A follow up to the Climate Expenditure and Institutional Review
Context
The Government is committed to addressing the climate change challenge in the Philippines which is here to stay and will only intensify in the next few decades. It is an overarching issue that poses challenges and presents opportunities for attaining inclusive growth, shared prosperity and alleviating poverty in the Philippines.
• As one of the world’s most vulnerable country to extreme weather events and sea level rise, the Philippines is already feeling the impacts of climate change. Regionally, 16 provinces of the Philippines are considered among the top 50 most vulnerable regions in Southeast Asia (Yusuf & Francisco 2010). The urban poor in informal settlements account for 45 percent of the total Philippines’ urban population, and are particularly vulnerable to floods associated with intensified storm surges and sea-level rise (World Bank 2013, and four cities (San Jose Manila, Roxas, and Cataboato) were listed among the top 10 most vulnerable cities to climate-related impacts (Dasgupta et al. 2009). About 70 percent of the 1,500 municipalities located along the coast are vulnerable to these added climate risks (GFDRR).
• Public and private investments in development practices to increase climate resilience protect against present risks and provide socio-economic and environmental benefits while offsetting future impacts. Investing in low carbon growth may increase the competitive advantage of the Philippines and set the country on a more sustainable green growth path. Climate action especially in the fields of agriculture, infrastructure, and energy can create employment opportunities.
Recognizing the critical and complex short- to long-term challenges and opportunities posed by climate change, the Philippines has demonstrated leadership with its strong commitment to a comprehensive climate change reform agenda.
• The Government is implementing the short- and medium term actions under the National Climate Change Action Plan (NCCAP), including the completion of adaptation/disaster risk reduction enhanced provincial plans. It has also formulated guidelines on mainstreaming adaptation/disaster risk reduction in land use plans to guide action at all levels.
• The Government has also enacted complementary sectoral policies and programs including the ongoing strengthening of building and infrastructure standards, the adoption of the building back better approach and promotion of energy efficiency and renewable energy standards to deepen the climate response.
• The Government has enacted institutional reforms including the establishment of the Climate Change Commission in to lead on policy development and to coordinate, monitor and evaluate climate response and the Cabinet Cluster that is focused on increasing convergence and coordination.
Further progress is being made: The Government is now scaling up climate financing by leveraging the domestic budget to effectively implement and deliver its climate change reform agenda, and paving the way for a broad, strong financing strategy.
• The Philippines is consolidating the reforms and setting the stage for scaling up action, including by building on the recommendations of the Climate Public Expenditure and Institutional Review (CPEIR) launched in June 2013.
• The CPEIR recommends scaling up climate action guided by three pillars: (i) Strengthening the planning, execution and financing framework for climate change, (ii) Enhancing leadership and accountability through monitoring, evaluation, and reviews of policies and activities; and (iii) Building capacity and managing change.
• Four Oversight Agencies Climate Change Commission (CCC), Department of Budget and Management (DBM), National Economic and Development Authority (NEDA), and the Department of Finance (DOF)] are initiating reforms aimed at (i) enhancing planning, prioritization, design, and reporting of climate programs, activities and projects to improve their effectiveness and support higher levels of financing, and (ii) establishing the enabling environment by completing and implementing the reforms begun with the Climate Change Act.
• The World Bank, with additional support from the Australian Government (Department of Foreign Affairs and Trade through the Australia-World Bank Philippines Development Trust Fund), is providing technical assistance to the government in developing and implementing these reforms and in fully institutionalizing them over the next two years
Key Results and Achievements
In particular, National Government Agencies (NGAs) have further prioritized climate change expenditures in their 2015 budget proposals resulting in a continued increase of the climate budget of the Government.
• DBM and CCC have led the development and adoption through a Joint Circular linked to the Budget Call of a standardized framework for use in the planning, budgeting, monitoring and reporting of public CC expenditures. The DBM and the CCC established the common framework for Climate Change Expenditure Tagging (CCET) across government consisting of policy-based definitions of CC response aligned with the NCCAP including a common method for tagging CC expenditures focused on accountability and the assignment of roles and responsibilities to Agencies.
• 53 National Government Agencies have prioritized and tagged their budget proposals for climate change spending using common guidelines and typology. About 5% of the 2015 Agency-proposed allocation responds to climate change, with about 98 % directed towards adaptation, in line with NCCAP priorities. The largesse expenditures are for flood control protection.
• For the first time, the national government’s Technical Budget Hearings have explicitly begun discussions on climate change prioritization in Agency budget proposal submissions. These discussions have established a policy dialogue between the CCC, the DBM and the national government agencies that can help catalyze the inclusion of indicators to monitor climate change results and objectives.
The Government has also leveraged the Program Budget Approach (PBA) formulated by the Cabinet Cluster on Climate Change to submit a program that constitutes a major part of the overall climate change expenditure.
• The proposed 2015 program under the Cabinet Cluster on Climate Change PBA consisted of about 4% (PHP 107.3 Billion) of the total 2015 national budget. The Government has scaled up this PBA by fivefold between 2013-2015.The 2015 PBA was formulated through an inter-Agency coordination process aimed at strengthening its coherence, targeting and convergence. The President’s Budget Message of 2015 highlighted the increased funding through the PBA and the government’s ability to more effectively monitor and account for climate spending using the climate expenditure tagging system.
• The Program Budget Approach provides an opportunity to strengthen and scale up Government Climate Response. It incentivizes coordination and convergence among National Government Agencies (NGAs) in the planning, budgeting and implementation of priority programs by focusing the available fiscal space on them. Over 80 percent of the 2015 PBA is focused on addressing climate risks. It accounts for about half of the climate expenditures in the national budget.
The Government (DBM, CCC, and DILG) has also set in motion the piloting of the CC Expenditure Tagging (CCET) at the Local Government Unit (LGU) level for the FY2015 budget.
• The DBM issued Local Budget Memorandum 68 encouraging LGUs to tag climate expenditures in their Annual Investment Plans. The Joint Memorandum Circular 2014-01 (co-signed by DBM, CCC, and DILG) includes guidelines and CC typology adapted from the national CCET. Consistent approaches for tagging at national and local levels facilitate a comprehensive national assessment of climate response and gaps across all sources of budget financing.
• The CCET LGU Pilot in FY2015 is designed to prepare a roadmap for scaling up CCET to all LGUs for the FY 2016 budget. 42 Local Government Units have been trained to tag their 2015 Annual Investment Plans.
• LGUs and the League of Local Governments have been fully supportive and engaged in the piloting and adoption of the CCET system. Champion LGUs acknowledge the importance of CCET, support piloting the system with their 2015 Annual Investment Plans, and have expressed willingness to champion its scale up in 2016 through examples of how they have integrated CCET into their budgeting processes. This work will build the business case for LGUs to access finance from the recently Government created People’s Survival Fund that supports communities and local governments to adapt to the impacts of climate change.
Moving Forward
There is a vision and a sustained Government commitment to move forward. The focus of the reform effort on budget mobilization to address climate risks will shift to further institutionalize the process and tools by 2016, and deepen the quality of the planning, prioritization, funding gaps assessments process in order to mobilize the entire budget cycle to more effectively develop and execute the national climate response.
• The tools and processes developed for the 2015 budget cycle have provided early indications for the need and utility of these reforms in support of the improvement of the planning, prioritization, budgeting and reporting of the government climate response. Much of the initial effort has been focused on tagging climate change expenditures to establish a common baseline data and to initiate a more strategic discussion on prioritization and on addressing gaps.
• During the preparation of the budget year 2016, the Government will focus on building tools and processes through a sustained and expanded effort to use a climate lens during the Government’s planning and prioritization processes. This will also include building upon the lessons learned during the 2015 budget process to strengthen the tagging and tracking of climate change spending for the 2016 budget year to strengthen the processes for tracking, monitoring, and reporting the expenditures together with the results they are delivering.
