Last January, Secretary Maria Antonia Yulo Loyzaga of the Department of Environment and Natural Resources (DENR) issued a landmark Administrative Order establishing an institutional mechanism for Natural Capital Accounting (NCA) within the department. This initiative aims to systematize the measurement and accounting of environmental assets—both biotic and abiotic—including water, minerals, energy, timber, fish, ecosystem assets, biodiversity, and ecosystem services.
Natural Capital Accounting represents a paradigm shift in environmental governance. By quantifying the value of natural resources and ecosystem services, NCA integrates environmental considerations into economic planning and policy development. This approach ensures that the depletion or degradation of natural assets is accounted for, promoting sustainable resource management and long-term economic resilience.
The Philippines faces two pressing environmental issues that underscore the importance of NCA.
Historically, the Philippines was almost entirely covered with forests. However, due to deforestation and unsustainable practices, the country has lost a significant portion of its forest cover. This loss has led to habitat destruction, biodiversity loss, and disrupted ecosystem services.
Despite being an archipelago, the Philippines grapples with water scarcity. One-third of Philippine river systems are considered suitable for public water supply, and it is estimated that by 2025, water availability will be marginal in most major cities and in eight of the 19 major river basins. Factors such as pollution, over-extraction, and watershed degradation contribute to this crisis.
The DENR’s adoption of NCA has several critical implications.
First: informed decision-making. By providing a clear picture of the nation’s natural assets, policymakers can make informed decisions that balance economic development with environmental sustainability.
Second: resource management. Accurate accounting of resources like water, minerals, and forests enables better management practices, ensuring that exploitation does not exceed regeneration capacities.
Ecosystem preservation. Valuing ecosystem services—such as water purification, flood regulation, and carbon sequestration—highlights their importance, fostering initiatives aimed at their preservation and restoration.
To enhance the effectiveness of NCA, the Philippines can draw inspiration from international best practices.
Australia’s Environmental-Economic Accounts: Australia has developed comprehensive environmental-economic accounts that integrate environmental data with economic indicators, aiding in sustainable policy development.
Botswana’s Wealth Accounting: Botswana incorporates natural capital into its national accounting systems, ensuring that natural resource depletion is reflected in economic assessments.
Costa Rica’s Payment for Ecosystem Services (PES): Costa Rica has implemented PES schemes where landowners are compensated for maintaining forest cover, recognizing the value of ecosystem services such as carbon sequestration and biodiversity conservation.
Implementing NCA in the Philippines may encounter challenges, including data availability, capacity constraints, and the need for inter-agency coordination. To address these, the following steps are essential:
First: Capacity building involves investing in training and resources to equip DENR personnel and stakeholders with the skills necessary for effective NCA implementation.
Second: Data integration calls for establishing robust data collection and management systems to ensure accurate and up-to-date environmental information.
Third: Stakeholder engagement promotes collaboration with local communities, private sectors, and other government agencies to foster a shared commitment to natural capital preservation.
The DENR’s Administrative Order on Natural Capital Accounting marks a transformative step toward sustainable environmental governance in the Philippines. By recognizing and valuing the nation’s natural assets, this initiative lays the foundation for policies that harmonize economic growth with ecological integrity. Embracing NCA not only addresses current environmental challenges but also ensures that future generations inherit a resilient and bountiful natural heritage.
