Philippine Ecosystem and Natural Capital Accounting

Policy, intent, and guiding principles

The State policy is to recognize natural ecosystems as an integral part of patrimony and heritage.
The State policy is to protect and promote ecological balance and resilience and advance the right of the people to live in harmony with nature.
The State policy is to adhere to internationally accepted System of Environmental-Economic Accounting that measures and monitors the dynamic interaction and intersections of the environment, economy and society.
The State policy is to develop a comprehensive information system and accounting framework that considers the role of natural capital, including ecosystem services, and its impact on the economy.
The State policy is to compile and progressively integrate natural capital accounts in macroeconomic indicators, strengthening and building on Republic Act No. 10625 (the “Philippine Statistical Act of 2013”).
The State policy is to provide indicators that facilitate the integration of environmental and natural resource concerns in planning and policy making at national and subnational levels, in allocating budgets, and in designating regularly produced statistics for an identified period of analysis.
The State policy is to establish and improve interagency coordination to link natural capital information and ensure efficient data management, and to establish an office to guide such coordination.
The State policy is to understand nature’s pricelessness and intrinsic value, recognize nature’s interdependencies, and consider that nature and ecosystems have inherent rights to exist, with an end view of recognizing legal rights that protect endangered ecosystems and applying the precautionary principle, especially when economic values cannot be estimated.

Key system established: PENCAS

The Act institutionalizes the PENCAS within the government bureaucracy.
The PENCAS must be based on internationally accepted environmental-economic accounting frameworks.
The PENCAS framework must include an officially designated list of statistics on the depletion, degradation, and restoration of natural capital.
The PENCAS framework must include statistics on environmental protection expenditures, pollution and quality of land, air and water, environmental damages, and adjusted net savings.
The PENCAS operates as the national system for ecosystem and natural capital accounting toward integration into policy and macroeconomic indicators.

Defined terms under the Act

“Adjusted net savings” refers to the sum of net national savings and education expenditure, and deducts natural resources such as energy, minerals, forest, water, soil, inland wetlands, coastal and marine areas, and fisheries, depletion, and greenhouse gas emissions and pollution damage.
“Ecosystem” refers to all living things in a given area, their interactions, and their non-living environments (including weather, earth, sun, soil, climate, atmosphere, water).
“Ecosystem accounting” refers to a coherent framework integrating measures of ecosystems and flows of services with measures of economic and other human activity.
“Ecosystem services” refers to benefits supplied by ecosystem functions received by humanity and all elements of living systems; ecosystem services consist of provisioning services, regulating and maintenance services, and cultural services.
“Environmental indicators” are environment statistics selected to depict important phenomena or dynamics for synthesis and presentation in a simple, direct, clear and relevant way.
“Natural capital” refers to the stock of renewable and non-renewable resources (including plants, animals, air, water, soils, ores, and minerals) that provide a flow of benefits; natural capital includes ecosystem services such as air and water filtration, flood protection, carbon sequestration, pollination of crops, and habitats for wildlife.
“Natural Capital Accounting (NCA)” refers to a systematic way of measuring and reporting on stocks and flows of natural capital, covering individual environmental assets and natural resources (biotic and abiotic) and ecosystem assets, biodiversity, and ecosystem services.
“System of Environmental-Economic Accounting (SEEA)” refers to an integrated framework for economic and environmental data giving a comprehensive view of interrelationships among the economy, environment, ecosystems, and stocks and changes in stocks of natural assets bringing benefits to humanity.
“Valuation” refers to determining the value or worth, in both physical and economic terms, of natural capital and the service it provides at national and subnational levels.

Objectives of PENCAS

The PENCAS must support economic, environmental, and health policy development and decision-making.
The PENCAS must provide a system for the collection, compilation, and development of physical and natural capital accounts as a tool for physical and development planning and programming, policy analysis, and decision-making.
The PENCAS must serve as a comprehensive data framework for generating natural capital statistics and accounts toward progressive integration in macroeconomic indicators.
The PENCAS must provide tools and measures that contribute to protection, conservation, and restoration of ecosystems.
The PENCAS must provide valuation of ecosystem services (provisioning, regulating and maintenance, and cultural services).

Implementation institutions and governance

The PSA Board oversees the implementation of PENCAS.
The PSA Board directs relevant interagency committees created under Section 10 of Republic Act No. 10625 to assist the PSA in addressing agency and sectoral concerns in developing natural capital accounts, especially on:
- (1) techniques and methodologies in generating environment and natural resources statistics,
- (2) areas of duplication, discrepancies, and gaps, and
- (3) workable schemes for improving data systems, including production, dissemination and archiving of data and information.
The Interagency Committee on Environment and Natural Resources Statistics (IACENRS) provides support to ensure data requirements for NCA are generated by all concerned agencies and adopts, implements, and updates an NCA Roadmap guiding short-term, medium-term, and long-term activities for budget support and monitoring and evaluation of NCA implementation in the country.
A Technical Working Group (TWG) on NCA is established under IACENRS.
The TWG must consist of PSA as lead accounts compiler, DENR as main data producer, NEDA, and DA, with PSA serving as chair and providing secretariat support.
The TWG must:
- provide immediate support to achieve priority activities across all components of the NCA Roadmap, including ensuring inclusion of proposals through program convergence budgeting to avoid duplication of funding and collaborating with development partners;
- serve as a forum to discuss and resolve issues on compilation, processing, and dissemination of natural capital and ecosystem statistics and accounts in terms of accuracy, completeness, timeliness, and relevance;
- review and recommend enhancements to concepts, techniques, and methodologies to ensure conformity with prescribed statistical standards and classification system;
- identify and recommend statistical measures, strategies, and policies for improvement to IACENRS;
- recommend improvements in methodology and formulate measures ensuring data requirements are generated and addressed by all concerned agencies;
- prioritize outputs for urgent statistical requirements in the Philippine Statistical Development Program, including monitoring and measuring accomplishment of relevant chapters of the Philippine Development Plan and its Results Matrices and Philippine obligations in multilateral environmental agreements; and
- update the PSA Board and IACENRS on developments in natural capital and ecosystem statistics and accounts.

National government functions and duties

The PSA has overall responsibility for institutionalizing and progressively implementing PENCAS following the SEEA framework.
The PSA must develop and maintain compilation of natural capital accounts and environmental and ecosystem accounts at the national level and, as necessary, at the sub-national levels.
The PSA must coordinate with and provide technical support to interagency committees, task forces, technical working groups, national agencies, and LGUs for generation, compilation, and use of environmental accounts, statistics, and indicators.
The PSA must designate, in coordination with concerned agencies, the required environment and economic statistics in agencies and bureaus responsible for generating data.
The PSA must create a service called Environment, Natural Resources and Ecosystem Account Service (ENREAS) under the Sectoral Statistics Office, subject to evaluation and approval of the Department of Budget and Management (DBM) and compliance with civil service laws, rules, regulations, and guidelines.
The DENR must provide NCA data to PSA and ensure participation of its concerned offices, bureaus, and attached agencies.
The DENR must spearhead establishment of site-specific ecosystem accounts.
Within its Environmental Impact Assessment (EIA) System, the DENR must frame the natural environment, ecosystem services, and natural capital as opportunities, benefits, or assets that may be put at risk.
The DENR must ensure wide availability of frameworks, tools, methods, and skills, including the Extractive Industries Transparency Initiative (EITI), and must use available temporal and spatial NCA data in conducting EIA.
The DENR must be strengthened through creation of new plantilla positions, subject to existing laws, rules, and regulations.
The NEDA, including its regional offices, must ensure NCA is included in national and regional development priorities based on usefulness for policy analysis, development planning, and investment programming.
The NEDA must provide strategic guidance on uptake on policy use and application, enhancing institutional capacity, and raising awareness and transparency of NCA work.
The DA must assist the PSA in generating and providing NCA information for agricultural areas, fisheries and aquatic resources, and must coordinate with DENR on associated ecosystem NCA.
The DA must ensure BFAR continues information on fisheries valuation and accounting.
The DA must ensure the National Fisheries Research and Development Institute (NFRDI) continues research and development activities and studies supporting assessment, including profiling the status of the country’s fish stocks.
The DA must ensure the Bureau of Soils and Water Management (BSWM) considers NCA to ensure soil fertility and hydrological stocks and services.
The DA, BFAR, BSWM, and NFRDI must create national capital units through additional plantilla positions, subject to existing laws, rules, and regulations, and approval of DBM.
The DILG must consolidate and submit NCA-related data and statistics from local governments to PSA and DENR.
The DILG must ensure LGUs utilize and mainstream NCA into local policies, plans, and programs.
The Department of Education (DepEd), Commission on Higher Education (CHED), TESDA, and state universities and colleges (SUCs) must craft modules in all levels and modalities of basic, technical, vocational, and higher education to capacitate citizens to avail of participatory mechanisms relating to PENCAS.
The PRC must incorporate NCA concepts in continuing professional education programs and develop understanding of the impact of different professions on the environment.
The DOF must integrate NCA considerations into fiscal policies and regulations and develop incentive mechanisms that drive NCA investments.
The DOE and DHSUD must integrate NCA considerations into performance of their mandates and ensure planning and decision-making consider natural capital.

Participating bureaus and stakeholder involvement

The DENR bureaus and NAMRIA must contribute to collection, generation, analysis, and presentation of PENCAS statistics and data requirements.
The National Water Regulatory Board (NWRB) must contribute to collection, generation, analysis, and presentation of PENCAS statistics and data requirements.
The DA bureaus, especially BFAR, BSWM, PFDA, PRRI, NIA, and PCA, must contribute to PENCAS statistics and data requirements.
The National Renewable Energy Board (NREB) must contribute to PENCAS statistics and data requirements.
Research and development institutes and science and technology services, especially PAGASA and PHILVOLS (of the DOST), must contribute to PENCAS statistics and data requirements.
Other bureaus must contribute as necessary.
The TWG on NCA must involve other relevant agencies, the private sector, and nongovernment organizations, including indigenous peoples and local communities, particularly on generation and provision of NCA data and on use of natural capital and ecosystem accounts.
Subject to implementing rules and regulations and national security concerns, stakeholders must regularly publish NCA information on their website and/or other medium deemed appropriate.

Access, participation, and citizen remedies

Concerned agencies must institute consultative mechanisms and mass collaboration measures to popularize PENCAS and ensure wide comprehensibility and usage of the accounts.
Any citizen has the right to information on any account generated under the Act.
Any citizen has standing to compel performance of mandates under the Act.
Any citizen may seek justification from any government agency that ignored or neglected PENCAS accounts and indicators in policy or decision-making.
Major PENCAS accounts, results on nature’s wealth and the economic value of ecosystem services, and loss and damage associated with disasters or climate change must be released along with releases of national economic data such as Gross National Income (GNI) and Gross Domestic Product (GDP) and other often-released measures of the state of the country’s economic health, highlighting resources and ecosystems’ contribution to the economy, incomes, and employment.

Rights of nature and valuation framing

Nothing in the Act negates that nature has inherent and intrinsic value separate and distinct from economic value.
The Act recognizes that maintenance of nature’s vital cycles, functions, and processes ensures sustainability and health of natural ecosystems.
The Act recognizes limits to natural ecosystems’ ability to regenerate.
The Act requires that human development that alters or affects natural ecosystems be sustainable and must allow for renewal and restoration.

Budgeting and implementation timeline

Initial implementation costs are charged against the current year’s appropriations of the concerned departments or agencies.
After initial implementation, continued implementation costs must be included in the respective budgets of the departments and agencies in the annual General Appropriations Act.
Within one (1) year from effectivity, the PSA must constitute an interagency working group composed of agencies and offices enumerated under Sections 6 and 7 to issue the rules and regulations necessary for effective implementation.
Relevant agencies must integrate internationally recognized best practices and methodologies as they execute and implement the Act and rules and regulations, ensuring progressive integration of the SEEA.
The implementing rules and regulations must include the timeframe, manner, and other details regarding collection, renewal, and review of NCA data by government agencies and other stakeholders.

Procedural cross-applications and compliance frameworks

In implementing the Act, penalties provided in Republic Act No. 9485 (the Anti-Red Tape Act of 2007), as amended by Republic Act No. 11032 (the Ease of Doing Business and Efficient Government Service Delivery Act of 2018), and Republic Act No. 10625 (the Philippine Statistical Act of 2013) apply.

Separability, repealing, and effectivity

If any provision of the Act is declared unconstitutional or otherwise invalid, the validity of the other provisions remains unaffected.
All laws, decrees, orders, rules and regulations, issuances, or parts thereof inconsistent with the Act are repealed or modified accordingly.
The Act takes effect fifteen (15) days after publication in the Official Gazette or in a newspaper of general circulation.