Economic Growth, Development Policy and the Environment in the Philippines

Abstract

In this paper we examine data on environmental quality and natural resource degradation in the Philippines, considering trends over time, and compare the Philippine case with those of its Asian regional neighbours. We briefly review theoretical links between environmental quality, resource depletion, and development strategies and outcomes using the scale, composition and technique effect framework. We discuss Philippine environmental outcomes in a general equilibrium framework. A review of historical evidence suggests that protectionist import substitution industrialisation (ISI) strategy, corrupt administrations and weak property rights combined to promote rapid deforestation and land degradation. ISI policies also imparted an urban bias to development and expanded certain pollution intensive industries. These, together with inadequate investments in urban infrastructure and weak regulatory regimes, worsened urban air and water pollution. On the other hand, the Green Revolution in lowland rice agriculture reduced food prices and weakened incentives for deforestation, but increased harmful pesticide use. We analyse the impact of trade liberalisation and rice and corn policies with the APEX applied general equilibrium model of the Philippine economy. Trade liberalisation may not be harmful, indeed it may even be helpful, for environmental protection, but is no substitute for effective environmental policies. Past experience and current trends indicate that a better future for the Philippine environment requires a combination of government action, community initiatives and institutional innovations.