Growth in a time of (climate) extremes: Can the Philippines get its act together? (Part 1)

by Lawrence Ang


Yes. You’ve read a lot about it recently. You’ve probably even had a couple of intense, curious, or at the least “interesting” conversations about the Philippines with your family, friends, and colleagues. But, alas, the Philippines isn’t just about its President or its notorious traffic. Right? Right.

So let’s talk about it. Let’s talk about the Philippines.

Annual GDP growth?—excellent at 6-7%. Demographics?—over 52% of the population are of working age, and all fluent English speakers (now that’s a workforce!). A high income country by 2040?—looks like it’s destined to happen. The gears of growth running Asia’s favorite beach destination is so well-oiled that its credit ratings were upgraded to investment grade and above over the last 3 years alone. Not even the recent downturn in the US and Asia markets made this economy flinch. No wonder, it feels unstoppable.

But let’s talk about climate change for a second. Or to paraphrase, the way nature is pulling the rug on emerging economies. The Philippines is, if not the most, vulnerable nation in Asia when it comes to extreme weather events. An average of 20 typhoons ravage the country annually, with droughts interspersed in between. Typhoon Haiyan, recorded history’s strongest supertyphoon ever, claimed at least 10,000 lives in 2013 and resulted in over $225 million of damage across major cities, coastal areas, and agricultural towns—with several communities still recovering 3 years on. It comes as no surprise then that the Philippines has a reputation of being one of most vocal champions of the United Nations Framework Convention on Climate Change and the recently signed Paris Agreement—a product of decades’ worth of global negotiations that limits greenhouse gas emissions to “safe levels” and sets the framework for how the international community will assist developing countries, institutionally and financially, adapt to the new norm of a hotter, more unpredictable, and extreme world.

But here’s the rub. As the Philippines experiences phenomenal growth on one hand, and an uncertain climate future on the other, what does the future hold for Asia’s new tiger economy? Well, it seems, more uncertainty. The country is yet to ratify the Paris Agreement, as of this article’s writing, putting into jeopardy opportunities to receive much needed financial resources from the international community to help the country cope with the effects of climate change. Furthermore, current domestic capacities to implement climate adaptation measures have been left wanting, despite the nation holding the record for having passed some of the most progressive climate laws and policies in the region. A budget issue? Perhaps. A case of a new administration still gauging the benefits of “owning” the problem? Many believe so.

Add to that, there’s the other big elephant in the room—the country’s energy mix. In the nation’s quest to fulfill its ambition of becoming a high income economy by 2040 (with average per capita income expected to reach $14,000), powering the country’s industrialization has become an absolute priority. So much so that the cheapest options on the table, which today are perceived to be coal-fire powered plants, have been deemed as the most convenient and expedient to address the country’s energy woes, notwithstanding the country’s rich renewable energy resources, which admittedly are variable and “peaky”.

But should this be the case? Is a coal-dependent future the smartest way forward? What of natural gas, the world’s emerging “transition fuel”; or solar micro-grids, the energy of the future according to Silicon Valley? Is there a way for the Philippines to stay flexible, enough to take advantage of rapidly innovating energy technologies like cheaper solar and batteries? How much will it cost and who pays? How does all of this affect the country’s ability to compete with its neighbors?

The debate rages on.

In partnership with the Ateneo School of Government, SSG Advisors is developing a policy roadmap for the Philippine government and the nation’s power industry under the “Getting Our Act Together” Project—a multi-sectoral initiative focused on developing concrete policy recommendations towards accelerating an optimal energy mix, climate action, and private sector collaboration. Since the project’s launch in August 2016, several expert workshops and policy dialogues have been held with leaders from the public and private sectors, altogether crystallizing practical policy measures that can immediately be adopted to balance climate and energy in the midst of a rapidly developing Philippines.

The holy grail of an optimal energy mix capable of delivering secure, affordable and sustainable power to all now dominates talks within executive and legislative circles, as it is likely to affect the major decision making processes of jeepney drivers to blue chip investors alike and, at the same time, mirror the country’s seriousness in tackling carbon emissions in solidarity with the rest of the world, small as its footprint may be.

One thing’s for sure, though. As the next global climate conference is just around the corner (November 2016 to be exact), the Philippine government is expected to make major decisions around its ratification of the Paris Agreement and its long-term strategy to power the Philippines. So between now and then, the buzz is likely to enter a crescendo. So let’s keep talking. Until Part 2!

 


lawrence

Lawrence Ang is Director for Asia for SSG Advisors. He brings nearly ten years’ experience at the nexus of sustainable development and private sector engagement in the region. Aside from leading SSG’s partnership building and impact investment advisory work in Asia, Lawrence is currently leading SSG’s efforts, in partnership with the Ateneo School of Government, to develop policy pathways towards establishing a climate-smart development agenda, an optimal energy mix, and an enabling environment for private sector investment in the Philippines.

 

 

 

Can Better Data Enhance the Climate Resilience of Small Holder Farmers?

WILD-photoFarming is – at the best of times – a risky undertaking.  For smallholder farmers in developing countries, such as Kenya, this is not the best of times. A report by Environment for Development finds that severe droughts in Kenya have interrupted rainfall partners with serious consequences such as harvest failure, deteriorating pastures, and livestock losses. [1] These losses have implications for agricultural incomes as well as local food security. It is therefore essential that smallholder farmers have access to risk management tools, such as climate data or weather insurance.

For years, insurance companies and donor organizations have been trying to develop weather-indexed insurance for smallholder farmers with limited success.  A key challenge in many countries has been the lack of accurate climate data – both current and historical.  Weather insurance requires accurate historical and current climate data so that insurance companies can develop models that allow them assess risk and set premiums.  Without accurate data, insurance premiums end up being very high – often beyond the means of a farmer to pay.  These high premiums have hindered the uptake of weather insurance products by smallholder farmers.

A new tool may help address this challenge by providing highly accurate historical and current climate data that can help lower weather insurance premiums significantly.  As a key outcome of the USAID/Kenya and East Africa PREPARED project, the GeoCLIM tool allows for much more accurate climate data by synching up inputs from both ground weather stations and satellites.  GeoCLIM was originally developed by PREPARED partners and stakeholders (including Tetra Tech, FEWS NET, USAID, ICPAC, UCSB and USGS) for use by policymakers across East Africa to address climate change and famine early warning. SSG Advisors and PREPARED partners also envisioned its significant potential for the insurance industry – providing much-needed data required to better forecast risks and, therefore, set premiums.

Under the auspices of PREPARED, SSG Advisors brought together national meteorological and hydrological organizations, climate scientists, technology firms, insurance companies and farmers groups to explore how GeoCLIM might underpin the development and scaling of weather-indexed insurance products targeted at smallholder farmers in Kenya and, eventually, across East Africa.  At a two-day workshop, participants used Osterwalder’s  Business Model Canvas to develop and clarify what a weather-index insurance business model might look like.[2]  Partners mapped out product offerings, channels, value proposition, relationships etc. – all the essential elements of how a weather-indexed insurance product can be offered and scaled for smallholder farmers.

With business models developed, the partners are now working to formalize a partnership that will result in the launch of a new weather-index insurance product for smallholder farmers by late 2016.  By harnessing the power of climate data, insurance companies, governments, donors and scientists are giving small holder farmers the tools they need to adapt to a rapidly changing climate.



[1] Kabubo-Mariara, Jane and Kabara, Millicent. (20145). Climate Change and Food Security in Kenya. Environment for Development Discussion Paper Series. 15-05.

[2] Osterwalder, A., Pigneur, Y., & Clark, T. (2010). Business model generation: A handbook for visionaries, game changers, and challengers. Hoboken. NJ: Wiley. Sahlman, WA (1997). How to Write a Great Business Plan. Harvard Business Review75(4), 96-108.