It has been 11 years since Typhoon Haiyan devastated central Philippines killing thousands of people and causing around USD 10 billion of damage¹. The Philippines is hit by around 20 typhoons each year and incurs some USD 3.5 billion in economic losses annually from extreme weather events and other natural disasters².

According to the Philippines Country Climate and Development Report (CCDR) prepared by the World Bank, the economic losses associated with climate change-related physical risks in the country could reach up to 7.6% of GDP by 2030 and 13.6% by 2040³.

As a result, the country is seeking investment solutions focussed on adaptation, for example building weather-resilient infrastructure and improving the resilience of the food system. This will be funded partly by private investment, though, to reach the scale needed, more must be done to build investor confidence.

Funding will also come through ramping up government spending. For 2024, the government has proposed allotting PHP 543.45 billion (USD 9.74 billion) for climate spending, a 17% increase from 2023, which was already 60% higher than 2022⁴.

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Weather-resilient infrastructure

Much of the emphasis of this climate spending is on infrastructure.

When Typhoon Haiyan hit, for example, more than 560 electricity transmission towers fell⁵. Some villages were left without power for several weeks, highlighting the need for more advanced early warning systems and more durable transmission towers and microgrids, which can ensure a steady flow of power even when disconnected from a main grid.

Securing a stable electricity supply during storms is vital, particularly in remote areas, where breakdowns in communication can hamper evacuations and other rescue efforts. Power is also essential for lighting and running water pumps, which are important in preventing the spread of disease, a common consequence of typhoons, earthquakes, and floods.  

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Food systems

Protecting and developing the food system is also critical, given that agriculture contributes approximately 12% of the country’s GDP⁶. The Philippines is one of the world’s largest producers of rice, keeping much of it for domestic consumption. However, these rice fields can be vulnerable to the increasingly extreme weather conditions associated with climate change.

The Department of Agriculture has been championing climate-resilient agriculture practices. When it comes to rice production, farmers are experimenting with varieties tolerant to salinity and droughts, and are increasing the use of water harvesting technologies.

Globally, food systems are uniquely vulnerable to rising temperatures. They are also a major cause of climate change – agriculture is the second-largest emitter of greenhouse gases and is the leading cause of deforestation and biodiversity loss. At Lombard Odier, we believe that regenerative agriculture, precision farming and innovations such as stress-tolerant crop varieties will all play a part in the ongoing transition towards new, sustainable food systems. For investors, the food systems transformation is creating new opportunities in the production of sustainable and climate-resilient foods and related products, such as animal feed, aquaculture infrastructure and clean fertilisers.

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Seaweed

Moves are also afoot in the Philippines to protect the production of seaweed, which has multiple uses in both food and non-food industries, such as food additives, animal feed, pharmaceuticals, nutraceuticals, cosmetics, textiles, bio-fertilisers or bio-stimulants, bio-packaging, and biofuel, among others⁷.

Asia produces 97.4% of the world’s seaweed, and ensuring that supplies are not compromised by typhoons and climate change is becoming increasingly important. Coast 4C, a seaweed trading company in the Philippines, is building a network of typhoon-resilient seaweed nurseries and implementing disaster-risk reduction plans to protect their crop⁸.

Seaweed could also help protect other crops. Filipino researchers have found that a seaweed extract, when processed with radiation, can make rice plants more resistant to typhoons and boost production by 20%–30%⁹.  When applied as a fertiliser, researchers said plants grew stronger roots, sturdier stems and more tillers¹⁰. Innovations such as this could prove key to building extreme-weather resilience in agriculture.

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Investment challenges

Government and regional initiatives aim to channel funding into climate-focussed projects. The People’s Survival Fund, for instance, provides financing for on-the-ground projects in water management and farming¹¹, such as riverside ecosystem protection, flood risk protection, and climate risk education for farmers.

Meanwhile, the government amended the Renewable Energy Act in November 2022 to allow 100% foreign ownership of renewable energy projects, hoping to spur investment into climate mitigation solutions¹².

However, there is still a significant investment gap when it comes to scaling critical solutions and putting typhoon-preparedness plans into action. For example, the World Bank has warned there are “notable gaps” between planned spending by the country’s Department of Agriculture and actual disbursements, due to poor project selection and failure of local governments to provide counterpart funding¹³.

The Bank has also called for reform of agricultural support policies to encourage more diversified production systems, which tend to be more resilient to climate shocks¹⁴, to bolster productivity and enhance water storage capacity for a consistent supply¹⁵.

Project bottlenecks

Others argue that red tape is hampering permit approval for renewable energy projects¹⁶ and claim there is ‘mis-tagging’ of projects so that they do not receive investment from funds with a sustainability focus¹⁷.There have also been delays due to arguments over rights-of-way¹⁸, which have included challenges to the clearance of land around potential electricity transmission lines.

Meanwhile, though the initiative to allow 100% foreign ownership of renewable energy projects is a bold step, some remain concerned that such “foreign-owned” projects may not be run for the benefit of local people¹⁹. Finance alone won’t be enough – a commitment to the region and its people is required for sustainable progress to be made.

Across the Philippines much is being done to combat climate change and better prepare for extreme weather events, including infrastructure upgrades and food system development. However, there are numerous financing and bureaucratic obstacles to be overcome if the innovations currently underway are to translate into concrete and long-lasting solutions.

¹ Filipino typhoon survivors join ‘david and goliath’ climate fight (eco-business.com)

² For sustainable finance to flow in the Philippines, transparency and political will are key (eco-business.com)

³ Philippines Economic Update: Securing a Clean Energy Future (reliefweb.int)

⁴ Philippines’ Marcos faces ‘greenwashing’ claims as climate spending soars (aljazeera.com)

⁵ Haiyan: The Legacy of a Supertyphoon (floodlist.com)

⁶ Climate-Resilient Agriculture in the Philippines (amia.da.gov.ph)

⁷ Seaweeds and Microalgae: An Overview for Unlocking their Potential in Global Aquaculture Development (openknowledge.fao.org)

⁸ Meet the startup that's making seaweed more sustainable (conservation.org)

⁹ Philippines: Radiation-Processed Seaweed Increases Typhoon Resistance of Rice (iaea.org)

¹⁰ Philippines: Radiation-Processed Seaweed Increases Typhoon Resistance of Rice (iaea.org)

¹¹ The People’s Survival Fund (climate.gov.ph)

¹² Allows 100% foreign ownership in the renewable energy sector (investmentpolicy.unctad.org)

¹³ Philippines Economic Update: Bracing for Headwinds, Advancing Food Security (thedocs.worldbank.org)

¹⁴ Philippines Economic Update: Bracing for Headwinds, Advancing Food Security (thedocs.worldbank.org)

¹⁵ Philippines Economic Update: Securing a Clean Energy Future (reliefweb.int)

¹⁶ Chinese investment in Philippines’ renewables (eco-business.com)

¹⁷ Amid perennial floods, Philippines think tank chief calls for government to strengthen climate finance accounting for key projects (eco-business.com)

¹⁸ NGCP: Reasons for project delays “beyond their control” (powerphilippines.com)

¹⁹ Chinese investment in Philippines’ renewables (eco-business.com)