Philippine Ecosystem and Natural Capital Accounting Systems Act (PENCAS)

Senate of the Philippines

Sponsorship Speech
Senate President Pro Tempore
Loren Legarda

Philippine Ecosystem and Natural Capital Accounting Systems Act (PENCAS)

13 September 2023

Ginoong Pangulo at mga kagalang-galang na kasamahan, magandang araw.

Payagan ninyo akong magpaliwanag sa paraang mauunawaan ng mas marami. Inaanyayahan ko kayong isipin ang pangkababaihang kuwentuhan, katapat ng kuwentong barbero pero may pinagkakaabalahan – naglalaba sa sapa, o nagsusulsi habang binabantayan ang mga bata. Ang kuwentuhan ay kung paano nalalamang kumikita ang kanilang maliliit na negosyo.

Sabi ng isa, mabuti na lamang at hindi na sila umuupa, malaking bawas sa gastusin kaya kumikita ang tindahan.

Sabi ng pangalawa, mabuti na lamang at tumutulong na ang panganay, malaking ginhawa kung may ibang kailangang gawin.

Sabi ng pangatlo, mabuti na lamang at naibebenta ang tanim na gulay, malaking bawas sa puhunan.
Sabi ng pang-apat, mabuti at hindi ako pumayag na putulin ng barangay ang puno sa may tindahan, kung hindi ay hindi makakayanan nag init at kailangang magsara ng tindahan sa tanghali.

Ito po ang mga halimbawa ng hindi natin kinukwenta sa maliit na negosyo, at maihahambing rin sa ekonomiya ng bansa. Marami sa nakagiginhawa, sa nakababawas ng pagkalugi at sa nakapagpapatuloy ng mga serbisyong pampubliko ay hindi nabibilang.

Sa national accounting, kabilang diyan ang mga taong tumutulong batay sa sariling kagustuhan, at ang mga kaugnayan. Ang nakabahaging halaga na nagbibigay-daan sa mga indibidwal na magtulungan upang epektibong makamit ang isang karaniwang layunin ay tinatawag na Social Capital.

Kabilang din ang mga bunga ng kalikasan na napakikinabangan, gaya ng mga biyaya ng lupa – prutas, gulay, kanlong ng mga puno. Nariyan din ang mga proseso ng kalikasan na maaaring intangible ngunit maituturing namang isang puhunan — ang kalinisan ng tubig at hangin dulot ng pagsasala ng lupa, paglilinis ng hangin dulot ng paglago ng mga puno at halaman, ang pagtupok ng lamok, ng mga tutubi, at paniki ay maituturing naman na Natural Capital.

Kapag hindi natin binibigyang halaga ang natural na yaman, maaaring dahan-dahang nalulugi na ang bayan nang hindi natin namamalayan.

As you can see, you need imagination to appreciate natural capital. The reason it is hard to capture and explain is that it is tied up not just with actual stocks — fruits, vegetables, timber, mines, but also with the invisible — relationships and processes, benefits and services.

We need to account for the food chain: understand what eats what in the ecosystem to be able to appreciate the services plants and animals provide in the food web . We need to see entire ecosystems to appreciate that the thriving of the coral reef is due to the ground cover of the upland soils by vegetation, and that without the vegetation preventing erosion, the coral reefs will choke on silt.

We need to appreciate that, as maligned as snakes are in the bible and in our normal lives, their predation of small mammals reduces the spread of viruses brought by rodents due to the antiviral properties of snake venom.

And there is so much we still do not know and understand of the services nature gives us.

Unfortunately, what we do not know, we have failed to value. And we have failed to account for it, resulting in our lack of understanding of what we are gaining or losing.

Knowing these values and accounting for them will change the way we interact with nature and hopefully increase our consciousness about our shared wealth. Our behaviors and practices will be informed by the knowledge that they have direct impacts on the economy and our national budgets and therefore in what we can expect from government. For instance, knowing about the costs of pollution clean up and lost resources due to waste can help reduce our damaging behaviors. We can expect better planning and spending by government and prevent wastage of public funds and recognize ecosystem services as part of social services. Kapag alam natin kung ano at gaano ang ikinalulugi ng ating ekonomiya, naniniwala akong magtutulungan tayong kumilos ng tama, magdesisyon ng tama.

Up to the typhoons of this year, we have accounted for billions in agricultural losses, but do not have figures for damaged ecosystems, when those very ecosystems will be the source of restoration and rehabilitation of agricultural systems. Restoration must use economic indicators that value more than just the incomes and ignore the destruction of our natural capital in supporting agriculture, generating revenues, and calculating what we risk losing if we do not invest in protection and resilience or, sadly what is actually lost.

As we face an age of changing climate and unprecedented biodiversity loss, the challenge is how we can use our vulnerability as an opportunity to examine the role and impact of natural resources on the economic growth of a developing nation such as our country. Sa madaling salita, itama na po natin ang kwentahan nang nakikita ng malinaw ang kalikasan – kung ano ang halaga nito at kung ano ang nawawala kung bulag nga tayo rito.
I could say this is probably the best time to institute this commonsensical approach to managing our national patrimony, but the true best time would have been when I first filed the Philippine Economic Environmental and Natural Resources Accounting (PEENRA) bill in 2007. We would have realized then what we have, what we stood to lose, the damage we stood to suffer, and we would have planned and invested accordingly.

The UN has been working on institutionalizing this for many years, starting with the SEEA Central Framework adopted in 2012. In 2019, the United Kingdom’s Treasury commissioned Sir Partha Dasgupta to produce a report on the economics of biodiversity for their national accounts. The report issued in 2021 begins with the assertion that Nature is a “blind spot” in economics and that we can no longer afford for it to be absent from accounting systems that dictate national finances or ignored by economic decision makers.

In the same year, the United Nations adopted the System of Environmental-Economic Accounting (SEEA), officially ensuring international recognition and reducing our blindness.

This bill responds to the loud call of the times. It provides indicators that will integrate the concerns of nature in planning, policy making and budgeting, adopts the international standards under SEEA, and ensures interagency coordination to link natural capital information with the performance of agency mandates.

The bill’s Declaration of Policy includes the recognition of natural ecosystems as an integral part of our patrimony and heritage, ensuring that our economy opens its eyes and reduce its blinders.

The bill defines Natural Capital as the stock of renewable and non-renewable resources, including plants, animals, air, water, soils, ores, and minerals, that provide a flow of benefits to people and living things. Natural capital includes but is not limited to ecosystem services such as air and water filtration, flood protection, carbon sequestration, pollination of crops, and habitats for wildlife.

We can calculate provisioning services — the fruits and harvests from nature; regulating services — the cleaning power of soil to water, of trees to air, the temperature control provided by plants as well as protective services of mountains and watersheds; cultural services — the meanings and values of our resources guiding lifestyle, intellectual and social development, aesthetics; and supporting services — like the natural processes of photosynthesis that give us all our nourishment. Measuring these services will open our eyes to the true value of nature and everything she does for us.

By institutionalizing a Philippine Ecosystem and Natural Capital Accounting System (PENCAS), we hope to integrate environmental inputs and outputs in the determination of national income accounts to reflect a more accurate state of development and economic performance of the country. In addition to the Gross National Product and other usual indicators, our citizens will be informed of nature’s contribution to the economy. Our bill shall ensure that we have a list of officially designated statistics on the depletion, degradation, and restoration of natural capital, environmental protection expenditures, pollution and quality of land, air and water, environmental damage and adjusted net savings.

We have named relevant departments to ensure the generation the necessary data on natural capital – DENR, DA, DOE —but also use them in decision-making and teach the means for their generation and usage. We have included mandates for the Department of Education and relevant agencies, the Professional Regulation Commission, the DOF, DSUHD, and the DILG to enhance the use of natural capital indicators in their work.
The National Economic and Development Authority (NEDA) adopted a Roadmap to Institutionalize Natural Capital in 2021 for natural capital accounting. The bill mandates the NEDA to include NCA in national and regional development priorities based on the usefulness of the accounts in policy analysis, development planning, and investment programming.

The Philippine Statistics Authority (PSA) is designated in the bill to oversee PENCAS implementation and create the Environment, Natural Resources and Ecosystem Account Service (ENREAS) under their Sectoral Statistics Office. The PSA’s expertise and capabilities make them well-suited to guide the integration of PENCAS into our bureaucratic systems, facilitating successful implementation and accurate reporting of natural capital accounts.

The Department of Environment and Natural Resources (DENR) will ensure that the lessons from its WAVES projects are institutionalized in its programs to generate natural capital data to the PSA and the bill requires them to expand data generation on NCA.

I have every confidence that what these agencies have done previously — NEDA’s Roadmap, PSA’s Task Force on Natural Capital Accounts, and the DENR Secretary’s initiatives — have set the stage to launch and execute the system fully and comprehensively when legislated.

But to ensure that these agencies comply and get as much participation as possible, we have instituted mechanisms that require public consultations. We also included a provision that gives any citizen the standing to compel the performance of any of the mandates under this Act, and to seek justification from any government agency that may have ignored or neglected PENCAS accounts and indicators in their policy or decision-making.

There is always the possibility that Natural Capital Accounts can be used just to value what can be extracted and feign ignorance of all the accompanying processes. This will perpetrate our nature blindness and lead to the destruction of ecosystems.

To prevent this, the bill has provisions on Environmental Impact Assessment (EIA) and the rights of of nature recognizing its intrinsic and inherent value.
Just because we are assigning value to these previously undervalued stocks and services does not mean that we can just pay to destroy them.

At the Committee Hearing on May 29, 2023, DENR Secretary Maria Antonia Loyzaga said. “We must measure what we treasure as a country.” She followed up by saying it would “help map possible directions in the development of the nation beyond traditional indicators and allow us to explore multiple trajectories for social, economic, and environment development from the valuation of our natural resources.”

I hasten to remind this august body, however, that NCA must not be merely a province of the DENR but an overarching system to govern our entire economy.

Thank you, Mr. President. Isang luntiang Pilipinas sa ating lahat!