The Philippines has immense potential to capitalize on a growing market for environmental assets such as carbon credits, biodiversity credits, and blue carbon credits. As global rules for these markets take shape, the country must be prepared with policies that align with the emerging landscape.
These environmental assets work similarly to gold stars awarded in kindergarten for achieving certain milestones. However, instead of a teacher awarding a star, independent verification and scientific measurement determine the validity of the asset. When a forest is restored or a habitat protected, a credit may be issued once the benefit is measured against an accepted standard.
Credits such as carbon, biodiversity, and blue carbon can acquire financial value, enabling buyers to fund verified environmental improvements, meet climate or nature commitments, or offset emissions. The value of these assets depends on whether the underlying benefit is real, measurable, durable, and verifiable.
The Philippines is one of the world's megadiverse countries, with rich plant diversity and a long coastline. This natural endowment positions the country as a prime candidate for forest, biodiversity, blue carbon, and coastal restoration projects.
These projects can channel private financing into conservation efforts that the government and communities cannot fund alone, transforming conservation from a public expense into a productive undertaking.
The Philippine Ecosystem and Natural Capital Accounting System Act is a crucial starting point in recognizing ecosystems and their services as part of the country's wealth. However, further policies must be developed to define these assets, establish ownership, and determine how they will be transferred and retired.
The country's natural resource rules were originally designed for extractive activities, which have different requirements than conservation projects that operate over extended timelines. Large-scale mining and renewable energy have more favorable regulations than conservation projects, despite similar capital and technical demands.
Clear rules defining these new assets, distinct from ownership of the underlying land and natural resources, are necessary. The rules must determine who initially owns the environmental outcome, represented by a credit, and allocate rights among stakeholders, including landowners, indigenous peoples, and project developers.
Property rights are essential for any market, and investors will not commit long-term capital without clear rules and regulations. Credible measurement, independent verification, transparency, and environmental integrity are also crucial for preventing fraud and ensuring the authenticity of these environmental assets.
In the long term, constitutional reform should distinguish between activities that extract and deplete natural resources and investments that protect, restore, and increase their value. This will help align private incentives with the public interest and provide stronger reasons for landowners, communities, and developers to prioritize conservation efforts.
The new assets, carbon and nature credits, give verified conservation outcomes measurable economic value, providing a tangible reward for those who protect and restore nature. Good rules can align private incentives with the public interest, ensuring that conservation efforts yield both environmental benefits and financial returns.
