THE Philippine climate change mitigation effort will be borne largely by the private sector, the World Bank (WB) said in a report, adding that the absence of policies optimized for unlocking private investment could erode gross domestic product (GDP) by as much as 13.6% in the worst case.
“It is absolutely key that the incentives for the private sector be put in place so they can fully take action,” Benoit Bosquet, regional director for Environment, Natural Resources and Blue Economy Global Practice at the World Bank, said on Wednesday at a virtual briefing presenting the World Bank Group’s Country Climate and Development Report for the Philippines.
“The good news is that the Philippines does have many options to address climate change which could dramatically reduce the impacts,” Mr. Bosquet added.
The World Bank’s more moderate projections for GDP erosion range from a 3.2% average loss by 2030, and 5.7% in losses by 2040.
He added that the Philippines must address both extreme and slow-onset events and provide targeted support for the most vulnerable members of society.
Climate mitigation financing is a contentious issue in developing countries, which include some suffering from the worst effects of climate change. Developing countries have taken the position that the rich world did the most to disrupt the climate when it industrialized, and bears responsibility for funding the bulk of climate mitigation efforts.
The previous Philippine government has argued for “climate justice” from developed countries, estimating that the Philippines can internally fund only a fraction of its climate-mitigation bill.
“Climate change indeed poses major risk for the development of the Philippines. Policy inaction will impose substantial economic and human costs, especially for the poor,” Mr. Bosquet said.
The report recommended that governments arrange incentives in such a way that make the benefits of climate action clear, while removing obstacles to allow the private sector to undertake climate projects.
“We can induce farmers to adopt practices that reduce water use and emissions while increasing productivity by ensuring these practices are more profitable than the status quo. We can induce the private sector to invest in renewable energy by ensuring that renewable energy plants are more profitable than fossil fuel plants,” the report stated.
“Likewise, private sector investment in electric vehicles and energy-efficient and disaster-resilient buildings will depend on the profitability (of such projects),” it added.
“Adaptation is the key priority for the Philippines. Adaptation means reducing the risk and damage from extreme events, like typhoons. It also means reducing the risk from slow onset events like rising temperatures and we should not forget about that,” Mr. Bosquet said.
“The good news is that adaptation actions can substantially reduce the impact of climate change on the economy. Economic losses could be reduced by two-thirds by mid-century,” he added.
Typhoons have been estimated to dampen GDP by 1.2%, the World Bank said.
The report recommended avoiding new construction in vulnerable areas and increasing the energy efficiency of buildings to help urban residents deal with the effects of gradually increasing temperatures.
“Improving water storage will reduce the risk of damaging floods and droughts and, by increasing water availability, allow irrigation to be extended into rainfed areas, thus helping farmers in those areas adapt to higher temperatures,” it added.
World Bank Regional Vice-President for East Asia and Pacific Manuela V. Ferro said that the power sector is a potential driver for mitigating climate change risk.
“The Philippines is one of those countries where there is a sweet spot between climate change mitigation action and lowering the price of electricity,” she said.
“Investments in renewable energy… (that) bring costs down are very within hand. That’s a sector we see tremendous potential to do more,” she added.
Mr. Bosquet said the Philippines has the opportunity to decarbonize using solar and wind energy.
“An important aspect of this transition is that all these options reduce the current electricity generation costs. The Philippines has a high cost of electricity at the moment. Based on our analysis, we see that many of the investments that are already planned will do a great deal and the adaptation options are feasible and costly, but less costly than other countries we’ve analyzed,” he added.
According to the World Bank, most climate actions do not require legislative change but improved implementation of existing programs or changes to implementing rules and regulations.
“For example, strengthening financial sector regulators’ capacity to integrate climate risks in monitoring and supervision requires developing regulations, guidelines, and standards but no new legislation,” it added. — Luisa Maria Jacinta C. Jocson