36107 Governance of Natural Resources in the Philippines: Lessons from the Past, Directions for the Future Rural Development and Natural Resources Sector Unit East Asia and Pacific Region November 2003 Governance of Natural Resources in the Philippines: Lessons from the Past, Directions for the Future Rural Development and Natural Resources Sector Unit East Asia and Pacific Region November 2003 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank JBIC Japan Bank for International Cooperation CBFMA Community Based Forest Management LGU Local Government Unit Agreement NCIP National Commission for Indigenous People CENRO Community Environment & Natural Resources NEDA National Economic and Development Officer Authority CSC Community Stewardship Contract NGO Nongovernmental organization DA-BFAR Department of Agriculture Bureau of Fisheries NIPAS National Integrated Protected Areas System and Aquatic Resources PACBRMA Protected Areas Community Based Resource DAO Departmental Administrative Order Management Agreement DENR Department of Environment and Natural PAWB Protected Area Wildlife Bureau Resources PENRO Provincial Environment & Natural Resources DILG Department of Interior and Local Government Officer DOF-BLGF Department of Fisheries-Bureau of Local PO People's Organization Government Finance SIFMA Socialized Industrial Forest Management EO Executive order Agreement UNEP United Nations Environment Programme FASPO Foreign Assisted Projects Office UNDP United Nations Development Programme GNI Gross National Income USAID United States Agency for International IFMA Industrial Forest Management Agreement Development IPRA Indigenous People's Rights Act WB World Bank iii CONTENTS PREFACE vii EXECUTIVE SUMMARY ix 1. CHALLENGES FOR NATURAL RESOURCE GOVERNANCE 1 2. POLICIES, LAWS, AND NSTITUTIONS FOR I NATURAL RESOURCE MANAGEMENT 3 3. DENR FINANCING FOR NATURAL RESOURCE MANAGEMENT 16 4. THE UNFINISHED AGENDA FOR EFFECTIVE NATURAL RESOURCE GOVERNANCE 22 5. IMPLEMENTING RIGHTS TO NATURAL RESOURCES: EXPERIENCE FROM THE FIELD 23 6. INSTITUTIONS:THE IMPACTS OF NCOMPLETE I DECENTRALIZATION ON NATURAL RESOURCE MANAGEMENT 27 7. FINANCING AT THE LOCAL LEVEL 38 8. CONCLUSION AND RECOMMENDATIONS 42 REFERENCES 45 BOXES 1 Trends in Natural Resources in the Philippines 2 2 Key features of the National Integrated Protected Areas System Act of 1992 6 3 The DENR's budget preparation process 17 4 The Palawan Council for Sustainable Development: an institutional model for better natural resource governance 30 5 Corruption and illegal logging in Isabela province 33 6 Paying for participation: the cost of running a protected area management board 36 FIGURES 1 Institutional structure and agency mandates for natural resource management 11 2 Organizational chart for the Department of Environment and Natural Resources 12 3 Spending by DENR natural resource bureaus, 1998­2002 19 TABLES 1 Decentralization of natural resource management functions under the Local Government Code of 1991 4 2 Main legal instruments for forest ownership, access, and control 8 3 DENR budget and regional allocations, 1998­2002 18 4 DENR Actual Income, 1999­2003 18 5 DENR budget allocations and government counterpart funding for protected areas and the Protected Areas and Wildlife Bureau, 1998­2003 20 6 Allocation of forestland in Agusan del Sur province by type of tenurial instrument and granting agency 29 7 DENR staffing for the Philippines's 360 protected areas 34 8 Stakeholder participation in protected area management boards in Mt. Isarog National Park, Northern Sierra Madre Natural Park, and Puerto Princessa Subterranean River, 2000­01 35 MAP Natural Resource Management and Governance, Philippines 51 v PREFACE T his report analyzes natural resource management unpublished academic reports,and reports by government agen- and governance in the Philippines, identifying re- cies, nongovernmental organizations (NGOs), universities, the cent trends, current challenges, and future goals. Asian Development Bank (ADB), the United Nations Environ- The first half of the report summarizes the status of ment Programme (UNEP), the United Nations Development the country's natural resources, describes sector policies, insti- Programme (UNDP), the World Bank, and bilateral donors. tutions, and budget mechanisms, and identifies impediments to improvements. The second half focuses on three crucial issues The analysis for the report was carried out between September for natural resource governance: property rights,institutions,and 2002 to June 2003. During this period, a new Secretary of De- financing. As part of its analysis of these three overarching is- partment of Environment and Natural Resources was appointed, sues, the report considers cross-cutting governance concepts and many of the recommendations proposed in the report are such as participation, accountability, transparency, corruption, currently in the process of being implemented. and service delivery.The report's final section offers conclusions and recommendations. The Study was carried out by a team of Filipino researchers and World Bank Staff and consultants.Members of the team included: The primary audience for this report is the government of the Giovanna Dore and Gilbert Braganza,Brenda Phillips and Patricia Philippines--particularly national and local agencies and offi- Morente from the World Bank, Arne Jensen, Charles Barber, En- cials with mandates for natural resource management. For aca- vironmental Sciences for Social Change, Floredema Eleazar, and demics and researchers the report provides an overview of Paul Holtz.The overallTask was managed by Asmeen Khan.The problems in natural resource management and governance. For Study benefited from comments provided by Kathy Mackinnon, civil society the report might create opportunities to engage in William Magrath, Stephen Mink, and Ernie Guiang. The team dialogue with other stakeholders. And for donors it sheds light would like to acknowledge the substantial help and assistance on the challenges involved in developing and implementing provided the Department of Environment and Natural Resources, natural resource management projects in the Philippines. particularly the Director for ForeignAssisted Projects and his staff. The Study was financed by the World Bank with additional sup- The report's analysis draws on many studies conducted over the port from the Global Environmental Facility and the Danish Gov- past decade--including studies commissioned for this report, ernment through aTrust Fund. vii EXECUTIVE SUMMARY A lthough the Philippines was once one of the Unclearinstitutionalmandatesbetweencentralagenciesand richest biological regions on Earth, 50 years of local governments. severe natural resource degradation have Lackofsustainedfinancingatthenationallevelandrevenue taken a catastrophic toll. As a result the country generation at the local level to finance natural resource now has among the lowest forest cover per capita in the tropics, management. and many mangrove and coral reef ecosystems have collapsed. Delays and other problems in issuing and enforcing the new The main direct causes of this degradation include pollution, tenurial instruments for public forests. urbanization, sedimentation, conversion to other land uses, Lackofequivalenttenurialinstrumentsforcoastalwatersand and--most important--overexploitation, often involving de- resources. structive approaches to resource extraction.These problems have Administrativeimpediments. been exacerbated by weak natural resource management, lim- Insufficientcapacity,accountability,andtransparencyinpublic ited financial resources, and ineffective environmental institu- and private institutions responsible for managing natural tions. (In this report natural resources refers to forests, coastal resources. waters, mangroves, coral reefs, watersheds, and protected ar- eas. Mineral resources are covered by a separate initiative be- This report focuses on three crucial aspects of natural resource tween the Department of Environment and Natural Resources governance and the extent to which they explain failures in im- and the World Bank). proving it: Over the past decade the government has tried to reverse these Property rights--tenurial and use rights for natural resources trends, introducing innovative institutional and legal reforms have not been fully implemented, hindered by rigid bureau- for sustainable natural resource management--including, in cratic procedures. the early 1990s,a comprehensive decentralization program that Institutions--aprofusionofunderfunded,centralizedinstitu- promotes resource management by local governments, indig- tions have unclear and overlapping mandates,ineffective pro- enous groups, and resource-dependent communities. For ex- cesses for stakeholder participation, and inadequate mech- ample, new tenurial instruments have granted a variety of anismstoensureaccountableperformanceandservicedelivery. property rights to local and indigenous communities--particu- Financing--an inefficient, erratic system sets budgets for larly for public forests--and a national system of protected ar- natural resource management, leading to a multitude of eas has been created. underfunded policies and programs for protected areas, community-based forest management, rights of indigenous In addition, in recent years many donors have supported efforts peoples, and so on. to improve natural resource management by building the ca- pacity of the Department of Environment and Natural Resources This report draws on the extensive literature on natural resources (DENR), local governments, nongovernmental organizations and governance in the Philippines,and complements it with data (NGOs), and local communities, and by supporting innovative from the DENR and National Economic Development Author- partnerships among them. ity (NEDA). In addition, case studies from resource-rich prov- inces are used to provide local perspectives that illuminate overall Despite these efforts,natural resource management in the Phil- problems--and offer examples of how to improve institutional ippines has a mixed record of performance. The main reasons performance in resource management.The report's main mes- for failure are: sages are summarized below. ix EXECUTIVE SUMMARY Effective natural resource management requires way to harmonize the Indigenous Peoples Rights Act with the further institutional devolution National Integrated Protected Areas Systems Act. The Local Government Code of 1991 devolved substantial power, Instruments for community-based forest management responsibility, and resources to local governments, including have strengthened local rights--but inefficiency and weak aspects of natural resource management.Yet the DENR still takes enforcement create conflicts and inhibit sustainable use the lead in managing natural resources. Only 4 percent of the and investment DENR's more than 23,000 staff have been devolved to local gov- ernments, and 18,000 DENR staff are in regional offices. Secure tenure can give communities an incentive to invest labor and capital in sustainable management of their lands, waters, Meanwhile, provincial and municipal governments have lim- and other resources. Recognizing that, in the 1990s the Philip- ited capacity in resource management. For example, many mu- pines reversed a long-standing policy of state ownership of for- nicipalities do not have environment and natural resource estlands and developed regulations and tenurial instruments that officers--and given ceilings on hiring and the limited devolu- allow individuals and communities to control and use forest- tion of natural resource management functions, local govern- lands and their resources. By 2000 nearly a third of public ments have little incentive to fill these positions.As a result most forestlands were formally covered by some type of community- local governments remain dependent on the DENR and are of- based tenurial instrument. ten disengaged from local resource management.Although some local governments have assumed active roles in natural resource But this new tenurial system is fraught with problems. To re- management, this is generally due to the specific commitment ceive resource use rights, communities must complete a series of local political leaders and so is neither institutionalized nor of cumbersome procedures, which includes social preparation sustainable. prior to receiving these rights. And once rights have been granted, communities can use forest resources only after the Multiple laws devolving natural resource responsibilities DENR has approved the resource management frameworks have led to an administrative impasse that needs to be and annual workplans that applicants are required to produce. resolved Because this documentation is often too complex for commu- nities to produce, many must turn to NGOs or consultants for Responsibilities for natural resource management have also assistance. been decentralized by the Strategic Environmental Plan for Palawan, the Indigenous Peoples Rights Act, and the National Moreover, problems and conflicts arise when different tenurial Integrated Protected Areas System Act--in Palawan province, instruments--such as ancestral domain claims of indigenous in recognized ancestral domains of indigenous peoples, and in groups and various forest management tenures--are issued for protected areas, respectively. But these measures' procedures the same area. In other cases local right-holders have no way of and requirements often overlap or conflict with the Local Gov- enforcing their rights against powerful outsiders--such as ille- ernment Code, adding an additional layer of bureaucracy and gal loggers with political or military connections.As a result many often causing delays in issuing environmental clearances, in- forestlands formally under community-based tenurial instru- digenous titles, community-based forest management instru- ments remain as they were before: de facto open access areas. ments, resource use permits, and the like. Urgent attention should be given to harmonizing these mechanisms and stream- Devolution of control over coastal waters and resources needs lining their regulatory procedures. Efforts are currently under- to be complemented by community-based property rights to x Governance of Natural Resources in the Philippines EXECUTIVE SUMMARY reverse the current open access situation and provide incentives sponsibilities to manage them sustainably, in accordance with for sustainable community-based coastal resource management. national and local standards and priorities. The DENR should enforce these responsibilities and standards--and provide local Although the 1991 Local Government Code and 1998 Fisheries governments and communities with the services and tools they Code devolved control over coastal waters up to 15 kilometers need to observe them. from the shore to municipal and city governments, there is no system of tenurial instruments for coastal waters equivalent to Thus the DENR needs to evolve in three directions.First,it needs those for forestlands. As a result most of the country's coasts to complete the devolution of natural resource management remain de facto open access areas--with attendant over- functions mandated by the Local Government Code and other exploitation and use of destructive fishing methods. legislation. Second, the DENR needs to recast its role--becom- ing the guardian of national minimum standards for natural re- The forest-related tenurial instruments show that while ten- source management and building its capacity to ensure that local ure is insufficient to ensure sustainable natural resource man- governments and communities observe them.Finally,the DENR agement, it is an important foundation for sustainable needs to strengthen its capacity to help local governments and management in situations where poor and growing popula- communities meet those standards. To fulfill these new roles, tions depend on local resources for their livelihoods.The same the DENR needs to restructure, redefine its programs, and re- dynamic applies to fisheries, coral reefs, and other coastal re- orient its staff. sources--as has been well documented by sites where local governments and communities have instituted de facto tenur- The DENR's budget management process needs ial regimes over coastal waters. to be overhauled Devolution of natural resource governance and tenurial Between 1998 and 2002 just 5 percent of the DENR's budget rights to local governments and communities must be went to development expenditures--that is, actual investments complemented by a strong governing hand from the in natural resource management. During the same period the DENR--to facilitate and enforce observance of the DENR's overall budget dropped 43 percent. The department's responsibilities that accompany devolution limited budget is spread across too many programs and projects, and is fragmented among the DENR's four bureaus--signifi- Neither devolution of governance under the Local Govern- cantly limiting any bureau's ability to effectively implement natu- ment Code nor creation of local tenurial rights over forest- ral resource policies. lands was driven by evidence that such measures would improve natural resource management. Rather, both largely "Banner programs"--created by DENR secretaries to put their resulted from the democratization of Philippine society since personal and political mark on the DENR's overall program-- the fall of Ferdinand Marcos' in the 1980s--and, in the case are one reason that resources are allocated inefficiently across of community-based forestry, from the failure of top-down, too many program. (The fast turnover of DENR Secretaries is state-led forest management to provide ecological sustainability also a problem: there were four during 1998­2002.) Banner or social equity. programs are supposed to provide focused budget resources to environmental and natural resource management challenges But local management and control do not necessarily lead to requiring special attention and immediate intervention. New sustainable natural resource management. Devolution of rights banner programs are adopted each year without DENR evalu- to natural resources must be accompanied by devolution of re- ations of existing ones--which tend to take on bureaucratic Lessons from the Past, Directions for the Future xi EXECUTIVE SUMMARY lives of their own--and assessments of their ongoing budget two-thirds of its development budget. Donor investments have requirements. In addition to limiting the effectiveness of ban- consistently focused on forestry and upland activities. ner programs, this approach creates significant inefficiencies in spending on natural resources. Large investments from donor projects have cushioned low gov- ernment funding for the DENR, but projects'potential to fulfill The DENR must slash"routine"costs the department's mandate is constrained by their weak perfor- mance. A recent review by the National Economic and Devel- In 1998­2002 a staggering 95 percent of the DENR's budget went opment Authority indicated that among the country's rural to"routine"costs of administrative management and operational development agencies, only the DENR has exhibited a decline support (with salaries accounting for a large share of these costs). in physical accomplishments--and cost and time overruns were Thus 95 percent of the budget was used to maintain a bureau- largely to blame. Moreover, the DENR's performance rating for cratic system for spending the remaining 5 percent of the bud- donor projects was less than satisfactory. Much of this weak get on actual environmental and natural resource management performance was due to the DENR's lack of staff capacity, its services. failure to provide adequate counterpart funding,and its frequent shifting of priorities under the banner programs discussed above. The DENR employs far more people than can be justified by its level of service delivery. The current ratio between routine and New institutional arrangements--including participation development spending (95:5) needs to be drastically altered-- by communities and local governments--appear to be aiming, within five years, for a ratio of at least 75:25. Without one solution such a transition, it will be impossible for the DENR to effec- tively deliver natural resource management services.Though this New institutional arrangements such as protected area man- change will be politically difficult, it is technically and opera- agement boards and provincial environmental councils have tionally feasible. helped bring together key stakeholders in forums where resource management decisions are made in a more open, transparent The DENR needs to boost its revenue manner.For example,many protected area management boards are actively involved in issuing local conservation regulations DENR revenue from taxes,penalties,and other fees and charges and implementing management plans for protected areas. In totaled 472 million pesos in 2001, about 13 percent less than in addition,enhanced stakeholder partnerships have increased the 2000. This revenue accounted for only about 6 percent of the number of volunteers and NGOs assisting protected area su- department's budget--and should be significantly increased by perintendents in park management and protection activities. improving enforcement and implementation. But financing for the activities of protected area management Donors need to better integrate projects with DENR boards remains limited and based on externally financed programs to improve fund use and effectiveness projects. And the Integrated Protected Area Fund, established under the Act on the National Integrated Protected Areas In the 1970s the Philippines had 4 donor projects (those involv- System, does not yet function effectively. Without sustainable ing official development assistance) involving natural resource financing, much of the recent progress on institutional arrange- management, with a combined cost of $24 million. Cumulatively ments could be lost. These new arrangements must also pur- there have been 173 foreign-assisted projects totaling $1.2 bil- sue an agenda that matches responsibilities with institutional lion--accounting for a quarter of the DENR's overall budget and capacity and accountability. xii Governance of Natural Resources in the Philippines EXECUTIVE SUMMARY Setting institutional standards for environmental services examined ways to improve service delivery and reduce bottle- would improve transparency and accountability necks--for example, by easing requirements, posting and pub- licizing information, making costs transparent, and publicizing No standards or time limits exist for processing the various types the number, location, and recipients of permits issued in mu- of resource use permits. Getting a permit or tenurial instrument nicipalities and provinces.The DENR and Department of Inte- is an expensive, time-consuming, complicated process that few rior and Local Government should work together to improve individuals or community groups can afford. Neither local gov- such mechanisms, particularly in resource-rich provinces with ernments nor the DENR have developed service standards or numerous land use conflicts. Lessons from the Past, Directions for the Future xiii EXECUTIVE SUMMARY RECOMMEND ATIONS FOR IMPROVING NATURAL RESOURCE GOVERNANCE Problem/issue Envisaged solution Agency responsible Specific action Timing Property rights Tenurial instruments for The DENR needs to review DENR Office of DENR undersecretary for 6 months community-based forest man- and simplify its procedures the Secretary policy and planning to agement have strengthened develop draft administrative local rights, but bureaucratic order simplifying procedures complexity and lack of enforcement are causing conflicts on the ground Unclear territorial jurisdiction Develop tenurial instruments DENR Office of the Create a working group to 6 months of local governments for natural for local governments to set Secretary; Depart- study different models resource management aside areas that will be entirely ment of Interior (such as forest co-manage- managed by them, set stan- and Local Govern- ment) and make recommen- dards for their use or develop- ment; local govern- dations to the DENR, ment, and establish mechanisms ments Department of Interior and to review performance Local Government, and mayors of local governments Devolution of control over Department of Interior and Secretary of Department of Interior and 18 months coastal waters to local govern- Local Government, Bureau Department of Local Government, with ments needs to be comple- of Fisheries and Aquatic Interior and Local Bureau of Fisheries and mented with effective c Resources, and the DENR Government Aquatic Resources, DENR, ommunity-based property need to develop policy and and civil society to assist rights legal instruments LGUs with policy guidelines The DENR and local govern- The DENR needs to work DENR Office of DENR undersecretary for 12 months ments need to jointly review with local governments on the Secretary technical services to review and decide on resource use technical oversight and organizational arrangements permits in a transparent, rule enforcement.The DENR and make changes to increase accountable, participatory should build local govern- technical oversight and support manner ments' capacity to carry out to local governments devolved responsibilities for natural resource management and ensure that department staff are oriented toward this new role Institutions Incomplete decentralization Further devolve DENR staff DENR Office of DENR Secretary--to review 12 months of DENR staff and functions; to provincial and municipal the Secretary options and prepare a policy overstaffing in DENR cen- governments (especially in paper on reducing and tralized offices resource-rich provinces). devolving staff Review personnel distribution in all bureaus and at all administrative levels xiv Governance of Natural Resources in the Philippines EXECUTIVE SUMMARY RECOMMEND ATIONS FOR IMPROVING NATURAL RESOURCE GOVERNANCE Problem/issue Envisaged solution Agency responsible Specific action Timing Natural resource manage- Delegate resource use permits DENR Office of DENR Undersecretary 6 months ment institutions--both (such as community-based the Secretary; of field operations--to provincial DENR and forest management agree- DENR bureaus review options and issue local offices--are stretched ments) to local governments a new administrative order to deliver their institutional once more staff have been mandates devolved Overlapping institutional Make land use decisions and DENR Office of Post provincial information 6 months mandates at the local level issuance of resource permits the Secretary; on resource and land use between the DENR, local more public through better Regional Executive permits on the DENR's governments, and other information, stakeholder con- Directors Website central government line sultation, and public hearings agencies contribute to land prior to decisionmaking use conflicts Insufficient transparency Same as above DENR Office of Develop and implement 6 months in resource allocation the Secretary; guidelines on information decisions Regional Executive disclosure through an Directors administrative order Weak standards and Develop service standards Department of Establish a working group 6 months accountability for natural for the DENR and local Budget and Man- with the three departments, resource service delivery governments, reduce the agement; DENR; local governments, and civil number of institutional Department of society representatives to requirements, and make the Interior and Local develop and pilot standards cost of permits transparent. Government for one or two services (such Encourage third-party as community-based forest monitoring of service management or environmental delivery by local groups compliance certificates) The DENR and local govern- Link local government and DENR; Depart- The DENR contracts out 18 months ments have minimal access to DENR decisionmaking to ment of Interior updates of data maps on updated data on natural accurate data to ensure and Local Gov- natural resource management resource management scarce government resources rnment; PAWB and use to third parties (such are properly allocated as universities); information published annually and posted on DENR Website Successful partnerships Develop more partnerships DENR Office of Undersecretary forTechnical 6 months between the DENR, local with qualified civil society the Secretary Services to review of tech governments, NGOs, and and private sector groups nical services that could be civil society should be to increase local capacity contracted out, draft admin- expanded for natural resource istrative order management. Mechanisms for partnerships should be defined and funding ensured to sustain such partnerships Lessons from the Past, Directions for the Future xv EXECUTIVE SUMMARY RECOMMEND ATIONS FOR IMPROVING NATURAL RESOURCE GOVERNANCE Problem/issue Envisaged solution Agency responsible Specific action Timing Policy conflicts and under- Simplify policy framework to National Economic Working group to review 12 months evaluation of natural ensure adequate evaluation and Development policies and prepare guide- resources is resulting in of resource use to attract Authority; DENR lines to resolve conflicts their overextraction and private investment in natural Office of the strongly discouraging resources Secretary; private investment local governments Financing DENR budget allocations Rationalize the budget process DENR Office of Set annual targets for in- 12 months are fragmented across too at the national and local the Secretary; creasing development many programs and projects levels Department of expenditures and link to (nationally and locally) Budget and service delivery Management DENR spending has been Prioritize budget allocations DENR Office of Evaluate banner programs 6 months erratic, reflecting the priority across programs, activities, the Secretary; and reduce their number given to natural resource and projects, and consolidate Department of management by different resource use to eliminate Budget and administrations duplication of functions Management Local government budget Expand decentralization of DENR Office of Increase DENR budget 12 months allocations for natural resource budget control at the local the Secretary; allocation to regional and management are low and not level and increase local gov- Department of provincial offices. Depart- necessarily dependent on ernments' financing propor- Budget and ment of Interior and local income levels--but more tionately so they can fulfill Management; Local Government to on priorities identified by local their devolved responsibilities local governments; issue guidelines to local officials and, often, donors Department of governments for environ- Interior and Local mental service standards Government Low revenue generation by the Explore opportunities to DENR; DOF; DENR undersecretary for 12 months DENR and local governments increase revenue from natural Department of policy planning to establish resources, including expanded Budget and a working group to review base for revenue sharing with Management revenue and fee structures local governments and creation and recommend to DENR of instruments for local govern- Secretary ments to collect fees, revenues, and other user charges for Working group drawn from natural resources the DENR, DOF-BLGF to identify opportunities for creation of instruments to collect fees, revenues, and user charges from natural resources, develop model ordinances and disseminate across all local governments xvi Governance of Natural Resources in the Philippines EXECUTIVE SUMMARY RECOMMEND ATIONS FOR IMPROVING NATURAL RESOURCE GOVERNANCE Problem/issue Envisaged solution Agency responsible Specific action Timing Contributions from donor Strengthen the links between DENR Office of 6 months projects have become planning and budgeting the Secretary; essential for the DENR within the DENR, DENR Department of to fulfill its mandates at the agencies, and DENR and Budget and national and especially local governments Management; local levels local governments Confusion exists on whether Same as above DENR Office of Undersecretary for planning 6 months the DENR or local govern- the Secretary; and policy to chair working ments are to contribute to Department of group to improve planning counterpart funding for donor Budget and and budgeting for donor projects Management; projects local governments Lessons from the Past, Directions for the Future xvii CHAPTER ONE Challenges for Natural Resource Governance T he Philippines was once one of the world's richest Administrative obstacles at the local level. biological regions, with extensive and diverse Lack of accountability and transparency among public insti- tropical forests (including large coastal mangrove tutions and NGOs involved in delivering services to upland areas), high levels of species endemism, and 27,000 communities. square kilometers of coral reefs containing enormous marine Inadequateinstitutionalcapacity. biodiversity. But while the country is still home to biodiversity of global importance,1 over the past 50 years its natural re- Together these factors point to systemic problems in natural re- source base has undergone catastrophic degradation--a pro- source governance that must be addressed if current and future cess that has accelerated in the past 20 years (box 1). Causes efforts to improve natural resource management are to succeed. of this damage include overexploitation, urbanization, pollu- Governance is generally defined as"the rules under which power tion, sedimentation, and conversion to other land uses. And is exercised in the management of a country's resources, and despite impressive strides toward establishing a comprehen- the relationships between the state and its citizens, civil society sive policy, legal, and institutional framework for sustainable and the private sector"(Brown and others 2002). For the pur- management of natural resources, implementation has been poses of this report, natural resource governance is seen as hav- uneven. ing three main dimensions: Bilateral and multilateral donors have supported numerous Property rights--the allocation and enforcement of rights to interventions aimed at improving natural resource manage- ownership, access, and control over natural resources, as de- ment and strengthening the capacity of domestic entities-- termined by policies and laws. including the Department of Environment and Natural Institutions--the mandates, functions, and capacities of Resources (DENR), local government units, nongovernmen- government agencies in charge of managing natural re- tal organizations (NGOs), and local communities--to address sources, the relationships among these agencies and with the top natural resource priorities. Though there have been civil society organizations, the processes for stakeholder par- some successes, the overall outcomes of these initiatives have ticipation in decisionmaking, and the mechanisms for stake- not been satisfactory. holders to hold government agencies accountable for their performance. Better outcomes in natural resource management are impeded Financing--theprocessesforfinancing,budgeting,allocating, by several factors: spending, and accounting for the use of resources for natural resource management. Unclear institutional mandates between local governments and the DENR. This report assesses the extent to which problems with these Insufficient financing at the national level and revenue gen- dimensions of governance explain failures in implementing natu- eration at the local level to finance natural resource manage- ral resource management policies in the Philippines, particu- ment programs. larly for forestry and marine resources. Emphasis is placed on Delays in issuing tenurial instruments. local-level analysis,focusing on regions rich in natural resources but suffering from widespread poverty. The essential question that this report seeks to answer is, why are national policies and 1. For detailed information on the current state of and trends in procedures for natural resource management not working at the Philippine biodiversity, see Ong, Afuang, and Rosell-Ambal(2002). provincial and municipal levels? Lessons from the Past, Directions for the Future 1 CHAPTER ONE Challenges for Natural Resource Governance BO 1.X TRENDS IN NA TURAL RESOURCES IN THE PHILIPPINES The Philippine archipelago comprises more than 7,000 islands with a land area of 298,170 square kilometers and a coastline of 18,000 kilometers.The two largest islands--Luzon in the north and Mindanao in the south--make up the majority of the country's land area, while theVisayas is an extensive group of islands and islets in the central part of the archipelago. Much of the country is hilly or mountainous, with nearly three-fifths defined as uplands. In 2000 the country's population was 75 million, up from 36 million in 1970. Much of the population-- especially rural poor people--depends directly on natural resources.At least 40 million people reside in some 10,000 coastal barangays (the smallest political unit), and another 12­13 million live in ecologically fragile uplands. Changes in status In 1900, 70 percent of the country (21 million hectares) was covered by a rich mosaic of tropical forests, including extensive commercially valuable dipterocarp forests. But by 1999 forests accounted for just 18 percent (5 million hectares) of the country's land area, with less than 1 million hectares of old-growth natural forests.A 1997 survey of Earth's frontier forests--natural forest areas that are"relatively undisturbed and big enough to maintain all of their biodiversity"--concluded that there are no such forests left in the Philippines (Bryant, Neilsen, and Tangley 1997).Moreover, the country is among the 11 poorest of the 89 countries in the tropics (Borlagdan,Guiang,and Pulhin 2001;see also DENR and UNDP 2002). Coral reefs have also suffered extensive degradation and face ongoing threats. Just 4 percent are in excellent condition (defined as having more than 75 percent hard and soft coral cover), while 28 percent are in good condition (50­75 percent), 42 percent are in fair condition (25­50 percent),and 27 percent are in poor condition (less than 25 percent).When only hard coral cover is considered,only 2 percent of the reefs are in excellent condition (Licunan and Gomez 2000).In addition,70 percent of Philippine reefs are face high or very high levels of threat (Burke, Selig, and Spalding 2002). Coastal mangroves have not fared much better, with their coverage falling from 450,000 hectares in 1918 to 288,000 hectares in 1970, 138,000 hectares in 1993 (White and Cruz-Trinidad 1998), and 112,400 hectares in 1997 (DENR and UNDP 2002).What remains is 95 percent secondary growth; most of the 5 percent that is primary or old growth is in Palawan (White and Cruz-Trinidad 1998). Direct causes of degradation Direct causes for the rapid degradation of natural resources and loss of biodiversity in the Philippines include: Overexploitation of natural resources such as timber,mangroves,wildlife,and fisheries,sometime using destructive and wasteful methods (such as blast and poison fishing on coral reefs). Conversion of natural ecosystems--such as forests and mangroves--to other land uses,including subsistence and commercial agriculture and aquaculture. Development of urban and industrial infrastructure,including roads,settlements,and mining and industrial facilities. Pollution and sedimentation from urban and industrial centers and agricultural expansion. Indirect causes Direct causes of resource degradation are driven by a complex structure of indirect causes, including: Limited availability of agricultural land for the fast-growing population. Displacement and migration due to natural disasters and insurgencies. Skewed distribution of rights to land and natural resources. De facto open-access tenure in many upland and coastal areas. Insufficient government capacity to manage lands,waters,and natural resources under state jurisdiction. An underfunded,incomplete system of protected areas,with many gaps in coverage of important ecosystems. Overlapping and conflicting laws and property rights for natural resources--particularly between conservation objectives and natural resource rights in protected areas. Overlapping institutional functions and mandates. Limited appreciation of and political support for natural resource conservation in government decision making. 2 Governance of Natural Resources in the Philippines CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management T he Philippines's policy and institutional framework review.2 Moreover, in some areas responsibilities are blurred, for natural resource management has undergone and there is a need to clarify and harmonize the roles of the sweeping changes since Ferdinand Marcos's re- DENR and local governments. The DENR has taken steps to gime was ousted in 1986. Government functions this end by issuing several administrative orders and circulars have been decentralized. Numerous mechanisms have been which help define roles and responsibilities for local govern- implemented to strengthen stakeholder participation in ments in areas such as communal forests, community water- decisionmaking. The role of NGOs has expanded. The rights sheds and reforestation areas. However, only 4 percent (895 of indigenous peoples have been recognized. And a compre- employees) of DENR personnel were devolved to local gov- hensive national system of protected areas has been estab- ernment units--compared with the Department of Agricul- lished. In addition, a wide variety of new and restructured ture, where nearly 60 percent were devolved.As a result most institutions have been put in place to administer the new policy local governments have insufficient capacity to carry out the and legal framework. decentralization mandate, and significant human resource development is required to improve matters. Local govern- ments face challenges in securing financing, have limited THE POLICY FRAMEWORK-- capacity to deliver environmental services, and possess in- A SHIFT TOWARD DECENTRALIZATION complete information for monitoring environmental perfor- mance.At the same time, it is important to have a strong core In 1991 the Philippines introduced the Local Government agency, and the DENR should continue to be the main agency Code, among the most comprehensive decentralization poli- for managing natural resources and take the lead in guiding cies undertaken by a developing country in the 1990s. This and assisting the decentralization of environmental and natu- "revolution in governance" devolved substantial powers, re- ral resource management. sponsibilities, and resources from the national to local govern- ments (Rood 1998). The country's three tiers of local In addition to the Local Government Code, the 1992 Strategic government units consist of 78 provinces in the first tier, 83 Environment Plan for Palawan and the 1998 Indigenous Peoples cities and 1,537 municipalities in the second, and 41,939 Rights Act are de facto measures further decentralizing natural barangays in the third. In addition, for administrative purposes resource management in Palawan Province and territories con- the country is divided into 16 regions that contain the taining indigenous peoples. deconcentrated regional offices of central departments and agencies. The Strategic Environment Plan for Palawan created a unique arrangement for environmental and natural resource manage- The Local Government Code devolved numerous aspects of ment.This was done largely because of Palawan's reputation as governance from the DENR to local government units--in- the Philippines's"last frontier"of untrammeled nature, and be- cluding some natural resource management functions such cause of the perception that special measures were needed to as community forest and communal watershed management, prevent its ecosystems from experiencing the degradation com- law enforcement through the issuance of local ordinances, mon in other parts of the country.The plan promotes sustainable and control over water within 15 kilometers of shore.The main provisions of the code affecting natural resource management are summarized in table 1. Despite the transfer of these func- 2. Elaboration of the DENR functions devolved under the Local tions, the DENR is ultimately responsible for managing for- Government Code can be found in DENR DAO 92-30,"Guidelines for est resources, and implementation of these functions by local theTransfer and Implementation of DENR Functions Devolved to Lo- government units is subject to its supervision, control, and cal Government Units." Lessons from the Past, Directions for the Future 3 CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management TABLE 1. DECENTRALIZA TION OF NATURAL RESOURCE MANAGEMENT FUNCTIONS UNDER THE LOC AL GO VERNMENT CODE OF 1991 Level of government Function National Conservation, management, protection, development, and proper use of natural resources and promotion of sustainable development Management of: programs, projects, and activities funded by government agencies and foreign sources and of items under relevant executive orders and special laws, including the Agrarian Reform Program Local Implementation and coordination of DENR policies, regulations, programs, projects, and activities Enforcement of Forestry Laws related to community and social forestry projects Management of communal forests with an area of less than 5,000 hectares, provided they are used for community forestry projects Management, protection, and rehabilitation of small watersheds that supply local water (as identified by the DENR), including extension and research services related to water and soil use and conservation projects Establishment, protection, and maintenance of tree parks, green belts, and other tourist attractions in areas delineated by the DENR (except those covered by the national protected areas system) and collection of fees for their services and the use of facilities established in them Regulation of flora outside protected areas and implementation of Rehabilitation in Conservation Hotspots (RICH) and Conservation of Rare and Endangered Species (CARE) activities in areas identified by the DENR Implementation of land management agreements, cadastral surveys, lot surveys, and isolated and special surveys Enforcement of small-scale mining laws Issuance of permits and adjudication of conflicts over fees for collection of guano and extraction of sand, gravel, and other quarry resources Management of small local hydroelectric projects Issuance of environmental compliance certificates for projects and businesses Implementation of solid waste disposal and other environmental management systems and services Adoption of adequate measures to protect the environment and conserve land, mineral, marine, forest, and other resources in their jurisdiction Provision of necessary financial, technical, staffing, and other resources to ensure efficient, effective implementation of devolved functions development in Palawan through conservation and careful use similar to the National Integrated Protected Areas System and development of natural resources. A main focus is forest (see below)--that controls development in ancestral and conservation and protection,including a ban on commercial log- other lands and in coastal and marine areas.The network is ging. Key features of the plan include: widely used in land use planning. Creating the Palawan Council for Sustainable Development Developingastrategicenvironmentalplantoguidelocalgov- to review applications for environmental compliance certifi- ernment units. cates and land use plans and to conduct compliance moni- Establishing an Environmental Critical Areas Network-- toring for the DENR. 4 Governance of Natural Resources in the Philippines CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management The Indigenous Peoples Rights Act established a regime to Order 263, with implementing rules and regulations pro- protect indigenous tenurial claims and other rights, provid- mulgated in DENR DAO 96-29).This regulatory framework ing some of the country's most comprehensive tenurial in- integrated a variety of previous initiatives for social and com- struments. The recognition of indigenous peoples' private munity managements of forests, uplands, and coastal areas property rights supports the long-ignored legal doctrine that and for recognizing ancestral domains. The strategy gives lands occupied since time immemorial--that is, since before People's Organizations a central role in managing forests colonialism--are not public lands. Key features of the act and has established new tenurial instruments for forest include its: ownership, access, and control (Heltberg 2002). Fisheries Code. The 1998 Fisheries Code assigned coordina- Support for private rights to ancestral domains, including tion and consultation functions to the Department of mechanisms for recognizing and delineating titles to such Agriculture's Bureau of Fishery and Aquatic Resources and domains. mandated the establishment of local councils for integrated Guaranteesofrightstoself-governance,empowerment,and resource management to foster cooperation between local cultural integrity, including rights to use traditional justice government units. Several of the code's features are relevant systems, conflict resolution mechanisms, and other prac- to local governance and resource management in protected tices--though the government retains regulatory powers over areas. First, it defined municipal waters and established local resource use and management. governments'jurisdiction over them. Second, it assigned en- Recognition of rights to indigenous knowledge systems and forcement responsibilities to local governments for wetland practices. and marine resources, including patrolling the areas and is- Creation of the National Commission on Indigenous People suing regulatory ordinances. Finally, it established fish sanc- to help such groups obtain titles to and develop plans for the tuaries and made local governments responsible for issuing sustainable development and protection of ancestral domains. permits and collecting fees for fishery activities and for regis- Establishment of anAncestral Domain Fund. tering municipal fishermen,fishponds,and fishery industries. National Integrated Protected Areas System Act. This 1992 act The act's implementing rules and regulations were issued in 1998, established the legal basis for developing a national system but that same year its constitutionality was challenged by a law- of"remarkable areas and biological important public lands suit. Though the suit was ultimately rejected by the Supreme with habitats of rare and endangered species of plants and Court in 2000, it slowed implementation of the act. animals, bio-geographic zones and related ecosystems, whether terrestrial, wetland or marine, all of which shall be designated as`protected areas.'" The act's main features are THE LEGAL FRAMEWORK-- summarized in box 2. AN EVOLVING ROLE FOR PROPERTY RIGHTS Though there are multiple laws and regulations that govern natu- General types of property rights for natural resources ral resource management in the Philippines, the three most im- portant for forests and coastal areas are the: Clear, enforceable rules for natural resource ownership, access, and control--that is, tenure--are crucial for sustainable and ef- Community-Based Forest Management Strategy. In 1995 the fective natural resource management.Two broad types of tenur- Philippines adopted a community-based approach as its ial rules are important: access rules defining who has access to official strategy for forest management (through Executive resources, and conservation rules limiting resource use and Lessons from the Past, Directions for the Future 5 CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management BO 2. X KEY FEATURES OF THE NA TIONAL NTEGRATED I PR OTECTED AREAS SYSTEM ACT OF 1992 The National Integrated Protected Areas System (NIPAS) Act governs the national system of protected areas, which includes 360 sites covering 3.8 million hectares. Key features of the act include: A 13-step process for assessing and formally establishing existing and new protected areas as official NIPAS sites. AprocessforremovingprotectedareasfromthesystemiftheydonotmeetNIPAScriteria,suchasareasthathavelostmostoralloftheir original vegetation. A management planning strategy to guide the formulation of site management plans, including innovative features such as zoning in protected areas, habitat rehabilitation, community organizing, socioeconomic and scientific research, and public hearings to assess draft plans. Creation of local boards to manage protected areas.The boards are composed of local and provincial government officials,regional and provincial DENR officials, local representatives of other government agencies, and representatives of NGOs, People's Organizations, and indigenous communities. Full recognition of ancestral lands and indigenous peoples'customary rights. Establishment of a tenurial instrument under which tenured migrants (people who lived in a protected area for more than five years before presidential proclamation of the area) can become stewards of land in a protected area's multiple use areas or buffer zones. Creation of an Integrated Protected Area Fund to support NIPAS areas.The fund draws its income from fines,entrance fees,donations, concessions and leases (in multiple use areas), and taxes on permitted sales and exports of fauna and flora. Recognition that government agencies other than the DENR--as well as local governments in marine areas and indigenous holders of certificates of ancestral domain claim--can hold jurisdiction over protected areas as long as they coordinate with the DENR in preparing management plans. development in areas governed by access rules.Tenure over natu- munity. In common property regimes ownership or control ral resources generally falls into one of four categories: may be vested in a village, tribe, clan, user committee, coop- erative, or local government.These regimes may or may not Open access situations lacking effective ownership and control. have conservation rules, and rights to use land or resources Pure open access situations include resources from oceans may be granted to individuals in the community.Traditional and the atmosphere. Most terrestrial and coastal areas have systems of natural resource tenure are typically common prop- formal property and use rights, but when such rights are erty regimes; the model is also common in community for- unclear or not enforced, a de facto open access situation estry,irrigation,and coastal resource management programs. often emerges. Because they lack access and conservation State property regimes where the state owns the resource and-- rules, resources under open access are highly prone to over- ideally--enforces both access and conservation rules. This is the exploitation. formal situation for forest and coastal resources in many tropi- Commonpropertyregimeswhereresourcesarecommunallyowned cal developing countries, including the Philippines. But state and access rules are defined in terms of membership in the com- failure to enforce its property regime (and local resistance to 6 Governance of Natural Resources in the Philippines CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management state ownership) often leads to the de facto open access situ- Thus the Philippines's property rights regime for natural re- ation described above. sources is one in which the paramount right of state property Privatepropertyrightsvestedinindividuals.Forestsandother is delegated to communities and individuals through a variety natural resources are widely held as private property in some of legal instruments for common property and private prop- countries, as in much of Europe.Although individual owner- erty, for the purpose of improving the open access situation ship rights are far less common in Southeast Asia, significant that prevailed under more centralized state ownership. These areas--such as logging concessions--may be considered instruments generally include both access rules and conserva- de facto private property, at least for a certain period tion rules. (Heltberg 2002). Tenurial instruments for forests. Natural resource property rights are most developed for forests.The basic tenurial instruments are Philippine property rights for natural resources community-based forest management agreements (granted by the DENR to People's Organizations for 25 years and renewable Under the Spanish colonial regime the Philippines's forests and for an additional 25 years) and certificate of stewardship contracts other natural resources were declared state property. The 1987 (awarded by the DENR to individuals and families for the same Constitution reaffirmed this doctrine, stating that: duration).Similar tenurial instruments are granted to indigenous holders of certificates of ancestral domain claims and ancestral All lands of the public domain, water, minerals, coal, land claims who enter into community-based forest management petroleum, and other mineral oils, all forces of potential agreements for part of their territory.Vested rights granted under energy,fisheries,forests or timber,wildlife,flora and fauna, previous tenurial instruments remain valid.Tenurial instruments and other natural resources are owned by the state. The related to community-based forest management are summarized exploration, development, and utilization of natural in table 2. resources shall be under the full control and supervision of the state. Conservation rules include requirements to develop commu- nity resource management frameworks and annual workplans-- So, formally the country's tenurial regime for natural resources which must be approved by local DENR offices--and to obtain is a state property regime. But over the past decade a complex a DENR permit to use forest resources for commercial purposes. mix of regulations, policies, programs, and tenurial instruments has developed under which rights to control and use forests and These new instruments have appreciably strengthened formal coastal areas and their resources can be allocated to individuals, legal rights to forestlands for local and indigenous communi- local and indigenous communities,and the private sector.These ties, who can now obtain: mechanisms were the result of the transformation in natural resource management policy from the top-down, state-centric, Long-term production sharing agreements (lasting 25 years resource exploitation orientation toward the current emphasis and renewable for another 25). on community-based management,decentralization of govern- Rights to use timber and nontimber resources. ment functions,recognition of the rights of indigenous peoples, Rightstoenterintojointventureswithpublicorprivateenti- conservation of biodiversity, and restoration of degraded habi- ties to develop and manage forestlands under community tats.They also resulted from recognition that the former system tenure. gave rise to widespread de facto open access situations and re- Rightstoissueindividualpropertyrightsinforestlandsunder sultant resource overexploitation. community tenure. Lessons from the Past, Directions for the Future 7 CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management TABLE 2. MAIN LEGAL INSTRUMENTS FOR FOREST OWNERSHIP,,, ACCESS,,, AND CONTR OL Instrument Legal Basis Definition Community-based forest DENR DAO 22-93; A production sharing agreement between a community and the management agreement EO 263 (1995); government to develop, use, manage, and conserve a specific portion DENR DAO 96-29 (1996) of forestland, consistent with principles of sustainable development and pursuant to a community resource management framework. Certificate of stewardship EO 263 (1995); A 25-year contract, renewable for another 25 years, awarded to contract DENR DAO 96-29 (1996) individuals or families occupying or tilling portions of forests. Industrial forest management DENR DAO 04-97 A 25-year production sharing agreement between the DENR and an agreement individual or corporation to develop, use, and manage a tract of forestland, other public land, or private land to grow timber species (including rubber) and nontimber species (including bamboo and rattan). Socialized industrial forest DENR DAO 24-96 An agreement in which the DENR grants a natural or juridical person management agreement the right to develop, use, and manage a small tract of forestland (1­10 hectares for individuals or single families, 10­5,-000 hectares for associations or cooperatives), consistent with principle of sustainable development. Certificate of ancestral DENR DAO 02-93 A certificate issued by the DENR to an indigenous community or domain claim a people declaring, identifying, and recognizing their claim to a territory they have possessed and occupied and used--communally or individu- ally--in accordance with their customs and traditions since time immemorial. Certificate of ancestral DENR DAO 02-93 A certificate issued by the DENR to an indigenous Filipino individual, land claim a family, or clan declaring, identifying, and recognizing their claim to an area they have possessed, occupied, and used--by themselves or their predecessors--since time immemorial. a. Under the 1997 Indigenous Peoples Rights Act, certificates of ancestral domain claim are eventually to be converted into certificates of ancestral domain title, while certificates of ancestral land claim are to be converted to certificates of ancestral land title. Rights to transfer claims to relatives, community members, nearly 10 million hectares of forestlands were placed under or People's Organizations. logging concessions.Today the area under community-based management is nearly four times the area under private con- In 2000 more than 5.3 million hectares of forest area--17 trol, and also exceeds the areas set aside in protected areas percent of the Philippines's land area and 30 percent of its and watershed reservations. The big difference is that sev- public forestlands--were covered by community-based te- eral decades ago the country's forests were relatively intact nurial instruments and management agreements. This was and had a high economic value (Borlagdan, Guiang, and a reversal from the situation in the 1960s and 1970s, when Pulhin 2001). 8 Governance of Natural Resources in the Philippines CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management Tenurial instruments for coastal areas. Tenurial instruments for waters, and guidelines from the Bureau of Fisheries and coastal areas are far less developed. As with forests, coastal Aquatic Resources and DENR would be essential to ensure and marine areas are formally owned and controlled by the minimum standards across local governments for such state. But the Local Government Code extended the defini- instruments. tion of municipal waters--identified by their bordering cities and municipalities--from those within 3 nautical miles of the No data are available on the total area where local govern- shore to those within 15 kilometers. It also gave city and mu- ments have granted individuals or organizations the right nicipality governments considerable authority over resource to use coastal resources. But a survey in the mid-1990s iden- access and use in those waters. Devolved functions include tified 43 community-based coastal resource management rights to grant fishery licenses and other privileges, enact projects implemented in 1984­94 (Pomeroy and Carlos management ordinances (including measures such as closed 1997), and numerous studies since have profiled additional seasons, fish sanctuaries, and prohibitions on the use of de- projects. structive fishing equipment and methods), and impose pen- alties for illegal fishing and other environmentally destructive activities. THE INSTITUTIONAL FRAMEWORK-- AVARIETY OF STAKEHOLDERS The 1998 Fisheries Code further strengthened the role of cities and municipalities in regulating resource access and use in mu- Despite this elaborate tenurial regime and policy and legal nicipal waters. With limited exceptions, all fishery activities in framework--and its formal application to all public forests and these waters are to be undertaken by municipal fishers and their coastal areas--an open access situation still prevails in many cooperatives or organizations,as listed in the municipal registry. areas.This situation is due to problems with both the tenurial In addition, cities and municipalities can grant such organiza- framework and its implementation. What institutions are in- tions use of demarcated areas to catch fish and engage in mari- volved in these arrangements, and how can they be made more culture or fish farming." effective? These provisions have led to a proliferation of community- National government agencies based coastal resource management projects over the past decade. But coastal management cannot take advantage of The DENR is the primary government agency responsible for the kinds of specific tenurial instruments in place for forests. conservation, management, development, and proper use of Rather, an ad hoc situation prevails in which cities and mu- the Philippines's environment and natural resources. But nicipalities are charged with devising local plans--including many other government agencies have mandates and pro- access and conservation rules--through consultations with grams that touch on natural resource issues. Of particular local management councils for fisheries and aquatic resources, importance are the National Economic and Development with guidance from the Bureau of Fisheries and Aquatic Re- Authority and the Department of Agriculture's Bureau of Fish- sources and the Fisheries Code.The only specific tenurial in- eries and Aquatic Resources. In addition, the National Irriga- strument established by the Fisheries Code is the fishpond tion Administration, National Power Corporation, and license agreement, which is issued by the bureau.These agree- Philippine National Oil Company play important roles in ments can be issued to individuals or fisher organizations for watershed management. All these national agencies share 25 years (renewable for an additional 25 years) on public lands their natural resource management responsibilities with declared available for fishpond development. Local govern- local government units under the provisions of the Local ments have yet to develop tenurial instruments for municipal Government Code. The institutional structure and agency Lessons from the Past, Directions for the Future 9 CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management mandates for natural resource management are outlined recommendations on development planning,policymaking,co- in figure 1. ordination, monitoring, and evaluation. Although NEDA has units that deal specifically with agriculture, trade and industry, Department of Environment and Natural Resources. The DENR infrastructure, and social development, there is no such unit for is headed by a secretary who is assisted by four under- environmental and natural resource issues. secretaries.The department also has 15 regional offices, each of which is headed by a regional executive director who is Bureau of Fisheries and Aquatic Resources. The 1998 Fisheries assisted by four assistant regional directors. In addition, the Code made the Bureau of Fisheries and Aquatic Resources a DENR has 74 provincial offices and 170 community offices line agency in the Department of Agriculture, operating under (figure 2). the supervision of the undersecretary for fisheries and aquatic resources. The bureau's functions cover many aspects of fish- National Economic and Development Authority. NEDA is the lead eries policy, management, industry, marketing, and research agency for social and economic development planning and policy and development. The bureau is headed by a director who is coordination. The president of the Philippines is the chair of assisted by assistant directors for technical services and for NEDA's board, the director general of the NEDA Secretariat is administration, under whom sit 10 division directors. Regional vice chair, and the heads of all major government departments fisheries offices report to the director; provincial offices report and agencies are members. The board is assisted by five cabi- to regional directors. net-level interagency committees: Development Budget Coor- dination, Infrastructure, Investment Coordination, Tariff and The bureau holds a mandate from the 1998 Fisheries Code to: Related Matters,and Social Development.NEDA is an oversight agency, and two of tits five committees are of particular impor- Enforce all laws, formulate and enforce all rules and regula- tance for natural resource management: tions governing the conservation and management of fish- ery resources (except in municipal waters),and settle conflicts Development Budget Coordination Committee. Chaired by the over resource use and allocation in consultation with the lo- secretary of budget and management,this committee advises cal government units and the national and local councils for the president on annual government spending, spending for fisheries and aquatic resources management. development activities (both current spending and capital Recommendmeasuresforprotectingandstrengtheningfish- outlays), and capital outlays for specific investments and in- ery industries. frastructure projects. Thus the committee plays a major role Helplocalgovernmentunitsdeveloptheirtechnicalcapacity in determining budgets for agencies, programs, and projects for developing, managing, regulating, conserving, and pro- involving natural resource management. tecting fishery resources. InvestmentCoordinationCommittee.Thiscommittee,chairedby the secretary of finance,advises the president on domestic and Local governments foreign borrowing and evaluates and reports on the fiscal, monetary, and balance of payments implications of major na- As noted,local governments have become more important since tional projects.Thus the committee plays an important role in the Local Government Code was passed in 1991. Although the determining which foreign-assisted projects involving natural country has 17 administrative regions, the actual subnational resource management go forward. units of government are the 79 provinces, 115 cities, and 1,495 municipalities into which they are divided. Cities and munici- The NEDA Secretariat serves as the board's research and tech- palities are further split into more than 42,000 barangays, the nical support arm,providing staff who conduct studies and offer lowest level of government organization. 10 Governance of Natural Resources in the Philippines CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management FIGURE 1. IIINSTITUTIONAL STRUCTURE AND AGENCY MAND ATES FOR NA TURAL RESOURCE MANA GEMENT Local Government Units Local Ordinances and Resolutions Local Govern- ment Fisheries Code Code CBFMA* Agricul- DILG Joint tural and DA-BFAR Memo- Fisheries randum Manage- Circular ment 2003 Act DENR NIPAS** CBFMA, CSC, IFMA SIFMA, PACBRMA Private POs Sector IPRA Law NCIP National Economic Department of Development Authority Budget and Management *All CBFMA applicants require endorsement by the LGUs. **In NIPAS areas, LGUs and POs are members of the PAMB. Lessons from the Past, Directions for the Future 11 CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management FIGURE 2. ORGANIZA TIONAL CHAR T FOR THE DEP ARTMENT OF ENVIR ONMENT AND NA TURAL RESOURCES POLLUTION ADJUDICATION SECRETARY BOARD MINES ADJUDICATION BOARD NATURAL SPECIAL DIRECTORATE FOR RESOURCES MINING CONCERNS OFFICE INTEGRATED DEVELOPMENT HEAD EXECUTIVE WATER CORPORATION DIRECTORATE ASSISTANT RESOURCES ­ Socio-Political and MANAGEMENT Economic Affairs UNDERSECRETARY UNDERSECRETARY FOR SPECIAL ACTION AND FOR PLANNING AND INVESTIGATION DIVISION FIELD OPERATIONS POLICY ASST. SECRETARY FOR FOREIGN-ASSISTED AND SPECIAL PROJECTS REGIONAL PRIVATE SECTOR ENR - FASPO ENVIRONMENT FACILITY ENVIRONMENT AND - CSAN Regional Office COOPERATION AND MANAGEMENT FOCAL CENTERS NATURAL RESOURCES - REGIONAL PUBLIC INVESTMENT PROGRAM INFORMATION SYSTEM SUPPORT GROUP OFFICE AFFAIRS OFFICE SUPPORT GROUP GROUP (RENRO-16) HUMAN PLANNING AND ADMINISTRATIVE FINANCE RESOURCES LEGAL MANAGEMENT DIVISION DIVISION MANAGEMENT DIVISION DIVISION DIVISION LOCAL PLANNING MINES AND FOREIGN INVESMENTS AND POLICY GEO-SCIENCES INVESTMENTS AND PROGRAM SERVICE BUREAU SERVICE SUPPORT SERVICE ECOSYSTEMS FOREST LAND PROTECTED AREAS RESEARCH AND MANAGEMENT MANAGEMENT AND WILDLIFE ­ Planning and ­ Planning and ­ Multilateral ­ Special Fund DEVELOPMENT SERVICE SERVICE MANAGEMENT Programming Policy Division Investment Program Division SERVICE SERVICE Division ­ Administrative Program Division ­ Program Assess- ­ Project Develop- Division ­ Bilateral Invest- ment and Com- ­ Forest Resources ­ Land Management ­ Ecosystems ­ Protected Areas ment and Evalu- ­ Finance Div. ment Program munication Development Division Research and and Wildlife ation Division ­ Mineral Economics, Division Division Division ­ Surveys Division Development Division ­ Policy Formulation Information and ­ Program Accounts ­ Forest Resources Division Division Publication Div. Management Conservation ­ Technology ­ Policy Review and ­ Mining Environ- Division Division Transfer and Analysis Division ment and Safety Information ­ Statistical Coor- Division Division dination Division ­ Mining Tenements ­ Coastal and ­ Environmental and Management Div. Marine Manage- Natural Resource ­ Marine Geological ment Division Economics Division Survey Division ­ Lands Geological Survey Division ­Mining Technology Div. ­Metallurgical Tech- nology Div. REGIONAL PENRO OFFICE (74) ­ Administrative and Finance Div. ­ Mine Management CENRO Div. (170) ­ Geosciences Div. ­ Mining Environ- DENR ORGANIZATIONAL CHART ment and Safety Div. AS OF JUNE 16, 2003 MANAGEMENT DIVISION 12 Governance of Natural Resources in the Philippines CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management NATIONAL MAPPING AND RESOURCE INFORMATION AUTHORITY LAGUNA LAKE DEVELOPMENT AUTHORITY NATURAL RESOURCES DEVELOPMENT CORPORATION UNDERSECRETARY FOR MANAGEMENT AND UNDERSECRETARY FOR TECHNICAL SERVICES LAND MANAGEMENT ASST. SECRETARY ASST. SECRETARY FOR LEGISLATIVE ASST. SECRETARY FOR GENERAL LEGAL LIAISON AND ADMIN. FOR MUSLIM AFFAIRS SERVICES LEGAL SERVICES PUBLIC AFFAIRS INFORMATION OFFICE SYSTEMS MANAGEMENT ­ Public Information - MISD Division ­ Research and Development Communication Division PROTECTED HUMAN ECOSYSTEMS FOREST FINANCIAL AND ENVIRONMENTAL LAND AREAS AND LEGAL ADMINISTRATIVE RESOURCE RESEARCH AND MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT WILDLIFE SERVICE SERVICE MANAGEMENT DEVELOPMENT BUREAU SERVICE BUREAU BUREAU BUREAU SERVICE BUREAU ­ Administrative ­ Legal Staff ­ Personnel ­ General Services ­ Accounting ­ Career Manage- ­ Planning and Pro- ­ Finance and Ad- ­ Planning and Pro- Division ­ Planning Staff Investigation Division Division ment Division gram Management ministrative gram Management ­ Planning and ­ Administrative Division ­ Records Manage- ­ Budget Division ­ Management Dev- Staff Services Unit Staff Project Manage- and Finance ­ Claims and ment and Docu- ­ Management elopment Division ­ Administrative and ­ OD-Planning ­ Administrative and ment Services Division Conflicts Division mentation Division Division ­ Trainers Develop- Finance Division Management Finance Division Division ­ Biodiversity Man- ­ Processing and ­ Personnel Division ment Division ­ Legal Division Services Unit ­ Records Manage- ­ Legal Division agement Division Documentation ­ Medical and ­ Environment and ­ Management Infor- ­ Forest Ecosystems ment Division ­ Reforestation ­ Protected Areas Division Dental Unit Natural Resources mation System Research Division ­ Land Administra- Division Community ­ Investigation and Academy ­ Environmental ­ Grassland and De- tion and Utiliza- ­ Natural Forest Management Litigation Division Impact Assess- graded Areas tion Division Management Division ­ Law Enforcement ment Division Ecosystems Re- ­ Geodetic Surveys Division ­ Nature Recrea- and Licenses ­ Research and Dev- search Division Division ­Social Forestry tion and Exten- Division elopment Division ­ Technology Dev- ­ Legal Division Division sion Division ­ Research and ­ Environmental elopment Division ­Forest Land Uses ­ Wildlife Resources Legal Opinion Quality Division ­ Coastal Zone and Division Division Division ­ Environmental Freshwater Eco- ­Forest Economics ­ Ninoy Aquino Education Division systems Research Division Parks and Wild- Division life Nature Center ­ Upland Farms Eco- ­ Hinulugang Taktak systems Research National Park Division ­ Los Bańos Exper- iment Station REGIONAL OFFICE ­ Adm. & Fin. Div. ­ Poll. Con. Div. ­Env'l Imp. & Mon- itoring Div. ­ Leg. & Env'l Ed. Approved by: Div. ­ Plan. & Prog. MIS ELISEA G. GOZUN & Stat. Div. Secretary Lessons from the Past, Directions for the Future 13 CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management The Local Government Code made local governments respon- effective and reasonable participation at all levels of social, sible for a wide variety of government functions, including de- political and economic decision making shall not be abridged. livering basic services in health, social services, agriculture, the The State shall, by law, facilitate the establishment of adequate environment, public works, education, tourism, telecommuni- consultation mechanisms" (ADB 1999; see also Carino 2001). cations, and housing.The code also assigned local governments various regulatory responsibilities, such as reclassification of Numerous laws and regulations for NGOs and People's Orga- agricultural lands, enforcement of environmental laws, inspec- nizations were promulgated in the years that followed, and tion of food products and quarantine, and enforcement of na- these organizations'participation in development processes and tional building codes. natural resource management is strongly institutionalized at a formal, legal level.The Local Government Code assigned seats As part of the devolution under the Local Government Code, to NGOs and People's Organizations on local development many employees of national government agencies have been health and school boards, for example, which the law on the transferred to local governments, including (as of 2000) 42,000 National Integrated Protected Areas System allocates seats to from the Department of Health, 15,000 from the Department of NGOs, People's Organizations, and indigenous communities Agriculture, 5,000 from the Department of Social Welfare and on local protected area management boards. In addition, the Development, and 700 from the DENR.The code also increased Fisheries Code of 1998 mandates the development of fisheries the financial resources available to local governments by broad- and aquatic resources management councils at the city and ening their taxation powers and ability to generate revenue from municipality levels,"formed by fisherfolk organizations/coop- local fees and charges,providing them with a specific share from eratives and NGOs in the locality." resource exploitation in their areas (such as mining, fishery, and forestry charges), and increasing their share of national tax rev- As a result of these measures, the Philippines is home to a enue from11 percent to 40 percent or more (Brillantes 2000). large and active community of NGOs and People's Organiza- tions. By 1995 the Securities and Exchange Commission had NGOs and People's Organizations registered some 60,000 nonstock, nongovernmental institu- tions--50,000 NGOs and 10,000 People's Organizations. But Upon coming to power in 1986 after the ouster of Ferdinand these figures cover a wide range of organizations,and the num- Marcos, President Corazon Aquino called on the Philippines ber of development-oriented NGOs is more like 3,000­5,000. to "institutionalize People Power" and "establish institutions In 1995 there were also 35,000 cooperatives registered with where they do not exist,"setting the stage for a dramatic ex- the Cooperative Development Authority (ADB 1999). pansion of civil society organizations (NGOs and POs) in the country's political life and development policy.The 1987 Con- Many NGOs are engaged in field activities (in many cases as stitution institutionalized the role of NGOs, affirming that"the implementing agencies of donor-assisted projects) and advo- State shall encourage non-governmental organizations, com- cacy related to natural resource management. A 1999 study by munity-based or sectoral organizations that promote the wel- the Asian Development Bank found that the areas of public fare of the nation."Another set of provisions set out the roles policy where NGOs have had the most significant impact in- and rights of People's Organizations, indicating that"the State clude tenurial systems in the uplands, indigenous rights, com- shall respect the role of independent people's organizations to munity forestry, and coastal fisheries management. NGOs enable the people to pursue and protect, within the democratic range from sophisticated national organizations with numer- framework, their legitimate and collective interests and aspi- ous field projects to small local organizations focused on one rations through peaceful and lawful means."Another section municipality.A number of international environmental NGOs states that"the right of the people and their organizations to are also active in the Philippines. 14 Governance of Natural Resources in the Philippines CHAPTER TWO Policies, Laws, and Institutions for Natural Resource Management Despite the strong legal and policy basis for participation by Nations Conference on Environment and Development (the NGOs and People's Organizations in natural resource man- Earth Summit). agement and development more generally, a recent study cau- tions that: Major donors include the Asian Development Bank, Canadian International Development Agency, Danish International De- The government's legal framework for NGOs is but one velopment Agency, European Union, German Agency forTech- aspect of the broader policy environment for NGOs. Es- nical Cooperation, Global Environment Facility, government of pecially for field-based NGOs,the actual democratic space Japan (through the Japan International CooperationAgency and is determined by local realities--the peace and order situ- Japan Bank for International Cooperation), U.S. Agency for In- ation, local patronage policies, economic factors such as ternational Development,government of the Netherlands,vari- local marketing cartels, the impact of development poli- ous UN agencies,and theWorld Bank.Bilateral assistance comes cies on target communities,and the attitudes of beneficia- in the form of grants, while the ADB, JBIC, and World Bank ex- ries in local community relations. (Asian Development tend loans. The DENR is the country's largest recipient of offi- Bank 1999) cial development assistance for such activities. Donors In the 1970s the Philippines had 4 projects involving natural resource management that were funded by official development The Philippines has attracted considerable international financ- assistance, with a combined cost of $24 million. In the 1980s the ing for investments in environmental and natural resource number of such projects grew to 48, with total funding of $449 management. This support reflects the country's strategic lo- million. In the 1990s the number reached 112 and involved ag- cation, rich and diverse ecosystems, and strong government gregate investment of $760 million.And by 2001 there were 173 commitment to sustainable development--through, among projects with a combined cost of $1.2 billion (DENR 2001a). In- other measures, the establishment of the Philippine Council vestments in forestry,protected areas,and upland activities have for Sustainable Development in the wake of the 1992 United consistently been the focus of donor support. Lessons from the Past, Directions for the Future 15 CHAPTER THREE DENR Financing for Natural Resource Management T he national government's budget groups expen- BUDGET MANAGEMENT ditures into six main categories. Economic services is the category that nominally pertains to spend Between 1998 and 2002 the distinction between the DENR's ing for environmental and natural resource man- development budget and routine budget was neither clear nor agement. But not all expenditures in this category are environ- consistent, and there was considerable mingling of operating mental, and environmental expenditures also occur in expenditures between the two. The main reason is that most categories with primary functions that are not environmental. agencies are underfunded for operations or investments, and Between 1990 and 2002 the budget allocation for economic they tap the other budget to make up for the shortfall. This services (as a share of total expenditures) fell from 24 percent blurring of the two budgets implies that changes in either can to 21 percent. have both short- and long-term effects on natural resource management. Between 1998 and 2002 the DENR: In addition,the DENR's tendency to catalogue contributions for Received a budget allocation equal to 0.18­0.23 percent of foreign-assisted projects as routine or investment expenditures gross national income (GNI). often distorted budget and expenditure planning and manage- Received 5­7 percent of its budget through revenue. ment. More important, it prevented the DENR from making Spent 5 percent of its budget on development. But spend- adequate provisions to ensure the continuation and sustainability ing on development dropped 43 percent during this period, of specific investments and operation and maintenance activi- from 416,364 million pesos in 1998 to 178,116 million pesos ties after donor contributions end. in 2002. This sharp decrease was partly caused by the im- In 2002 the DENR received a budget of 6.53 billion pesos, some pact that the East Asian financial crisis had on the Filipino 1.42 billion pesos more than in 2001 (table 3). Until 1998 the economy. Spent 95 percent of its budget on routine expenditures, split DENR's annual budget allocation grew by an average of 17 per- cent a year. But between 1999 and 2001 it fell by an average of between general administration support and support to ­6 percent a year--then rose 28 percent in 2002. operations.3 Spent 51 percent of its budget on regional expenditures. During Fidel Ramos's administration (1992­98) the DENR's Spent4percentofitsbudgetacrossitsfourbureausinvolved budget grew in four of six years and maintained a stable 0.24 in natural resource management. percent share of GNI. But during Joseph Estrada's administra- Sometimes catalogued contributions (in addition to the re- tion (1998­2001) the budget shrank in two of three years quired counterpart funding) for foreign-assisted projects as (­11 percent in 1999 and ­20 percent in 2001, with growth of 13 development expenditures,and sometimes as routine expen- percent in 2000). ditures (box 3). REVENUE As noted, revenue accounted for 5­7 percent of the DENR's 3. General administration support covers activities and expendi- budget in 1998­2003.Between 2000 and 2001 revenue increased tures dealing with administrative management and operational sup- 15 percent, from 399 million pesos to 472 million. port to the entire department. Support to operations covers expenditures that provide staff or technical support to operations but that do not produce goods, deliver services, or directly engage At the national level revenue generation was extremely in regulations. weak, with the DENR Office of the Secretary and the bureaus 16 Governance of Natural Resources in the Philippines CHAPTER THREE DENR Financing for Natural Resource Management BO 3. X THE DENR'S BUDGET PREP ARATION PR OCESS At the beginning of each year's budget cycle, the DENR Planning Service and Budget Division issues budget preparation guidelines for all DENR units.These guidelines--based on the Department of Budget and Management's budget circular--identify priority programs and prescribe policies and procedures for budget preparation and allocation, and so influence the structure of the DENR's budget proposal. Because this first stage of the budget preparation process is considered a necessary act of compliance,senior DENR managers do not actively participate.The task is generally left to the planning and budget offices. Between 1998 and 2001 the programs financed by the budget were essentially the same. In 2000 the Department of Budget and Management introduced the Major Final Outputs System.This system was meant to provide line agencies with an opportunity to revisit their programs, activities, and projects, drop irrelevant programs and define new ones based on emerging needs and priorities,allow flexibility in the use of funds, and reward agencies that met their own targets.Senior DENR managers did not fully understand the system's meaning, scope, and implications, and for 2001 failed to make any adjustments to DENR programs, activities, and projects--essentially resubmitting to the Department of Budget and Management a duplicate of the previous year's budget proposal. Every year, after its proposed budget has been approved by Congress and the president, the DENR goes through a reprogramming exercise to: Prepare the work and financial plans required by the Department of Budget and Management. Make changes called for by the Department of Budget and Management and the Office of the President (as a result of the budget debate in Congress) that have a bearing on reallocations among programs, regions, and sectors. Address any inability of the budget preparation process to allocate sufficient funding to priority programs. Once the reprogramming exercise is completed, the revised budget is submitted to the Department of Budget and Management for use as the basis for direct releases to regions, agencies, provincial offices, the Office of the Secretary, and other DENR offices. Although the repro- grammed budget differs from the one originally submitted to the Department of Budget and Management and approved by the Congress and the President, there is no mechanism for checking its consistency with the government's Mid-term Policy Development Program. Finally, DENR agencies, provincial offices, the Office of the Secretary, and other offices are required to submit budget accomplishment reports to the Planning Service at the end of each fiscal year. But the lack of reporting funds used against physical accomplishments makes the reporting exercise less useful that it could be. experiencing a nearly 50 percent decline between 1999 and 2003, DENR BUREAUS in the total amount of revenues generated.Specifically,the OSEC experienced a decline of 21.3 percent between 1999 and 2000; Of the 4 percent of the DENR's budget spent on its four bu- however, since 2000, the downward trend was reversed, and reaus, nearly all was used to fund routine expenditures. Only 3 OSEC revenues generation increased some 20% in 2001 and a percent was earmarked for development expenditures. further 5.5% in 2002. In addition, between 1999 and 2002, the share of revenue collected by DENR regional offices increased 7 Spending patterns across the bureaus vary significantly due to percent.The government plans to introduce comprehensive tax the rather fast turnover of DENR secretaries and the need to reform,which might provide the DENR with an adequate frame- finance"banner"programs as well as other ongoing or new pro- work and incentives for increasing revenue (table 4). grams, projects, and activities in each bureau (figure 3). Banner Lessons from the Past, Directions for the Future 17 CHAPTER THREE DENR Financing for Natural Resource Management TABLE 3. DENR BUDGET AND REGIONAL ALLOCATIONS ,,, 1998­2002 Indicator 1998 1999 2000 2001 2002 Total budget Billions of pesos 6,323,410 5,610,868 6,359,918 5,106,216 6,530,852 Percentage of GNI 0.23 0.18 0.21 0.16 0.25 Regional allocation Billions of pesos 3,491,000 3,063,000 2,351,000 3,122,000 3,127,000 Percentage of total budget 55 55 37 61 48 Source: Financial Management Services, DENR 1998­2002. programs are meant to provide funding for natural resource man- opment and management, ancestral domain management agement challenges requiring special attention or immediate and development, biodiversity conservation, and informa- intervention. But these programs change from year to year, and tion, education, and communications. But budgets for these the DENR does not assess their effectiveness or needs for addi- programs were reduced during the budget approval process. tional funding before choosing and funding new ones.This prac- In 1999 the banner programs were essentially the same, but tice has severely limited the effectiveness of banner programs the budget emphasized sustaining financing during the tran- and created significant inefficiencies in expenditures for natural sition to a new administration and strengthening reforms for resource management. Between 1998 and 2002 the following sustainable resource management.The focus on these initia- banner programs were created, resulting in some reshuffling of tives resulted in further reductions in budget allocations for the DENR's budget: the banner programs. AfteranewsecretaryoftheDENRenteredofficein2000,the In 1998 seven banner programs were identified, including banner programs were made part of a 14-point agenda for forest management and protection, water resources devel- the department's activities. The resulting budget increased TABLE 4. DENR ACTU AL NCOME I ,,, 1999­2003 a Office 1999 2000 2001 2002 2003 OSEC 380,092,356 298,991,242 359,229,681 379,144,826 202,899,952 EMB 1,589,469 15,926,631 19,787,873 41,167,392 15,955,602 MGB 37,030,988 45,821,842 59,819,941 45,835,831 21,283,476 NAMRIA 8,517,491 9,214,158 8,812,481 8,686,165 4,409,678 NRDC 57,916,943 28,692,994 24,540,792 (12,411,304) (5,023,682) Total 485,147,248 398,646,859 472,190,770 462,422,911 239,525,028 Source: DENR a. As of June 30, 2003 18 Governance of Natural Resources in the Philippines CHAPTER THREE DENR Financing for Natural Resource Management FIGURE 3. SPENDING BY DENR NA TURAL RESOURCE BUREA ,,, 1998­2002 US 100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 1998 1999 2000 2001 2002 Forest Management Bureau Lands Management Bureau Ecosystems Research and Developemnt Bureau funding for timber plantation establishment, protection, and Budget allocations for the four DENR bureaus are fragmented maintenance by 115 million pesos, for forest protection by across too many programs and projects, significantly limiting 341 million pesos, and for community-based forest manage- the bureaus'ability to implement natural resource management ment by 30 million pesos. policies and address pressing challenges. Moreover, this frag- In 2002 another new secretary took the helm of the DENR, mentation impedes the DENR from moving toward sustain- and for the first time the Major Final Outputs System was able management of natural resources. used in determining the department's priorities. But the re- sulting budget hardly changed. For example, there were only slight increases in funding for plantation establishment (18 PROTECTEDAREAS million pesos), forest protection (30 million pesos), commu- nity-based forest management (11 million pesos), protected In 2002 the combined budget for protected areas and wildlife area regional operations (9 million pesos), and soil conserva- and the DENR's Protected Areas and Wildlife Bureau ac- tion and watershed management (6 million pesos), and mi- counted for about 5 percent of the DENR's total budget (with nor decreases for coastal environment programs (8 million 3.7 percent for protected areas and 1.3 percent for the bureau). pesos), forestland classification (4 million pesos), and ances- During 1998­2003 protected areas received $32 million tral lands management. from the DENR budget and from government counterpart Lessons from the Past, Directions for the Future 19 CHAPTER THREE DENR Financing for Natural Resource Management TABLE 5. DENR BUDGET ALLOCATIONS AND GOVERNMENT COUNTERPART FUNDING FOR PROTECTED AREAS AND THE PR OTECTED AREAS AND WILDLIFE BUREA ,,, 1998­2003 U (thousands of U.S. dollars) Change, 1998­2003 Type of funding 1998 1999 2000 2001 2002 2003 (percent) Protected areas and wildlife 4,030 3,570 3,358 2,481 2,648 2,630 ­34.7 Counterpart funding 686 1,587 1,703 748 589 451 ­34.3 Integrated Protected Areas Fund -- -- -- 680 -- -- -- Subtotal 4,716 5,157 5,061 3,909 3,237 3,081 ­34.7 Protected Areas and Wildlife Bureau 3,184 2,130 2,101 1,588 1,556 1,492 ­46.9 Total 7,900 7,287 7,162 5,527 4,793 4,573 ­57.8 Note: The exchange rate for $1 was 40 pesos in 1998, 39 pesos in 1999, 44 pesos in 2000, 50 pesos in 2001, 51 pesos in 2002, and 54 pesos in 2002. Source: DENR appropriation budgets and IPAF Summary Report 2002. Between 1998 and 2001 the Integrated Protected Areas Fund, funding for projects receiving official development assistance active in 71 protected areas,generated nearly $1 million (58 mil- (table 5). lion pesos; see box 2 for a description of the fund). In 2001 the fund allocated $680,000 to 10 protected areas, with N. Aquino Allocations to protected areas peaked in 1998, but by 2003 Wildlife Park (in Quezon City) receiving more than 80 percent. they had fallen by 58 percent. Between 1998 and 2003 the This park is the fund's largest income generator. budget for the Protected Areas and Wildlife Bureau was cut by half--from $3.2 million to $1.5 million--reflecting the reallocation of funds from the bureau to regional budgets OFFICIAL DEVELOPMENT ASSISTANCE for protected areas. Although the bureau has suffered per- AND FOREIGN-ASSISTED PROJECTS haps the largest cutbacks among DENR bureaus, it has main- tained 11 programs. Only the biodiversity program, respon- As noted, the DENR is the Philippines's largest recipient of offi- sible for most matters related to the international convention cial development assistance for environmental and natural re- on biodiversity, saw a substantial increase in funding. Its source management. Between 1998 and 2002 there was budget rose 84 percent between 1998 and 2003, reaching considerable variation in the funding that the DENR received $210,000. from foreign-assisted projects, reflecting the size of each year's foreign project portfolio. Over the period such projects contrib- Counterpart funding for official development assistance rose uted an average of 22 percent to the DENR's budget, with the between 1998 and 2000 but has since been falling. The three share peaking in 2000 (25 percent) and bottoming out in 2001 main projects for protected areas ended in 2002, and in 2003 (13 percent). only one project is focused on protected areas. The remaining projects--community development activities, regional biodiv- Foreign-assisted projects financed, on average, 60 percent of ersity projects--have less direct impacts on protected areas. the DENR's development expenditures. Even in 2001, when 20 Governance of Natural Resources in the Philippines CHAPTER THREE DENR Financing for Natural Resource Management the budget for such projects was at its lowest level, 73 percent bution to the DENR's budget. This situation is aggravated by of DENR capital expenditures came from donors. Donor the fact that DENR regional budget allocations do not take projects also subsidized the DENR's routine budget, covering into account foreign-assisted projects--so a region with many 39 percent of operating expenditures between 1998 and 2002. such projects can receive the same allocation from the regular Funding from these projects has helped counter the negative budget as a region with none. As a result regions tend to over- impacts of low government funding for investing in and oper- stretch their capacity to host as many foreign-assisted projects ating priority programs. Indeed, donor contributions are es- as possible, to the detriment of project performance. sential for the DENR to meet its mandates at the national and, especially, local levels. Performance of foreign-assisted projects Foreign-assisted projects also helped the DENR pay its staff, The DENR's foreign-assisted projects have performed poorly in accounting for 4 percent of personnel costs in 1998­02.This share recent years, exhibiting a decline in physical accomplishments declined over this period, however, reflecting concerns among and an increase in cost and time overruns (NEDA 2001). Be- donors and the Department of Budget and Management about tween 1998 and 2001 the projects' physical accomplishments the DENR's high personnel costs under its regular budget. averaged 84 percent for grant-financed projects but just 64 per- cent for investment projects.And in 2002 both grant- and loan- Between 1998 and 2002 most donor projects focused on for- financed projects underperformed, averaging 66 percent and 62 estry and uplands. But over the years the focus of the assistance percent (DENR FASPO 2002). Key reasons for such poor per- has changed slightly, increasing resources for coastal and ma- formance included late releases of DENR counterpart funding, rine projects,biodiversity conservation,and general environmen- a prolonged transition period resulting from the change in gov- tal protection.In 2001 the DENR had 25 projects in the pipeline, ernment administration,delayed procurement of goods and ser- 14 of which have received funding commitments from multilat- vices, slow turnover of project funds, prolonged startup or eral funding institutions. The rest are expected to receiving fi- mobilization of new projects due to unfamiliarity with govern- nancing from bilateral sources, for total projected investments ment and donor procedures,slow decisionmaking in multiagency of $103 million.These new projects reflect the DENR's willing- and multisector projects, resource use conflicts in the imple- ness to strike a balance in funding the green, blue, and brown mentation of the Indigenous Peoples Rights Act, National In- sectors; projects related to management and improvement of tegrated Protected Areas System, and community-based forest environmental quality are expected to account for 59 percent of management, and long procedures for processing community- future funding commitments,with projects for forestry,uplands, based forest management applications and affirmation of an- and coastal resource management accounting for 27 percent. nual work plans and resource use permits in community-based But Department of Budget and Management requirements for forest management areas. agencies to accommodate donor appropriations within their budget ceilings could jeopardize the implementation of the Strong concerns have been raised about the sustainability of projects currently in the pipeline. donor-supported projects. Such projects have been used to supplement the DENR's regular budget so that vital functions Effect of foreign-assisted projects on regional budgets and services can be delivered.The projects are assumed to com- plete the implementation of efforts that have already been Most foreign-assisted projects focus on specific areas. Hence started, because the regular budget is insufficient to complete regions without such projects do not benefit from their contri- the work that needs to be done. Lessons from the Past, Directions for the Future 21 CHAPTER FOUR The Unfinished Agenda for Effective Natural Resource Governance D espite the Philippines's comprehensive policy Government Code has been incomplete and unclear,leading and institutional framework and significant to considerable confusion and conflict between local govern- external financing, many natural resource man- ments and the DENR. The DENR has retained a powerful agement initiatives have failed to achieve their voice in local decisions on natural resource management-- objectives. Institutional roles and responsibilities often overlap, though it lacks the local capacity to implement its decisions. and the country's natural resources continue to deteriorate-- This has led to a situation in which local governments view severely undermining efforts to alleviate rural poverty,stimulate natural resource management as the DENR's concern, de- sustainable rural development,and conserve unique biodiversity. spite the clear mandate for local governments to play a stron- ger role in such activities. Consensus is growing that these implementation failures are Ineffectivestakeholderparticipation.Thelegalframeworkforcivil largely the result of weaknesses in the legal, institutional, and society participation in natural resource planning and man- political arrangements--including the role of donors--that guide agement is quite strong--much stronger than in many other the governance of natural resources in the Philippines.As noted, Southeast Asian countries. But many participatory mecha- three dimensions of natural resource governance appear to un- nisms are not really functional, and many natural resource derlie these failures. decisions continue to be made by the DENR and local politi- cians, powerbrokers, and officials, with little meaningful in- The first is weak property rights--and the incomplete imple- put from NGOs. mentation of the framework for tenurial and use rights over Inadequate accountability. In cases where communities and natural resources.Although the Philippines has developed com- other stakeholders have disputes with the DENR or local prehensive tenurial and resource use instruments and permit governments, few mechanisms allow for complainants to air procedures to give effect to decentralized, community-based their grievances and seek redress. natural resource management, this framework has not been implemented effectively.As a result tenurial rights are often in- The third weakness in natural resource governance is poor fi- secure and so do not provide incentives for communities to adopt nancial management--with an inefficient system for budgeting more sustainable methods for resource management. and financing that does not ensure funds are allocated to prior- ity activities. Although national plans and priorities may look The second dimension is ineffective institutions--with a profu- rational on paper, they are subject to complex reprogramming sion of institutions with unclear and overlapping mandates, in- as funds move through the system. And though many natural effective stakeholder participation, and inadequate mechanisms resource management functions have been devolved to local to ensure accountability for performance: The natural resource governments, the DENR continues to absorb the lion's share of governance problems associated with institutions fall into three natural resource management budgets--and often micro- categories: manages the allocation and use of funds that do flow to regional and provincial offices. Incompletedecentralization.Asnoted,overthepastdecadethe Philippines has implemented far-reaching decentralization of The next three chapters examine these governance issues in government responsibilities and services. But devolution of detail, analyzing the challenges they pose for effective natural natural resource management functions under the Local resource policies and programs. 22 Governance of Natural Resources in the Philippines CHAPTER FIVE Implementing Rights to Natural Resources: Experience from the Field KEY ISSUES AND EXAMPLES OF TENURIAL RIGHTS Problems with community-based forest management in Quirino and Agusan del Sur A variety of instruments have made it possible for communities to gain formal,legal tenure to forestlands in exchange for agree- The formal granting of tenurial rights under the community- ing to conservation rules included in DENR-approved commu- based forest management program is only the first step in imple- nity resource management frameworks and annual workplans. menting effective access and conservation rules, as Quirino But implementation of this regime has been sporadic and prob- province illustrates. Quirino is a mountainous province cover- lematic. A recent assessment of community-based forest man- ing nearly 306,000 hectares in the southeastern portion of the agement identified the following key problems: Cagayan Valley. Three-fifths of Quirino is forestland (184,019 hectares), and the province has 39 agreements for community- The current system is so dependent on state (DENR) action based forest management covering 85,897 hectares and ben- and approval that"communities cannot move without going efiting 19,485 individuals.Thus these tenurial agreements cover through the grind of the DENR's bureaucracy."Where land 28 percent of Quirino's land area and 47 percent of its forest- rights are actually granted,they are"more often than not,ren- lands.Implementation of community-based forest management dered ineffective by the Environmental Compliance Certifi- has been supported by the government of Germany. cate requirement." Even when land rights are granted, communities can only Despite the implementation of community-based forest man- take advantage of them--that is,exploit the natural resources agement, open access remains a problem in Quirino. Commu- therein--after development and DENR approval of their re- nities complain that they receive little technical or other support source management frameworks and annual workplans. Ini- from the government to manage the areas granted to them. tially patterned after the old logging licensing system,"these Key government staff--such as employees of DENR commu- documents are often too complex for the communities"and nity offices and others involved in implementing community- are often produced for the communities by NGOs or based forest management--are often reassigned,disrupting the consultants. continuity of project implementation. Budgets are depleted to TheDENRhasanunrealisticexpectationandassumptionthat pay for consultants and contractors, leaving little to finance communities possess capacities equivalent to those of the field activities by community holders of forest rights. Illegal private sector in applying for resource use rights. logging is reportedly widespread, and there have been allega- tions that military and DENR staff have been involved in such The result of this situation is that "to capitalize and generate activities. revenues from the communities'major assets,namely their lands, labor, water and whatever available forest resources are avail- The local government has expressed frustration that it has an able in their tenured area, the communities have to almost beg unclear role in community-based forest management relative the DENR to grant them resource use rights."Faced with these to the DENR. The government views its involvement as lim- bureaucratic barriers, communities have an incentive to convert ited to cursory consultations--and the results of such consul- brushlands and second-growth forests into upland farms, since tations are often disregarded in project implementation. The the DENR does not regulate the production and marketing of local government would also like to see a true devolution of cash crops.Thus a tenurial system designed to provide commu- community-based forest management from the DENR, includ- nities with incentives to keep land under forest cover--or refor- ing allowing the government to issues resource use permits, est it--is instead encouraging the conversion of forestlands to file cases,and award tenurial instruments.The local government agriculture (Borlagdan, Guiang, and Pulhin 2001). does not think that the DENR should exercise state control Lessons from the Past, Directions for the Future 23 CHAPTER FIVE Implementing Rights to Natural Resources: Experience from the Field over community-based forest management areas or serve as a 80 percent of the park should be declared a strict protection regulatory body. Rather, its role should be limited to monitor- zone.Yet about 70 percent of the park is deforested and occu- ing and supervision. pied by indigenous peoples, migrant subsistence and commer- cial farmers, and vacation homes. Some 32,000 people live in Problems with forest tenure rights also affect Agusan del Sur, 39 settlements in the park, engaged in both subsistence farm- where 20 percent of the province's 613,700 hectares of forestland ing of corn and root crops and commercial production of pota- are covered by community-based forest management agreements toes and vegetables. The area is socioeconomically complex, and 30 percent by ancestral domain claims.The legal relationship with indigenous groups long mixed with migrants and a vari- between these two tenurial instruments--and which one takes ety of resource management systems. priority--is a key obstacle to establishing tenurial security for lo- cal user groups. In addition, incorrect certificates of ancestral do- The law on protected areas and DENR regulations grant occu- main claims have reportedly been issued, with errors in the areas pation rights to qualified migrants residing in multiple use and covered and the persons granted rights.As a result a large portion buffer zones of protected areas, and define a"tenured migrant" of the province's land area is under conflicting ownership claims as"any person who has actually and continuously occupied an brought about by overlapping and erroneous land classification. area for five years prior to its designation as a protected area [under the law on protect areas] and is solely dependent on that Incorrect and conflicting rights in protected areas area for subsistence."Migrants who do not meet this descrip- tion are supposed to be removed from protected areas. But cri- Tenurial implementation problems also plague multiple use ar- teria for determining who is a legitimate tenured migrant are eas within and buffer zone areas around protected areas. For unclear: there are no documented property rights, and lands in example, a review of governance issues at three protected areas the park are frequently bought and sold--though doing so is found that the eight certificates of ancestral domain claim is- illegal.As a result must of the park is a de facto open access area sued at the sites were generally technically flawed, with errone- (De La Paz 2001). ous geographical and technical descriptions,wrong households included in the certificates, and households missing from the certificates (Jensen 2003). Large portions of the areas included KEY PROBLEMS WITH COASTAL RESOURCE MANAGEMENT were not areas claimed by indigenous peoples,while areas where AND PROPERTY RIGHTS--AND RESPONSES indigenous people live and exercise their rights were not in- cluded.Two of the sites (Mt. Isarog and Northern Sierra Madre) As noted, coastal waters are not subject to the same range of contain many areas where absentee landlords, outside tenurial instruments as forests or the same control and su- businesspeople, local politicians, and relatives of government pervision by the central government.The Local Government officials are claiming land and being granted titles by the DENR. Code provides a legal basis for local governments to estab- Meanwhile, tenurial instruments for communities actually liv- lish property rights--or at least use rights--for coastal waters, ing in these areas have been delayed by the DENR's failure to using municipal ordinances to declare areas sanctuaries issue guidelines for their issuance. or limit resource use in certain areas to particular users. In limited cases indigenous peoples may be able to use the In- Similar problems have arisen at Mt.Apo Natural Park in south- digenous Peoples Rights Act to do the same thing. But imple- ern Mindanao, the site of the Philippines's tallest mountain. mentation of such measures has been sporadic, and most Mt.Apo was declared a natural park by presidential proclama- coastal waters and resources remain under an open access tion in 1996, under the law on the National Integrated Pro- situation that facilitates continued overexploitation and re- tected Areas System. Under DENR slope and altitude criteria, source degradation. 24 Governance of Natural Resources in the Philippines CHAPTER FIVE Implementing Rights to Natural Resources: Experience from the Field Under the Local Government Code and the Fisheries Code, erally ineffective in protecting their marine waters from com- coastal local governments are responsible for planning,legislat- mercial fishers and in enforcing laws and regulations (Pido and ing, regulating, enforcing, and monitoring and evaluating sus- others 1996). tainable coastal resource use in municipal waters and coastal areas. The DENR and the Bureau of Fisheries and Aquatic Re- What is needed is a set of tenurial instruments appropriate for sources are to help build local government capacity, provide coastal waters and resources, tailored to the capacities of local policy direction, set minimum standards, and maintain the in- fishing communities and bound by criteria ensuring that sus- formation and data needed for national-level planning. tainable management--use rules--and access rules are part of the system.Development of coastal tenurial instruments should The main problem is that local governments have not, by and benefit from the lessons from the implementation of forest- large, fulfilled their responsibilities in this regard, and neither related tenurial instruments over the past decade. Lessons are have the DENR and fisheries bureau provided the support that also available from the few local governments and communi- might make that possible.In the words of the DENR's proposed ties have taken steps to establish de facto tenurial arrange- policy for national coastal resource management: ments--including both fishing and conservation areas--using the authority devolved by the Local Government Code or, in Despite the presence of a comprehensive legal and policy some cases, the Indigenous Peoples Rights Act. framework for coastal resource management, implemen- tation has remained fragmented and weak. Local govern- Granting fishing privileges in Culasi ment units generally lack the technical and financial resources to implement coastal resource management. In Culasi municipality inAntique province the local government Coastal law enforcement is dismal. Furthermore, the ab- used its authority in granting fishing privileges as the basis for sence of mechanisms to promote multisectoral collabora- designating 1 square kilometer between the coast and a nearby tion between national government agencies, local island as an area for territorial use rights in fisheries.This move government and other sectors continue to hinder effec- effectively turned a formerly open access fishing area into an tive planning and effective implementation. (DENR 2001) area under community tenure (Agbayani 1996).Numerous simi- lar cases are described in Foltz and others (1996) and in Local Fishpond license agreements--the only real tenurial instrument Government Center (1996). for coastal waters established by national law and policy--have generally been monopolized by the wealthy.This is because"most Establishing indigenous rights to a small-time fishers have neither the considerable money nor the marine territory around Coron Island technical know-how needed to set up aquaculture projects.They also lack the political connections that facilitate the granting of Coron Island, in northern Palawan province, is an interesting licenses and permits."Thus most profitable aquaculture enter- case in which an indigenous community used the Indigenous prises have ended up in the hands of wealth, politically con- Peoples Rights Act to establish community property rights over nected entrepreneurs (Pabico 2002). a marine territory. In 1998 the DENR granted the island's indig- enous Tagbanua people a certificate of ancestral domain claim So, while management of municipal fisheries is legally a state that covered more than 22,000 hectares, including not only the property regime implemented through municipal governments, island but also significant areas of the coastal waters surround- in reality it is more of an open access regime. Municipal fishers ing it.This was converted into a certificate of ancestral domain are largely unhampered in moving from one municipal fishing title once the Supreme Court Challenge to the Indigenous ground to another. Moreover, municipal governments are gen- Peoples Rights Act was defeated in 2000 (see above), and the Lessons from the Past, Directions for the Future 25 CHAPTER FIVE Implementing Rights to Natural Resources: Experience from the Field Tagbanua now hold the first such title encompassing not only the world's aquarium fish and coral, and cyanide fishing--an their ancestral lands but also surrounding coastal waters. illegal and highly destructive method of stunning fish to make them easier to capture--has been widely used in the industry The community patrols the area to chase away fishers using ille- for decades. gal or destructive methods,but it does not restrict access to those using environmentally friendly fishing methods.According to a The Marine Aquarium Council requires each certified collec- Tagbanua leader, establishment and enforcement of the tion (harvest) area to develop a management plan that limits Tagbanua's tenure over the island's waters have more than access to members of the community collection group and sets doubled their fish catch since 1998 (Arquiza 2001). But while aside a portion of the area (the goal is 20 percent) as"no take" the Coron case is an important example of how establishing reserve zones. Fishers help select and design the reserves, in- effective tenurial rights over coastal waters can improve natural creasing the probability that the reserve zones will be respected resource management,the provisions of the Indigenous Peoples by collectors and their communities and defended against Rights Act are unlikely to be applicable to many coastal areas poachers. Because the council also helps communities get their because--unlike in the uplands--there are few areas where fish to markets, fishers have a strong incentive to protect their indigenous groups can claim exclusive ancestral rights over collection areas. These collection area management plans are marine territories. currently being piloted in several areas of Bohol and northern Palawan. Implementing environmental and harvesting standards for the aquarium fish industry The collection areas and reserves certified by the council have no formal legal status because,as noted,no appropriate tenurial Another interesting model is being tested by the Marine instruments exist. But with support from resource users, com- Aquarium Council, an international NGO that has developed munities,and local governments--combined with the authority environmental certification standards for the aquarium fish in- over coastal waters devolved to municipal governments--these dustry and is helping several Philippine fishing communities areas will likely receive some form of formal status from local implement the standards and receive its certification. This is- governments, including the granting of at least the equivalent sue is significant because the Philippines is a major source of of tenure to the collectors associations managing the areas. 26 Governance of Natural Resources in the Philippines CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management T he previous chapter assessed the problems that Overlapping and poorly defined responsibilities are especially have arisen in implementing the legal devolution problematic, especially for the institutions responsible for allo- of property rights over publicly held natural re- cating land and resource use permits--primarily local govern- sources from the state to local actors. This chapter ments and the DENR but also the National Commission for analyzes the governance problems that have arisen at the local Indigenous Peoples and regional and provincial development level as a result of the institutional devolution of authority over councils. Under current legislation each of these entities has a natural resource management. mandate to issue land and resource use permits to specific groups, including People's Organizations, indigenous groups, investors, and tree farmers. Each institution relies on different NATURAL RESOURCE GOVERNANCE IN AN ERA OF maps and data sets, and their decisionmaking often lacks trans- INCOMPLETE AND CONFUSED DECENTRALIZATION parency.Making matters worse,they do not coordinate with each other. As a result there have been many serious conflicts over As noted, relatively few DENR staff have been devolved in land and resource use. response to the Local Government Code: just 895 (4 percent), compared with nearly 46,000 (61 percent) from the Depart- More broadly, local decisionmaking is often made chaotic by ment of Health and nearly 18,000 (60 percent) from the De- the wide variety of institutions and officials with overlapping partment of Agriculture. Though most DENR staff work in or conflicting legal or de facto roles in natural resource gover- subnational offices, the department remains highly central- nance, representing different interests and constituencies. For ized, with a limited number of field staff spread over a large example: area. Field staff report through a system of municipal, pro- vincial, and regional DENR offices, while links--and account- DENR regional offices implement policies, regulations, and ability--to local governments are sporadic and tenuous. In programs, recommend project approvals, manage and allo- many areas the limited number of DENR field staff has re- cate regional budgets,supervise processing and trade of natu- sulted in a de facto devolution of responsibilities to local gov- ral resource products,supervise provincial DENR offices,and ernments, NGOs, and community groups, but without monitor foreign-assisted projects. commensurate devolution of formal powers or financial DENRprovincialofficesenforceenvironmentallawsandregu- resources. lations, resolve claims and conflicts over natural resources, and supervise the activities of natural resource permit hold- Many of the problems that arise in the field--land use con- ers. flicts due to overlapping claims, weak enforcement of regula- DENRcommunityofficesimplementlaws,collectandaccount tions, overly bureaucratic procedures for processing resource for fees, file court cases, conduct surveys of areas covered by use permits--stem from lack of physical and technical capac- leases and permits, and initiate settlements of conflicts be- ity, limited accountability to local clients, lack of service stan- tween natural resource users.A community office may cover dards, limited local financing, and overlapping and poorly several municipalities. defined institutional responsibilities. Characteristics of the Environmentandnaturalresourceofficersarelocalgovernment Philippine political economy--particularly the powerful infor- officials who coordinate and supervise the planning and mal patron-client networks of politicians, bureaucrats, and implementation of DENR functions devolved to local gov- wealthy businessmen at the local level--also undermine ac- ernments.Such officers are not mandatory,and are appointed countability and effective performance by agencies responsible at the discretion of local governments. for natural resource management (see Rood 1998; Sidel 1997; Protected area management boards--established in every offi- and Chrispijn 1995). cial protected area--approve funding proposals, decide on Lessons from the Past, Directions for the Future 27 CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management budget allocations, develop planning and protection activi- Regionalandprovincialdevelopmentcouncilsareadvisorybod- ties, and monitor and mitigate natural resource and land use ies that initiate the development of multisector development in protected areas. plans, including mandatory municipal comprehensive land Protectedareasuperintendents--appointedbytheDENRforev- use and development plans--the regional and provincial ery protected area--coordinate the roles of the DENR and lo- physical frameworks and development plans that set priori- cal governments in protected areas; form partnerships with ties for resource use and protection. As with protected area local and indigenous communities in and adjacent to the ar- management boards, NGOs are guaranteed representation eas, as well as with NGOs; plan, protect, and manage the ar- on these councils. eas;developandimplementinformation,education,andvisitor The National Commission for Indigenous People, established programs; maintain peace and order and enforce rules; moni- under the 1998 Indigenous Peoples Rights Act, helps indig- tor natural resource and land use; and provide regular reports enous people develop ancestral domain sustainable devel- on these issues to protected area management boards. Each opment and protection plans and obtain legal title to their supervisor is the chief operating officer of the local board and ancestral lands and waters.The commission is represented at is directly responsible to it,but also reports to the regional and the regional and provincial levels. Because of delays in issu- provincial DENR offices. ing its guidelines and implementing rules and regulations, TheBureauofFisheriesandAquaticResourcesisresponsible,at the NCIP is only now beginning to function. (Before the In- the provincial level,for issuing licenses to commercial fishing digenous Peoples Rights Act was passed, documentation of vessels operating outside municipal waters, monitoring and indigenous claims was handled by DENR ancestral domain reviewing joint fishing agreements,providing services related programs). to fisheries production,processing,and marketing,enforcing fishery laws,resolving conflicts in consultation with local gov- With this enormous array of institutional actors, it is often un- ernments, and formulating regulations for conservation of clear what has been decentralized to which institution, and fishery stocks. there are no mechanisms for evaluating or holding account- Local governments,in coordination with the DENR and sub- able the institutions charged with providing natural resource ject to its rules, are required to adopt adequate measures to services.The negative impacts of these disjointed institutional protect the environment and conserve land, mineral, ma- dynamics--and the ways that some areas are trying to amelio- rine, forest, and other resources within their jurisdiction.As rate them--are illustrated by the cases described in the sec- part of such efforts, they establish local development coun- tions that follow. cils with private sector and NGO participation at the mu- nicipal,provincial,and regional levels,formulate,coordinate, and monitor development plans and projects, establish mu- AGUSAN DEL SUR PROVINCE-- nicipality environment and natural resource committees and CHAOS IN THE SSUANCE OF I TENURIAL INSTRUMENTS offices, develop initiatives to fund environmental programs, and issue natural resource management ordinances on cer- Agusan Del Sur is a mountainous province covering 896,000 tain topics. hectares on the island of Mindanao. Just over three-quarters Local government councils (sangguniang bayan) can pass ordi- of the province is officially classified as forestland, though nances and resolutions related to the environment--for ex- only 14,000 hectares of old growth forest remains and 38 per- ample concerning pollution, illegal logging, or destructive cent of the province is cultivated. More than half of the island's fishing--and provide for the establishment,maintenance,and population is poor, and 56 percent are indigenous peoples. protection of communal forests, watersheds,mangroves,and Though the island was once a major source of timber, log- similar forest resources. ging has mostly ended, and three-quarters of the population 28 Governance of Natural Resources in the Philippines CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management make their living from agriculture and small-scale forestry Predictably,implementation of the Philippines's complex tenur- activities. ial regime for forestlands has been something of a disaster this muddled institutional environment.Various agencies have allo- As in many other provinces, the natural resource management cated tenurial rights despite inadequate baseline information, roles of local governments and the DENR are unclear--though minimal consultation with affected stakeholders, and no coor- in theory a provincial environment and natural resource council dination with other agencies doing the same thing. As a result provides a mechanism for coordination and communication be- nearly all of the province's legally designated forestland is cov- tween them. Neither the DENR nor the province's local govern- ered by one or another tenurial instrument issued by four sepa- ments have significant field capacity for natural resource rate agencies (table 6).These agencies work from different base management. The DENR has only about 200 employees in five maps, resulting in numerous errors, overlaps, and conflicts be- community offices spread across the province and,as noted,only tween groups receiving rights to forestland. a small part of the DENR's budget is devoted to field-based natu- ral resource activities.The provincial government has only 28 staff Conflicts and overlaps also occur at a larger scale, because the engaged in natural resource management, supplemented by 42 DENR has promoted two overlapping, inconsistent initiatives at the municipality level.The local government's budget for natu- at the province level. The first is a timber plantation"corridor" ral resource management is also extremely limited, accounting (essentially an area prioritized for the development of indus- for less than 2 percent of the total. Although the DENR is sup- trial, monocultural timber plantations) under which 392,000 posed to provide technical support and capacity building to mu- hectares have been allocated to private investors under indus- nicipal staff engaged in natural resource management,this rarely trial forest management agreements.The second is a biodiversity occurs due to DENR staff and budget limitations. The only area corridor under which 579,000 hectares of forestland classified where the DENR helps local governments is in monitoring for- as watersheds are being promoted for biodiversity conservation. eign-assisted natural resource management projects. Under this scheme, current holders of tenurial rights within the TABLE 6. ALLOC ATION OFFORESTLAND INAGUSAN DEL SUR PR OVINCE BY TYPE OFTENURIAL INSTRUMENT AND GRANTING AGENCY Area covered Instrument Number issued (hectares) Granting agency Timber license agreement 2 136,399 DENR regional office Industrial forest management agreement 8 87,382 DENR provincial office Industrial tree plantation lease agreement 3 65,930 DENR provincial office Integrated social forestry 12,919 Municipality Community-based forest management agreement 22 116,489 Municipality Civil reservations 3 12,084 DENR Certificate of ancestral domain 9 179,680 National Commission for Indigenous People (province) Total 47 610,883 Source: ESSC 2003. Lessons from the Past, Directions for the Future 29 CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management proposed biodiversity corridor would allocate part of their hold- provides a venue for stakeholders to enter into meaningful rela- ings to conservation but would not relinquish their tenurial rights. tionships with local governments and the DENR. Political ad- Obviously,all these tenurial permutations cannot coexist peace- ministrators could support such a code through local legislation, fully. The DENR's promotion of the two new corridor schemes and should ensure that it provides flexibility for amendments to in an already complex and conflicted tenurial landscape, with- accommodate changes in local conditions. Such a code would out open consultation with stakeholders, has already led to se- need a supporting institutional mechanism, and so would re- rious conflict with landowners and barangays that fall within quire creating councils at the provincial and municipal levels. the timber corridor area. One novel example of such a mechanism is the Palawan Coun- cil for Sustainable Development (box 4). Agusan Del Sur's tenurial problems ultimately stem from the lack of a mechanism for institutional coordination.One mecha- nism that could strengthen institutional coordination is a pro- QUIRINO PROVINCE--DENR AND LOCAL GOVERNMENT vincial environment code that provides a comprehensive strategy COOPERATION TO COMBAT ILLEGAL LOGGING for natural resource management.Such a code would help bridge gaps and conflicts in environmental management policies. It Quirino is a mountainous province covering some 306,000 could also empower local communities through increased envi- hectares in northeastern Luzon.Three-fifths of the province is ronmental awareness--and thus build a stronger local constitu- legally classified as forestland, but much of this area has been ency for the environment. In addition, an environment code degraded by logging operations and slash-and-burn agricul- BO 4. X THE PALA WAN COUNCIL FOR SUST AINABLE DEVELOPMENT::: AN INSTITUTIONAL MODEL FOR BETTER NA TURAL RESOURCES GO VERNANCE The Palawan Council for Sustainable Development,created in 1992 by national legislation and funded by the national government budget,has jurisdiction over the entire province of Palawan. It is chaired by the executive secretary of the Office of the President and has members of cabinet rank from the DENR and other agencies. Council members also include representatives from the League of Municipalities and the League of Barangays in Palawan. The council's main mandate is to ensure that all local governments in Palawan use the provincial Environmentally Critical Areas Network zoning map when planning and implementing development activities.The council helps local governments finalize their comprehensive land use plans in conformity with the network map. It also formulates policies for implementation by local governments in Palawan, and all administrative orders issued by the council are adopted by local governments. The council also reviews applications for environmental compliance certificates before the DENR reviews, and conducts its own inspections as well. In addition, the council conducts natural resource monitoring and research, including monitoring changes in the province's forest cover. Although the council has many positive features that may provide a model for other provinces, it also has problems. Some natural resource stakeholders consider the council just another layer of bureaucracy. For example, the fact that applications for environmental compliance certificates have to be reviewed by the council and the DENR--a requirement unique to Palawan--is often viewed as an additional bureaucratic burden. Such applications will not be approved unless they are presented to and discussed at regular council meetings.Yet the council meets irregularly, leading to delays in the processing and issuance of the necessary clearances--and to mounting complaints from the private sector. Some applicants claim that because of this convoluted process, it can take up to two years to be issued an environmental compliance certificate. 30 Governance of Natural Resources in the Philippines CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management tural activities. About three-quarters of the province's 150,000 DENR, and Philippine police have entered into a formal agree- people live in rural areas, with 70 percent engaged in agricul- ment to collaborate on such activities. To support this partner- ture, hunting, and forestry activities, particularly for the furni- ship,the Quirino provincial council developed a forest protection ture industry. There are 39 agreements for community-based plan that was endorsed by the DENR provincial office. In addi- forest management covering nearly 86,000 hectares--equal to tion, a joint task force has been created to monitor the commu- 28 percent of the province's land area and 47 percent of its nity-based forest management areas where most illegal logging forestlands. Because of the active furniture industry and some occurs. The provincial council has also organized a Forest Pro- rich stands of commercially valuable timber, illegal logging is a tection Council that discusses illegal logging policies and issues, perennial problem despite widespread tenurial rights for com- and at least three checkpoints have been established to monitor munity forestry. the outflow of timber and catch those transporting illegally cut timber.Collaboration between the DENR and the provincial gov- The provincial government in Quirino has taken an active ap- ernment has broadened to consider creating legislation that proach to natural resource management, establishing an office would generate additional revenue for natural resource man- for the environment and natural resources in 1993. The office agement activities,such as by charging downstream water users has 36 employees, and there is a proposal to add 31 more. No in other provinces for water coming from upstream watersheds corresponding local government offices have been established in Quirino. at the municipal level, however, so the provincial office is re- sponsible for the entire province,helping municipalities deal with Despite its strong cooperation with the DENR, the provincial illegal logging and community-based forest management issues. government has expressed interest in taking on more devolved To the extent that municipal governments directly assume natural natural resource management functions. This is because gov- resource management functions, they are implemented by mu- ernment officials believe that the DENR does not provide ad- nicipal agriculturalists. Because of extremely limited municipal equate technical assistance, doing so only when specific funded budgets, funds for municipal natural resource management are projects are at stake. From the government's perspective, the provided by the provincial government. DENR is mainly a channel for getting funds from donors, a bu- reaucracy that issues tenurial instruments,and a partner in com- Unlike in some other provinces, Quirino's office for the envi- bating illegal cutting. Indeed, this is a common perspective in ronment and natural resources works closely with the DENR many provinces. provincial office in executing natural resource management func- tions.The only natural resource management functions formally If local governments are to play a stronger role in natural re- devolved to the provincial government are management of sites source management, they will require increased technical ca- under the Integrated Social Forestry program and supervision pacity and financial support to plan, manage, and implement and monitoring of former project sites under an environment natural resource projects. One way to achieve those goals adjustment loan. But the provincial government is much more would be to devolve a larger share of DENR staff from re- involved in natural resource management than its formal man- gional and provincial offices to local governments. Doing so date suggests, actively participating in implementation of all would make particular sense in resource- and mineral-rich community-based forest management sites and in enforcement provinces, where increases in staff at the local government of forest protection. level could be offset by increased revenue from natural re- source management services. The relatively high cooperation between the DENR and the pro- vincial government is illustrated by the approach used in joint Forestland co-management agreements are another potential efforts to combat illegal logging. The provincial government, way to boost the capacity of local governments and promote Lessons from the Past, Directions for the Future 31 CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management better coordination with the DENR.These agreements provide Waste ManagementAct and their implementing rules and regu- a formal means for a partnership between local governments lations, and co-management of forest resources where Eco- and the DENR in the protection or development of specific sec- Governance Project teams work with DENR field offices and tions of the forestland within a municipality. Despite the pro- members of the League of Municipalities to take advantage of gressive devolution of central powers and responsibilities, there management and investment opportunities arising from the is reluctance on the part of DENR officials to concede part of national community-based forest management program and their resource management authority to local governments.For- the Local Government Code. estland co-management agreements provide a way to overcome this reluctance by providing a mutually agreed framework in which the DENR and local governments can co-manage speci- ISABELA PROVINCE--INSTITUTIONS STRETCHED fied areas. THIN ON LUZON'S LAST FOREST FRONTIER For their part, local governments must be ready to fund invest- Isabela is the largest province in northern Luzon, with a land ments in developing the agreements. One model that has sup- area of 13,643 square kilometers. Its population of nearly 1.3 ported such initiatives is the World Bank­financed million is mainly settled in the Cagayan river valley in the east- Community-Based Resource Management Project, which pro- ern part of the province. The western part, mountainous and vides local governments with loans and grants to support in- densely forested, is the location of the 395,500 hectares North- vestments in natural resource management. Targeting poorer ern Sierra Madre Natural Park--considered the Philippines's municipalities,since 1999 the project has provided financing for most intact and important protected area. Illegal logging and small-scale reforestation and other environmental initiatives. encroachment by small farmers are the main threats to the park, Results from the field appear promising. In Agusan del Sur, for which has 24,000 inhabitants.With valuable timber resources at example, local governments in three municipalities have devel- stake, corruption among local government officials is also a big oped agroforestry, micro-watersheds, and tree-plantations on problem (box 5). degraded watersheds with local People's Organizations. Nowhere in the country is effective natural resource manage- Another promising initiative to strengthen the natural resource ment more important, but the capacities of the DENR and lo- management capacity of local governments is the Eco-Gover- cal governments are not up to the job. The DENR provincial nance Project funded by the U.S. Agency for International office and six DENR municipality offices supervise and moni- Development. The project helps local governments use exist- tor 3 timber license agreements, 38 lumber dealers and rattan ing mechanisms to work with other agencies in planning and permittees, 612 industrial forest management agreements cov- managing their environment and natural resource base. The ering 3,806 hectares, 62 forest grazing land agreements cover- project also helps local governments network with each other ing 20,096 hectares, 15 industrial forest management and with national technical agencies to implement common agreements covering 33,147 hectares, and 8 tree farm leases strategies to increase the authority and public accountability covering 1,366 hectares.The DENR also provides support to 6 of national and local governments for effective, environmen- community forest project sites covering 43,305 hectares and 3 tally sensitive management of local resources. Project activi- certificates of ancestral domain claim areas covering 45,276 ties support successful examples of local government initiatives hectares. In addition, the DENR directly manages 3 watershed by taking advantage of vehicles such as national programs for projects and,together with stakeholders,is responsible for man- community and local government management of forest and aging three large protected areas--the most important of which coastal resources. Examples include helping municipalities is the Northern Sierra Madre Natural Park, which received sup- adopt the National Fishery Code and comply with the Solid port from donors and international NGOs.To conduct all these 32 Governance of Natural Resources in the Philippines CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management BO 5. X CORRUPTION AND LLEGAL I LOGGING IN SABELA I PR OVINCE At the local level, corruption related to natural resource management takes two broad forms. Most common are the many situations where government officials extract unofficial fees for performing services they are supposed to perform as part of their jobs, such as issuing resource use permits and other clearances. As in many other countries, this kind of petty corruption also occurs in many sectors other than natural resources.A second, more serious form of corruption occurs when officials take payments in exchange for permitting illegal activities--such as illegal logging--or are engaged in illegal activities. According to a detailed field study carried out in 1997, this latter form of corruption is widespread in Isabela province. The local furniture industry--which, with some 13 cooperatives and numerous shops, is sizable--is the driving force behind illegal logging in Isabela and the corruption that it engenders. Narra (Pterocarpus indicus) is the timber of choice for the furniture industry, but the species is increasingly rare and subject to a variety of DENR harvest restrictions.Thus industry buyers mainly rely on illegally cut sources provided by small teams of loggers. Because such transactions are illegal, the principals involved--middlemen, sawmills, furniture makers and cooperatives, the CagayanValley Chamber of Furniture--must make regular payments to a variety of civilian and military officials (including DENR commu- nity and provincial offices) as well as, in some cases, the New People's Army, an insurgent group active in the area. This kind of corruption is by definition difficult to document. But it is likely that the Isabela case is unique only in that it has been so carefully documented. An investigation of fraud in the awarding of integrated forest management agreements, for example, concluded that "a wide- spread pattern of fraud in the awarding of [the agreements] has resulted in rampant tree-cutting in areas intended for forest protection. . . . DENR investigators suspect that dozens of Department personnel may have connived with loggers to use the agreements as a cover for illegal logging" (Severino 2000). Source: Huigen 1997. tasks, spread out over a vast and remote territory, the provincial palities in Isabela, only one has an office for the environment and municipality DENR offices have 355 technical and admin- and natural resources. istrative staff. The provincial government of Isabela designated an office for PROTECTED AREA MANAGEMENT BOARDS-- the environment and natural resources in 1992 and created a A MODEL FOR NATURAL RESOURCE GOVERNANCE? unit for such activities in 1998.The provincial office started with 14 staff, all of whom were devolved from the DENR and for- As noted, primary responsibility for management of nationally merly employed as community development officers in the In- designated protected areas has been devolved to multi- tegrated Social Forestry program. The province established the stakeholder protected area management boards. While many office to revive the DENR's Integrated Social Forestry projects, protected areas in the system do not yet have functioning man- which were turned over to local governments at some 22 sites. agement boards, the number is increasing. Where such boards The office also reviews environmental compliance certificates in are adequately funded and the full range of stakeholders are areas devolved to local governments and processes permits for actively involved, they offer the best hope for instituting effec- sand and gravel. But the office has no role in protected area tive governance for the country's protected areas. The boards management,even though a substantial portion of the province's may also offer a model for local natural resource governance land is protected area, because the province views protected ar- that could be applied to a broad range of natural resource man- eas as the responsibility of the DENR. Among the 35 munici- agement concerns. Lessons from the Past, Directions for the Future 33 CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management The DENR does not have the capacity to effectively manage the For example, the number of resolutions passed in nine sites nation's 360 protected areas, which cover 3.8 million hectares financed by the World Bank­Global Environment Facility and often suffer from serious land use conflicts and encroach- project increased from 50 in 1996 to 124 in 1999, and 56 just ment threats.About 1,100 DENR staff are allocated to protected in the first quarter of 2001. area management (table 7). Although 90 percent of these staff work in the field, that means that each staff member is respon- Most protected area management boards have not, however, sible for managing 3,800 hectares.There are 159 protected area achieved a truly multistakeholder identity.The DENR is the chair superintendents managing 169 protected areas--meaning that of the boards and executing body for the National Integrated 191 protected areas do not have a superintendent. DENR staff- Protected Areas System Act, as well as the regulatory body issu- ing for protected areas is supplemented by volunteers and NGO ing land and resource use permits. Thus at the local level, pro- employees. Indeed, at some sites these supplemental workers tected area management boards are perceived as extensions of account for more than 80 percent of staff. the DENR rather than as joint enterprises of local stakeholders, each with an equal say in its deliberations and decisions. One Protected area management boards offer a model--beyond result is that local governments generally perceive protected ar- the useful but ad hoc support provided by volunteers and eas as the responsibility of the DENR rather than as a responsi- NGOs--through which the DENR can enlist a wide range of bility of theirs.But this view may be changing: local governments stakeholders to support protected areas and provide concrete and NGOs are taking an increasingly active role in board pro- assistance for their protection and management. The boards ceedings and outcomes, though in the three protected areas re- have been relatively successful in bringing together stake- viewed in depth for this study--Mt. Isarog National Park, holders in a forum where decisions are made in a transpar- Northern Sierra Madre Natural Park,and Puerto Princessa Sub- ent and accountable manner. For example, data from sites terranean River--most input to board agendas still comes from financed by the World Bank­Global Environment Facility Con- the DENR (table 8). servation of Priority Protected Areas Project indicate that the boards have helped protected areas substantially increase the And although participation by People's Organizations, indig- number of natural resource management issues discussed, enous peoples' representatives, and barangay officials is still with a corresponding increase in actions and initiatives on limited, it is better than in the past--and in many cases is con- the ground. Increased participation by local stakeholders has tributing to better working relationships between these groups also significantly increased the number of conservation, re- and the DENR and local governments. Increased discussions of source use, and management resolutions issued by the boards. protected areas and their problems among these stakeholders TABLE 7. DENR ST AFFING FOR THE PHILIPPINES'''S 360 PR OTECTED AREAS Regional Provincial Protected area Protected area Central office offices offices (est.) superintendents staff (est.) Total (est.) 100 121 400 159 330 1,100 Note: Superintendents and staff cover 169 protected areas. Source: DENR-PAWB 2003. 34 Governance of Natural Resources in the Philippines CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management TABLE 8. ST AKEHOLDER PAR TICIPATION IN PR OTECTEDAREA MANA GEMENT BO ARDS IN MT... ISAR OG NA TIONAL PARK,,, NOR THERN SIERRA MADRE NA TURAL PARK,,,AND PUERTO PRINCESSA SUBTERRANEAN RIVER,,, 2000­01 (number of board members) Stakeholder Mt. Isarog Northern Sierra Madre Puerto Princessa DENR(including park superintendents) 31 30 5 Provincial and municipal governments 12 16 58 Barangay governments 15 5 6 NGOs 17 19 17 People's organizations 2 1 1 Indigenous peoples' representatives 1 2 1 Source: Office of Park Superintendents, board minutes. have also reduced conflicts over natural resource management. sures to resolve conflicts. This development is reflected in the Still, based on the three sites reviewed for this study, it cannot relatively high number of natural resource management inter- be said that protected area management boards are appreciably ventions since 1999--largely reflecting the institutionalization fostering more integrated natural resource management imple- of the DENR's Biodiversity Monitoring System.The system has mentation between government agencies such as the DENR, provided the management board with data on more than 60 Department ofAgriculture,local governments,and law enforce- plant and animal species and on 16 resource and land use ment agencies. Indeed, some key government stakeholders-- management practices. including the Bureau of Fisheries and Aquatic Resources, Department of Agriculture, and National Commission for In- Although protected area management boards provide a poten- digenous People--are seldom represented on the boards, de- tial model for local institutional coordination and stakeholder spite their role being prescribed in the act on protected areas. involvement in natural resource management--as well as the Representatives of members of congress, who could contribute best hope for more effective governance and protection of the to protected areas' financial sustainability, are also seldom country's beleaguered protected areas--severe governance chal- involved. lenges remain: In recent years the boards in the Mt. Isarog and Northern Sierra No mechanism defines and facilitates functional coordina- Madre parks have become more engaged in park management, tion among the DENR and other government entities and largely due to training financed through foreign-assisted NGOs for protected area management. projects in these sites. (At the Puerto Princessa site, by con- Overlaps persist between the Local Government Code and trast, discussions have focused on ecotourism and income gen- the act on protected areas with respect to the granting of re- eration rather than natural resource management.) Until 2000 source use permits, collection of fees, and land use develop- conservation and park protection were generally never dis- ment and enforcement. cussed at the Northern Sierra Madre site. But there has been a Local governments show limited willingness to give perceptible move toward more open, regular discussion of re- protected area management the same priority as other source management problems and an increase in joint mea- activities. Lessons from the Past, Directions for the Future 35 CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management BO 6. X PAYING FOR PAR TICIPATION ::: THE COST OF RUNNING A PR OTECTED AREA MANA GEMENT BO ARD Effective governance of a protected area requires a functional management board through which all stakeholders meet regularly, review management activities, and pass ordinances related to the protected area.Without dedicated financial resources to support board meetings and functions, there is essentially no protected area governance. Data from the Mt. Isarog, Northern Sierra Madre, and Puerto Princessa Subterranean River protected areas indicate that the annual cost for a typical management board--with 35 members holding 10 technical and 8 executive meetings a year--is about $7,500. Costs include travel, honorariums, and capacity development of stakeholders to ensure their active participation. Most of the costs at these three sites are financed by foreign-assisted projects. Few boards generate sufficient resources or receive funds from the DENR to ensure adequate partici- pation by all stakeholders in decisionmaking. In short, the policy framework and local mechanism to enhance stakeholder participation and institutional coordination in protected areas management are in place, but are vulnerable to collapse when foreign funding ends--unless the DENR and local governments allocate sufficient funding for a board's continued operation. The central government provides limited financing for pro- encouraged by myriad bureaucratic requirements and proce- tected area management, leading to heavy dependence on dures. For example, obtaining a wood recovery permit in Puerto donor-assisted projects to finance most aspects of manage- Princessa National Park requires nine processes and clearances ment--including the costs of making management boards from seven agencies--and takes five months. functional (box 6). Mechanisms are general lacking (Puerto Princessa National Local governments and the DENR provide a range of services Park is an exception) to ensure coordination and harmoniza- to citizens, from technical support and training for community tion between the decisions of protected area management natural resource management and social forestry projects to boards and municipal councils. land surveys, permits, tenurial instruments, and environmen- tal compliance certificates. But there are few opportunities for users to rate these services and few incentives for local gov- CREATING DEMAND FOR GOOD NATURAL RESOURCE ernments and the DENR to improve service quality and out- GOVERNANCE--ESTABLISHING SERVICE DELIVERY reach and to reduce transaction costs. Moreover, accountability STANDARDS AND ACCOUNTABILITY MECHANISMS and transparency are lacking in natural resource expenditures and revenues. The DENR and local governments will deliver more effective natural resource management services only when their constitu- Although there are national systems for rating local govern- ents demand them.With the high turnover in local elected offi- ments--such as the Local Productivity and Performance Mea- cials, however, public accountability of local government surement System (managed by the Department of Interior and performance is limited, and there are no performance-based Local Government to determine assess local capacity for ser- measures for environmental services delivered by local DENR vice delivery) and the Citizen Satisfaction Index System (imple- units or local government staff. This lack of accountability sig- mented by civil society organizations to provide feedback on nificantly increases the likelihood of corruption among local of- the quality of services)--few are linked to program manage- ficials who process permits, issue tenurial instruments, and ment. Improving agency performance requires management provide other natural resource services. Illegal activity is also support at the highest levels. 36 Governance of Natural Resources in the Philippines CHAPTER SIX Institutions:The Impacts of Incomplete Decentralization on Natural Resource Management To make local DENR staff more responsive, the DENR secretary tal services are devolved to local governments. Some donors, should consider conducting user surveys to rate services.For local such as the U.S.Agency for International Development (USAID), governments, independently conducted public surveys and the are working directly with progressive local governments and the Local Productivity and Performance Measurement System are a DENR to promote increased transparency and accountability in start, but will be difficult to implement until more environmen- local natural resource management. Lessons from the Past, Directions for the Future 37 CHAPTER SEVEN Financing at the Local Level D espite significant differences in land area, popu- of functions across local environmental offices.Although regions lation, income, and natural resource endow- have developed mechanisms to improve coordination with the ments, DENR spending on natural resource DENR, the situation remains problematic. management shows limited variation across re- gions. Regional allocations are generally low and spread across too many programs and projects,undermining their impact and ISABELA PROVINCE impeding the DENR from fulfilling its regional mandate.And as noted, across regions some 95 percent of the DENR's budget is Isabela is a first-class local4 government and received large in- allocated to routine expenditures,and just 5 percent to develop- ternal revenue allotments (derived from national taxes) from the ment expenditures. central government. During 1996­2002 these allotments ac- counted for nearly 93 percent of the province's income. Less In the three provinces reviewed in this chapter--Isabela,Palawan, than 5 percent of the province's income came from local taxes, and Quirino--DENR provincial and community offices gener- and just over 1 percent came from operating and miscellaneous ally play a limited role in the annual budgeting and program- income. Because these income levels were sufficient to finance ming process. Budget targets and ceilings, based on DENR Isabela's operating and development budget requirements, the priority programs, are handed down to regional offices after the province had little incentive to generate additional revenue from final DENR budget has been approved. Budget allocations are local sources. Moreover, it has been claimed that the magnitude then divided among provincial and community offices (six in of the province's forestland limits its real property tax base.As a Isabela, two in Quirino, and seven in Palawan).To receive funds result real property taxes generate very little revenue. from the Department of Budget and Management, the DENR must prepare budget breakdowns through the provincial level; Between 1998 and 2002 the composition of Isabela's expendi- allocations between provincial and community offices are agreed tures improved, with personnel costs dropping from 54 percent internally. of the budget to 38 percent.This change was largely the result of drastic measures to improve the province's fiscal situation. Sav- Although local governments and the DENR follow the same ings on personnel costs were channeled to operations and main- principles and guidelines in preparing their budgets, the pro- tenance, which grew from 15 percent of the budget in 1996 to cesses are separate. Across regions, allocations for natural re- 29 percent in 2002. Allocations for non-office support--essen- source management account for just 1­2 percent of local tially the development budget--fluctuated during this period, government budgets. Local governments rely on funds from peaking at 30 percent of the budget in 1997 and dropping to 21 donors to develop and implement natural resource programs percent in 2002. and projects--and make no provisions to ensure their sustainability after donor support ends. The Investment Coor- Budget for natural resource management dination Committee has issued guidelines on cost-sharing ar- rangements which are based on a financial viability assessment Isabela engages in two types of spending related to natural re- of the local government,which determines the amount of assis- source management: the operating budget of its environment tance to be provided to the local government unit. The separate preparation of local government and DENR bud- 4. Based on Department Order 32-01 of the BLGF, Department of gets results in limited prioritization of budget allocations across Finance.Municipalities are classified in 6 income brackets ranging from programs, lack of consolidation of resource use, and duplication 35 to 7 million pesos. 38 Governance of Natural Resources in the Philippines CHAPTER SEVEN Financing at the Local Level and natural resources office, and programs financed by the 20% 32 million pesos from forest charges and other fees due to the Development Fund.5 During 1998­2002 about 1 percent of government. Isabela's budget went to these activities. Budget of DENR provincial and community offices Programs and projects received only 28 percent of Isabela's budget for natural resource management; nearly all of the re- Between 1998 and 2002 Isabela's spending on natural resource maining funds were spent on the salaries and operations of management was not covered by DENR budget allocations to the province's environment and natural resources office. The its provincial and community offices. In 2002, for example, office provided continuous funding for just four major pro- DENR's provincial office in Isabela was given a budget of just 64 grams: the Fishery Development Program, ISF projects, the million pesos.About 91 percent of this went to routine expendi- ENR Watershed Development Project, and the Community- tures,and 1.5 percent to development expenditures.Meanwhile, Based Forest Management Project on Environment and For- DENR's community offices in Isabela received an average of estry Natural Resource Management. Such limited funding 640,000 pesos. reflects the low priority given to natural resource manage- ment--which is ironic given that the province has such exten- sive forests and its economy largely depends on forest-related PALAWAN PROVINCE activities. The limited budget may also reflect the Isabela government's limited mandate for natural resource manage- Palawan is also a first-class local government. During 1998­2001 ment.This situation is very different from that in other resource- the province's internal revenue allotment accounted for 97 per- rich regions, where local governments allocate larger budgets cent of its income (net of borrowings)--indicating limited capac- to natural resource management--particularly for programs ity to generate income to finance its operations.Very little of the outside devolved functions. For example, Isabela has no pro- province's income--about 0.03 percent--comes from its share of gram to strengthen enforcement against illegal logging, which the use of national wealth. This fact could be explained by the is a serious concern in the province. strict limits on logging in the province.Logging activities are lim- ited to harvests from community-based forest management ar- Revenue eas, which are conducted on a very small scale and have been irregular because of the changing policy on community-based In 1996­2002, 56­75 percent of Isabela's income from natural forest harvesting.The small share of income from national wealth resources came from its share of the proceeds from the use of may also be due to the fact that income from tourism based on national wealth. The rest came from mining taxes, sand and natural resources (and related sources) is not captured in the re- gravel taxes, and charges on forest products, which accounted porting formats of local governments. for 6­28 percent of local taxes. Revenue from natural resources accounted for 0.6­1.2 percent of provincial income in 1996­2002, In 2001 Palawan province had an operating budget of 622 million and covered 48­153 percent of the province's budget for natural pesos--62 percent more than in 1997. But while the budget in- resource management. For its part, in 2002 the DENR collected creased, the composition of expenditures hardly changed. Per- sonnel costs averaged 53 percent of the budget during this period, ranging from 52 percent in 2001 to 62 percent in 1998.This share exceedsthelimitprescribedintheLocalGovernmentCode,which 5. The 20 percent Development Fund is the portion of the LGU's internal revenue allotment earmarked for development projects deter- specifies that first-, second-, and third-class local governments mined by the LGU. should allocate no more than 45 percent of their budgets to Lessons from the Past, Directions for the Future 39 CHAPTER SEVEN Financing at the Local Level personnel services. As in many local governments, Palawan's Revenue spending on capital outlays was low, averaging only 8 percent of the province's budget during 1997­2001--though it ranged from Palawan generates limited local revenues from natural resource 4 percent in 2001 to 20 percent in 2000. This composition also activities.The province has declared a total ban on logging, and reflects the allocation of the 20% Development Fund. Although mining is not encouraged. Palawan has huge deposits of off- the development fund is supposed to finance development ex- shore natural gas, but recent exploration of these resources led penditures, the data suggest that it has been used to finance rou- to a dispute with the central government over royalty sharing. tine expenditures. As for the DENR,in 2001 it collected just 137,043 pesos in forest charges, from rattan cutting. Budget for natural resource management Budget of DENR provincial and community offices During 1997­2001 the Palawan government allocated an aver- age of 1.5 percent of its budget to natural resource­related ac- Funding for the DENR's provincial and community offices in tivities. This share peaked in 1999 at 2.8 percent and was at its Palawan reflect the situation in other DENR field offices.In 1999­ lowest level in 1998, with a mere 0.8 percent. But while these 2002 the provincial office's operational budget did not increase, shares may seem small,the absolute amounts were quite high-- and averaged just 4,019,750 pesos.Allocations for the main pro- reaching 13 million pesos in 2000 and 12 millions pesos in 2001. vincial office accounted for 17 percent of the DENR's operations The Palawan government's budget for natural resource man- budget for Palawan in 2002,and the combined total for all of the agement is spent on two main items: the operating budget of DENR's provincial offices accounted for 40 percent.The remain- the province's environment and natural resources office and the ing 60 percent of the operations budget was shared among the programs financed under the 20% Development Fund. In 1997 seven DENR community offices--meaning that each office re- the environment and natural resources office received 83 per- ceived less than 10 percent of the budget, or just 374,300 pesos cent of the budget--and in 1998, 93 percent. But the situation on average. changed considerably starting in 1999,when the budget for pro- Palawan Council for Sustainable Development grams exceeded that for the office. In 1999 the office's share of the budget was 34 percent, in 2000 it was 33 percent, and in The Palawan Council for Sustainable Development receives regu- 2001 it was 45 percent. Moreover, proceeds from the 20% De- lar funding from the national government through the Annual velopment Fund were used to finance the office's programs, General Appropriations Act. During 1998­2002 its funding in- projects, and activities. About three-quarters of Palawan's bud- creased 48 percent. The council has been the implementing get for natural resource management was allocated to routine agency for Palawan-based natural resource management projects expenditures;justone-quarterwenttodevelopmentexpenditures. such as the Palawan Tropical Forest Protection Project, the Sec- ond Palawan Integrated Area Development Project, and the The programs supported by Palawan's environment and natural Sustainable Environmental Management Project in Northern resources office varied considerably. Only the Bantay Palawan Palawan.Overall,the council appears to have maintained its op- Program and Fisheries Development Program ran for three years; erational efficiency and serviced the needs for it was established the rest were one- or two-year programs with no clear long- term orientation.The small allocations for the various programs also undermined their long-term impacts. No allocations were QUIRINO PROVINCE made for ISF, communal forestry, or micro-watershed rehabili- tation activities--which are functions clearly devolved to local Quirino is a third-class local government. During 1998­2002 its governments. budget increased by less than 1 percent a year. Because of this 40 Governance of Natural Resources in the Philippines CHAPTER SEVEN Financing at the Local Level low budget level, the provincial government has been unable to ties.While the amount in pesos was small (4.5­6.5 million), the provide the mandatory benefits due to its personnel--though, fact that a low-income local government allocated a consider- as in other provinces, personnel costs have accounted for the able share of its limited budget to natural resource management largest share of its budget, averaging 54 percent. In 2002 this indicates the priority and importance given to natural resources. share was 47 percent of the province's budget. This allocation Overall, allocations for routine expenditures fell between 1998 violates the provision of the Local Government Code, which and 2002, while the share of the 20% Development Fund de- states that third-class local governments cannot spend more than voted to natural resource management increased. 45 percent of their budgets on personnel services. Allocations for capital outlay have been minimal, accounting for just 1.4 Revenue percent of the budget in 2002.The policy of setting aside 20 per- cent of the internal revenue allotment for development expen- Given its vast timberland, one of Quirino's most important ditures has ensured that some budget is left for the province's sources of revenue is its share from the proceeds of the use of development activities.This may also explain the minimal allo- national wealth. Indeed, in 1995 it received nearly 41 million cation for capital outlays in the province's operating budget. pesos from the national government. But the province chose to lobby for the cancellation of timber licenses to enable commu- Like most third-class local governments, Quirino is highly de- nities to have access to its forest resources.The DENR cancelled pendent on internal revenue allotments to finance its operating all such licenses, paving the way for the establishment of many and development budgets. In 1998­2002 these allotments ac- community-based forest management sites throughout the prov- counted for 88 percent of the province's income. And if the ince. This program is now the centerpiece of the provincial province's large borrowings in 1995­97 and 2000­01 are not con- government's efforts to alleviate poverty in some 80 percent of sidered as source of revenues, the internal revenue allotments its barangays. accounted for 91 percent of the province's income. Other sources of income are fees from sand and gravel extrac- Budget for natural resource management tion and operating and miscellaneous revenue from real prop- erty taxes and other taxes. But because Quirino's small Between 1998 and 2002 about 2 percent of Quirino's budget agricultural area limits its real property tax base, receipts from went to its office for the environment and natural resources and these sources are very low.Thus natural resources account for a to related natural resource management programs and activi- minimal share of the province's income--just 0.9 percent in 2002. Lessons from the Past, Directions for the Future 41 CHAPTER EIGHT Conclusions and Recommendations PROPERTY RIGHTS AND TENURE to deal with resource management within their administrative areas. To ease this situation, more partnerships should be fos- Tenurial instruments issued by the DENR under its commu- tered with civil society groups and private sector actors to in- nity-based forest management policy have formally strength- crease local capacity to manage natural resources. ened local rights. But bureaucratic complexity, inefficiency, and weak enforcement have resulted in conflicts on the ground and Institutions in charge of natural resource management--both limited the potential of these instruments to provide incen- local governments and provincial offices of the DENR--have tives for sustainable management and investment. To remedy limited capacity to fulfill their institutional mandates. Provin- these shortcomings, tenurial instruments for forestland should cial agencies lack adequate staff and budgets to deliver techni- be reviewed,consolidated,and streamlined.In addition,mecha- cal support and training to community groups, private actors, nisms for enforcing access rights and responsibilities for sus- indigenous groups, and farmers and fishers involved in natu- tainable resource use attached to those rights should be ral resource management activities. NGOs and other civil so- strengthened. ciety groups currently fill this gap. Foreign-assisted projects are the main source of financing for the development expendi- Moreover, the devolution to local governments of control over tures of NGOs and government agencies. Few activities are coastal waters and resources needs to be complemented by an sustained through local government or DENR development effective system of community-based property rights to reverse budgets.To improve this situation, more DENR staff should be the current open access situation and provide incentives for sus- devolved to provincial and municipal governments, especially tainable community-based coastal resource management.Thus in resource-rich provinces. And once that happens, local gov- a national system of standardized, legally enforceable commu- ernments should be given more power in granting resource nity-based tenurial instruments should be established for mu- use permits--such as community-based forest management nicipal coastal waters and resources. agreements. There appear to be few service standards for natural resource INSTITUTIONS AND MANAGEMENT management. Processing for resource use permits (fishing per- mits,community-based forest management agreements,indus- Overlapping institutional mandates at the local level between trial forest management agreements),environmental clearances, the DENR, other central government agencies, and local gov- and other permits is a time-consuming, opaque, laborious pro- ernments are a major factor contributing to land use conflicts cess, requiring multiple payments to myriad agencies at the lo- and limited accountability for service delivery. Local agencies cal level. This situation provides an environment conducive to issue multiple permits for similar resource use rights, and re- corruption and rent seeking.These problems could be eased by source allocation decisions have limited transparency.To address developing service standards for natural resource management these problems, land use decisions and the issuance of resource services from the DENR and local governments, reducing the permits should be made more public--through better informa- number of institutional requirements, and making the costs of tion, increased stakeholder consultation, and more public hear- permits more transparent. In addition, local groups should be ings prior to decisionmaking. encouraged to monitor service delivery. There appear to be few formal forums for the DENR and local Some new institutional partnerships show how partnerships governments to collaborate on activities. In most cases local between local governments and the DENR could work.Protected governments have handed over natural resource management area management boards and the Palawan provincial environ- responsibilities to the DENR, and have limited staff or budgets mental council are institutional mechanisms that could be 42 Governance of Natural Resources in the Philippines CHAPTER EIGHT Conclusions and Recommendations replicated. But constraints remain--including financing, capac- Contributions from foreign-assisted projects are generally cata- ity issues, and incomplete or overlapping legislation. One way logued as both development and routine expenditures in the to address these constraints would be by publishing annual re- DENR budget.This practice has become essential for the DENR ports at the provincial level on budgets, administration, person- to be able to meet its mandates at the national and especially nel, and services delivered. local levels. But it has often biased the planning and manage- ment of budget expenditures and prevented the DENR from Both the DENR and local governments work from limited infor- making adequate provisions to ensure the continuation of devel- mation and data at the local level. Many parks in protected ar- opment expenditures after donor contributions cease. eas are no longer viable, and a reassessment is required. In watershed management,local governments and the DENR need DENR regional allocations are generally low and spread across to develop better working relationships to deal with upstream- too many programs and projects, jeopardizing the possibility for downstream externalities and to provide appropriate tenure and DENR to fulfill its regional mandates. To address this problem, irrigation user charges to encourage farmers to maintain forest budget allocations should be prioritized across programs, activi- cover. In coastal areas, limited information on the resource base ties,andprojects,andresourceuseshouldbeconsolidatedtoelimi- makes it difficult to regulate fishing in municipal waters or within nate duplication of functions. In addition, the resource use and marine protected areas. To address these issues, local govern- budget process should be strengthened by moving toward func- ment and DENR decisionmaking should be linked to better,more tional allocation of resources. Moreover, efforts should be made accurate data. One way to integrate resource management is to strengthen the links between planning and budgeting within through the Comprehensive Land Use Planning mandated un- the DENR, DENR agencies, and between the DENR and local der the Local Government Code.At the national level, a review governments. of the protected areas system and a focus on critical lowland areas of high biodiversity are critical to ensure that scarce gov- Decentralization has given local governments increasing respon- ernment resources are properly allocated. sibilities for natural resource management--including planning, law enforcement,program implementation,and monitoring and evaluation. But local governments appear not to be receiving FINANCING AND BUDGETING adequate financial and technical support from the DENR to manage their new duties and responsibilities. Thus decentrali- Although DENR budget allocations are not low, DENR spend- zation of budget control should be increased--as should financ- ing is fragmented across too many programs. This approach ing for local governments to fulfill their devolved responsibilities. significantly limits the effectiveness of all DENR programs and makes it difficult for DENR agencies at the national and Policy conflicts among laws and regulations and weak enforce- local levels to implement natural resource management poli- ment of policies on resource use (especially at the local level) are cies and address pressing natural resource management chal- resulting in overextraction of natural resources and discourag- lenges. It also prevents the DENR from making significant ing private investment in natural resources. progress toward sustainable management of natural re- sources. Moreover, between 1998 and 2002 DENR spending Local government budgets for natural resource management are was erratic, reflecting the varying priority given to natural very low--averaging 1­2 percent of total budgets. Local gov- resource management by past and present administrations. ernment spending on natural resource management is not nec- This situation should be resolved by rationalizing the budget essarily dependent on the government's income level. Instead, preparation process at the national and local levels for both it tends to reflect priorities identified by local government offi- the DENR and local governments. cials and donors. Lessons from the Past, Directions for the Future 43 CHAPTER EIGHT Conclusions and Recommendations There is no clear distinction between allocations for routine and foreign-assisted projects. Local governments interpret the Lo- development expenditures at the national and local levels.Most cal Government Code as making the DENR entirely respon- local governments are underfunded for routine expenditures, sible for providing counterpart funding to foreign-assisted and they tap development funds to cover the shortfall.The blur- projects.But the DENR feels that local governments should pro- ring of the two budgets has both short- and long-term effects vide some counterpart funding. Based on a assessment of local on the management of natural resources. governments'financial viability, the Department of Budget and Management is expected to make a final decision on this issue There is confusion between the DENR and local governments by the end of 2003. on who is supposed to provide the counterpart funding for 44 Governance of Natural Resources in the Philippines REFERENCES Agusan del Sur. Breakdown of programs financed under the 20% De- Bruner, .A. G., R. Gullison, R. 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