Category Archives: Environmental Economics

This category includes educational materials on environmental economics or economic valuation of environmental and natural resources.

The Economic Loss of Rice Farms Due to Sea Level Rise and Farmer Adaptations

How are research topics arrived at? One of the ways on how to identify a phenomenon worthy of research investigation is to go out on field and ask questions.

This article discusses how research topics in environmental science can be generated through interaction with community members as clients of the research outputs. Specifically, it examined the issue of sea level rise as a pressing issue threatening the rice production capacity of a community living next to Malampaya Sound, a marine biodiversity rich body of water located northeast of Palawan Island. It was once dubbed the ‘fish bowl’ of the Philippines.

The trip yesterday to Abongan, a farming community in the municipality of Taytay located 167 kilometers northeast of Puerto Princesa, Palawan (Figure 1), was a fruitful one. I discovered an environmental issue that could be a good research topic to explore. The rice farmers in that community experience the negative effects of sea level rise – a manifestation of climate change. This issue arose as our research team conducted a focus group discussion with agriculture stakeholders.

sea level rise
A map showing the location of sea level rise affected farmlands in Abongan (Map source: Wikimapia.org).

Salt water inundated and changed a portion of the farmlands into mangrove stands. The phenomenon started way back in 1994, according to the barangay chairman of Abongan.

Reminded of the environmental economics perspective on evaluating environmental issues, a question popped in my mind: “How much in terms of money is the value lost by farmers each year because of the advancing sea waters?”

The Economic Loss of Rice Farms Due to Sea Level Rise

To objectively examine the issue discussed earlier, let us enumerate and assume the value of the different variables at play in this phenomenon:

  1. Area of farmland affected by sea level rise: 200 hectares
  2. Number of cavans of unhusked rice grains (palay) produced per hectare: 100
  3. Percentage of rice (bigas) produced in a cavan of palay: 25% or 1/4
  4. Price per kilogram of rice: PhP42 or $0.92
  5. Kilograms of rice per cavan: 50
  6. Number of croppings per year: 2
  7. Percentage of return from farm investment: 50%

The net loss of income on annual basis, therefore, can be computed by converting the net income from rice produced per hectare to the number of hectares affected. This is obtained by multiplying the number of kilos of rice produced per hectare to current price. This is equal to 25 cavans or 1,250 kilograms times PhP42 ($0.92); that gives a total of PhP52,500 ($1,150) per hectare.

If 200 hectares are affected by sea level rise each year, the total value of rice yield per hectare will be PhP10,500,000 ($48,300) per cropping season. Since there are two cropping seasons per year, total annual loss in income will be double this amount.

The annual loss in income of farms in Abongan, therefore, will be PhP21,000,000 or $96,600. Since the percentage of return from investment is roughly 50%, the annual loss in net income is half this final value which is the same value obtained for one cropping season, i.e., PhP10,500,000 ($48,300).

The value given above assumes that the area of affected farmland is the same. But farmers observed that saltwater goes further inland each year. This causes anxiety among farm owners especially those whose land lie next to rivers.

Adaptation of Rice Farmers to Sea Level Rise

Currently, some of the farmers build dikes to prevent saltwater from flowing into their farms. There’s also a plan to increase the flow of freshwater from the watershed to their farms.

Further reflecting on the issue, three questions came to my mind:

  1. What species of mangroves successfully settled in the upper reaches of the river next to farms?
  2. What are the other adaptations measures did farmers make to mitigate the advancing waters aside from dikes and increased freshwater flow?
  3. What is the salinity of river water next to farms?

Now, can you appreciate the value of having to go out in the field and identify environmental issues that hound communities? In the process of finding answers to questions, the outcome of your study will be helpful inputs that will empower communities.

Figuring out your research topic in the four corners of the classroom will offer you less ideas to pursue. Get up and explore the world.

©2015 January 11 P. A. Regoniel

Negative Externalities of Fumigation in Poultry and Piggery Operations

What is a negative externality? Appreciate the importance of knowing and understanding externality, an environmental economics concept, by reading this article.

In environmental economics, one of the interesting and useful concepts discussed is externality. And I was reminded of this concept when I took a trip, together with friends and family, to Kitu-Kito. It is an ideal spot to spend quiet time or to commune with nature . The place can be accessed within 30-minutes of leisurely driving from the City of Puerto Princesa.

It’s a holiday so we thought of having a picnic on board a raft made of large PVC pipes that a motorized boat tows along a river towards the open, deeper parts of Honda Bay. We did a similar trip several months back—but without the flies.

Why so Many Flies?

What reminded me of the externality concept? Well, I noticed an unusually large number of flies swarming at our food. We have to keep the food containers closed.

I asked why there are so many flies that day. The pests somewhat curbed our appetite because we all know that flies are harbingers of many kinds of diseases.

According to Penn State University (2014), flies transmit at least 65 diseases to humans. Flies leave pathogenic organisms in excretions upon alighting on food.

This is disturbing as this would mean that we might ingest contaminated food because of flies landing on our meal and doing their nasty behavior of regurgitating or excreting things that we don’t want. Getting ill means lost work hours or lost opportunity to do other important things.

flies on plate
Flies on plate after lunch.

Just curious what could have caused this large number of flies to come and pester us, I asked the group if anyone knows why. Then our boatman said, “This happens every time those guys operating the poultry and piggery in the upland spray fumigants to get their farm rid of flies.

“Ah, that’s an excellent answer to my question. ” I nodded indicating my enlightenment. Everybody new to the place sure learned something that day.

Negative Externality of Fumigation

Flies pestering our meals is a negative externality of fumigation.

The externality in the foregoing short narrative are flies swarming the neighborhood when fumigants are in effect. They were not killed on the spot but escaped from the poultry and piggery farms. Their eggs and larvae must have been killed but the adults are scot-free—and posed danger to neighboring houses and, us, picknickers.

The escaping flies that potentially bring diseases with them is a side effect of fumigation in the poultry and piggery farms. This is a negative externality that is not reflected in the cost of services involved in the operation of the farms.

To internalize the externality or to correct the inequality in benefits as a result of the operation, the poultry and piggery farm owners should pay parties affected by their activities. They should pay us for lessened enjoyment of the sea scape and the cool breeze because we have to contend with the flies that pester our meals.

How much should they pay us? This concern requires the conduct of a study. If we complain about the negative effects of the poultry farm, we should show the link between their operation and the unusual number of flies that affect third parties like us. Also, the owner of the farms should ask us and the neighborhood how much we are willing to accept as compensation for the nuisance.

Read more about externality in the following article:

Externalities: the Mango Grower and the Beekeeper

References

Pennsylvania State University, 2014. House flies. Retrieved June 21, 2014, from http://ento.psu.edu/extension/factsheets/house-flies

© 2014 June 21 P. A. Regoniel

Environmental Economics: Definition and Approach

Understand environmental economics by reading this article.

There is worldwide recognition that natural resources are finite. Hence, if used improperly, resources become scarce and finally get exhausted through time.

Anything in this world that gets scarce becomes more important, much more valuable than when it was in great supply. There is a need, therefore, to manage scarce resources to maximize their utility. This is the realm of economics.

The same applies to natural resources. As human population increases, more natural resources are required to provide for their needs. Thus, natural resources become scarce. Scarce natural resources, therefore, should be managed to ensure their availability not only for this generation but in generations to come. Environmental economics aims to satisfy this goal.

Environmental Economics Defined

Environmental economics is a branch of economics that uses economic principles in the study of people’s behavior in relation to their environment. It examines the way people make decisions that may either lead to environmental destruction or environmental enhancements. It clarifies options for decision-making by using economic tools.

This goes to say that whatever environmental degradation that results nowadays is a result of man’s deliberate disregard of the value of maintaining a viable store of natural resources. This behavior is considered unethical or immoral as it negatively impacts on other people’s welfare. The question of equity arises.

Examples of Unethical or Immoral Behavior Towards the Environment

What are examples of decisions that threaten environmental integrity? The following is a list of things that people do due to lack of ethical standards and immoral behavior:

  • indiscriminate throwing of wastes into waterways,coastal fishing
  • use of dynamite in fishing,
  • clear-cutting of forests especially in steep mountain slopes,
  • use of fine-mesh nets in catching fish,
  • trading of endangered species of plants or animals,
  • cutting of mangroves for charcoal,
  • mineral extraction without rehabilitation,

… and many others.

Why do people behave this way?

In the environmental economics perspective, the above behaviors occur because people have failed to see the value, or cost of their actions. This failure prevents them from making sound, rational decisions that work towards their advantage.

For example, had fishers known that if they have caught only the large or moderate-sized fish using the prescribed mesh size for their nets, there will still be enough fish to catch in the future. Enough fish populations are allowed to reproduce and the young allowed to grow to more valuable sizes, instead of just being dumped as by-catch. This means more profit for fishers as they don’t need to go farther away to catch migrating fish.

Why Use the Environmental Economics Approach?

Appealing to people’s morality or adherence to ethics does not usually appeal to many people. Changing people’s attitude and behavior take time. Actions to save the environment may be too late when finally, behavioral change is instituted among those who directly interact with their environment to make a living.

The economic incentive is one of the main reasons why people behave the way they do. If they realize that their action will have long-term consequences on their livelihood, they will voluntarily exhibit behavior towards adopting a better alternative. Thus, environmental economics help make clear the options by offering tools to balance the costs and benefits of their action.

Reference

Field, B. C. and M. K. Field, 2006. Environmental economics: an introduction, 4th ed. London: McGraw-Hill Irwin. 503 pp.

© 2014 June 7 P. A. Regoniel

The Externalities of Urban Development

Should urbanization and development be always greeted with open arms? Here’s a personal account of the externalities of urban development.

Early this morning as I try to enjoy the refreshing light of dawn in our porch and wait for the sun to shine, I expected to breathe the fresh air to fill my lungs and get ready to face another day. But I was greeted by the putrid smell of methane, presumably coming from a neighbor’s pig business, a block away from home. They buy and hold a large number of pigs and cows to be butchered in nearby market that supplies the increasing meat demand of a growing population in the city. Occasionally, someone surreptitiously leaves a herd of goats to graze at the vacant lot next to our house, taking advantage of the fresh grass shoots that spring up whenever I have somebody mow down the tall cogon grasses that easily burn when withered and dry. In the past, I have to frantically douse the grass fire that pose hazard to our house. And the buffer of mowed area of about five meters lessens the risk. But then again, this herd of goats add stench to the already foul air because of their excrements. Their persistent, irritating calls to each other is a distraction to my writing mood.

This scenario is quite different when we settled in this place 15 years ago. The place was quiet and generally rural. I can breathe fresh air and have a good sleep in the sleepy afternoon – deep slumber in a quiet environment. Only the sweet sound of chirping birds are audible. I long for this kind of atmosphere, but here I am suffering the externalities of so-called urban development.

Indeed, now we have piped-in water, electricity that powers up different appliances that provide information and entertainment, can easily access a mall where I spend a large sum of hard-earned money, modern communication gadgets that rapidly get outmoded as new, more pricey ones arrive with better designs or more ringtones than the previous one, a washing machine that replaced manual clothes washing, an air conditioner to cool off hot, humid days in a concrete house, among others. All these “conveniences” become desired targets of what I call the “active scavengers” – people who come to your house and pick anything they want when you’re away. Once, these guys were rarely a complaint.

sunrise

As more people came in and populate the city, the poorer the quality of life had become for me. I, therefore, list down the price of increased urbanization to the general environment below based on this musing:

  1. Poor air quality
  2. Noise pollution
  3. More expenses to keep up with the demands of modern living
  4. Increased threat to life and property

This list of the externalities of urban development should be long but just to put the point across,  these things made a major impact to the way I live. Are there things I could do to mitigate the effects of these externalities that lower the quality of life in the once peaceful place I used to live? As a thinking animal, adaptation takes the form of fight or flight. I can do something actively to change the environment, or escape the undesirable situation. Correspondingly, the ill effects of externalities listed above can be mitigated thus:

  1. Petition that the livestock holding station be located somewhere else, away from the residential houses
  2. Have my room fitted with sound proofing
  3. Buy only what I really need or live simply
  4. Secure the property area with burglar proof fences

Once, a professor from a British university visited our place. He talked about pollution. What really caught my attention was when he said that in many cities in England, they would like to step back in their development because of the high levels of lead found in the hair of young children. They were exposed to large levels of lead from petrol in the air because of a busy thoroughfare.

Where does this take us? This just means that urban planners must see to it that optimal conditions, not maximal, are maintained for the citizen’s greatest benefit. Urbanization and development must be taken with caution and good planning.

© 2013 December 15 P. A. Regoniel

Sustaining Resource Conservation: Economic and Moral Incentives

What motivates people to conserve or protect natural resources? Is it always the economic incentive? Read on to find out.

The previous days with a documentary film crew brought me once again in close contact with nature and ponder why great efforts have been made to keep the natural environment intact in those areas that we visited. These include the awesome Underground River, one of the New 7 Wonders of Nature found in Puerto Princesa, west of the Philippines; the  Mangrove Paddle Boat Tour forest where local folks entertain tourists while navigating a brackish water river flanked by a well-preserved mangrove forest; and yesterday in a rather unique 200 meter plus stretch of family protected coral reef in Snake Island.

Mindful of the plight of these naturals wonders of nature, I explored answers to the following questions:

  1. What were the major reasons for conservation and protection,
  2. Who are the major players and their roles, and
  3. What are the prospects of sustainability of these natural resource-oriented activities?

Three levels of conservation were examined: city government, community, and family.

Economically-Driven Incentive to Conserve: City Government and Community Level Conservation

The driving force behind the first two tourist attractions, i.e., the underground river and the pristine mangrove forest, is mainly economic. The underground river, serving as an tourist attraction, is city government managed while the mangrove paddle boat tour featuring the tall mangrove trees and mangrove wildlife is a community-based sustainable ecotourism project.

The community of Sabang, tour operators, inns and hotels, tourist guides, souvenir shops, and other tourism-oriented service providers benefit a lot from the revenue brought in by tourists willing to spend their money for the mainly aesthetic benefits given to them by the underground river. The enjoyment of limestone formations of stalactites and stalagmites that form impressions like the holy family, the dragon’s head, “the highway”, the cacao fruit, among others make visits to the underground river worthwhile.

underground river
Underground River entrance in Sabang, Puerto Princesa.

 

Meanwhile in Sabang River, tall mangrove trees that make one wonder how long they have been there, occasional encounter with a mangrove snake “sleeping” on a clump of leaves or a python nestled in a hollowed part of a mangrove branch, brackish water fishes, eel, among others, leave tourists spellbound. Their experience is further enriched by tour guides giving an entertaining trivia of information about the mangrove ecosystem.

This continuous inflow of monetary benefits encourage the local people to keep their environment in a state conducive enough to attract visitors. As long as the natural environment is maintained, they will have a continuous source of income. Economic sustainability is assured.

But what if the main motive of conservation is a personal conviction to do so in respect to marine life? How sustainable is it?

Moral Conviction: Family Level Conservation

Mang Felix is probably an unsung hero of conservation who, by his own inner, moral conviction, protected a reef patch as out of moral conviction. He settled with his family in the north end portion of Snake Island, a sandbar which gradually built up through the natural process of sedimentation. Although he initially joined a group of illegal fishers that destroyed most of the highly productive coral reefs of Honda Bay in the 1970s to 80s, he thought that coral reefs are homes to fishes and therefore must be spared from destructive fishing practices.

He built his makeshift house next to a 200-meter stretch of coral reef in  the later part of the 1980s. He rallied the support of his family of eight to keep illegal fishers from that narrow, fringing reef at the west side of their home. Even members of his family are not allowed to fish in that zone.

After roughly 23 years, the small fringing reef became a refuge for different kinds of fishes. Schools of sea mullet (banak) frequent a part of the protected area. Reef fishes live undisturbed in branching and tabulate corals.

The family benefited as they need not fish from far areas and spend a lot on fuel. They fish just around the protected zone, enjoying the spillover effects.

house on sand
The house of Mang Felix bounded by mangroves planted by his family.

As a healthy coral reef abound with marine life, many fishers in nearby barangays took interest in whatever potential yield that reef could give them. They have an easily accessible fishing ground but were prevented from exploiting it because of the gregarious and adamant protection the family gave to that reef. They begun to question the right of Mang Felix and his family to protect that reef, who at a certain point of time were recognized as informal caretakers that kept the reef intact from opportunistic fishers.

There had been several attempts to dislodge the simple home in that part of Snake Island but the family remained steadfast and held on to it justifying their existence by sheer adherence to sustainable fishing methods and never “touching” the reef and admonishing others to do the same. Recently, however, their passive fish corral (tangkal) located a few hundred meters from their house was removed by government authorities for some reason. As a result, more than 50% of their livelihood source was lost.

When asked how Mang Felix would sustain protection in the future, he said that one of his sons will continue the legacy and resist whatever attempts there may be to separate them from the reef which had become a part of their lives.

Discussion

Nature conservation and protection have been the focus of government, non-government or private sectors in view of sustaining the goods and services that the natural environment is able to provide. Sustainability is always the underlying principle in such initiatives. Without the prospect of maintaining the integrity of natural resources and enjoying the benefits these can give, the future generations will have to suffer the consequences: loss of revenue from non-extractive economic activities like ecotourism, depletion of natural food sources, chronic poverty and hardship for small fishers and farmers as their catch dwindled, among others.

The two situations described above show how organized groups and even a family can protect natural resources. While large-scale and medium-scale ecotourism ventures appear to be more sustainable, small-scale attempts to maintenance of natural resource integrity should not be ignored. Family-based protection, when done by many people (see Successful Family-Based Mangrove Afforestation Project) , could be more effective especially when there are enforcement problems as a result of corruption, lack of dedicated personnel, or funds to patrol the vast seas and isolated forest lands.

Conclusion

While economic benefits are strong incentives to protect natural resources, personal conviction and sheer love for nature can assure resource sustainability.

© 2013 October 25 P. A. Regoniel

Transaction Cost: Unaccounted and Underestimated Expenses Often Overlooked

The resolution of unfair distribution of wealth entail cost. This is referred to as transaction cost. This article clarifies this concept in view of understanding how one’s actions can affect a great number of people.

In times when controversy arises due to faulty transactions or market failures, the cost associated with it is usually unaccounted for or underestimated. People tend to overlook the significance of transaction cost hence incur expenses which should have been better avoided.

But what is a transaction cost? If you search the internet for a definition of this concept, you will notice that there is no consensus on what it really means. In fact, Korolyova devoted a paper in an attempt to explain it.

Transaction Cost Defined

According to the Business Dictionary, transaction cost is the cost associated with exchange of goods or services and incurred in overcoming market imperfections. Examples include communication charges, legal feeds, informational cost of finding the price, quality, and durability, transport cost, among others.

On the other hand, based on textbook definition, About.com lists the components of transaction cost into 1) search costs, 2) negotiation costs, and 3) enforcement cost. Search cost is the cost incurred in locating information for a potential exchange, negotiation cost is the cost associated to forge an agreement on the terms of exchange, and enforcement cost is the cost of enforcing the agreement.

These definitions are a bit complex especially to an economics neophyte. To simplify matters, Turkcebilgi.com’s examples offer a better perspective of what transaction cost really means.

Transaction cost is:

  • the commission paid to brokers by a stock buyer or seller of stock.
  • the cost of buying a banana, excluding the price of the banana itself, such as the time, energy and effort you exerted to find the kind or price of banana you prefer, cost of transportation from your house to the store, the time you spend in the queue, the effort you made in paying, etc.

Budget conscious mothers tend to overlook this cost. Typically, they tend to spend a lot of time haggling the prices of goods with the vendor whenever possible, walk around in circles trying to find the cheapest price of a pair of shoes, dress, jewelry, among others. They forget the cost in time (opportunity cost), effort (all those energies equate to calories of energy from food to power the walk), and transportation cost to the male with the cheapest goods in town.

Hidden Transaction Cost in Controversial Transactions

Based on the definitions provided above, transaction cost may be defined as the costs incurred in the instance of doing business. Let me expand discussion on this subject further to cover a recent controversial issue: the politics of the resource allocation  I recently wrote about. The original transaction involves misuse of public funds, which in business, can be equated to failed market transaction.negotiation

As the controversy rages on, lots of energies are expended to pursue the case. I felt I need to write about the high cost involved in this issue and identified these costs as transaction costs that for me unnecessarily becomes a burden to taxpayers.

As the investigations are going on, while concerned government agencies are hot on heels on the alleged perpetrators of misused government funds, costs are incurred. Specifically, the transaction costs associated with the pursuance of this case include the following:

  1. Provision of security, escorts, housing, medical treatment, etc. to the whistleblowers,
  2. Going after the principal suspect and accessories to the crime,
  3. Hearings plus more security costs to keep the suspects unharmed,
  4. Attorney’s fees for both the defendant and the plaintiff,
  5. Privileged speeches and investigations to clarify issues or shed light on some lawmakers’ involvement,
  6. Time, money and effort of people who go to the streets to protest the misuse of pork barrel funds, among others.

These are the transaction costs but these costs can also be treated as externalities of the misallocation of government funds, particularly royalties from sale of natural gas. Unless the issue is resolved soonest, transaction costs will incrementally go up. Had not the major issue arose, no cost would have been incurred for its resolution. Had there been fair distribution of wealth a big portion of which come from natural gas, there would not have been no transaction costs to correct the unfair distribution of proceeds.

How to Minimize or Get Rid of Transaction Costs

How should those involved in transactions reduce or eliminate the associated costs? Firstly, they should be made fully aware that there are costs involved in facilitating transactions. As cases like the misuse of funds can drag for years, a speedy resolution must be made to avoid incurring more expenses. It is obvious, and there are many evidences available to pursue the merits of the case. The problem appears to be that creative dodges made by defendants (as they have enough money to spend) can keep the wheel of justice from moving swiftly. This will entail more cost at the expense of the public.

If it is just a simple transaction of buying, say, a banana, buy that heck of a banana the first time you see it. If there will ever be a difference between the one you bought and the cheapest one available, you have saved time anyway. Time is more important than that negligible savings on price. Five minutes of valuable time spent with your children or loved one is way too important to miss.

© 2013 October 9 P. A. Regoniel

Politics of Resource Allocation: The Case of the Pork Barrel Funds

What is resource allocation? How is it practiced? What are suggested solutions to ensure fair distribution of wealth? Here’s an analysis of a recent case.

Resource allocation has always been a contentious issue in many countries. That is primarily because the allocation of a country’s wealth depends heavily on politicking, lobbying, or manipulating funds to serve self-interests among those involved.[1,2] This is a controversial process termed as the politics of resource allocation.

The intention of an efficient allocation of resources should have been needs-based, i.e., putting funds where they are greatly needed such as to help uplift chronically poor citizens or address emergencies caused by both anthropogenic or man-made disasters or natural calamities.

The recent issue on a celebrated, well-crafted scam that funneled public funds to questionable non-government organizations in the Philippines highlights inefficiency and inequitability in resource allocation by those involved. For years, the resource allocation framework has allowed bribery to take place, partly because there are loopholes or flaws in its implementation. For this reason, the problem should be addressed as a systemic case, not personality-based, as the issue is being pursued at this time. One person cannot do all those illegal maneuvers without cohorts to make it happen. As the common idiomatic expression says, “It takes two to tango.”

Neeraj Negi, an evaluation officer of the World Bank, explains that funds are allocated based on a resource allocation framework, the creation of which depends on the composition and influence of the members. A lot of lobbying occurs during the process of building the framework, but in the end, the fund provider takes the upper hand. The resulting resource allocation framework may or may not truly respond to the intended purpose.[3]

Existing Resource Allocation Framework

A system governs allocation of scarce resources to constituents. This is referred to as the resource allocation framework. It guides the distribution of a country’s wealth in view of uplifting the living conditions especially of the poor sectors of society who lack opportunities to improve their lot.

Since there are problems arising from the current allocation framework in the Philippines, it should be faulty. Why is the resource allocation framework faulty?

To make clear this issue and to view things systematically, let me represent the current resource allocation framework in the country using the following diagram created using XMind.

allocation of pork barrel funds
Representation of the pork barrel fund allocation.

This representation of the resource allocation scheme for non-government organizations alone, though simple, reflects the reality as reports, observations, and public knowledge show. The left side represents the informal arrangements made by dishonest politicians while the right side of the framework represent those who stay true to their sworn duties as public officials.

If the funds were used for infrastructure, contractors and suppliers usually give 40 to 50% ‘discounts’ for their services or products either as traditionally practiced or as a result of coercion. The evidences of these undesirable practices are easily seen:

  • roads that get narrower than planned or get potholes in less than a year,
  • bridges that easily collapse upon the slightest gush of flood waters,
  • low quality educational materials,
  • inadequate health services,
  • politicians or government administrators who become instant multi-millionaires despite a humble background,
  • no improvement in the lives of marginalized communities despite funds ‘allocated for their benefit’,
  • and many more.

What are suggested solutions to the resource allocation problem?

It took whistleblowers to expose such inappropriate management of funds as their predecessors did in the past. Why do events like these recur? That’s because the allocation system stays the same. The popular solution from well-meaning sectors of society is to scrap the pork barrel funds. But is this the real solution?

It is likely possible that resource allocation will remain laden with corruption even if these funds change hands; such as giving concerned government agencies a hand on fund management once allocated for lawmakers’ discretionary use. The solution appears to be the exercise of transparency in all dealings and an agreed upon resource allocation framework that truly addresses the needs of the people.

As for the corrupt politicians, the citizens must be discerning enough to vote those who are capable of giving rein to their carnal desires and selfish interests. Thanks to a democratic society; there is always hope in sight. Despite its failings, there is always room for improvement.

References

1. Shoham, J. (2001). Taking the politics out of resource allocation: the Kenya experience. Retrieved September 26, 2013, from http://fex.ennonline.net/14/taking

2. Palawaniswamy, N. and N. Krishnan (2008). Local politics, political institutions, and public resource allocation. Retrieved September 26, 2013, from  http://www.ifpri.org/publication/local-politics-political-institutions-and-public-resource-allocation

3. Cornell Institute for Public Affairs. (2008). Neeraj Negi: The Politics of Resource Allocation: Lessons from the GEF Experience. Retrieved from http://www.cornell.edu/video/neeraj-negi-the-politics-of-resource-allocation

© 2013 September 27 P. A. Regoniel

The Relationship Between Bribery and the Environment

Bribery can lead to environmental degradation. What are the evidences? Are there solutions to this age-old corrupt practice? This article explores these issues.

The recent spate of corruption highlighting a businesswoman allegedly bribing government officials to channel billions in taxpayers money to fly-by-night or bogus non-government organizations prompted me to write this article. Since my concern is largely on the environmental implications of events like this, I reviewed literature on how corruption, specifically bribery, relates to the environment.

Bribery and the Environment

Considering that governance becomes the prime focus of analysis when corruption issues arise, this discussion will examine undesirable practices, specifically offering of incentives to public officials in view of exempting them from the rule of law or pocketing taxpayers money for their own selfish purposes. Bribery occurs at different levels of government, that is, from the highest administrative or lawmaking bodies to operational levels charged with law enforcement responsibilities.

A brief review of reports on the relationship between bribery at different levels of government and the environment yielded the following summaries and conclusions:

1. Bribery of law enforcers leads to low compliance among violators thus pressure to natural resources.

Sundström’s study[1] in South Africa revealed that law enforcers’ acceptance of bribes from small-scale fishers who commit illegal fishing such as poaching decrease their trustworthiness. As a result, fishers tended to exploit their natural marine resources more than what it can sustain. Overfishing upsets the balance of the marine food chain such that the population of target fishes decline and sizes of fish caught by fishermen get smaller through time.

2. Ineffective regulatory systems results to pollution.

Environmental inspections as a regulatory system serve to deter non-compliance with rules and regulations set forth for approval of environmentally critical projects. Once those tasked to do such inspections receive money in exchange for favorable reports on the project’s environmental performance despite exceeding permissible emission levels, pollution results. The effects of pollution may be immediate (acute) or long-term (chronic) depending on the nature of the pollutant.

For example, if a mining project does not have adequate leachate treatment facilities as a result of non-compliance to required mitigating measures, high concentrations of heavy metals will be discharged into waterways. This will disrupt the normal biological processes in aquatic ecosystems where various organisms including man derive sustenance.

3. Environmentally harmful policies are formulated such that disasters occur.

When unscrupulous individuals bribe lawmakers to craft policies towards their favor, environmentally harmful policies result. For example, if the government allows logging in highly elevated or watershed areas, lack of trees to cushion the impact of heavy rains result to flooding of low-lying villages. This will mean loss of lives and property aside from loss of important ecological goods and services.

4. Unfair allocation of environmental resources lead to further environmental degradation.

If high-ranking officials accept bribes to allow large commercial fishing companies to fish in municipal waters, unfair allocation of marine resources occur. As small fishers do not have the means to compete with the efficient, mechanized fishing equipment of large-scale fishers, they will resort to illegal means that further degrade the environment. One of them is the use of dynamite in fishing wherein large areas of productive reef are destroyed. The attitude that prevails is “Well take them (the fish), before they (the large-scale fishers) do.”thief

What has been done so far to curb bribery?

Acceptance of bribes shows the vulnerability of those tasked to govern and enforce the rules and regulations of a country. Many solutions have been suggested, recommended and enforced including reforms to improve transparency and accountability, legislation to reduce flaws in existing laws, reducing the discretionary powers of public officials, greater awareness among the people, involving citizens in government affairs, and so on and so forth.[2] However, despite these measures, corruption persists in many countries.

The Economic Solution

Based on the resource allocation point of view, the practice of bribery continues because it offers those involved to get more than enough resources to satisfy their wants. The one giving the bribe and the one receiving the bribe both benefit from their transaction but third parties suffer. The negative environmental impacts then are externalities of these transactions. There is a need, therefore, to integrate the externality of environmental degradation as a result of bribery.

In view of developing a research concept using the economic solution of internalizing externalities, economic valuation may be used as an approach to determine if there is a relationship between the amount of bribe and the cost of environmental degradation. Thus, the following questions may be asked:

  • Is there a relationship between the amount of bribe and the corresponding cost of environmental degradation?
  • How much environmental degradation occurs for a certain amount of bribe?

For the benefits gained by both the briber and the bribed (my own terms for brevity), monetary incentives to disadvantaged parties can offset the negative effects of environmental degradation. The point is, the guilty parties should be made to pay for the consequences of their actions. Penalties should be proportionate to achieve environmental justice.

Environmental justice is defined by the US Environmental Protection Agency as “the fair treatment and meaningful involvement of all people regardless of race, color, sex, national origin, or income with respect to the development, implementation and enforcement of environmental laws, regulations, and policies.” This means fair allocation of natural resources to everyone should be pursued in a democratic society.

Reference

1. Sundström, A. (2013). Corruption in the commons: Why bribery hampers enforcement of environmental regulations in South African fisheries. International Journal of the Commons, 7(2). Retrieved from http://www.thecommonsjournal.org/index.php/ijc/article/download/370/360

2. Winbourne, S. (2002). Corruption and the environment. Retrieved September 11, 2013, from http://pdf.usaid.gov/pdf_docs/PNACT876.pdf

© 2013 September 12 P. A. Regoniel

List of Negative and Positive Externalities of Oil Spill

Many people view oil spills as grossly disadvantageous to everyone. In reality, there are benefits gained by some sectors from disasters like this. Read and find out how could this be so.

There was a lot of concern about wasted lives and property due to the collision of a cargo vessel and a passenger ferry last August 16, 2013 in Cebu in central Philippines. Aside from lost lives due to the accident, there were also concerns on the ill-effects of oil leaked into the environment. The sunken passenger ferry spilled thousands of liters of diesel and bunker oil that affected around 5,000 hectares of nearby coastal areas[1].

The oil spill in Cebu, although locally significant, pales in comparison to major oil spill disasters in human history. Among those that gained worldwide attention were the oil leaks due to a ruptured well in the Timor Sea in 2009 and a similar incident in the Gulf of Mexico in 2010. The latter one is considered the worst US environment disaster, second worldwide to the intentional oil spill during the gulf war in 1991[4].

Externality: Cost and Benefit of Oil Spill

These oil spills have both negative and positive externalities. An externality is a cost (negative effect) or benefit (positive effect) to a third-party as a result of an activity, transaction, or event like the oil spill. The third-party is originally not a part of the transaction, activity or event.

Oil spills are usually perceived negatively owing to the overwhelming impact to the environment and people’s livelihood especially those who are natural resource dependent. But viewing it more objectively, benefits accrue to other parties as it opens new opportunities to some sectors. While companies responsible for the disaster incurred millions of dollars to contain the spill and make reparations, benefits accrued to those tasked to do the clean-up, support services, and associated activities.

Here are lists of positive and negative externalities based on reports about the oil spill in Cebu[1], Timor Sea[2][3], and the Gulf of Mexico[4][5].

Negative Externalities of Oil Spill

  1. Fishing opportunities for thousands of fisherfolk lost due to mangrove contaminationdead fish
  2. Reduced marine productivity due to disruption of the food chain
  3. Opportunity cost due to government dispatch of ships and aircraft to conduct clean-up operations
  4. Loss of marine and coastal wildlife (e.g. fish, birds, turtles, sea snakes, mammals)
  5. Loss of tourism revenue (affects surfers, beach goers, sports fishing, SCUBA diving)
  6. Loss of ecological function of marshlands and mud flats
  7. Lost income for tourism industries
  8. Decline in aquaculture production (e.g. seaweed farms, fish cages, shellfish beds)
  9. Oil price hike due to lost oil production
  10. Health costs for those engaged in clean-up operations

Positive Externalities of Oil Spill

  1. Research opportunity – universities dispatched research ship to collect samples and analyze toxicity of water; monitoring project
  2. Containment technology development – improved devices or techniques to contain oil spills in extremely high pressures underwater
  3. Local materials development to contain oil spills (e.g. coconut husks, sawdust, chicken feathers, and hair)
  4. Increased profit from sale of dispersants and chemical compounds that break the oil into smaller molecules
  5. Work for thousands of workers addressing the spill
  6. Income from treatment and storage of retrieved oil
  7. Consultancies for oil spill experts
  8. Better oil field operation practices to prevent future disasters
  9. Thousands of scoopers and respirators sold to the benefit of manufacturers
  10. Income from rentals of portable toilets and bedrooms

Conclusion

While these lists of the negative and positive externalities of the oil spill are not exhaustive, these highlight the importance of viewing things objectively. These negative and positive externalities may be valued to see the overall impact of the disaster.

It must be pointed out, however, that the expected net benefits from oil spill will likely be negative because the effect of the oil spill to the environment can last for years. And the natural environment as life support systems is priceless.

References

1. Rappler. (2013, August 19). Oil spill: Cebu under state of calamity. Retrieved August 29, 2013, from http://www.rappler.com/nation/36787-oil-spill-cebu-under-state-of-calamity

2. Al Jazeera. (2009, October 30). Timor sea oil leak continues. Retrieved August 29, 2013, from http://www.aljazeera.com/news/asia-pacific/2009/10/200910307564274566.html

3. Arup, T. (2009, November 3). (2009, November 3). Mud to be used to stop oil rig fire today. In The Sydney Morning Herald. Retrieved August 29, 2013, from http://www.smh.com.au/environment/mud-to-be-used-to-stop-oil-rig-fire-today-20091102-htfp.html

4. Dell’Amore, C. (2010, May 13). Gulf oil leaks could gush for years. In National Geographic Daily News. Retrieved August 29, 2013, from http://news.nationalgeographic.com/news/2010/05/100513-science-environment-gulf-oil-spill-cap-leak/

5. BBC News. (2010, May 30). Gulf of Mexico oil leak ‘worst US environment disaster.’ Retrieved August 29, 2013, from http://www.bbc.co.uk/news/1019433

© 2013 August 30 P. A. Regoniel

Household and Government Adaptation Strategies to Climate Change

Flooding has been a perennial problem in many countries. This is made worse by climate change. How do households and governments adapt to these events?

I could not access the internet for the past two days due to service interruption probably caused by the strong typhoon code named ‘Maring” and southwest moonsoon referred to as ‘Habagat’ by the locals. The heavy fall of rain inundated many parts of northern, central, and southern Luzon in the Philippines affecting many residents living in those areas. The rising tide and release of impounded water in large hydroelectric dams worsened flooding in areas where the waters flow.

According to the National Disaster Risk Reduction and Management Council (NDRRMC), the calamity affected more than 1.7 million people where 17 died, 41 got injured and 5 persons were missing[1]. Many of these people stayed in evacuation centers after the raging waters submerged their houses and damaged their belongings.

Significant changes may have been made to mitigate the effects of flooding because the death toll this week is lesser compared to that of Typhoon Ondoy or Ketsana in 2009 that caused the death of more than 300 persons[2]. Apparently, the people as well as the government may have learned to adapt from experience and prepare for such disasters which seem to get worse.

Climate change is believed to be the primary cause of typhoon severity in the past few years. Despite the controversies associated with climate change, I adopt the side of those practicing the precautionary principle, i.e., it is better to adopt a policy that addresses an environmental problem than having to suffer the consequences of not taking action. Thus, I incorporate climate change in the following subtitles on people and government’s adaptation to large-scale flooding as a result of climate change.

Household Adaptation to Climate Change

While hundreds of people frantically moved to evacuation centers in response to early warnings from NDRRMC, still many others stuck it in their homes saying they are already used to these events and had, in fact, undertaken measures to adapt and survive. Residents even enjoyed the storms, frolicking, jumping in waist deep waters, and laughing it out while taking certain precautions by wearing hard hats and life vests (see video).

Of course, their behavior exposes them to yet another danger, i.e., leptospirosis (a disease caused by water contaminated by excrements of rats or other animals), the possibility of raging waters once the nearby dam releases excess waters in the reservoir, alienation from nearby sources of food if rains continue, exposure to toxic substances that may go with the waters, among others.

Other household adaptations to flooding include adding second floors to homes, modified transportation vehicles, makeshift rafts, thigh high boots, plastic bottles connected together, airbeds deployed as rafts, rubber boats, among others. Many of these household level flood adaptations are inexpensive, largely makeshift, or temporary solutions to flooding.rubber boat

I have not seen a household flooding adaptation on the long-term such as a house on log I saw many years ago in a periodically flooded marsh of Agusan. Of course, having a log house in the middle of the city is absurd but I believe households can come up with long-term solutions to their problems. Relocation to elevated areas, after all, appears to be the best thing households can do. This may mean they will have to forgo their life in the urban centers and live in the hills.

Government Adaptation to Climate Change: Critique and Suggested Solutions

If communities cannot effectively  adapt to flooding, then the government must take steps to aid its citizens. Disaster relief operations always follow calamities like this. This approach, however, is at best palliative. Prevention is always a better approach than cure.

While flooding is a natural event, the government can still do something about it. It can be avoided or minimized to some extent by good environmental planning and action. Good planning and policy can prevent costly impacts of flooding.

In an effort to prevent the costly impact of typhoons, administrators and planners are looking into the contribution of poor drainage, indiscriminate throwing of non-biodegradable wastes as well as buildings that block waterways, and even corruption as unsolved problems that impact on effective flood management.

Poor drainage

Planners in government believe that making infrastructures that promote drainage can help alleviate the problem on flooding. Without incorporating ecological principles, however, this may just be a hit-and-miss approach.

In reality, there is a limit to what a good drainage system can do because Metro Manila was historically a marshland. Flooding is a natural process in wetlands. Cities built on wetlands destroyed a very important ecological function, i.e., flood control[3]. Nature must take its course and repeat the same process (i.e. flooding) when loaded with lots of rainfall. This requires environmental planning that accommodates the role of marshlands: clearing the waterways, leaving existing wetlands as it is, or developing subdivisions away from the natural courses of water.

This entails much cost but the benefits may be weighed against the costs. The impact of climate change appears to worsen each year and investments along this line can prevent future tragedies.

Indiscriminate throwing of wastes that block waterways

Blocked waterways reduces the speed by which water flows to low level areas. Tons of plastic or non-biodegradable wastes still clog the drains. This is made worse by buildings blocking the waterways. This means that in general, many of the citizens still do not adopt good practices in disposing their solid wastes, and city zoning policies are not being followed.

While an appeal to the public to stop them from throwing wastes indiscriminately may work, economic incentives in the form of fines, seems to be a better option. This also requires a vigorous information and dissemination campaign (IEC) to educate the people about the impact of their action to the environment and themselves.

Corruption

Corruption was factored in the flooding prevention equation because a sizable part of the 10 billion pesos in Priority Development Assistance Fund or PDAF (widely know as pork barrel funds) was diverted to questionable projects of non-existent non-government organizations (NGOs). Only a handful of corrupt officials benefited from such allocations through kickbacks and commissions of up to 45%[4]. A large amount of these funds were earmarked to fund flood control projects.

The government is hot on the heels of the culprits although there are evidences that this corrupt practice have been going on for decades despite rules, regulations and policies that aimed to lower the incidence of this age-old practice. Corruption has been culturally ingrained and became a ‘normal’ part of people’s lives since time immemorial.

A friend and I once brainstormed to find out the underlying cause of corruption. We created a problem tree and arrived at the root cause — GREED.

Thus, the solution to this problem lies at the very foundation of one’s value system. Change must come from within the person.

Conclusion

Successful adaptation to climate change entails effective responses at household or community levels backed by a supportive government. The nature of this adaptation could be short-term or long-term. Well-informed government policies on climate change adaptation strategies appears most critical in providing long-term solutions to avert tragic consequences.

References

1.   Reyes-Palanca, Z. (2013, August 23). ‘Maring’ leaves 17 dead, 41 injured. Retrieved August 23, 2013, from http://www.journal.com.ph/index.php/news/top-stories/56739-maring-leaves-17-dead-41-injured

2. Agence France-Presse. (2009, October 9). Death toll from Ondoy rises to 337. Retrieved August 23, 2013, from http://www.abs-cbnnews.com/nation/10/09/09/death-toll-ondoy-rises-337

3. Novitzki, R., Smith, R., and J. D. Fretwell. Wetland functions, values, and assessment. Retrieved August 23, 2013, from http://water.usgs.gov/nwsum/WSP2425/functions.html

4. La Viña, T. (2013, August 6). Investigating the pork barrel scandal. Retrieved August 23, 2013 from http://manilastandardtoday.com/2013/08/06/investigating-the-pork-barrel-scandal/

© 2013 August 23 P. A. Regoniel