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Vol. XVIII No. 2

March - April 2000

ISSN 0115-9097

Metro Manila: On the road to clean air in 2000 Philippine Star, 31 March 2000

E

xposure to lead and particulate matter (PM 10 )

emissions has been associated with increased risk

of heart ailments, respiratory illnesses

for Vehicular Pollution Control in Metro Manila� written by Dr. Rosario G. Manasan, Dr. Marian S. delos Angeles, and Ms. Donna T. Ramirez for the Philippine Environmental and Natural Resources Accounting Project (ENRAP), different policy options are presented to control lead and PM 10 emissions in Metro Manila. The paper was read and discussed during a Pulong Saliksikan at the Philippine Institute for Development Studies (PIDS) last year.

Root sources of emissions The primary source of lead emission in Metro Manila is leaded gasoline from motor vehicles (Bennagen and Cruz 1995). Thus, with the 9.8 percent growth rate of vehicle stock annually, the level of lead emissions and airborne ambient lead concentration constantly increases. to page 2

and other health diseases which nec-

What's Inside

essarily has its corresponding costs. If left unabated, said emissions will lead to higher costs in terms of damages to

4

Toward a more responsive research agenda for development

9

Urbanization in a decentralized framework: The lure of the city

human health and budgetary costs for medical expenses. In this regard, what can and should be done to address the situation? In an integrative paper entitled "Alternative Policy Instruments

13

A challenge for health in the 21st century

16

What inflation is about

Editor's Notes Airconditioned buses and FX vehicles are heaven sent! At least to most working individuals who wish to get to their destinations smelling good and looking fresh. Why? Because the state of Metro Manila and its surrounding environs is in such a sorry state. Pollution-wise, that is. Getting around in jeepneys is a burden and traveling via the mass transport gives the feeling of being in a can of packed sardines. Besides, who wants to page 15


DEVELOPMENT RESEARCH NEWS

Clean air...

Figure 2.

Projected health damages associated with PM10 exposure, National Capital Region (In million pesos)

From page 1

14,000

This is exacerbated by the declining use of low-leaded and unleaded gasoline (which were in the first place meant to reduce the level of emissions when they were introduced in 1993 and 1994) since there are still a large number of cars having soft-valve seats that cannot accommodate unleaded gasoline.

Million Pesos

12,000

Lead is a neurotoxin that has been found to cause anemia, neurological dysfunction, renal damage, mental and physical retardation in children, cardiovascular diseases, and at high doses, even death (Lovei 1996). Health damages resulting from lead emission are projected to grow by 7 percent annually in Metro Manila, amounting to a high P13.1 billion by 2006 (see Figure 1) if with the current

Figure 1.

10,000 8,000 6,000 4,000 2,000

In the same manner, the primary contributor of PM10 in Metro Manila is transport-related, 16 percent of which are from vehicle exhaust and 53 percent from paved road travel.

Damages to health

March - April 2000

2

0 2000

2001

2002

2003

2004

2006

Year

accelerated rate of vehicle stock, no additional policy on lead emissions will be implemented. Likewise, exposure to PM10 increases the risk of various respiratory illnesses such as chronic bronchitis, asthma, chronic cough and even death. If no further policy on PM 10 emissions will be implemented, health damages due to such pollution are projected to reach P2.6 billion this year and P9.5 billion by 2006 as shown in

Figure 2. Premature mortality is estimated to be P1.1 billion while cost of medication from chronic bronchitis and lower respiratory illness totals to P1.5 billion this year. In terms of the cost of work days lost, it is estimated to be worth P2.0 million.

Choice of policy approaches The magnitude of the costs requires definitive action especially on the part of the government. Certainly, controls on the emission of these pol-

Projected health damages associated with lead exposure, National Capital Region (In million pesos)

14,000 12,000

Million Pesos

2005

10,000 8,000 6,000 4,000 2,000 0 2000

2001

2002

2003

Year

2004

2005

2006


DEVELOPMENT RESEARCH NEWS

Table 1.

Health benefits derived from two options to reduce lead emission, National Capital Region, 2000-2006 (In million pesos)

Option With price differentiation between leaded and unleaded gasoline With leaded gasoline ban

Table 2.

March - April 2000

3

2000

2001

707

1,219

4,565

5,452

2002

2003

2004

2005

2006

2,010

2,686

4,162

5,605

7,666

6,502

7,749

9,232 11,000 13,110

Projected social net benefits derived from two options to reduce lead emission, National Capital Region, 2000-2006 (In million pesos)

2000 Private Net Benefits With higher tax differentiation With leaded gasoline ban

2003

2004

4,906

2005

1,393

2,414

3,270

5,133

6,963

8,161

9,571 11,232 13,196 15,522

(174)

(404)

(444)

(744)

6,423

2006

8,874

(817) (1,207)

(1,376) (1,511) (1,659) (1,822) (2,000) (2,196) (2,412)

Social Net Benefits With higher tax differentiation With leaded gasoline ban

2002

865

Government Net Benefits (Tax Loss) With higher (158) tax differentiation With leaded gasoline ban

2001

707

1,219

2,010

2,826

4,162

5,605

7,666

3,757

5,452

6,502

7,749

9,232 11,000 13,110

lutants must be put into place. What instruments and approaches therefore should be adopted and used? In two separate papers dealing specifically with lead and PM10 emission control, respectively, by the same authors, alternative approaches were examined. Two alternative approaches to reduce lead emissions from motor vehicles were presented while three alternatives to reduce PM 10 emissions were looked into.

Lead emission control The two proposed options to pursue the reduction of lead emissions are: (1) implement a price differential between lead and unleaded gasoline favoring unleaded and (2) ban leaded gasoline by the year 2000. Table 1 shows the result of the computations of the health benefits for the period 2000 to 2006 under the two options while Table 2 compares the projected social net benefits between the two options. Assessment of the two alternatives The study reveals that the ban on leaded gasoline is the more attractive option because not only are health benefits enjoyed instantaneously, amounting to P4.6 billion in year 2000 (Table 1) as health damages associated with air lead exposure will be zero starting year 2000, and to P13.1 billion by year 2006, but the present value of social net benefits (i.e., health and technical cost less tax loss) is also higher (Table 2). Furthermore, the ban is also the more cost-effective option as health benefits far exceed the technical cost associated with the ban. Technical cost includes engine modification of P531.0 million; storage cost of excess lead of P0.20 million; sunk cost of purchased lead of P185.0 million; and technical to page 6


DEVELOPMENT RESEARCH NEWS

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March - April 2000

Toward a more responsive * research agenda for development by Dr. Ledivina V. Cariño**

O

n behalf of the Chairman of the PIDS Board of Trustees, Secretary Felipe Medalla, who unfortunately is not able to be around this morning, as well as the other members of the PIDS Board, let me welcome you to this very important and critical forum. I emphasize the word “critical” because I feel that this gathering will determine whether the task undertaken by the Institute on the formulation of a new research agenda for the next five years has been satisfactorily completed or whether there is a need to go further from here. And if so, how much further? Before we present the proposed new agenda, however, allow me to trace the steps taken by the Institute in coming up with this program. The importance of research to national policy formulation and decisionmaking cannot be overemphasized. This process involves defining

*Opening remarks delivered during the Forum on the Proposed PIDS Five-Year Research Agenda, 2000-2004 on January 13, 2000. **Dean, National College of Public Administration and Governance (NCPAG), University of the Philippines-Diliman, and Member, PIDS Board of Trustees.

year research programs. In defining its research program as well as in the conduct of research, the Institute makes it a point to undergo a rigorous consultative process, drawing from the views and perspectives of its clients and partners in the research community. In so doing, the resulting research outputs are in effect grounded on solid and empirical bases. Dr. Ledivina V. Cariño represents the PIDS Board during the forum on the proposed new PIDS 5-year research agenda.

the problems and gaps that should be addressed by research to develop an appropriate research program that is relevant to policymaking. The provision of such program is the mandate of the Philippine Institute for Development Studies (PIDS).

PIDS also makes an effort to evaluate on a regular basis the relevance of its research programs to development issues confronting the country as well as its research dissemination activities to bring its research outputs to the attention of the country’s policymakers. The most recent evaluation was undertaken in late 1997 by an External Review Committee created by the PIDS Board of Trustees. One of the tasks of the said Committee, composed of five respected experts in various fields, namely, Dr. Alfredo Bengzon, Dr. Jose Abueva, the late Dr. Jose Encarnación, Jr., Dr. Ernesto Pernia and Mr. Romeo Bernardo, was to assess the Institute’s

Historically, PIDS has worked on fulfilling this role in pursuit of sustained national development through the guidance of an array of key issues on economic and social concerns. Since 1981, for instance, its research program had been defined by certain policy "PIDS could take on a thrusts which provided the leadership role in influencing and direction of its research opencouraging other research erations for various five-year periods. From 1981 to 1995, institutions." in fact, there had been a compendium of three five-


DEVELOPMENT RESEARCH NEWS

niche in policy research given the increasing demands of policymaking and to see whether or not its research program is reflective of recent trends and developments in the socioeconomic environment of the country. When the External Review Committee came out with its assessment of the PIDS research program, they pointed out the need to redefine its priorities and, therefore, formulate a new research agenda in the light of emerging development issues. The PIDS Board of Trustees responded by adopting this recommendation and mandating the PIDS management to institute the mechanisms to operationalize such agenda. With the end view of having a broader, more in-depth and more objective assessment of development issues surrounding the affairs of the country and the world in the next few years of the new millennium, the Institute sought the assistance of outside experts in the person of Dr. Cielito Habito and former Congressman Margarito Teves. The former was chosen for his hands- on experience in formulating economic policy, having been a former Director-General of the National Economic and Development Authority (NEDA) and his familiarity of PIDS operations as Chairman of its Board of Trustees. Meanwhile, former Congressman Teves was chosen for his deep knowledge and experience in crafting socioeconomic bills. The consultants likewise included Ms. Ella Antonio to assist in the process. The consultants, together with officers and staff of PIDS, went through the whole process of research consultations, dialogues and integration to come up with a five-year research agenda covering the period 2000 to 2004. Initial inputs into the efforts of the study team came from the five-year research program developed

March - April 2000

5

Proposed Thematic Areas of the PIDS Research Agenda (2000-2004) Social Reform and Poverty Alleviation v v v v v

efficient and effective delivery of social services human resource development distributional issues population and development labor policy

Opportunities and Challenges of Globalization v v v v

maintaining macroeconomic stability competitiveness and competition policy infrastructure development stakeholder analysis (winners/losers)

Modernizing Philippine Agriculture v v v

productivity and competitiveness agricultural fiscal policies institutional issues

Holistic Sustainable Development v v v v

economic policies and sustainable development technology issues environment and natural resources use operationalizing sustainable development

Transcending Issues v v

governance issues availability and quality of appropriate benchmark data and information

by the PIDS senior research staff during their recent planning workshop. To guide the course of formulating the research agenda, the consultants developed a framework based largely on the Medium-Term Philippine Development Plan (MTPDP) of 1999-2004 or the “Angat Pinoy 2004,� as we know it now.

Recognizing the need to meet and confer with PIDS clients and policy stakeholders such as key government agencies, partners, the private sector, nongovernmental organizarioins (NGOs), and other interested parties, the consultants suggested the conduct of a series of small consultative sesto page 8


DEVELOPMENT RESEARCH NEWS

Clean air... From page 3

cost of shifting production to unleaded gasoline of P91.0 million. Total technical cost is only P808.0 million in the year 2000 as compared to P4.6 billion health benefits in the same year. On the other hand, the impact of a gasoline price differentiation on health damages is not as significant and drastic an alternative as the ban on leaded gasoline since it allows for the gradual offsetting of population growth health damages and the growth of vehicle fleet over time. Moreover, Executive Order 446 which was signed only last September 26, 1997 practically rendered the option of price differentiation between lead and unleaded gasoline as academic since it already mandates the phasing out of leaded gasoline in Metro Manila by January 1, 2000 and nationwide by January 1, 2001.

6

Assessment of the three alternatives Revitalization of the anti-smoke belching program The revitalization of the antismoke belching program is the most effective in terms of reducing PM10 emissions and subsequently, health damages in Metro Manila. Presumably, however, it is also the most expensive in terms of enforcement and monitoring by concerned government agencies as it requires a number of trained personnel and state-of-the-art equipment. If this program is strictly implemented and the emission standards are rigorously enforced, the transport sector will no longer pose an environmental health problem as health damages of P1.8 billion will be totally eradicated on the first year of implementation, resulting in health benefits of the same amount (P1.8 billion) in year 1998 and progressively growing to positive net benefits through time. The big challenge, though, as mentioned, is in the government costs of enforcement and monitoring as well as in the private costs of motor vehicle tune-ups. For instance, as of 1996, there were only 8 smoke meters available versus 1,168,134 registered vehicles in Metro Manila.

March - April 2000

vate costs, the first four years of implementation show negative figures. However, by 2001, they will jump to P379.0 million and progressively grow through time (Table 4). For projected government net benefits, meanwhile, that is, the difference in fines collected and enforcement costs, they resulted into a loss throughout the period under study. When one considers the overall social net benefits of the anti-smoke belching program, though, as computed by private net benefits less government losses, one sees negative (P569.0 million in 1998 to P146.0 million in 2000)results only in the first three years of implementation and then a positive value eventually of P259.0 million in 2001 and P5.2 billion in 2006 (Table 4).

Diesel desulphurization As to the diesel desulphurization option, it has lower health benefits compared to both the anti-smoke belching and diesel tax restructuring programs as shown in Table 3. At the same time, though, it has the lowest incremental private costs computed from the refinery costing as reflected in the diesel fuel pump price. Thus, it is a cost-effective option because private net benefits are positive starting the year 2000 as noted in Table 4.

PM10 emission control Meanwhile, the three alternatives to PM10 reduction are: (1) the revitalization of the anti-smoke belching program, (2) the diesel desulphurization option, and (3) the diesel tax restrucIn terms of projected private net turing. Table 3 summarizes the health benefits, that is, health benefits less pribenefits to be gained from each of the three alterna- Table 3. Health benefits derived from three options to reduce PM10 emissions, tives for the peNational Capital Region, 2000-2006 (In million pesos) riod 1998-2006 while Table 4 compares the Option 1998 1999 2000 2001 2002 2003 2004 projected social net benefits from each of Anti-smoke belching 1,838 2,261 2,644 3,263 4,034 4,992 6,187 the alternatives Diesel desulphurization 0 0 399 478 575 693 838 for the same peDiesel tax restructuring 0 0 0 1,096 1,329 1,617 1,972 riod.

2005

7,678

2006

9,540

677

822

2,410

2,954


DEVELOPMENT RESEARCH NEWS

Moreover, it does not require government enforcement except for the fuel quality monitoring of the three main oil refineries by the Bureau of Product Standards (BPS) of the Department of Trade and Industry (DTI). Since the oil companies are expected to make the necessary technical adjustments to meet the sulphur content standard by 2000 to operate efficiently, private costs are thus expected to decrease through time. Nonetheless, since the ideal world standard of 0.02 percent sulphur content of diesel is far from the projected sulphur content of 0.3 percent (2000 to 2004) to 0.2 percent (2005 to 2006) as applied in the study, there is a need for more stringent government controls.

Table 4.

March - April 2000

7

Projected social net benefits derived from three options to reduce PM10 emission, National Capital Region, 2000-2006 (In million pesos) 1998

1999

2000

2001

2002

2004

2005

(475)

(227)

(35)

379

927

1,646

2,582

3,792

5,350

Diesel desulphurization

0

0

232

301

387

493

626

251

368

Diesel tax Restructuring

0

0

0

586

788

1,041

1,360

1,760

2,262

(93)

(102)

(111)

(120)

(131)

(143)

(155)

(169)

(184)

Diesel desulphurization

0

0

0

0

0

0

0

0

0

Diesel tax Restructuring

0

0

0

509

542

576

612

652

692

(569)

(329)

(146)

259

797

1,504

2,427

3,623

5,166

Diesel desulphurization

0

0

232

301

387

493

626

251

368

Diesel tax Restructuring

0

0

0

1,096

1,329

1,617

1,972

2,410

2,954

Private Net Benefits Anti-smoke belching

Government Net Benefits Anti-smoke belching

Social Net Benefits Anti-smoke belching

Diesel tax restructuring Finally, under the diesel tax restructuring program, health benefits may be higher than the diesel desulphurization option but are incomparably ineffective vis-a-vis the antismoke belching program. In short, its health benefits of P1.1 billion in 2001 which are expected to reach P2.9 billion in 2006 are higher than the desulphurization option but definitely lower than the anti-smoke belching program as shown in Table 3. More-

over, it has a regressive nature, burdening the poor more than the rich since the former are heavier consumers of diesel fuel. In the meantime, as noted in Table 4, among the three options, the diesel tax restructuring is the only program with positive tax revenue gains for the government. Incremental tax revenue is expected to reach P500 million in 2001 and P700 million in 2006.

2003

2006

It is also cost-effective and administratively easy to implement. Its private and government net benefits are also expected to be positive. The main negative issue arising from this program, however, is the regressive nature of the tax restructuring, that is, lower income groups represented by commuters of public transport will be much affected by the higher diesel tax through time. to page 14


DEVELOPMENT RESEARCH NEWS

Toward... From page 5

sions. Each session was dedicated to the six themes of the Medium-Term Philipine Development Plan (MTPDP), thereby grouping the clients and stakeholders accordingly. During these sessions, the necessity of generating data and statistics on socioeconomic concerns became apparent. This warranted another session focusing on socioeconomic data generation and utilization highlighting the importance of making the Philippine statistical system responsive to the demands of policymakers, researchers and the general public. The participants in these sessions are leading experts in their own areas of interest. To name a few, they included National Treasurer Leonor Briones, Dr. Gerardo Sicat, Dr. Ceferino Follosco, Dr. Dante Canlas, Mr. Diwa Guinigundo, Ms. Ofelia Templo, Professor Rene Ofreneo, Dr. Eduardo Gonzales, Mr. Danilo Songco,

Dr. Gerardo P. Sicat, founding father of

8

March - April 2000

Dr. Emma Castillo, Dr. Mahar Mangahas, Commissioner Edgardo Abon, Assistant Secretary Flordeliza Andres, Professor Fortunato dela Pe単a, Dr. Liborio Cabanilla, Dr. Eliseo Ponce, Dr. Bruce Tolentino, Dr. Eugenio Inocentes, and Dr. Arturo Pacificador, Jr. Upon integration of the issues that came out during the consultative sessions, the consultants then met with legislators from both the Dr. Cielito Habito explains a point during his preHouse of Representatives and the sentation of the proposed agenda. Senate. The participants in these meetings, including Congressman Marcial Punzalan and Senator Franklin of these policy issues alone. ConsiderDrilon, were able to articulate the views ing its financial resources and pool of and concerns of the legislature, in par- research staff, formidable as it is, the ticular, the recognition by Congress PIDS could only cull out from this of its need for research support. larger research agenda its possible niche as basis for its contributions to At the end of all the meetings development policy research in the and consultations, what also became country. apparent was that the demands and needs of the country for policy reHowever, PIDS could take on a search are much broader and more leadership role in influencing and envaried than what has been anticipated. couraging other research institutions to take a similar stance and undertake In this regard, the PIDS humbly studies that are indicated in the reacknowledges that it can not tackle all search agenda. Furthermore, midterm reviews will be undertaken to ensure its continued relevance to crucial and emerging concerns of polPIDS, shares his views on the proposed icymaking.

research agenda during the presentation before PIDS research staff and friends.

To his left are Senior Research Fellows Dr. Myrna S. Austria and Dr. Josef T. Yap.

The result of this long and painstaking process of formulating a research agenda will now be presented to you. We hope that the discussions today will help in validating the content and, more importantly, assist the Institute in determining the priority areas that would characterize its operations for the next five years. On this note, therefore, allow me to thank you, on behalf of the PIDS Board of Trustees and the officers and staff of the PIDS, for taking time off from your hectic schedule just to participate in this forum. DRN


DEVELOPMENT RESEARCH NEWS

March - April 2000

9

Urbanization in a decentralized framework: The lure of the city*

I

t is common perception that anything urban has an added special attraction. There is status. There is a sense of achievement. In fact, Mr. Webster defines the adjective "urbane" as that which is notably polite or refined in manner. This quality suggests a well-educated and well-mannered individual, something which only an urban environment seems to offer. Under the Local Government Code of 1991, the advantages of cityhood have become even more pronounced as a result of the sharing formula for the internal revenue allotment (IRA). Thus, in recent years, a number of municipalities in and around Metropolitan Manila have been converted into cities. Majority of the respective constituencies welcomed such transformation as they looked forward to brighter and more

*Based on the following PIDS Discussion Papers: No. 98-31 "Metropolitan Arrangements in the Philippines: Passing Fancy or the Future Megatrend" by Dr. Rosario G. Manasan and Ruben G. Mercado, PIDS Senior Research Fellow and Research Associate, respectively; No. 98-32 "Environment and Natural Resources Management: Lessons from City Program Innovations" by Ruben G. Mercado; No. 98-36 "Health Management Strategies from Selected Cities" by Virginia S. Pineda, PIDS Research Associate; and No. 98-37 "Financing and Delivery of Urban Services in the Philippines: An Overview" by Dr. Manasan.

prosperous developments in most sectors under their respective local officials.

is looking at. However, it all boils down to access, either to basic services or to employment opportunities.

What it takes to become a city

Backgrounder: The research project

Achieving cityhood may sound like a dream-come-true but the truth is that such event signals the start, rather than the end, of more decisionmaking, difficult ones at that, to go along with the improved status.

The need to come up with studies which assess the state of urban elements amidst the increasing backdrop of local governance led to the commissioning of the Philippine Institute for

Urban living itself has two faces, depending

Metro on which perspective one is looking at. HowManila, the ever, it all boils down to access, either to basic major conglomerate of services or to employment opportunities. cities and municipalities in the country, has dazzling and impressive features. On one hand, Development Studies (PIDS) for a it has malls, restaurants, glamor, fash- component project under the Populaion and answered dreams. On the tion and Urbanization project manother, it has crimes, pollution, traffic aged by the Demographic Research and expensive goods—things which and Development Foundation (DRDF) most people from the rural areas do and funded by the United Nations not factor in when they decide to mi- Population Fund (UNFPA) entitled grate since their perception of the Managing the Urbanization Process under positive things in the city almost always a Decentralized Governance Framework. outweighs the others. Thus, there is The research project focused on the the perennial problem of rural folks state of urban service delivery and fimigrating to the cities in search for a nancing in the face of growing urbanbetter future. ization as well as the devolution of responsibility to the local government Urban living itself has two faces, to page 10 depending on which perspective one


DEVELOPMENT RESEARCH NEWS

10

March - April 2000

Redulla (regional technical director, Department of Environment and Natural Resources) and Dir. Judith Lim (regional head of the Housing and Land Use Regulatory Board or HLURB) who raised a number of points regarding urbanization.

Metropolitan arrangements

Philippine Copyright 1998, National Book Store, Inc.

units (LGUs). In addition, the project looked into case studies of selected cities whose respective administrations conceptualized and implemented innovations in the financing and delivery of urban services. Since the project’s completion in late 1998, the study team composed of PIDS Senior Research Fellow Dr. Rosario Manasan, Research Associates Ruben Mercado and Virginia Pineda, and Senior Research Specialist Eden Villanueva, has visited three provinces and presented the findings of the project’s various papers. The team presented its studies in Bohol in a forum organized by the League of Cities of the Philippines, and in Tuguegarao and Zamboanga City during consultative fora jointly sponsored with the regional offices of the National Economic and Development Authority (NEDA) in Regions 2 and 9, respectively.

The first regional forum held in Tuguegarao, Cagayan Valley was participated in by 10 government agencies, including the NEDA Regional Office, eight city/municipal offices, and two provincial television stations. Ms. Milagros Rimando (regional director, NEDA), Mr. George Camhit (regional director, Bureau of Local Government Finance - Department of Finance), Mr. Lorenzo Agaloos (regional technical director, Department of Environment and Natural Resources), and Dr. Carlos Cortina (medical specialist, Cagayan Provincial Health Office) shared their valuable comments on the findings presented by the study team. On the other hand, the forum in Zamboanga City was attended by representatives from the academe like Fr. William Kreutz (president, Ateneo de Zamboanga) and Dr. Fortunato Cristobal (dean, Zamboanga Medical School Foundation), and from the government such as Dir. Teotimo

How can an urban center maintain its programs and services? Is cooperation with local units near or surrounding it possible? When is a metropolitan arrangement possible? An urban settlement has a population of more than 100,000 (Mercado 1998) and has certain advantages such as higher productivity, reduced cost in delivery of certain services and increased revenue (Manasan 1998). Trends in the 1990s, however, show that said advantages are no longer enough to address the problems brought about by growing population and increasing urbanization. As such, in recent years, urbanized areas, with the help of neighboring units, have also pursued another direction: that of becoming a metropolis through special arrangements. Manasan refers to a metropolis as a “large urban settlement usually crossing local jurisdictional boundaries with at least one million population.” But in a more contemporary setting, urban settlements with less than a million population could undertake metropolitan functions or activities under a metropolitan arrangement Thus, aside from population-heavy Metro Manila, the country has seen the


DEVELOPMENT RESEARCH NEWS

emergence of Metro Davao, Metro Naga, Metro Cebu, Metro Iloilo, Metro Cagayan de Oro and Metro BLIST (formerly Metro Baguio). In the near future, other cities which see the need to cooperate with their neighbors in the name of efficient urban service delivery may also turn into the concept of a metropolis. This, according to Mercado, seems to be the direction as “Urbanization is an inevitable phenomenon and not a matter of choice.”

11

dresses the common problems which a single LGU cannot deal with on its own. The duplication of functions between the metro body and the LGUs may be lessened as well.The bottomline is coexistence and the willingness to see things work inspite of differences.

March - April 2000

of it staying only within the 7-kilometer radius. This is aside from the fact that the island area of more than 1,000 square kilometers is composed of 97 barangays having varying characteristics. For example, some are spread out, some are busy centers while others are quiet.

Mercado, however, replied that if a basis like common concerns and immediate problems which cannot be addressed singlehandedly by each LGU can be established, then the possibility of creating a Metro Zamboanga is always there. The imporIn the near future, other cities which see the tant thing is that the muneed to cooperate with their neighbors in the tually beneficial arrangename of efficient urban service delivery may ment is recognized and accepted by all involved also turn into the concept of a metropolis. and that the other details like the structure can be attended to afterwards.

Alongside this so-called phenomenon, however, are a number of issues which seem impossible to ignore. These include the legal framework of a metropolitan arrangement and the sharing of responsibilities among LGUs. Dr. Manasan stressed that LGUs must first accept that the arrangement is mutually beneficial to all, and then everything will follow from there. She pointed out, however, that the structure of such an arrangement is not a sufficient condition in its success or failure. Insofar as the legal framework is concerned, meanwhile, she noted that there is no provision in either the Constitution or the Local Government Code (LGC) which explicitly supports the LGUs’ undertaking of a metropolitan arrangement. The LGC only mentions cooperative arrangements when it comes to metropolitan schemes.

Problems may indeed arise from a badly implemented metropolitan arrangement but said arrangement can be made to work if the people will cooperate. Potential political and financial difficulties due to different political leanings may be minimized or even avoided if LGUs coexist under this arrangement. Local functions and metrowide services may operate on mutually exclusive grounds in the sense that the bigger metro system ad-

In the meantime, NEDA Region II Director Rimando welcomed the innovative scheme under a metropolitan arrangement, which, according to her,

should continue as a trend to give a chance for other urban municipalities/emerging cities to catch up in terms of development with the existing urban centers. For said arrangements to succeed, though, she identified four critical factors that need to be present, namely: v Involvement/support of local politicians who can promote metro arrangements; v Sustainability of programs with the support of higher level LGUs like provincial government; v Financial stability; and v Resolution of conflicts. During the Zamboanga forum, on the other hand, Fr. Kreutz noted that the concept for the creation of a Metro Zamboanga seems unrealistic since Zamboanga’s population of more than 500,000 has more than half

On the observation that a metropolitan arrangement has resulted in the faster rate of privatization as in the case of solid waste management, thereby making the role of LGUs redundant, Mercado pointed out that privatization is a variant of a functional fragmentation which can serve as one option for LGUs or a metropolitan arrangement to consider in delivering basic services. It can thus be used as a vehicle for delivering services by either the national government or the metropolitan arrangement. In this regard, Dr. Manasan stressed that a metropolitan arrangement creating its own problems is, of course, always a distinct possibility. After all, a metropolitan arrangement is not a solution. It is a possible option which can be made to work if people work hard enough on the process. She also added that metropolitan arrangement is not a layering. In a decentralto page 12


DEVELOPMENT RESEARCH NEWS

Urbanization... From previous page

ized regime, LGUs perform purely local functions while the metropolitan system does metrowide services. Both can coexist with one another.

Urban financing Due to inefficient tax collection, among others, Region 9, according to Fr. Kreutz, lags behind in terms of the delivery of basic urban services. He added that as the area becomes urbanized, it attracts migrants, most of whom are actually poor who contribute less in the revenue but nonetheless need the same level of basic services. Manasan said that this is one reality that takes place since collection efficiency is negatively related with income level. Thus, one area which should be given priority in future research is how LGUs can increase their revenues. The 1991 Local Government Code offers a number of areas and ways on how to achieve higher revenues as well as a more effective approach to utilize financial resources as guide to local executives. Local executives, though, seem not to know how to use them. A related sentiment was voiced out in the Tuguegarao forum, meanwhile, where Director Camhit expressed his concern over the bias of local chief executives toward infrastructure which invariably leaves out other equally important aspects of development such as education and health from the allocation of resources. On the issue of the proposed cityhood for Tuguegarao, Dr. Corona Borja, a Sangguniang Bayan member, noted that metropolitanization should be viewed as a positive development since conversion would mean a higher

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IRA for Tuguegarao to support more development projects even without increasing local taxes. However, she lamented the common misconception of many of her townmates that relate cityhood to higher local taxes. In view of this, she emphasized the importance of social preparation for the people so that the issues may be properly disseminated and ventilated. The Tuguegarao forum also raised the question of whether it is better for municipalities to remain rural if, as one of the PIDS findings shows, per capita expenditure decreases as cities become more urbanized. Relatedly, one of the participants asked how to address the sharing of revenues generated from big infrastructure facilities serving a big portion of the country but are located physically in certain LGUs. For instance, in the case of the Magat Dam in Isabela, how will the revenues be allocated? In response, Manasan said that the host LGUs of income-generating facilities operated by government corporations should rightfully have a fair share in the revenues earned from these facilities. As to the matter of remaining “rural,� the fact is that financial constraint is a common problem among LGUs, whether they are rural or urban. The bottomline is that there are urban LGUs which adopt innovations on service delivery to cope with the demands of urbanization given their limited financial resources. Said innovations are documented in this PIDS research project and are being disseminated to other LGUs for their information and reference.

Environment and natural resource management Mr. Lorenzo Agaloos from the regional office of the Department of Environment and Natural Resources (DENR) in Region 2 commented that

March - April 2000

four factors are critical in the success of environmental management. These are money, material, manpower and methods. An example of method is the incorporation of environmental awareness into elementary education under the ECO-WISE Project set up by the DENR. In Zamboanga, the sustainability or noncontinuity of certain environmental programs was of great interest to the participants. One suggested way to address this issue is to empower the people and get them deeply involved with environmental and natural resource management programs. Such an arrangement will ensure the sustainability of programs even with the regular shifting of the administrative guards. This sense of continuity in the implementation and monitoring of projects and programs exists, for instance, in Puerto Princesa City.

Health management strategies Dr. Carlos Cortina of the Cagayan Provincial Health Office took pleasure in announcing the implementation of health service delivery innovations in the various municipalities of Cagayan. These include the utilization of radio communication equipment during emergency cases, deployment of volunteer/casual health workers, and utilization of health workers' residence as a barangay health station. In both the Zamboanga and Tuguegarao fora, the concern whether to focus on curative rather than preventive health care was raised. Thus, the consensus was to reorient the people’s health concept toward preventive care. This reorientaion will lessen the dependence of people on specialized medical assistance and, subsequently, on hospitals and doctors. to page 14


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March - April 2000

A challenge for health in the 21st century* by Dr. Fortunato Cristobal**

Concept of health With the clamor for a new public health movement, the World Health Organization (WHO) organized the Alma Ata Conference in 1978 where they constituted an ambitious conceptualization of health by the year 2000. In 1986, a group from Canada responded and came up with the Ottawa Charter where they defined health promotion as a basic tool and a process of enabling people to increase their control over their own health to attain a state of complete physical, mental, and social well-being. The Charter also defined some prerequisites. These included peace, shelter, education, food, income, stable economy, sustainable resources, and social justice and equity. Thus, for the first time, the definition of health expanded. To promote health, the Charter proposed five strategies or action plans, namely: (1) building healthy public policy, (2) creating supportive environment, (3) strengthening community actions, (4) developing personal skills, and (5) reorienting the health services.

Primary health care vs. primary care Primary health care is a concept or a philosophy that defines all the approaches to health while primary care means service, specifically the first level of care. In rela-

tion to health services, there is a need to reorient the concept of what is health and what is illness. Health has two sides, the positive side which is the total wellbeing, and the negative side which is the absence of disease. Health promotion is about the positive side, that is, the social model for health rather than the biological model for health. Attempts have always been directed toward bringing the hospital approach down to the community level.The former is very much a diseaseoriented approach while the latter is a health-promotive strategy. Thus, health promotion should be beyond the responsibility of clinical and curative care. Both the Alma Ata and the Ottawa Charter challenge the restructuring of a top-down approach vis-Ă -vis the bottomup approach in health promotion. That is, both charters support the strengthening of community through participation and the empowering of people to take control and ownership over their own health. Social change should be led by the people and the community. As Jessie Partiff commented in 1974, "The greatest contribution to [the] health of the nation over the past 150 years was not made by doctors or hospitals but by local communities." An exceptional case is that of Surigao City's Primary Health Care Federated Women's Club (PHC) which mobilized member volunteers to conduct health-related programs and activities. It proved what statistics has been telling

us all along: that community programs are the ones really making a tremendous breakthrough in health promotion. Likewise, health must be put in the central agenda of every issue since it is the result of complex socio-political-economic factors and must not simply be approached on a sectoral basis.

Management issues and concerns The challenge for health in the 21st century requires a new style of management which should focus on sustainability, equity, and safety as well as ecosystem issues. This new management style is one which exercises power through influence rather than through authority, has leaders who share rather than control the people, has people who negotiate rather than dictate direction, needs and requires collegial rather than hierarchical structures, collaborates rather than competes, and finally, is holistic rather than sectoral in approach. DRN

*Culled from the author's presentation during the Forum on Population and Urbanization: Managing the Urbanization Process Under a Decentralized Governance Framework, 29 November 1999, Zamboanga City. **Dean, Zamboanga Medical School Foundation.


DEVELOPMENT RESEARCH NEWS

Urbanization... From page 12

As to the success stories of cities cited by the study team, some of the participants commented that these have already been in existence and working well even before the implementation of the 1991 Local Government Code. Thus, attributing their success to decentralization and devolution may not exactly be correct. It was also suggested that the research should have also included case studies of failure, like those in environmental and natural resource management, so that lessons may be drawn from them.

Local housing efforts During the discussions in both Tuguegarao and Zamboanga, housing provision is one area where many of the participants believe that government has to focus much of its resources and energy on. This is evident in the numerous comments and recommendations which were drawn from the participants. These included the following: v A policy for government land beneficiaries to avail of housing loans; v A policy on cultural diversity, such as houses on stilts; v Fasttracking of land conversion; v A survey conducted by LGUs to assess the magnitude of homeless individuals in their localities; v Utilization of indigenous materials; v An effective communication program to instill in beneficiaries that housing projects are not dole-outs; and v Participation of the private sector in subsidizing housing projects.

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Conclusion In her summing up of the discussions, Dr. Manasan once again emphasized that a metropolitan arrangement is “not a solution” but a “possible option which can be made to work if people work hard enough on the process.” LGUs' bonding together for the common good of their constituents is a way to ensure that each one benefits from the other and that in the strength of the many, the lives of a bigger number of individuals are uplifted. With regard to mergers of companies in the private sector, it is this concept of a special kind of arrangement which will allow LGUs to enjoy economies of scale. That is, efficient provision of public goods and services for the entire metropolitan populace. In the end, it is not only the people who can gain much from the metropolitan arrangements. The advantages and benefits they have enjoyed—and will continue to enjoy— will not only leave a mark of quality on their area but encourage other areas as well to imitate their programs and activities. Thus, a positive domino effect is bound to happen. All of these achievements, however, are dependent on the kind of governance and the willingness of the people to be involved in development. Perhaps, one good example of the show of sustainability of programs and the empowerment of individuals may be gleaned in the Galing Pook Awards, which, among others, had recognized breakthrough programs of provincial, city and municipal governments since 1993. The Galing Pook Awards, jointly undertaken by the Asian Institute of Management, the Ford Foundation and the Local Government Academy, are meant to promote excellence in local governance. In addition, the awards are also about the “spirit of service, compassion and innovation.”

Clean air... From page 7

As such, its projected social net benefits through time would not be as much as those of the anti-smoke belching program.

Conclusion In conclusion, the leaded gasoline ban and the revitalization of the anti-smoke belching program of the government, on the whole, are the best options to control air pollution (lead and PM10 emissions) and benefit society. In terms of health benefits, the leaded gasoline ban far exceeds the technical costs of implementation while the anti-smoke belching program totally eradicates environmental health problems related to particulate matter exposure. DRN References Bennagen, E. and Logarta Cruz. 1995. Estimation of Health Damages from Air and Water Pollution. Philippine Environmental and Natural Resources Accounting Project (ENRAP) III: Volume 5: Refinement of Accounts. Lovei, M. 1996. Phasing out Lead from Gasoline: Worldwide Experience and Policy Implications. Environment Department Papers No. 40.

To be included in the award’s Hall of Fame, a locality awardee has to have overall organizational effectiveness, sustainability of previous winning programs, and engagement of the civil society. Included in the prestigious Hall of Fame are Puerto Princesa City, Davao del Norte and Marikina City, three of the LGUs cited in the PIDS study. Recognition of the small successes of these LGUs may be one way of encouraging others to follow. GJE


DEVELOPMENT RESEARCH NEWS

Inflation... From page 16

creases in consumer demand and production does not increase. In contrast, cost-push inflation is associated with the rise in the cost of inputs in the production process. A key example is the rise in the price of oil. An increase in wages also leads to costpush inflation. When food prices rose dramatically in 1998 due to a shortage in agriculture supply, inflation followed suit. But improved weather conditions

eased the food supply problem and stabilized food prices in 1999, thereby bringing down inflation to single-digit levels. Inflation in 1999 has been on a downward trend despite the sharp rise in fuel prices. One reason for this is that in measuring inflation, food has a large weight in the basket of commodities being monitored by the National Statistics Office (NSO) and that the rapid rise of some commodities like oil had very little direct effect on inflation. As shown in Figure 1, such downward trend in 1999 should be interpreted as a slower pace of rising prices

Starting with the year 2000 issues, the new prices of the Development Research News (DRN) will be P25.00 per copy for walk-in purchase, P200.00 for local subscription (including mailing cost), and $20.00 for dollar subscription (including mailing cost).

Editor's Notes From page 1

to arrive in the office smelling like a car’s exhaust pipe? Concerned individuals are thus willing to spend a higher fare than usual just to avoid inhaling the intoxicating gas fumes of vehicles. Not doing so is like inviting endless trips to see the doctor. For such is the polluted state of Metro Manila that it is taking a toll on the health of everyone. How do we address such a major urban problem? Through the imposition of stricter rules and regulations to ensure that there is still enough clean air to breathe in the future? More investments in antipollutant devices? Related to this urban problem is the question of how to manage an urbanized area under

March - April 2000

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a decentralized framework. The bottomline is that both the civil and public sectors must have the will to do something and help one another in addressing major urban issues. Our twin features for this issue—one based on an ENRAP paper authored by Dr. Rosario Manasan, Dr. Marian delos Angeles and Ms. Donna Ramirez on viable options to control air pollution in the metropolitan area and another on Dr. Rosario G. Manasan et al.'s findings on addressing the challenges that go along with urbanization under a framework of leadership of the local government units—are therefore very timely as they look more closely into these aspects. Thus, the recommendations included herein, including the points raised by the participants in two workshops held in Tuguegarao and Zamboanga City relating to the findings of Dr. Manasan and associates, may well provide some eye-openers to our national and local policymakers. DRN

than in 1998. Nonetheless, the bottomline is that prices are still increasing. Hence, what Filipino consumers should hope for are lower prices of commodities instead of lower inflation. DRN

Vol. XVIII No. 2

March-April 2000

Editorial Board Dr. Mario B. Lamberte President Mr. Mario C. Feranil Acting Vice-President and Director for Project Services and Development Ms. Jennifer P.T. Liguton Director for Research Information Ms. Andrea S. Agcaoili Director for Operations and Finance Atty. Roque A. Sorioso Legal Consultant

Staff Jennifer P.T. Liguton Editor-in-Chief Liza P. Sonico Issue Editor Sheila V. Siar, Genna J. Estrabon, Jane C. Alcantara, and Edwin S. Martin Contributing Editors Valentina V. Tolentino and Rossana P. Cleofas Exchange Delia S. Romero, Galicano A. Godes, Necita Z. Aquino and Federico D. Ulzame Circulation and Subscription Liza P. Sonico Genna J. Estrabon Layout/Design


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What inflation is about*

To be clear about it, it is therefore important to explain the meaning and concept of inflation.

14.0

Inflation Rate (%)

S

ince January of 1999, statistics note that inflation has come down from a high of 11.5 percent to 2.6 percent in January 2000. All in just a year's time. But still, most Filipinos are not satisfied and continue to protest against rising commodity prices. Could it be that they are being misled by the rosy inflation reports? Or is it just a matter of misunderstanding some basic concepts?

12.0 10.0 8.0 6.0 4.0 2.0 0.0

Jan 1998

Jan 1999

Inflation measures the annual percentage increase in prices. A rise in inflation means a faster increase in prices while a fall in inflation means a slower increase in prices.

Figure 1.

The most usual measure of the percentage increase in price is that of retail prices. For example, if the price of galunggong were P20 per kilo in

January of 1998 and then rose to P30 per kilo in January of 1999, we say that the inflation rate (based on galunggong) is 50 percent. This figure

Jan 2000

Inflation Rate, in percent (January 1998 to January 2000)

DEVELOPMENT RESEARCH NEWS is a bimonthly publication of the PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES (PIDS). It highlights the findings and recommendations of PIDS research projects and important policy issues discussed during PIDS seminars. PIDS is a nonstock, nonprofit government research institution engaged in long-term, policy-oriented research. This publication is part of the Institute's program to disseminate information to promote the use of research findings. The views and opinions expressed here are those of the authors and do not necessarily reflect those of the Institute. Inquiries regarding any of the studies contained in this publication, or any of the PIDS papers, as well as suggestions or comments are welcome. Please address all correspondence and inquiries to: Research Information Staff Philippine Institute for Development Studies Room 304, NEDA sa Makati Building, 106 Amorsolo Street, Legaspi Village, 1229 Makati City, Philippines Telephone numbers 892-4059 and 893-5705 Telefax numbers (632) 893-9589 and 816-1091 E-mail address: publications@pidsnet.pids.gov.ph Reentered as second class mail at the Makati Central Post Office on April 27, 1987. Annual subscription rates are: P200.00 for local subscribers and US$20.00 for foreign subscribers. All rates are inclusive of mailing and handling costs. Prices may change without prior notice.

is determined by getting the price difference between the two periods and dividing said difference by the initial price, that is, P20 per kilo in January 1998. If in January 2000, the price rose to P36 per kilo, the inflation rate would be 20 percent. The inflation rate did come down, but actual prices nevertheless still increased. There are two major types of inflation, namely, the demand-pull and the cost-push inflation. Demand-pull inflation occurs when there are into page 15

*Based on the first issue of the PIDS Economic Issue of the Day, February 2000, Vol. 1, Number 1, written by Ms. Ma. Teresa D. Caparas, PIDS Research Associate.


Toward a More Responsive Research Agenda for Development