal matching grants to support (Php 15 million) constraints. LGU mitigation and • Establish a system preparedness activities (Php for payment for 5 million) environmental • Strategy for using DRRM services (Php 5 for poverty reduction (Php million) 3million) • Implement DRRM in poverty reduction Capacities for Local governments are • Develop capacities among • Evacuation centers effective response mandated by law to act communities to ensure in critical areas (Php at national and as the first responders. adequate emergency P270 million) local levels are However, many of them response (Php 10 million) strengthened, are unable to meet the • Revise/upgrade contingency through requirements – personnel, planning guidelines to collaboration among systems, and equipment to ensure that LGUS have LGUs and the private effectively deal with crisis on capacity to deal with worst sector the ground. case scenarios (PHP5 million) • Evacuation centers in critical areas (Php 90 million) Total financing needs Php 955 million Php 835million P O S T- D I S A S T E R N E E D S A S S E S S M E N T 155 PHOTO CREDITS Cover photo: John Paul del Rosario Inside front cover: Nonie Reyes DESIGN & LAYOUT Graphic Arm 156 PHILIPPINES TYPHOONS ONDOY AND PEPENG