Chapter 3. Adaptation to climate change in Philippine agriculture

Natural disasters cause considerable economic damage to the agricultural sector

The Philippines is exposed to numerous natural risks, but is particularly vulnerable2 to tropical cyclones, rising sea levels, landslides, earthquakes and volcanic eruptions. At least 60% of the total land area of the country is exposed to multiple hazards, and as a result 74% of its population is viewed as vulnerable (GFDRR, 2012). Tropical cyclones are the most frequent and the most damaging of all natural disasters in the Philippines, accounting for 88% of total damage and 79% of total lives lost (Jose, 2012). An average of 20 tropical cyclones occur every year, the highest frequency in the world, with 8 or 9 making landfall and with the island of Luzon at a significantly higher risk than the southern areas (WB, 2015). Climate variability increasingly induces drought during El Niño episodes and floods during La Niña (CCC, 2010a).

The impacts of natural hazards in the Philippines are severe. In the last two decades, more than 25 000 people lost their lives as a result of natural disasters, and the country suffered economic losses of more than USD 14 billion (USAID, 2014). Annual damage from disasters averaged PHP 19.7 billion over the past two decades, equivalent to an average of 0.5% of GDP each year (Jose, 2012; Llanto, 2011). In 2013 alone, Typhoon Haiyan (known also as Typhoon Yolanda) caused massive destruction: more than 8 000 are estimated to have died, four million people were displaced, and approximately 2.5 million people required direct assistance to rebuild their homes and livelihoods (Oxfam, 2014).

Damage to agricultural production from natural disasters is considerable and has increased significantly in the last decade (Box 3.1).

Box 3.1. Damage to agricultural production resulting from natural disasters

Damage to agricultural production in the Philippines resulting from natural disasters is substantial. Between 2006 and 2013, the FAO (2015a) estimates that total damage and loss in the agriculture sector amounted to USD 3.8 billion, arising from 78 natural disasters: 2 droughts, 24 floods, 50 tropical cyclones or tropical storms, 1 earthquake and 1 volcanic eruption. According to NEDA (2014), damage to agricultural production from weather-related disasters (i.e. tropical cyclones, tropical storms and flooding) over the years 2010-12 increased from an already high level. Figure 3.1 shows economic damage to the agricultural sector and to the total agricultural area caused by tropical cyclones, floods and droughts between 2000 and 2013.

The majority of damage and losses (USD 3.1 billion) occurred in the crop subsector, with over 6 million hectares of crops affected (FAO, 2015a). The highest losses were observed for rice, corn and high-value cash crops (Israel and Briones, 2013). A series of tropical cyclones in 2013 severely affected the coconut industry, one of the most important sectors of Philippine agriculture (Chapter 1) An estimated 33 million coconut trees across 295 000 hectares of land were damaged in the Eastern Visayas region alone, contributing to an overall -3.3% decrease in coconut production in 2013 (DA, 2013a).

Figure 3.1. Total value of damage to agriculture and agricultural area affected due to tropical cyclones, floods and droughts in the Philippines, 2000-13

Source: Israel and Briones (2013); NEDA (2014); Uitto and Shaw (2016).

 https://doi.org/10.1787/888933452615

The frequency and intensity of extreme events is likely to increase, as will their impact3 (GFDRR, 2015; WB, 2011). Despite the uncertainty associated with long term projections, it is likely that extreme rainfall events will become more frequent, particularly in the important agricultural regions of Luzon and Visayas. Increased rainfall intensity may trigger landslides and flooding of coastal areas and could cause crop and livestock destruction, livestock and aquaculture losses, as well as a reduction in the availability and quality of land due to erosion and landslides. Currently, 27% of the total land area in the country (8.3 million hectares) is considered to be vulnerable to drought, especially during El Niño years (NEDA, 2014). In addition, intensified drought can result in soil degradation and changes in water quality due to salt-water intrusion.

Climate change will slow agricultural productivity growth

Extreme events aside, climate change is expected to affect agricultural productivity by affecting cropping calendars, yield quality and levels, the proliferation of pests and incidence of diseases, livestock and fisheries production, and infrastructure. Rising sea levels brought about by climate change could negatively affect the land available for crops, increase the risk of flooding and storm damage, and lead to the salinisation of coastal croplands. According to estimates by the National Mapping and Resource Information Authority (NAMRIA), a rise of one meter in the sea level could translate into an estimated land loss of 130 000 ha in the Philippines (CCC, 2010a).

The future climate of the Philippines as a whole is likely to be warmer and wetter, but climatic impacts will vary regionally. Average precipitation and temperature are projected to increase according to all four different climate models: GFDL, HGEM, IPSL and MIROC (Table 3.1). Two of the climate models, IPSL and MIROC, project an increase in precipitation across all regions in the Philippines. GFDL and HGEM simulations show a likely decrease of average precipitation in western Luzon, and HGEM additionally projects a decrease in precipitation in Central and Southern Mindanao. All four models indicate an increase in precipitation in Visayas, Northeast Luzon and Northern Mindanao. Temperatures are projected to increase by between 1.5 and 2.9°C by 2050. The HGEM model projects the most negative changes in climate for the Philippines, with temperature increases across all regions in excess of 2°C (Thomas et al., 2015).

Changes in temperature and precipitation will have differentiated local impacts. As discussed in Chapters 2 and 2, rice, maize, coconuts, sugarcane, and bananas are among the most important crops in the Philippines, both in terms of harvest area and production value: rice and maize are major staple food crops, and coconuts, sugar and bananas are important export commodities (FAO, 2015b). Based on input from the climate models discussed above (Thomas et al., 2015), all five crops show different sensitivities to potential impacts from climate change (Table 3.2). The results suggest that the negative effects of climate change will be relatively modest for banana, coconuts, sugarcane and rice, and that coconut growers may benefit slightly from climate change. However, maize, which is already experiencing heat stress in the region, is projected to face significant negative impacts from projected temperature increases between 1.8 and 2.4°C.

In the aggregate, climate change effects are expected to be negative for most crops, including rice, maize and sugarcane, across all regions; however, some regions are expected to benefit. Projected declines in rice yields within the Luzon region, particularly for rain-fed rice plantations, contrast with positive development of rice yields for the Mindanao region. Sugarcane production benefits from temperature and precipitation changes in parts of central Luzon and Mindanao, but is unlikely to do so in the rest of the country. Maize is likely to be negatively affected across all regions (Thomas et al., 2015).

Environmental degradation magnifies the vulnerability of agriculture to climate change

The vulnerability of agricultural systems to climate change is aggravated by environmental degradation. In general, natural resources and the environment are facing a triple problem of overexploitation, depletion, and deterioration of overall quality (Israel and Briones, 2013). Healthy soils, good quality water and the existence of natural predators for pests dampen the effects of climate shocks on productivity. The Philippines is a country rich in natural resources, with a high level of biodiversity, and has some of the most extensive water resources in the world (GFDRR, 2011). However, many species are endangered, and forest cover has declined to less than half the levels recorded in 1917, mostly due to logging, mining, land clearance for agriculture and settlements, and poor management (USAID, 2011). The loss of natural vegetation harms ecological and agricultural systems and in extreme cases may cause community displacement (USAID, 2011).

Land and forest degradation have also disrupted the hydrological cycle of watersheds, resulting in accelerated soil erosion, the silting of rivers and reservoirs, increased and more severe floods, destruction of coastal mangroves, and reduced water supply (USAID, 2011). Furthermore, groundwater levels have generally declined due to over-extraction, causing wells and springs to dry up, and leading to saltwater intrusion in coastal areas (USAID, 2011). Further irrigation in water-stressed areas will only exacerbate the problem.

Farmers’ vulnerability to adverse shocks from climate change is amplified by poverty

Farmers’ vulnerability to adverse effects from climate change is determined by the characteristics and circumstances of their communities. Certain characteristics may make farmers susceptible and unable to cope with the damaging effects of a hazard (UNISDR, 2009; IPCC, 2007), thereby increasing their vulnerability, which can vary significantly within and between different communities. In the Philippines, factors that aggravate farmers’ vulnerability include: i) poverty; ii) lack of employment opportunities outside of the agricultural sector; iii) limited access to information; and iv) conflicting policy signals. These factors are discussed in more detail below.

The vulnerability of the country’s population, in particular farmers, to adverse shocks is amplified by the high poverty incidence4 (Jose, 2012). As stated in Chapter 1, even if progress in poverty reduction has been significant, almost one-fourth of the population remains vulnerable to falling into absolute poverty in the event of natural disasters or deterioration in economic conditions. Declining or stagnant agricultural productivity are among the main causes of rural poverty in the Philippines (IFAD, 2009), and climate change is likely to limit productivity growth further.

Poverty aggravates vulnerability as it hampers the ability of farmers to make adaptation decisions and investments. Poor farmers have limited opportunities to access more resilient crops and technologies. For instance, not all farmers can afford to purchase high-quality certified inbred and hybrid rice seeds, despite their yield advantages (Sombilla and Quilloy, 2014). From 2009 to 2012, farmers’ own-saved seeds accounted for more than 50% of the harvested rice area (Sombilla and Quilloy, 2014). In addition, while most farmers use modern varieties, they do not necessarily regularly participate in seed markets (Chapter 1).

Biotechnology crops have the potential to contribute to farmers’ resilience to climate change. Adoption rates of such crops in the Philippines have increased through the years, but remain low5 (Torres et al., 2013). Farmers with low incomes are more risk-averse as they do not have “resources to spare or gamble” (Torres et al., 2013) and are thus less likely to adopt new technologies that could increase their income. Yorobe and Smale (2012) draw on data collected from smallholder maize farmers in Isabela and South Cotabato to conclude that while the use of biotechnology maize alone may not be sufficient condition to increase yield and income, it reduces the probability of falling below the poverty threshold.

Lack of employment opportunities outside of the sector is an additional impediment to the adaptation of farmers and agricultural systems to climate change. Partial income diversification, within and outside agricultural sector, is an important adaptation strategy (Jarvis et al., 2011). As explained in Chapter 1, a decrease in employment in agriculture, supported by good macroeconomic performance and continued job creation by non-agricultural sectors, could lead to increased agricultural productivity (through a reallocation of agricultural resources) and poverty reduction. However, according to the OECD (2013a), unemployment and job creation problems are significant in the Philippines.

Vulnerability can also arise from limited access to adequate information. For instance, the effectiveness of early warning systems remains relatively low. Around 70% of farmers in the Philippines receive warnings on tropical cyclones 24 hours prior to the event. But only 10% receive warning on flooding; 12% on continuous rain; 4% on drought; and 13% on temperature increase. The number of weather stations also remains limited (Lansignan, 2015). The most common source of information for farmers is television, followed by radio. Other sources include neighbours, relatives and friends, and local government units (Peñalba and Elazegui, 2013). It is not clear whether farmers, on average, receive appropriate information on climate change, and whether they are aware of new technologies that can increase their resilience to climate shocks.6

Finally, some policy signals sent to farmers actually hamper their adaptive capacity.7 These are discussed in more detail in Section 3.4.

Strategies to improve the adaptive capacity of agriculture are on the increase

Since the late 2000s, the Philippines has joined numerous international initiatives and has made numerous efforts to adapt to climate change. Most significantly at the international level, the Philippines signed the United Nations Framework Convention on Climate Change (UNFCCC) in 1994. This had an important impact on long-term domestic policies in the Philippines.

At the national level, explicit climate change adaptation efforts have intensified since 2007, following the formation of a task force on global warming. In 2009, the Philippines adopted the Climate Change Law, followed by the 2010-2022 National Framework Strategy on Climate Change (NFSCC) and the 2011-2028 National Climate Change Action Plan (NCCAP). Table 3.A1.1 summarises the most relevant policies and institutions in relation to climate change adaptation at the international and national levels.

The two most significant documents outlining climate change adaptation priorities in the country are the NCCAP and the Philippine Development Plan (PDP).

The NCCAP determines climate-related objectives and priorities, as well as general guidelines for action (Box 3.2); it does not detail the practical steps to be taken to increase the adaptive capacity of farmers. According to the NFSCC, the Philippines climate strategy aims to: build the adaptive capacity of communities, increase the resilience of natural ecosystems to climate change, and optimise mitigation opportunities towards sustainable development (CCC, 2010a). Food security is currently seen as the primary strategic priority of the Philippine agricultural sector.

The PDP 2011-16 includes specific adaptation and mitigation objectives as national priorities (NEDA, 2011) and represents an improvement on its predecessor, The Medium Term Development Plan (MTPDP) for 2004-10 (NEDA, 2014). The MTPDP emphasised the importance of identifying and addressing extreme weather events and disasters but did not consider climate change impacts. More specifically, it included massive investments in flood control but left unclear whether infrastructure design and management for these projects incorporated potential climate change scenarios (Lasco et al., 2008). The PDP 2011-16 makes explicit reference to the need to consider climate change scenarios and impacts, in particular for infrastructure, agriculture and social development investments. Moreover, it includes a chapter dedicated specifically to the challenges and strategies related to creating a sustainable and climate-resilient environment.

But design, implementation and monitoring could be greatly improved

The NCCAP and the PDP 2011-16 are not fully aligned. Together, they define at the highest policy level what is to be considered as adaptation, and their lack of alignment is likely to lead to a divergence between departmental and local development plans on strategies and PAPs. For example, flood-control projects have been classified as an adaptation activity by the NCCAP and Departments’ work programmes, but have not been included under Key Result Area #5.8 It also remains unclear whether such projects are classified as adaptation activities at local level. Similarly, post-disaster related investments have been tagged as “adaptation activities” under Departments’ work programmes but not included in the other classifications (WB, 2013; Quieta, 2015).

Another important constraint preventing an effective realisation of the national adaptation plans is the gap between knowledge generation and project design and implementation. This gap persists despite the considerable efforts and progress the Philippines has made in identifying climate risks and impacts, in particular through scientific research and climate modelling.9 Innovative tools that help assessing climate change vulnerability are often too technical and complex, hampering their wide and systematic use by Local Government Units (LGUs) (WB, 2013; NEDA, 2014). Moreover, despite a significant increase in climate change assessments, there is still a lack of studies that identify climate impacts on various ecosystems and communities at the local and regional levels (NEDA, 2014).

Moreover, a lack of co-ordination and of clarity on roles and responsibilities has emerged between different institutions and stakeholders. At the sectoral level, strategic priorities (Box 3.2), are not always mainstreamed and implemented through the work programmes of different Departments. For instance, a lack of co-ordination still arises among the Climate Change Commission (CCC) and the National Disaster Risk Reduction and Management Council (NDRRMC) regarding disaster risk reduction and adaptation issues; it also arises among various DENR bureaus regarding environmental and natural resource management (NEDA, 2014). A lack of division of tasks and responsibilities, including a lack of leadership, may result in a duplication of efforts or, in extreme cases, no efforts at all. This contributes to inconsistencies in adaptation PAPs.

In addition, the broad scope and limited local presence of the CCC hamper its ability to implement the NCCAP and operationalise some of its tasks (WB, 2013). Conflicts also arise between national and local governments over the functions and the definition of the LGUs role in the implementation of adaptation PAPs (NEDA, 2014). Depending on the local needs and on the degree of collaboration with the central government, adaptation objectives may or may not be part of the LGUs’ activities.

Lack of institutional, financial and human capacity also seems to be hampering effective implementation of climate adaptation initiatives. Climate and natural resources agencies suffer from a shortage of personnel, expertise, capacity, and inefficient institutional processes. At the local level, management is also constrained by poor governance and inadequate financing (NEDA, 2014). Additional resources to fund some basic technical measures are also lacking, for instance weather forecasting facilities, for which there is only one station per province (Lansigan, 2015).

Furthermore, setting adequate indicators and monitoring systems to measure progress and success in adaptation, or adaptive capacity, remains a major challenge. The Philippines has recently attempted to put in place a monitoring and evaluation system to measure progress and success in adaptive capacity. However, these efforts face numerous constraints. In the absence of a clear indicator, the number of environmental hazards – human-induced and hydro-meteorological events – has been used as a proxy indicator to monitor the progress for adaptive capacity (NEDA, 2014).

Finally, the lack of clarity as to what should be tagged, as an adaptation activity can also hamper adequate budgetary planning, prioritisation and tracking. It is unclear whether the most effective actions to increase adaptive capacity receive financial support, and whether these actions are aligned with priorities set at the national level. As recognised by the Philippines Congressional Policy and Budget Research Department, the various approaches in defining what constitutes a climate change activity have led to inconsistencies in classifying and defining the level of funding budgeted for climate PAPs (Quieta, 2015). The next section of this chapter looks in more detail at the country´s climate budgetary planning and prioritisation, based on strategic priorities set within the NCCAP (Box 3.2) and other relevant policies.

Funds for climate change adaptation are limited, though increasing

Prioritisation of climate change adaptation in the national policy framework is mirrored by an increase in funding sources at the international, national, sectoral and local levels. However, several questions remain regarding how to track adaptation expenditures and whether there are mechanisms that allow for co-ordination of internationally funded PAPs with nationally funded ones.

At the international level, the Green Climate Fund (GCF) and, to a lesser extent, the Adaptation Fund (AF) are likely to form the two most important financing sources for adaptation projects. Support from international funds is often allocated to specific climate-related PAPs (Quieta, 2015). The mobilisation of funds for adaptation in the international arena has intensified since the recently adopted Paris Agreement. However, it is unclear at this point what share of these funds will be available for adaptation activities in the Philippines.

Moreover, various projects funded through Official Development Assistance (ODA), although not often specified as climate assistance, have an adaptation or mitigation component. From 2011 to 2014, a total of 49 PAPs, funded through ODA and amounting to PHP 50 billion (USD 1.18 billion), were tagged as climate change responsive. From these 49 PAPs, 26 PAPs (PHP 22.4 billion; USD 0.53 billion) were categorised as adaptation (NEDA, 2014). In general, most funds have been focused on adaptation, but the share of mitigation funding has been rising faster. As a result, from 2008 to 2013, the share of funds directed to adaptation dropped to 65% while funds for PAPs with mitigation benefits rose to nearly 29% (Quieta, 2015).10

At the national level, the People’s Survival Fund (PSF) is the main source of financing for climate change adaptation activities followed by the Performance Challenge Fund (PCF) (Quieta, 2015). The PCF is a national fund that provides performance-based grants to local governments, with an opening balance of PHP 1 billion (USD 200 million) to support adaptation activities of local governments and communities (Quieta, 2015; CCC, 2015b).

Adaptation funds are not well-aligned with the adaptation priorities identified by the government. Despite food security being the first priority of NCCAP, only 1% of adaptation PAPs were related to agriculture in 2012 (NEDA, 2012). Moreover, this small share actually represents an increase of more than 140% in real terms since 2011 (WB, 2013). In the same year, a large share of funds was allocated to other strategic priorities outlined in NCCAP (Box 3.2), namely water sufficiency for municipal use, followed by ecosystem and environmental stability. According to the World Bank (2013), funding for water sufficiency has shown the largest growth among NCCAP strategic priorities, from about PHP 6 billion in 2009 to about PHP 20 billion in 2013 (from USD 0.14 billion to USD 0.47 billion).

Although climate allocations increase each year, it is uncertain whether this reflects more action on climate adaptation or a change in tagging guidelines.11 Currently, many climate-tagged activities belong to the core activities of the DA.12 Large differences exist in attitudes to tagging between the sub-agencies of the DA. Some agencies, such as BAR, tag a majority of their expenditures as climate-related, while others, like the NIA, tag less than 1% as such. At this point, it seems too early to use tagging as a basis for conclusions on the level of resources allocated to, and level of preparedness of, the Philippines’ agricultural sector to climate change.

Mainstreaming strategic priorities needs to be strengthened at the operational level

Among the seven strategic priorities established by the NCCAP (Box 3.2), food security has the strongest link with agriculture. This strategic priority is defined as “ensuring the availability, stability, accessibility and affordability of safe and healthy food amidst climate change”. It focuses on two immediate outcomes: i) the enhanced climate change resilience of agriculture and fisheries production and distribution systems; and ii) the enhanced resilience of agriculture and fishing communities to climate change.

Efforts from the DA to turn the climate change adaptation strategic priorities into actions are underway. The DA created the Climate Change Program Office under its Office of the Undersecretary for Policy and Planning in 2010. This was followed by the release of a Policy and Implementation Program in 2011, which provided an initial guidance to the DA in addressing climate change issues. Moreover, some sub-departments within the DA also came up with plans and strategies to incorporate climate information into on-the-ground actions. One example is ATI’s Strategic Plan 2017-2022 that outlines actions to be taken to build climate change resilient communities via harmonised and unified extension services (ATI, 2016).

In January 2013, the DA launched the Adaptation and Mitigation Initiative in Agriculture (AMIA), a programme to mainstream climate change considerations within the Department.13 Under the AMIA, the DA introduced the Climate Change Systems-Wide Program (CCSWP) (Table 3.A1.2), which cuts across policy instruments and agencies of the Department and is expected to allow the Department to better address climate change vulnerabilities and risks. The DA now envisions strengthening the implementation of adaptation activities by: i) building its human and institutional capacity by strengthening knowledge and skills and developing an organisational culture (“mainstreaming at the strategic level”); and ii) incorporating climate change systems-wide programmes in all departmental policies across functions and agencies (“mainstreaming at the operational level”) (Serrano and Ilaga, 2014).

Many of the efforts of the Climate Change office within the DA have been aimed at ensuring the success of capacity-building activities, ensuring that the staff and personnel are well aware and equipped to address climate change issues within their respective mandates. This is reflected in various efforts such as developing partnerships. For instance, the DA established a collaborative relation with the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) and the University of the Philippines Los Baños Foundation, Inc. (UPLBFI) to implement the Strengthening Implementation of Adaptation and Mitigation Initiative in Agriculture (AMIA) (SEARCA, 2015).

Progress towards incorporating system-wide climate change programmes in all departmental policies is, however, less evident and faces significant constraints. First, the DA’s CCSWP does not make explicit reference to NCCAP strategic priorities. Second, it is unclear how different institutions at the national, sectoral and local levels co-ordinate in the design and implementation of existing and future climate PAPs. For instance, overlaps between the DA’s CCSWP and the AMIA-rice subsector may arise. In addition, overlaps and co-ordination issues may arise among different institutions (e.g. DA, NIA, DENR, CCC, LGUs) in the implementation of programmes such as the AMIA-rice subsector programme.

Even within the DA, the silver thread of consistency in defining an adaptation action is sometimes missing; this may make it difficult for subordinate bodies to understand which adaptation actions to implement. For instance, the DA’s reporting on climate change activities is inconsistent: the 2013 DA annual report (DA, 2013a) makes limited reference to climate change adaptation efforts and achievements, whereas the DA Annual Report 2014 does not make any reference to climate change adaptation (DA, 2014c); the 2013 DA Annual Report mentions the completion of Farm to Market Roads (FMR) as adaptation action, whereas the 2014 Annual Reports and those prior to the 2013 edition do not consider the constructing and rehabilitation of FMR as an adaptation action.

More importantly, little effort is made to screen current policies against the signals they provide to farmers. Effective alignment of existing policies with adaptation objectives and their implementation into the agricultural sector requires assessing if and how other agricultural and non-agricultural policies affect farmers’ resilience to climate change. The following section of this chapter identifies and assesses a number of agricultural and non-agricultural policies which may potentially effect agricultural sector adaptation.

The priority given to rice self-sufficiency undermines other adaptation actions

PAPs, reports and budget appropriations within the agricultural sector in the Philippines consistently define rice self-sufficiency as the main approach to achieving national food-security objectives (see Chapter 2). Accordingly, the majority of funds from the total DA budget continue to be allocated to the rice commodity programme and related activities (Chapter 2).

The promotion of rice production to achieve self-sufficiency could increase the future vulnerability of agricultural systems. Section 3.2 discussed future vulnerabilities for rice production in the Philippines and highlights that some rice-producing areas, e.g. Luzon, are likely to be exposed to droughts. By promoting water-intensive production in already water-scarce areas, support to expand irrigation systems may negatively affect the long-term resilience of agricultural systems and farmers (Ignaciuk and Mason D’Croz, 2014; OECD, 2015a).

Over-emphasis on the rice self-sufficiency strategy leaves both a shortage of – and a lack of clarity regarding – climate appropriations within the DA for a number of adaptation priorities set by the national (NCCAP and PDP) and sectoral (CCSWP) policy frameworks (as described in Section 3.3). These less-favoured priorities include: diversification of production and livelihood options for farmers; strengthening R&D; strengthening agricultural extension and support services; and conducting vulnerability and adaptation assessments, including studies on groundwater resources availability and vulnerability.

Switching from rice to more resilient crops, as well as diversifying crops and income sources, could significantly contribute to spreading farmers’ risks and reducing vulnerability to climate shocks. Where appropriate, adaptation options could therefore include diversification of production, for instance by expanding the production of high value crops in which the Philippines already has a comparative advantage (Clarete et al., 2013) and which could result in higher net returns for farmers. Not all farmers will have the ability or desire to switch to these crops: barriers to doing so might include access to land, technology, financial services, or cultural and socioeconomic constraints. Therefore, adaptation measures should involve identifying and addressing such barriers.

Better integration with international markets may help improve resilience

The Philippines’ agricultural trade policy follows the country’s rice self-sufficiency objectives (Chapter 2). Rice trade is restricted to protect farmers from import competition and price volatility. The Philippines considers relying on the world rice market a high risk as only 5-7% of the world’s rice production is exported and 84% of rice exports are controlled by only five countries. Furthermore, the government considers that climate change may increase the vulnerability of these rice-exporting countries, which might make them less reliable sources of rice (DA, 2012).

However, aside from perpetuating the volatility of the global rice market, trade restriction measures also risk worsening the effects of climate change by reducing the ability of producers and consumers to adapt (Nelson et al., 2009). In the absence of distortive trade policies, climate change will result in a shifting of the comparative advantage of agricultural production and in changes in trade flows as producers respond to changing constraints and opportunities. Restrictions on rice imports, therefore, are likely to limit farmers’ capacity to respond to these changes in market signals: these restrictions stimulate production of rice, even in less suitable areas, rather than motivating farmers to switch to more resilient and more competitive crops.

Moreover, the current trade policy settings induce higher domestic rice prices (Chapter 2), contribute to higher rates of undernourishment, and increase the impact of extreme weather events on the prevalence of food insecurity (Box 3.3). The inability to reduce production deficits caused by climate events increases the price of rice even further. This is especially important for the net-rice consumers, of which subsistence farmers form a large group.

Box 3.3. Assessment of food insecurity risk under extreme climate event scenarios

How do trade policy measures affect Philippine household food insecurity when extreme climate events occur? To answer this question a market equilibrium model (IMPACT) is used together with household survey data (Survey of Food Demand for Agricultural Commodities 2012). The approach follows an analytical framework for transitory food insecurity (OECD, 2015e).

Definitions of risk scenarios

Two natural disaster scenarios are developed and compared with a reference scenario without shocks. In addition to each of those scenarios, an alternative rice trade policy is simulated that sees the removal of the 18% tariff charged on rice imports (see Table 3.A1.3 for the scenario specification).

The first extreme event scenario (hereafter the Typhoon Scenario) is designed to represent an extreme event that would be specific to the Philippines. It is similar to Typhoon Haiyan, which hit the Philippines in November 2013: a strong typhoon making landfall and leading to significant flooding and wind damage across the archipelago. This event led to an increase in domestic food price by around 5%, while rice prices increased by nearly 10% (NEDA 2014). The analysis concentrates on yield losses for four commodities: bananas, coconuts, maize and rice. This scenario is based on work by Redfern et al., (2012), who estimated the effects of typhoons on Southeast Asia in 2011. The simulated yield loss in rice is 20% while slightly lower yield shocks are assumed for bananas, coconuts and maize, reflecting observed lower average yield losses from extreme events in the Philippines (Israel and Briones, 2013). To replicate additional damage to market infrastructure observed after Typhoon Haiyan, the scenario additionally assumes an increase in marketing margins (the cost of transporting commodities to markets).

The second extreme event scenario (hereafter the El Niño Scenario) simulates a strong El Niño event, with a global impact, including in the ASEAN region. The distribution of shocks is based on work by Iizumi et al. (2014), which demonstrates the average effects of El Niño events on global agriculture. The magnitude of the yield shocks are based on a series of scenarios run by IFPRI’s IMPACT model as input to a Lloyd’s Risk Report assessing the potential of El Niño events to disrupt agricultural markets (Lloyd’s 2015). This scenario focuses on three major crops: maize, rice, and wheat.

Market impacts of extreme climate event scenarios

A Typhoon Scenario would lead to production loss in the Philippines of 10% for bananas, 9% for coconuts, 15% for maize and 20% for rice (Figure 3.2). These production declines, combined with increasing marketing margins that reflect damage to transportation infrastructure, lead to increases in consumer prices for all analysed commodities: maize and bananas by around 5% each, rice by 11%, and coconut by 17%. To compensate for the shortfall in domestic production and to satisfy domestic demand, maize imports increase by 72% and rice imports increase by 173%, while exports of banana and coconut are reduced.

If the tariff on rice imports is eliminated, domestic rice prices would decline by 6% instead of increasing by 11%. Thus the impact of eliminating import restrictions, pushing rice prices down, would be stronger than the impact of a typhoon, pushing rice prices up. Lower domestic rice prices and increased imports would reduce domestic rice production by an additional 1.3 percentage points.

The El Niño Scenario leads to an almost 10% contraction of domestic maize and rice production, less than in the Typhoon Scenario. Due to the global nature of this event, world production of both rice and maize declines by about 4%, and wheat production falls by 2%. Both domestic and global consumer prices of maize, rice, and wheat increase by 10%, 15%, and 7%, respectively. Since the shock affects global, regional and domestic (Philippine) markets, prices overall are found to rise more steeply than under the country-specific Typhoon Scenario, thus food demand contracts more sharply. As a result of the somewhat smaller adverse impacts on production and higher domestic prices, the Philippines’ imports of maize and rice increase less than under the Typhoon Scenario. Despite the El Niño impacts, the domestic rice price remains higher than the import price, thus unlocking rice imports would still lower the domestic consumer price of rice.

Impacts on food insecurity at the household level

The impacts on food insecurity can be quantified in terms of changes in the rate of undernourishment. This rate is calculated by converting the simulated price and income changes to the changes in calorie intake at the household level through a detailed model of household demand. The food consumption responses of households are driven by changes in incomes and prices. Different households will react differently to those shocks, depending in particular on their specific income situation. For example, the own-price elasticity and income elasticity of rice is typically higher for low income households than for households at the upper end of the income distribution, and they will typically contract their rice consumption more sharply in case of extreme events such as those analysed here. To trace the household specific consumption responses, the analysis takes advantage of existing estimations of an Almost Ideal Demand System (AIDS) performed by Lantican et al., (2013). The simulated changes in the quantity of food consumption are easily converted to the changes in calorie intake at the household level. The quantity of rice consumption from own production is assumed to be unaffected by price changes.

In the reference scenario without extreme events, rice trade liberalisation would decrease the rate of undernourishment by 3.2 percentage points by improving access to rice by poor households (Table 3.3). This result indicates that trade measures currently in place are working against food security objectives: they increase the rate of undernourishment. While this policy supports the incomes of net rice producers, it taxes the majority of households, who are net rice consumers. According to the Survey of Food Demand for Agricultural Commodities 2012, approximately 72% of all Philippine households and 34% of rice producing households are net rice consumers. Thus, despite the policy objective to improve food security by increasing rice self-sufficiency and by preventing the transmission of price risks from the world market onto the domestic market, the current rice trade regime is in fact contributing to a more permanent state of food insecurity in the Philippines.

Figure 3.2. Production and price impacts of extreme climate events

% change relative to the reference scenario

Source: Authors’ calculations using IFPRI’s IMPACT model.

 https://doi.org/10.1787/888933452624

With the current trade policy in place, both the Typhoon and the El Niño scenarios significantly increase the prevalence of food insecurity in the Philippines, partly due to high domestic rice prices compared to those on international markets (Chapter 2). The policy restricting rice imports increases the rate of undernourishment by 5 and 4.5 percentage points in the Typhoon and El Niño scenarios, respectively, compared to a situation without those restrictions. The simulation results show that trade response enabled in the scenario without trade restrictions could mitigate the growth in the rate of undernourishment, even in the El Niño Scenario characterised by higher world price. In addition, the restrictive trade regime driven by the objective of self-sufficiency in rice production (Chapter 2) increases the risk of food insecurity in case of domestic crop failures.

Table 3.3. Impacts of risk scenarios on the prevalence of food insecurity at the household level
	Rate of undernourishment (percentage)	Median calorie intake (kcal per day per capita)	Depth of food deficit (kcal)
Reference
All Philippines	11.2	1 483	44
urban households	11.1	1 479	47
rural households	11.4	1 485	43
Reference without rice import restrictions
All Philippines	8.0	1 558	34
urban households	7.9	1 562	36
rural households	8.2	1 557	33
Typhoon Scenario
All Philippines	16.0	1 396	62
urban households	15.1	1 390	65
rural households	16.8	1 400	60
Typhoon Scenario without rice import restrictions
All Philippines	11.0	1 484	43
urban households	10.7	1 484	46
rural households	11.3	1 484	42
El Niño Scenario
All Philippines	15.6	1 401	61
urban households	14.6	1 399	63
rural households	16.4	1 401	60
El Niño Scenario without rice import restrictions
All Philippines	11.1	1 483	44
urban households	10.3	1 490	45
rural households	11.7	1 480	44
1. Simulated calorie intake is lower than the actual because Survey of Food Demand for Agricultural Commodities covers only 11 basic food commodities (rice, corn, noodles, bread and pandesal, root crops, meat, eggs, fish and marine products, vegetables, legumes and condiments, fruits, and milk). The calorie threshold of undernourishment is adjusted accordingly.
2. Depth of food deficit indicates how many calories per capita would be needed to lift the undernourished from their current status, everything else being constant.
Source: Authors’ simulations based on Survey of Food Demand for Agricultural Commodities 2012.

Climate change will also limit access to markets, due to a vulnerable and inadequate transport infrastructure system, hampering the effectiveness and viability of adaptation options in the agricultural sector. According to ADB (2011), changes in temperature are likely to impact road surfaces; extreme weather events, such as stronger or more frequent storms, will affect the capacity of drainage and overflow systems to deal with stronger or faster velocity water-flows; and increased salinity levels will reduce the structural strength of road surfaces. Currently, only a limited number of Philippine roads have adequate drainage and many roads do not even have a permanent surface (Chapter 1).

By stimulating agricultural R&D the government contributes to increasing farmer’s resilience

Well-targeted public investments in agricultural R&D may increase the resilience of the agricultural sector (Ignaciuk, 2015). Measures such as R&D to generate more resilient crops and technology transfer are important in reducing the potential negative impacts of climate change on agricultural production (Agrawala and Fankhauser, 2008; EEA, 2009; OECD, 2012; Ignaciuk and Mason D’Croz, 2014). Across countries, the role of the private sector in developing innovative technologies is increasing. A clear role of the public sector in stimulating R&D is to enable the private sector to invest in the development of new technologies, ensure that private knowledge gets disseminated, and encourage, where possible, public-private partnerships (PPPs) (Ignaciuk, 2015).

The Philippines has made climate change R&D investments a strategic priority within its national and sectoral climate-policy frameworks. The NCCAP (CCC, 2010b) includes knowledge and capacity development among its seven strategic priorities, while the PDP 2011-16 (NEDA, 2011) makes explicit reference to strengthening agricultural R&D and promoting the adoption of climate-responsive technologies and innovations. Furthermore, the DA CCSWP explicitly mentions various R&D strategies to help manage the risk of extreme climate events and to adapt to climate change (DA, 2013b).14

These strategies are to be carried out by a multitude of public and private R&D agencies (Stads et al., 2007; Chapter 2). The complex organisation of public agricultural R&D in the Philippines increases the risk of co-ordination failures and may lead to research fragmentation. Lack of co-ordination can hamper knowledge transfer and its integration into programme design and implementation; it can also cause overlaps between different programmes (Wesley and Faminow, 2014). How adaptation-related research is co-ordinated differs per commodity. For instance, the National Rice R&D Network (NRRDN), hosted by the Philippine Rice Research Institute (PhilRice), co-ordinates 57 public rice-related R&D agencies to avoid duplication of rice-related research (PhilRice, 2015). This consortium developed an impressive list of resilient rice varieties (Table 3.A1.4). The extent of co-ordination of climate-adaptation activities within other “commodity” group, between public and private research, or between different government institutions is less apparent.

The gap between knowledge generation and implementation of adaptation-related projects at the local level is an additional challenge. Tools to assess vulnerability of agriculture to future climate changes are often too technical and complex, hampering their wide and systematic use by national agencies, LGUs and farmers (WB, 2013; NEDA, 2014).

Current policy priorities (i.e. self-sufficiency in rice production) have resulted in the allocation of the majority of R&D funds to rice-related projects; this implies that other crops that are likely in some cases to be even more vulnerable to climate change effects are underfunded. In 2014 and 2015 rice-related R&D projects, funded within the DA, received the largest share of funds (DA, 2015b). The DA has also allocated significant resources to government corporations working on rice R&D. In 2014 alone, the DA allocated over PHP 500 million (USD 1.3 million) to PhilRice to be used exclusively for its rice R&D programme (DBM, 2014). Although the allocation of R&D resources towards rice-related R&D enforces research specialisation in an important crop which is vulnerable to climate change, a question remains whether more attention should be dedicated to other crops. For instance, maize is likely to suffer severely from climate change impacts (Section 3.2). Moreover, as budgetary resources are limited the “commodity” approach to R&D leaves almost no room for a more holistic approach to adaptation research.

In general, the Philippines ranks very low in R&D spending; at just 0.11% of GDP it ranked 89 out of 103 countries in the second half of the 2000s (Canlas et al., 2011). Appropriations for agricultural R&D in general and for adaptation R&D in particular are also low (Quieta, 2015; WB, 2013). For instance, despite budget increases to BAR since 2010 (Aquino et al., 2013), its budget remains low relative to that for other DA agencies. Out of the total 2014 DA budget of PHP 70 billion (USD 1.58 billion) (DA, 2014a), the DA’s related R&D activities received PHP 2.4 billion (USD 54 million) (DA, 2015a), while BAR was allocated PHP 1 billion (USD 23 million) (DA, 2014a). Besides BAR, R&D appropriations are also allocated to the DA’s various commodity programmes. As discussed earlier, the current tagging system prevents a detailed assessment of the magnitude of spending on adaptation-related activities.

In order to mainstream climate change adaptation into the DA’s R&D activities, BAR is currently advancing implementation of the “Climate Change R&D and Extension Agenda and Program” (CC RDEAP) and has initiated an integrated climate change research programme, AMIA.15 The PHP-135-million-AMIA research programme is a cross-commodity programme for a more holistic approach to climate change adaptation issues in agriculture. Another recent BAR initiative is to develop a climate change check-list which will be obligatory for all BAR-financed activities. This initiative aims to increase the monitoring and evaluation aspects of R&D spending towards climate-related activities and to help translate the research outcomes into policymaking strategies (BAR, 2015).

Limited extension services reduce farmers’ uptake of adaptation practices

Co-ordination of extension services, or rather the lack of it, between the key actors (the DA, LGUs, farmer associations and others), is a major challenge for implementing climate change adaptation actions at the local level. Chapter 2 discussed the policy reforms that led to decentralisation of extension services. The scope and the quality of extension services provided differ per LGU, which has consequences on the level of support farmers receive to increase their adaptive capacity.

Moreover, as in the case of research PAPs, the division of extension services into commodity programmes results in a fragmented approach to climate change adaptation. According to OECD (2015c), agencies that deliver advice, training, and extension services to support agri-environmental management need to be well co-ordinated, effective in reaching different groups of farms and types of farming, and capable of delivering a full range of services. The current extension system seems to be inefficient in the way it provides information to farmers, including on adaptation-related activities. Farmers undergo a number of commodity- or topic-based trainings, including for instance a number of separate trainings on potential effects of climate change on different commodities (ATI, 2014). Moving away from a commodity approach towards a holistic one, including promotion of various adaptation options (such as diversification to off-farm income), may increase the efficiency of the extension programmes in the Philippines (ACIAR, 2005). These efforts, however, require scaling up and reallocating funds for extension services across commodities and programmes, and adopting a more holistic approach for the design and implementation of these services.

The adequacy of extension services’ content and delivery mechanisms with regard to climate change is also unclear. According to OECD (2015c), the key ingredients for persuading and enabling farmers to adopt sustainable practices are: credible, relevant and up-to date business expertise advice, training, and extension. However, it is unclear whether services provided in the Philippines integrate and address the most relevant climate change challenges.

Farmers’ education level and the extension modalities may also hamper the effectiveness of incorporating adaptation options. One study assessing the role of agricultural extension systems in the Philippines shows that farmers do not always adhere to the set of recommendations given through extension services (Saz, 2007). The author concludes that farmers only adopt government production programmes because of the financial incentives provided. The cost of participating in such programmes would otherwise have been a significant barrier. Moreover, farmers do not always comprehend the benefits of using the proposed technologies (Saz, 2007). This may indicate a problem with the education level of farmers but also with the way the extension services are provided.

Subsidised insurance programmes impede signals sent to farmers

The multitude of government aid during a calamity weakens the signals sent to farmers regarding the need to address risks and reduces their incentive to adopt resilient practices. Subsidised insurance programmes are key mechanisms for allowing Philippine farmers reduce their financial exposure. However, international experience shows that subsidised insurance schemes have not been successful in reducing the use of additional ad hoc assistance granted after the event (OECD, 2011). In times of natural disaster in the Philippines, households, including rural households that “need it most”, are eligible for direct cash transfers from the government (IFRC, 2015). The government also provides funds under the Disaster Risk Reduction and Management Act16 and quick-response funds17 in times of natural disasters (DBM, 2015). These funds are distributed among the LGUs to rehabilitate local and regional infrastructure and provide any other help when crisis occurs. Moreover, some NGOs provide foreign aid to farmers in the post-disaster period.

Different layers of risks in agriculture require different responses (OECD, 2011). Optimal risk management strategies for different risk levels dictate that government policies should not provide support to deal with normal risks, such as normal variations in production, prices and weather (Figure 3.3). Such risks should be managed by farmers themselves as part of normal business strategy, through the diversification of production or the use of production technologies which make yields less variable. Income-smoothing through tax instruments for business is also part of normal risk management (OECD, 2011). At the other extreme, infrequent but catastrophic events that affect many or all farmers over a wide area will usually be beyond farmers’ or markets’ capacity to cope. Examples of such risk where governments may need to step in include severe and widespread drought or the outbreak and spread of a highly contagious and damaging disease. In between the normal and the catastrophic risk layers lies a marketable risk layer that can be handled through market tools, such as insurance and futures markets or through co-operative arrangements among farmers. Examples of such marketable risks include hail damage and some variations in market prices.

Figure 3.3. Optimal risk management strategies for different risk levels

Source: OECD (2011).

As yet, such a systematic approach to risk management is lacking in the Philippines. Moreover, the subsidised insurance schemes tend to conflate risk management tools with income support for farmers. Direct forms of income support would be much more effective.

In addition to being inefficient in meeting its stated objectives, the current insurance system does not allow the private insurance sector to develop. Subsidising insurance is costly to governments: Reyes et al. (2015a) and Corpuz (2013) found that the operational costs of the Philippine Crop Insurance Corporation (PCIC) are high and exceed the amount of premium collected. The role of the government should be rather to provide information, regulation and training for development of market-based risk-management tools (OECD, 2011).

In the case of the Philippines, two key policy design features may actually disincentivise adaptation: (i) preferential subsidies for rice producers and (ii) poorly designed compensation procedures.

The preferential treatment of rice incentivises its production, including in climate-unfavourable areas. The largest shares of the government’s crop-insurance subsidies are allocated to rice-producing farmers (54%), and corn farmers (25%), together amounting to PHP 1.54 billion (USD 35 million) in 2015 (PCIC, 2015; Reyes et al., 2015a, b). Currently, the Philippines offers varying subsidy rates by crop. Although the insurance for rice farmers may vary based on risk structure, in most programmes it is fully subsidised. Insurance for other crops such as corn or high-value crops (such as bananas, coconuts and mangos) is partially subsidised. Varying subsidy rates in this way incentivises the production of rice, despite potentially unfavourable climate conditions.

The terms of compensation and claim procedures for crop insurance may further disincentivise adaptive practices among subsistence farmers. The pay-outs are subject to lengthy waiting periods that disrupt efficient – and thus often adaptive – spending on farm expenditures. Claims are settled within 60 days, requiring farmers to tighten their budgets and daily expenditures in the interim (Reyes et al., 2015b). Moreover, the claim procedure can be obstructed by i) insufficient information about requested documentation; ii) inadequate staffing of PCIC to assess the damage; and, in more extreme cases, iii) difficulties of the PCIC administration in reaching the beneficiary.

An additional challenge with traditional crop insurance products is that their basic structure incentivises moral hazard. As pay-outs are determined by losses at the plot level, there is a risk that some farmers may make less effort or engage in maladaptive practices to intentionally disrupt yields and benefit from the insurance coverage. Applying an index-based system would simplify the compensation process, reduce moral hazard and the associated incentive for farmers not to reduce their exposure to risk. However, such system has other drawbacks (Box 3.4).

Land ownership uncertainties reduce incentives for investing in climate resilient technologies

Uncertain land ownership rights (Chapter 1) hamper the incentives for farmers to invest in measures which would increase their adaptive capacity. In particular, farmers might not be willing to implement adaptation strategies which require significant investments, when their land is not secure or they do not have full rights on the land (Yegbemey et al., 2013; Kudejira, 2014; Mutisi, 2009). For instance, a study of farmers’ adoption of Sloping Agricultural Land Technology (SALT)18 in the Philippines found that when farmers do not have long-term land tenure security they are less likely to invest in technologies for the long-term sustainability of their land (Malla, 2014).

The insecurity and unclear legislation regarding land ownership impacts farmers’ planning horizons and confidence in their potential to recover the long-term benefits of investments in new technologies and practices (Cenas and Pandey 1996; Nelson 1998; Malla, 2014). Another example of how unclear property rights affected farmers’ recovery from natural disasters can be illustrated by the Philippine government actions to help coconut farmers to cope with the 2013 typhoon losses. A law prohibiting the cutting, disposal or harvesting of coconut trees without the express consent of the landowner left it unclear who should bear the costs and benefit from the proceeds from clearing and selling fallen coconut trees after a natural or climate event when farmers do not have clear ownership rights of land (Oxfam, 2014).

Water policies and infrastructure are inadequate to deal with climate change

Despite the abundance of water in the Philippines, water supply is time- and site-specific and has become a scarce commodity in some areas. The amount of rainfall an area will receive is made less predictable by climate change and can have secondary consequences such as water scarcity or flooding (as evidenced in Section 3.2), with adverse effects on agricultural systems and farmers. Thus, emphasis on water security19 (OECD, 2013b) and proper allocation20 and management of water is imperative.

The NCCAP recognises various weaknesses that hamper water sufficiency in the Philippines, namely: weak protection of vital water resources; low access to financing to protect supply and improve distribution; inadequate performance of water service providers; inadequate support for rural water planning and infrastructures; and inadequate water-resource information for planning (CCC, 2010b). In addition, the NCCAP states that these weaknesses compromise the country’s ability to respond to the additional challenges posed by climate change, thereby widening the adaptation deficit.

Furthermore, there is little co-ordination among stakeholders, which may hamper effectiveness, efficiency, trust and engagement (three mutually reinforcing principles) of water governance21 (OECD, 2015b). This may negatively influence the adaptive capacity of farmers who may face water shortages due to inefficient water-governing systems. Currently, over 30 government offices are charged with the management of water resources and watersheds and separate agencies oversee supply and distribution (CCC, 2010b). This has resulted in fragmented management and weak protection of water resources. Senate Bill 1585 (2013) proposed one Water Regulatory Commission to streamline the current regulatory landscape and oversee all service providers, whether public or private, but it has yet to pass (Navarro, 2013). Aside from enacting a national regulatory framework, restructuring of the water industry needs to take place and performance targets need to be implemented (Navarro, 2013).

Irrigation plays a central role in agricultural and, in particular, rice production in the Philippines. However, from a climate change adaptation lens, current irrigation systems in the Philippines remain inadequate (ADB, 2012). First, in most cases the engineering designs for existing irrigation systems use standardised design criteria without regard to changing climatic conditions (WB, 2010). Second, the predominant cultivation and water management practices, as well as irrigation pricing mechanisms encourage the inefficient22 use of water resources.

Enhancing resilience of irrigation infrastructure to climate change has recently become a public concern in the Philippines. The NCCAP (CCC, 2010b) recognises that the water infrastructure and management systems in the Philippines are designed for less variable climate conditions. Since 2010 under the framework of the PhilCCAP, the government has started to re-think irrigation infrastructure in the face of climate change. Component 2 of PhilCCAP incorporates a subcomponent specifically aimed at redesigning and strengthening the climate resilience of vulnerable irrigation infrastructure (WB, 2010).

Despite the achievements in the context of PhilCCAP, it is important to note that less than 1% of NIA’s overall 2015 budget is devoted to climate change adaptation; this amount is inclusive of national and foreign-assisted projects (Navarro, 2013). NIA also has a quick-response fund that is directed towards restoring irrigation structures after disasters. This fund amounts to about 2% of NIA’s total budget. Overall, a lack of funds has hampered the effectiveness of adaptation PAPs. For instance, because of financial constraints NIA could not purchase the most accurate weather data from PAGASA and has relied on climate change data approximations to assess the technical specification of new canals. This makes it difficult to properly calculate long-term risks.

Besides inadequate infrastructure, current irrigation practices encourage the inefficient use of water resources. Continuous flooding has been embedded as a cultural practice amongst rice farmers (DENR and UNDP, 2015), but this practice hampers mitigation and adaptation, as it leads to methane fermentation (methane being a potent greenhouse gas) and to an excessive use of water.

The widespread occurrence of continuous flooding in the Philippines results in part from a lack of economic incentives for the adoption of more efficient water management. Irrigation service fees (ISF) are based on the size of irrigated area and not on the amount of water used, and vary depending on the type of irrigation system (e.g. pumps, reservoir, and diversion). Farmers pay a flat irrigation service fee per hectare, per season, per crop for National Irrigation System and they pay amortisation for Communal Irrigation System up to 50 years at 0% interest (NIA, 2013; Chapter 2). Without payments per actual use of water, there is no incentive for efficient use. Further, collection of fees depends mostly on the willingness of farmers to pay, which in turn is associated with the harvest they get in a given period and on their satisfaction with the provision of irrigation services (DENR and UNEP, 2015). Because water distribution is frequently unbalanced (with more water concentrated and extracted upstream the irrigation system), dissatisfaction and unwillingness to pay are frequent issues. In fact, collection rates are reported to be between 63% and 67% in 2013-15 (OPAFSAM, 2016). In addition, there is currently a lack of technical assistance to support the introduction of improved water management systems (DENR and UNDP, 2015).

Alternate Wetting and Drying (AWD) (Box 3.5) is promoted as an irrigation system with large adaptation and mitigation potential. Since 2001, pilot projects aimed at introducing AWD systems have been carried out in Luzon. In 2009 the Department of Agriculture also issued DA Administrative Order 25 “Guidelines on the Adoption of Water Saving Technologies (WST) in Irrigated Rice Production Systems in the Philippines”. This is the only existing policy document that supports the implementation of AWD (DENR and UNDP, 2015). It is not clear what share of farmers actually adopts the AWD systems; according to DENR and UNDP (2015), in 2013, 8% of all irrigated rice fields in the Philippines or 140 000 ha applied AWD, but according to NIA the area was much smaller. One of the ways to promote the wide adoption of AWDs is currently being tested via the UNDP-led AMIA-rice project.23 Farmers receive a 20% reduction in ISF when adopting AWD, which is awkward as it goes against the signal needed to foster more efficient water use. But this ISF reduction results in a 100% ISF collection rate in the areas where AWD is adopted (DENR and UNDP, 2015).

3.5. Summary

The impacts of natural hazards in the Philippines are severe: between 2006 and 2013, total damage and losses in the agriculture sector amounted to USD 3.8 billion. An increased frequency of extreme events has already been observed in the Philippines and this trend is likely to continue. Currently, 27% of the total land area in the country (8.3 million hectares) is considered to be vulnerable to drought, especially during El Niño years. Luzon and Visayas are likely to experience extreme rainfall as a result of climate change; extreme high-temperature events are likely to intensify across all regions.

Climate change will slow agricultural productivity growth for most commodities; rice and maize are likely to suffer moderate and significant damage from higher temperatures, respectively. A few crops (e.g. coconut) may, on average, gain from a changing climate. The prices of a majority of agricultural commodities are likely to increase due to climate change effects. The extent of the climate change effects will depend on farmers’ and agricultural sector’s adaptive capacity. High poverty rates amplify farmers’ vulnerability to climate change by hampering their ability to make adaptation decisions and investments. Similarly, the vulnerability of agricultural systems is aggravated by environmental deterioration, pollution and over-exploitation of natural resources and ecosystems.

The existing regulatory and policy framework in the Philippines reflects a substantial awareness regarding the threats posed by climate change and the need to address them. However, the two most relevant Philippine documents outlining adaptation strategies, the Philippines Development Plan and the National Adaptation Plan, are not well co-ordinated. This increases the inconsistencies of how adaptation is mainstreamed in sectoral and local plans. Despite the prominence of adaptation in budgetary planning, existing inconsistencies in the classification of what comprises climate change adaptation activities prevent consistent tracking and monitoring. Based on the current system of tagging, it is not possible to conclude whether there is a real increase of spending on adaptive actions. Moreover, doubt exists as to whether the tagged activities are indeed the most effective in increasing resilience of natural and human systems in the long term.

Policies have a role to enhance farmers’ adaptive capacity to climate change. Knowledge generation and dissemination is a core government responsibility. The Philippines is active in supporting R&D for climate resilience, but this effort is too focused on rice. Such focus may ultimately decrease farmer’s resilience by disregarding potentially more efficient solutions. In addition, extension delivery in the Philippines faces significant constraints, such as a lack of co-ordination between the key co-ordinating and implementing actors and a focus on increasing current production systems without taking into account climate change adaptation needs. An improvement of the efficiency of extension services, therefore, is likely to result in higher adaptive capacity of farmers.

However, policies may also impede climate adaptation of the agricultural sector. Policies stimulating rice self-sufficiency, for instance, pre-determine the prioritisation of crops to be covered by adaptation actions and may undermine the exploration of other adaptation strategies. It can also directly contribute to some maladaptive behaviour when, for instance, production of rice is stimulated in areas that already suffer from water shortages. With climate change this situation may further deteriorate. Similarly, current trade restrictions on rice imports have a detrimental effect on future food security as they worsen the effects of climate change and prevent efficient allocation of production in the face of climate change.

Current risk management and land tenure policies do not necessary increase the investment capacity of farmers, which may impede adaptation. The current crop insurance and disaster protection system supports rice producers to a large extent; this is likely to delay farmers responding and adapting to climate change; in particular it disincentives them from diversifying their crops, an activity which would improve resilience. Uncertain land-ownership rights hamper adaptation investments. Lack of property rights increases the vulnerability of farmers to climate change by discouraging and limiting adaptive capacity and investments in adaptation options.

The Philippines’ water related agricultural and non-agricultural policies have significant effects on adaptive capacity of agricultural sector. The current water distribution system in the Philippines is inadequate to respond to climate change-related intensified rain surges and droughts, which may negatively affect irrigation water availability and in turn decrease the adaptive capacity of farmers. Current irrigation practices in the Philippines remain inadequate to respond to climate change. The most prevalent type of irrigation (flooded irrigation) and current water payment system leads to inefficient use of the resource. Wasteful use of current water resources intensifies farmers’ vulnerability to climate change.