Forward-Looking LGUs now reaping benefits from Payments for Ecosystem Services

Dec 30, 2018


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While the Cagayan de Oro Council is debating the merits and demerits of the proposed ordinance on the Payment for Ecosystem Services, at least four forward-looking local government units (LGUs) in the Visayas and Mindanao are now reaping the benefits of implementing similar measures.

The draft ordinance sponsored by Councilor Ian Mark Nacaya proposed the adoption of a Payment for Ecosystem Services (PES) as “an emerging financial tool for environmental conservation built on research and community collaborations. It proposes a “reward mechanism” through which “buyers” who benefit from the intangible products of the eco-system such as fresh air, water and forests which mitigate disastrous floods, pay “sellers” who protect and provide these ecosystem services.  

WAO PES Contributions & Expenditures


Besides Nacaya, other councilors who have expressed their support for the PES ordinance are  Finance, Budget, and Appropriations Committee chairwoman Edna Dahino; Police, Fire, and Public Safety Committee chairman Romeo Calizo; Health Committee vice-chairman Reuben Daba; Tourism Committee chairman Jay Roa-Pascual; and Environment and Natural Resources Committee chairman Zaldy Ocon.

“It’s important for us to see the whole picture. There should be a sample so we can specify [and] clarify where the fund goes. The people should understand their involvement in protecting the environment by paying the ecosystem services. Help us understand where the money will be spent on. Credibility and trust (referring to the PES implementers) are important here,” Dahino stressed. “If we pay for the water supply and distribution, we must also pay for the source

San Carlos City’s Green Fund

San Carlos City in the province of Negros Occidental, Negros island in West Visayas, was one of the pioneers of PES implementation with the passage of  Ordinance No. 37, Series of 2004 “An Ordinance Regulating the Operations of the City Waterworks of  the City of San Carlos, Negros Occidental and Creating the  Watershed Protection Fund, and for other related purposes” some 14 years ago.

Through the so-called Green Fund, the LGU  utilizes a non-traditional scheme of financing environmental protection by imposing a fee P0.75 per  cubic meter of water used by the residents of San Carlos City as  provided by the aforementioned ordinance.

Wao Initial Results & Impact


The revenues generated goes to a Trust Fund created specifically to protect and rehabilitate the watershed within the City. The Green Fund Levy was increased from P0.75 to P1.00 per cubic meter in 2008.

Through a Memorandum of Understanding with the local water system, the LGU aims to leverage the fund over a period of 15 years with other resource  agencies to create  a substantial  multiplier effect  into the coverage  area.

Since its establishment in 2005, the San Carlos Watershed Management Project has progressed from an initial area planted of 3.87 hectares (ha.) to 445 has. as of 2012 with another 70 has. projected by 2013.

Through Nursery Operations conducted by the Nabingkalan Indigenous Seedlings Producers Assocation (NISPA), another imitative is turning laborers into entrepreneurs, an undertaking which has made the group the Grand Prize Winner for the Leonard CoAward  for Best Native Forest Tree Nursery in 2011.

The Galing Pook Foundation recognized the San Carlos City LGU with a Galing Pook Award in 2007 for its Water Levy for Watershed Development initiatives through the PES. The LGU is now recognized as the benchmark for PES in the Philippines.

The Galing Pook Awards recognizes innovative practices by local government units. The awardees of the Galing Pook are chosen from a national search of local governance programs, evaluated through a multilevel rigorous screening process based on positive results and impact, promotion of people’s participation and empowerment, innovation, transferability and sustainability, and efficiency of program service delivery.

Beyond the awards, winning programs become models of good governance promoted for adoption in other communities. They provide useful insights and strategies to find innovative solutions to common problems. More importantly, they affirm the community and the local government’s commitment to good governance.

The Wao PES Experience

Another PES pioneer is the Wao, Lanao del Sur LGU which has been implementing it as an alternative financing scheme since 2010 in partnership with local stakeholders who agreed to a PES scheme to sustain the municipality’s forest development program.

Among its partner institutions are the Wao Water District (contributing P75,000 a year); Unifrutti Philippines (P100,000/year contribution in cash or in kind);  Wao Truck Owners’ Association (10/truckload of agricultural products) and Wao Development Corporation  (P100,000/ year contribution in cash/in kind since March 2011).

WAO Land Use Vegetative Cover 2003 vs 2011


The revenues generated through the PES have been used for the purchase and distribution of rubber and coffee seedlings; rubber and coffee clones; and rubber, fruit tree and coffee seedlings.

Among the immediate results and impact of the PES initiatives are the establishment of a Municipal Nursery which augers a potential increase in household income of farmers (with 300 hectares  agro-forestry area), the creation of alternative employment (forest guards, laborers for nursery operations), and soil and water conservation resulting in the  shift in farming methods from mono-cropping with  corn to multiple cropping with  perennial crops such as rubber, fruit trees  and endemic wood species.

Most significantly perhaps, the PES initiatives have resulted in the cessation of  illegal cutting of forests and have  reduced kaingin to nil on an annual basis.

Naawan’s Green Governance Program

A mere hour’s drive from Cagayan de Oro City, the Municipality of Naawan, Misamis Oriental has been implementing its own version of the PES since 2013.

With less than 2,000 households served by the municipal water system, the local government of Naawan is generating an average of P350, 000.00 per year from its P1.00 per cubic meter of potable water provided for watershed and reforestation fee.

WAO Before & After PES implementation


Dubbed the Green Governance Program of Naawan, it aims to rehabilitate and protect the Naawan watershed, improve ecosystem services; reduce poverty; and develop the municipality’s  adaptation and resilience to the challenges of climate change.

Among the town’s stakeholders who have committed support to the program are the MASS-SPECC Cooperative Development Center, Environment Department of Holcim Philippines, and other stakeholders, with the Mindanao Development Authority (MinDA) as lead agency.

The Naawan Green Governance Program was conceptualized when the Misamis Oriental municipalities of  Manticao, Lugait, and Naawan (MANLUNA) a Cluster Eco-tourism plan to Conserve Nature and Revive Tradition as an Economic Driver, participated in the Partnership for Democratic Local Governance of Southeast Asia (DELGOSEA) Project which champions the ecosystem-based and ridge-to-reef approaches. 

Bago City Environmental Protection Fee

The latest but definitely not the least among the PES Pioneers, the  Bago City Environmental Protection Ordinance No. 15-16 An Ordinance imposing an Environmental Protection Fee, providing for the management and use thereof, and for other purposes was enacted by the Bago City SP Dec 29, 2015, and adopted unanimously by the Sangguniang Panlalawigan of Negros Occidental on 17 Feb 2016.

To date, the PES has collected P 2.5 million from commercial water users alone to finance forest conservation in Bago City, including forest protection and livelihood projects.

It has also in the process of negotiating an agreement with sugar and rice producers which is projected total collection of around P 2-4 million annually through the EPF.

Among the EPF’s immediate results is the reduction of charcoal-making within MKNP (?), increasing awareness of people on forest conservation, and encouraging more farmers to join the program.

The MKNP Conservation Area Protection and Management through LAWIN (a cybertracking and assessment tool), in collaboration with DENR and USAID is now being regularly patrolled, with data gathered processed and used to immediately response to identified threats. Continuing consultations with upland communities and suspected violators are being conducted as part of this response.


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