Wala Lang
A country’s economic performance is normally expressed as the value of goods and services produced during the year, and growth rate by comparing that figure with that of the preceding year.
Those figures, known as Gross Domestic Product (GDP), are measured either as (a) the total value of consumer, capital, and government goods and services produced by the country adjusted for imports and exports; or alternatively as (b) the amount earned by workers and managers, government, and returns or profits by investors and business owners. Both approaches theoretically yield the same result. Adjustments are made for inflation when comparing figures for different years.
SYSTEM OF NATIONAL ACCOUNTS Montalban Gorge on a pre-war stamp, before deforestation and piggeries.
GDP is not a perfect measure of economic performance. For example, say a bridge was built in 2019 at a cost of ₱50 million but was washed away by typhoon Rolly in 2020. It cost ₱20 million to repair damaged dikes and houses and to haul the debris away. It was rebuilt in 2021 to the same specs and at an inflation-adjust cost also of ₱50 million.
GDP computations for the three years would include the ₱50 million construction cost in 2019; the ₱20 million repair and rehabilitation costs in 2020; and the ₱50 million to rebuild. Its destruction in 2020 would not be taken into account in a GDP computation and the statistics would be as if the country were experiencing continuous progress with a hiccup in 2020.
GDP statistics would be even more misleading if the country’s virgin forests were to be logged; mountains bulldozed with the soil sold to China for West Philippine Sea reclamation; copper minerals dug up and exported. Sold for little more than the extraction and processing cost, go into GDP without allowing for the loss of the irreplaceable resources or the coral reefs and fish breeding grounds that become Chinese air fields.
This is what Deputy Speaker Loren Legarda seeks to remedy in introducing House Bill 9181. She proposes an ecosystem and natural accounting system that takes into account any losses or improvements in the country’s natural resources. The Management Association of the Philippines (MAP) has been in the same advocacy through its Sustainable Development Committee that includes Dr. Corazon Pe Benito Claudio, former NEDA head Cielito Habito, and former Silliman University president Ben Malayang III.
Entitled “Philippine Ecosystem and Natural Capital Accounting System (PENCAS) Law of 2021,” the bill improves upon standard economic indicators that track not only the value of goods and services produced but also quantifies the consequences of the accompanying pollution, waste disposal, loss of natural resources. The bill recognizes that the GDP generated in Metro Manila, for example, has to be viewed also in the light of its side effects like the plastic waste that pollutes Manila Bay and the China Sea, impact on the livelihood of fishermen, and potential health problems of the millions who eat Manila Bay caught seafood.
A good deal of international thinking has gone into these concepts. The United Nations System of Environmental-Economic Accounting (SEEA) was formulated in 2006, subsequently refined with the adoption of the SEEA Ecosystem Accounting and the Natural Capital Accounting and Ecosystem Valuation Project.
It is a framework that encompasses factors that are almost always excluded in short- and medium-term economic planning such as land use and land cover, urbanization, air emissions, energy sources and uses, biodiversity, water resources, intensity of crop and animal production.
Congresswoman Legarda’s bill emphasizes that national income figures form the basis and express the targets of national economic management, policy making, project identification and design, fiscal and debt policy, and related matters. She stresses that the omission of the environmental impact of public and private sector decisions could have catastrophic consequences two or three generations from now.
It’s later than we think.
Comments are cordially invited, addressed to [email protected].