IMAPE Research Paper No. 06

The Environmental Impact of MacroeconomicPolicies on Mining and Quarrying Sector inPalawan Province

Danilo C. Israel, Aida Torres and Adelwisa Sandalo

July 2001

This work was carried out with the aid of a grant from the InternationalDevelopment Research Centre, Ottawa, Canada.

IMAPE Project. Policy and Development Foundation Inc.

Unit 7B Vernida I Condominium, 120 Amorsolo Street, Legaspi Village, Makati 1229,Metro Manila, Philippines

Telephone: (632) 813-6178 to 79, 816-3263 Fax: (632) 813-6179

E-mail: mimap@pacific.net.ph

IMAPE ProjectPhilippines

Impacts of MacroeconomicAdjustment Policies on theEnvironment Project

The Environmental Impact of Macroeconomic Policies on the Mining and Quarrying Sector in Palawan Province

by

Danilo C. Israel Adelwisa Sandalo

and Aida Torres

Abstract

The main objective of this study was to investigate the direct environmental impact of specific macroeconomic policies on the mining and quarrying sector of Palawan. A corollary objective was to provide a general overview of the mining and quarrying sector in the Philippines and Palawan. Rapid rural appraisal (RRA) methods were employed in the analysis.

The study found that a positive direct effect of financial liberalization was the

increase in the number of banks in Palawan. This gain, however, was tempered by the low level of use by mining and quarrying firms of banks as source of investment. Since it did not influence investment and production levels, the increase in the number of banks and fund availability did not directly influence the rate of mineral extraction and environmental degradation in the sector.

Foreign exchange liberalization, through devaluation, caused some contraction in

the activities of quarrying firms. This helped reduce the rate of mineral extraction and environmental degradation in the sub-sector on a firm basis. However, devaluation also made quarrying households poorer, forcing them to depend more on wood for their cooking fuel needs and reducing further their willingness to pay for any form of environmental improvement.

Trade liberalization helped reduce the costs of imported inputs of the single

mining firm but did not directly influence the production of mining and quarrying firms, which either had pre-set exports or catered only to the domestic market. Consequently, the policy did not directly influence the rate of mineral extraction and environmental degradation by the firms and their willingness to pay for environmental improvement.

Investment promotion may has an important role to play if it helps lead to an

environmentally safe nickel processing facility currently being proposed by the single mining firm in the province. For its part, tight fiscal policy may have improved environmental management by encouraging private participation in the mining sub-sector. On the negative side, the reduced budgets for monitoring and enforcement may have contributed to the significant proliferation of illegal operations in the quarrying sub-sector.

The Environmental Impact of Macroeconomic Policies on the Mining and Quarrying Sector in Palawan Province*

by

Danilo C. Israel Adelwisa Sandalo

and Aida Torres**

I. Introduction

The Impact of Macroeconomic Adjustment Policies on the Environment (IMAPE) Project has been conducted in the Philippines in light of the recognition that policies intended to attain economy-wide objectives could have significant effects on the natural environment. Among the major undertakings of the project is the evaluation of the interactions between policies, firms and households, and the environment in a selected case study area.

An earlier effort of the IMAPE in the above regard was the conduct of a study on

the environmental impact of macroeconomic policies in Palawan (Israel et al. 1999). The province was specifically investigated because it is a special zone for environmental protection in the country. In addition, national and local government units (LGUs) in Palawan in general are relatively well advanced in the application of the Geographic Information Systems (GIS), a modern technology that is potentially useful for the purposes of the IMAPE.

As a continuation of the abovementioned study, the IMAPE recently conducted

another effort to further investigate the impact of macroeconomic policies on the environment in Palawan. This time, the analysis is concentrated on mining and quarrying because of the great potential of the sector, both as a source economic growth and environmental degradation in the province. Furthermore, whether or not mining and quarrying should be encouraged nationally is a current political and social issue that cannot be overemphasized.

* This research is part of the Impact of Macroeconomic Adjustment Policies on the Environment (IMAPE) Project funded by the International Development Research Center (IDRC) of Canada. ** Ph.D. in Resource Economics and consultant of the Policy and Development Foundation, Incorporated (PDFI); Head, Policy Research Division, Palawan Council for Sustainable Development (PCSD); and Head, Technical Services Division, PCSD, respectively. Research assistance was provided by Ms. Merlinda Hilario and Ms. Concepcion Gilongos of the PCSD and Mr. Edralin Bayona of the PDFI.

This paper is the final report of the IMAPE study on the mining and quarrying

sector in Palawan. It is jointly prepared by members of the staff of the Policy and Development Foundation, Incorporated (PDFI) and the Palawan Council for Sustainable Development (PCSD). It benefited from the indispensable assistance provided by various private and public sector individuals and institutions at the local, provincial, regional and national levels.

II. Objectives and Activities

The main objective of the study was to investigate the environmental impact of various macroeconomic policies implemented by the national government over the years on the mining and quarrying sector of Palawan. Specifically, it looks into the interactions between policies, firms and households in the mining and quarrying sector, and the natural environment. A corollary objective was to provide a general overview of mining and quarrying in the Philippines and Palawan that may be useful for future undertakings of the IMAPE as well as related research activities.

To attain the abovementioned objectives, the study conducted the following:

a) review of the laws covering the mining and quarrying sector at the national and

local levels; b) review of the management aspects of the mining and quarrying sector at the

national and local levels; c) review of the available literature on mining and quarrying development in the

Philippines; d) development of the theoretical framework for evaluating the environmental

impact of macroeconomic policies on the mining and quarrying sector in Palawan;

e) profiling of the mining and quarrying sector of the Philippines; f) profiling of Palawan, its economy and its mining and quarrying sector; g) conduct of the case study of mining and quarrying firms and households in

Palawan; and

h) generation of conclusions and recommendations from the study.

III. Review of the Laws Covering the Mining and Quarrying Sector There were various laws passed concerning the mining and quarrying sector in the Philippines. Commonwealth Act (CA) 137, otherwise known as the Mining Act of 1936, was the earliest. Among others, this law gave priority to Filipinos to explore and utilize mineral lands and resources. Later on, Presidential Decree (PD) 463, or the Mineral Resources Development Decree of 1974, revised CA 137. The overall aim of this legislation was to provide for a modernized administration, exploitation and development of all mineral lands in the country.

In 1984, PD 1899 was passed which established small-scale mining as a new dimension in mineral development. Then, in 1991, Republic Act (RA) 7076, or the People’s Small-Scale Mining Act, was promulgated. It aimed to further promote, develop and protect small-scale mining operations so that more employment opportunities can be created and an equitable sharing of the wealth and natural resources can be effected. In 1995, the most recent mining law, RA 7942 or the Philippine Mining Act, was passed. It aimed to promote the rational exploration, development, utilization and conservation of mineral resources through the active partnership of the government and the private sector. Among its important features was the provision of financial or technical assistance any qualified person or entity that has the capability to undertake large-scale mineral exploration.

The Philippine Mining Act is unique for some reasons. It is the first law that

specifically addressed the concerns of indigenous peoples in mining areas. Furthermore, through its Implementing Rules and Regulations (IRR), the law ordered mining firms to establish the Contingent Liability and Rehabilitation Funds (CLRF) that will guarantee their compliance to environmental commitments.

Aside from those already mentioned, there are other national laws that affect the

mining and quarrying sector particularly related to the environment. PD 1151, or the Philippine Environmental Policy Law, mandated that national agencies and instrumentalities of the government as well as private individuals, corporations and entities, including those in the mining and quarrying sector, to implement and adopt the Environmental Impact Statement (EIS) System. PD 1152, or the Philippine Environment Code, established the environmental management policies and prescribed environment quality standards to be followed nationally. PD 1586 mandated that no person or entity shall operate in an environmentally critical area without first securing an Environmental Compliance Certificate (ECC) to be issued by the President of the Republic or his duly assigned representatives. For Palawan, the most important law that relates to the environment is RA 7611, or the Strategic Environmental Plan for Palawan, which was enacted in 1992. Among others, this legislation ordered the creation of the PCSD and stipulated the formulation and implementation of the Strategic Environmental Plan (SEP) for the entire province. The SEP was intended to serve as basis for the long-term development of the area in an

environmentally sustainable, socially equitable and economically practicable way (PIADPO n.d.). Among its significant features is the Environmentally Critical Areas Network (ECAN) that establishes a graded system of protective management from strict control to very light control over the various ecosystems and environments in the province. IV. Review of the Management Aspect of the Mining and Quarrying Sector

4.1 Mining Sub-Sector Nationally, the Department of Environment and Natural Resources (DENR)

manages mining in the country. This is the department mandated by law to manage, conserve, protect and develop natural resources in the pursuit of sustainable development. The DENR carries out its mining-related functions through its Mines and Geosciences Bureau (MGB) and Environmental Management Bureau (EMB).

The DENR Secretary is the entity authorized to grant permits and enter into mineral agreements in behalf of the government. These permits and agreements include the Exploration Permit (EP) for exploration activities, Mineral Agreement (MP), which is either a Mineral Production Sharing Agreement (MPSA), Co-Production Agreement, or a Joint-Venture Agreement, for extraction activities, and the Financial or Technical Assistance Agreement (FTAA) for the large-scale exploration, development and utilization of mineral resources. The Secretary also supervises the Regional Directors of his department who are responsible for the coordination and implementation of the programs and activities in the different regions, including the administration of all mineral lands and related resources within their regional jurisdiction. The Regional Directors are also the ones responsible for coordinating with the LGUs, Non-government Organizations (NGOs) and other stakeholders in matters relating to mining management. The Director of the MGB is directly in charge of managing all mineral lands resources of the country. He has various powers, including the authority to enforce guidelines and policies concerning the safe and sanitary operations of all mining operations. He also recommends to the Secretary the granting of permits and mineral agreements to qualified applicants and can cancel mining rights because of noncompliance to the important mining and environment-related rules and regulations. At the regional level, the MGB Regional Director has the primary responsibility of implementing the mining laws, rules and regulations and the programs of his Bureau in his assigned region. Monitoring and enforcement of mining-related rules and regulations in the regions is an important task of the Regional Directors. Part of these activities is the conduct of safety inspection of storage facilities and installations and the conduct of on-site validation of the reports submitted by the mining operations to his office and similar activities.

The EMB is involved in mining since by law, it has the primary responsibility to accept, process, monitor and evaluate EIS and recommend the rules and regulations for the Environmental Impact Assessments (EIAs) of all industrial activities, including mining operations. Furthermore, the agency is required to provide critical technical assistance for the implementation and monitoring of the EIAs and make recommendations to the DENR Secretary regarding the issuance of ECCs to mining applications. At the provincial level, the Provincial Environment and Natural Resources Office (PENRO) and the Community Environment and Natural Resources Office (CENRO) are DENR offices that implement the policies, programs and projects of the department in the province and community levels. Working with the Regional Offices of the national government and the environmental offices of the LGUs, these agencies assist in the conduct of on-site inspections and monitoring of all mining operations within their jurisdiction.

4.2 Quarrying Sub-Sector

The management of quarrying activities covering more than 5 hectares is under the DENR through the regional MGB. For operations covering 5 hectares or less, the LGUs are in charge of management. In this case, the Provincial Governor or City Mayor issues the permits for quarrying operations, subject to the recommendation of the Provincial or City Mining Regulatory Board (PMRB/CMRB). For Palawan, only the Provincial Governor can issue quarrying permits. The City of Mayor of Puerto Princesa does not issue permits because it is still a component, not a chartered, city.

4.3 ECC Requirement

In general, mining and quarrying applicants have to get an ECC from the DENR before they can start operations. In this particular aspect, the role of PCSD in Palawan is crucial since mining and quarrying applicants have to get its endorsement before the DENR issues the ECC. By virtue of the Local Government Code (LGC), the provincial government of Palawan, the city government of Puerto Princesa and some of the municipalities now have Environment and Natural Resources Offices (ENRO) under their administrative set-up and control. As part of their functions, these local agencies assist in the mining and quarrying management in the province, particularly in the review of permit applications and the monitoring and enforcement of rules and regulations within their jurisdictions.

V. Review of the Literature on Mining and Quarrying in the Philippines There were several studies already done about mining in the Philippines although only a few were available about quarrying. Most of the studies on mining were mainly descriptive and provided only a general overview of the industry. A few of the studies discussed the environmental impacts of mining, either in support or opposition to the industry.

De Vera (1996) explained the importance of the mining industry to economic

development. He stated that its contributions were significant in terms of production, employment and foreign exchange generation. He also argued that mining supports the program of countryside development that aims to draw the population away from congested urban areas. De Vera, however, stated that due to several technical, economic, social and environmental factors, some of the biggest mining firms have closed down in recent years resulting to the significant drop in the production of some important minerals. In a more optimistic note, Ramos (2000) argued that despite the various problems faced by the industry, it still faces a bright future. He cited that while minerals production in the country was dormant, exploration activities were progressively expanding.

Tujan and Guzman (1998) reviewed the mining sector and made a strong critique.

They stated that like many of the other sectors of the economy, mining is either small-scale and isolated or large-scale but concentrated in the hands of the local rich and their foreign cohorts. They asserted further that it is export-oriented yet import dependent, thus, condemning the country to backwardness and plunder by foreign corporations and comprador-landlords.

A few works highlighted the negative environmental effects of mining in specific

areas (Bennagen 1998, UBC abd UP 1996, Briones 1987; Briones n.d). They emphasized that mining is an environmentally destructive and accident-prone economic activity that needs strict and proper management if it is to appropriately contribute to national development. Other studies, on the other hand, defended mining in relation to the environment. Angeles (1995) asserted that the criticisms that mining received were the results of misinformation and the lack of knowledge on the environmental aspects of mining. MGB (2001a) further argued that if mining is done in a sustainable and environment friendly manner, it can actually enhance instead of degrade the environment.

Only two studies dealing on quarrying were available. Martin and Discipulo

(1996) explained the importance of the quarrying industry of the Southern Tagalog Region to the growth and development of Metro Manila. Martin (2000) chronicled the experience of the MGB in addressing the environmental problems caused by quarrying in Rizal province. He explained that the agency, in cooperation with the quarrying operators, LGUs and the various other stakeholders did much to improve environmental management in quarrying in controversial sites.

VI. Theoretical Framework for Evaluating The Environmental Impact

The framework for evaluating the environmental impact of macroeconomic policies in Palawan was discussed by Israel et al. (1999), based on earlier framework-building works of the IMAPE (Intal 2000, Francisco and Sajise 1992, Quesada 1992, Lamberte et. al. 1991). This theoretical framework was reworked to fit the current analysis of the mining and quarrying sector.

In theory, the relationships between macroeconomic policies, mining and quarrying firms and households, and the natural environment can be viewed as follows (Figure 1). Macroeconomic policies affected the environment through different transmission channels and mechanisms that exist from the national level down to the microeconomic level. In return, the state of the environment influences macroeconomic policy-making because of the growing acceptance among countries that sustainable development is the appropriate path to follow. Furthermore, the environment affects the world and national economies because of the important role it plays in the production of goods and services.

In the forward flow of relationships, the implemented macroeconomic policies affect the national economy through the national output, employment inflation, balance of payments and other macroeconomic aggregates. A tier below, the policy-induced changes in the national economy influence specific sectors in the economy through three transmission channels: the labor and capital market, goods and services market and the provision of public goods. Policies influence through these channels by inducing changes in the prices of capital and labor, prices of product and services and the amount of available public goods. Since the microeconomic units of the sectors, specifically the firms and the households, participate in the three transmission channels, the changes eventually affect them by way of three transmission mechanisms, particularly the changes in the relative prices, changes in the incomes and the changes in their purchasing power.

In the case of mining and quarrying, the behaviors and decision-making of the

firms that have environmental significance are affected by changes in the relative prices they face, the incomes they generate and in their purchasing power in several ways. For instance, an increase in the incomes and purchasing power of firms as a result of macroeconomic policy may increase their willingness to pay for activities for environmental improvement. On the other hand, it may encourage the same firms to increase the rate of mining and the level of mineral depletion and environmental degradation. Like the firms, the activities of households that have bearings on the environment are affected by changes in the relative prices, incomes and purchasing power as well. An increase in the incomes and purchasing power of the households, for instance, may raise their willingness to pay for activities for environmental improvement. Or it may increase their rates of consumption, and, thus, their capacity to potentially contribute to environmental degradation. While the interactions between macroeconomic policies, mining and quarrying firms and households and the environment can be theoretically analyzed, they are actually difficult to empirically estimate. The main reason for this is that the secondary data on the different economic and environmental variables needed for such analysis are generally sketchy or downright non-existent, particularly at the local levels. Primary data gathering can be done to address this constraint but a survey, for instance, can also be very costly and time-consuming to conduct, especially where respondents have limited knowledge and understanding of macroeconomic policies and their impacts. A third and equally important reason is that even if primary and secondary data and information can be had, a quantitative model that can accurately measure all the different

relationships has yet to be developed for local situations. Most modeling efforts at present have been concentrated on analyzing the relationships between macroeconomic policies and the environment at the national level where secondary data are relatively more available.

A more practical way of empirically studying the interactions between policies, mining and quarrying firms and households and the natural environment then was needed. For this study, it was decided that only the direct and observable effects of macroeconomic policies were looked into as these can be easily ascertained and validated among the firms and households in the field. For the data gathering and actual analysis itself, Rapid Rural Appraisal (RRA) and case study approaches were applied. These methods were considered ideal for the rural nature of the mining and quarrying sector, the type of research problem at hand and the research conditions and constraints faced by the study.

Five macroeconomic policies have important bearings on the environment and

Intal (2000) made a thorough discussion of the direct and indirect impacts of some of these on the entire economy and the environment. Below, the direct interactions between the macroeconomic policies, the mining firms and households and the natural environment are summarized (Figure 2).

The first macroeconomic policy is financial liberalization, which was initiated by

the national government through a series of financial reforms (Reyes and Cororaton 1996). Briefly, the general intents of this policy are to reduce interest rates and increase the availability of credit in the economy. Other things the same, easier credit and lower interest rates will encourage the firms in the mining and quarrying sector to invest more, resulting to the expansion and growth of the sector. Environmentally, more production in the sector will lead to more intense mineral extraction and environmental degradation per se. The second policy is foreign exchange liberalization, which was also implemented by the government through a series of reforms. The policy aimed to correct an overvalued currency and abolish various controls related to foreign exchange transactions. The potential positive and direct effects of these are the inflow of foreign capital into the mining and quarrying sector and the increased participation of firms in the export market. A potential negative effect is that the devaluation will raise the level of prices and dampen growth in the economy. If mining and quarrying are mostly non-tradable, then further contraction results as costs of production go up while demand goes down. Environmentally and on the negative side, the growth that the inflow of capital and increased exportation brings will worsen mineral extraction and environmental degradation. Furthermore, households made poorer by devaluation will be less willing to pay for environmental improvement and more willing to exploit natural resources to meet their needs. On the positive side, if a non-tradable mining and quarrying sector contracts, overall mineral extraction and environmental degradation may also significantly slow down.

The third policy is trade liberalization, which was pursued mainly through the Tariff Reform Program (TRP). As a result of this policy, the tariff range for various imported production inputs was reduced and various import restrictions were reduced or eliminated (Austria and Medalla 1996). The potential negative impact of these reforms on the mining and quarrying sector is the reduced production by firms if relatively cheaper imported substitutes for its products are available in the market. The potential positive impact is increased production due to higher investment by firms in cheaper imported and more efficient equipment. If most of the products are tradable and trading partners also practice trade liberalization, firms may increase exportation resulting to the expansion of the sector. Environmentally, the decreased production by firms due to intense competition from import substitutes will reduce mineral extraction and environmental degradation. If higher investment in imported equipment includes those for environmental protection and management, the level of environmental degradation is also lowered. However, if increased exportation results from trade liberalization, then worsening mineral extraction and degradation occurs. The fourth policy is investment promotion, which was initiated again through a series of reforms (Reyes and Cororaton 1996, Austria and Medalla 1996). This policy was intended to increase the flow of invested foreign and domestic funds into the economy. Like some of the other policies, the potential positive impacts of investment promotion are the increased investment and growth in the mining and quarrying sector. These should promote further resource extraction and environmental degradation in the mining and quarrying sector. However, if investment into environmental protection and management accompanies overall investment, then some mitigation of the environmental problems may happen. The fifth policy is tight fiscal policy, which was intended to improve the deteriorating fiscal position of the country (Manasan 1998). This policy was pursued through improved tax generation and reduced government expenditures. Reduced government expenditures for environmental protection and management, particularly in the area of monitoring and enforcement, may result to increased incidence of violation of environmental rules and regulations, worsening mineral extraction and environmental degradation. Higher taxation can significantly increase costs of firms and households and reduce their willingness and ability to spend on environmental protection and management. VII. Profile of the Mining and Quarrying Sector of the Philippines

The Gross Value Added (GVA) of the mining and quarrying sector contributed

about 1.56 percent to both the Gross National Product (GNP) and the Gross Domestic Product (GDP), on average annually, from 1985 to 1998 (Table 1). In money terms, national mineral production amounted to about P24.9 billion, on average annually, over the same period (Table 2). Of this, approximately 65 percent was metallic production while 35 percent was non-metallic production.

In recent years, nickel was the only metallic mineral significantly mined in Palawan while sand and gravel were the most important quarrying products. Thus, it is instructive to look into the production performance on these minerals nationally. In money terms, national nickel production was about P484 million, on average annually, from 1985 to 1998 and comprised 3.11 percent of the total metallic mineral production (Table 3). National sand and gravel production was approximately P4 billion and formed 39.33 percent of the total non-metallic mineral production, on average yearly, over the same period (Table 4).

In terms of volume, the average national production annually of nickel from 1985

to 1999 was 580.25 thousand dry metric tons of beneficiated ore (Table 5). From 1985 to 1997, 13.88 thousand metric tons of metal were produced. The estimated national reserves of nickel, on average, annually were 1,307 billion metric tons for the 1985 to 1996 period. The average annual ratio of the production of beneficiated nickel ore to the estimated nickel reserves was approximately only .09 percent for the 1985 to 1996 period.

The average annual volume of sand and gravel production was 29.55 million

cubic meters for the 1985 to 1999 period while the estimated annual reserves of sand and gravel was 70.04 million cubic meters from 1993 to 1996 (Table 6). The average annual ratio of the production of sand and gravel to total reserves of sand and gravel was 38.92 percent for the 1993 to 1996 period.

In summary, over the years, the annual contribution of the mining and quarrying

sector to the overall economy has been small compared to the other sectors. The contribution of nickel to total metallic mining production has been modest also while that of sand and gravel to total non-metallic mining output has been much more significant. The potentials for the expansion of both nickel mining and sand and gravel quarrying, however, are great given that only a tiny portion of the estimated nickel reserves and less than half of the sand and gravel reserves have been exploited by the sector on an annual basis.

VIII. Profile of Palawan, Its Economy and Its Mining and Quarrying Sector

8.1 Profile of the Province of Palawan and Its Economy

Palawan is the largest province of the Philippines and among the richest in natural resources. Owing to its relatively preserved environment, it is dubbed as the “last ecological frontier”. For a long time, the development of the province has been slow because of its far distance from the national capital region and other population centers. In recent years, economic prospects have improved to some extent as its rich natural resources got advertised and both the local and foreign entrepreneurs started to come in.

Palawan belongs Region IV or the Southern Tagalog region of the Philippines (Figure 3). It is located in the western part of the archipelago bounded in the east by the Sulu Sea, in the west by the South China Sea, in the north by the Mindoro

Strait and in the South by the Balabac Strait. Its southernmost tip is only about 97 kilometers from Sabah, Malaysia.

Palawan is composed of one main island and several surrounding islands

(Figure 4). It has a total land area of 14,896 square kilometers and is the largest province in the country (Table 7). Palawan is a second-class province with one first class municipality, the capital City of Puerto Princesa, and 23 other municipalities that are either third, fourth, fifth or sixth-class. Puerto Princesa is the largest municipality while the smallest is Kalayaan Island. The province has a total of 431 barangays. Puerto Princesa has the most number of barangays while Kalayaan Island only has one barangay.

In 1995, Palawan had a total population of 640,486 people (Table 8). It is

expected to grow to 789,417 individuals in 2000. The estimated annual growth rate was 3.56 percent from 1903 to 2000. The population density increased from 2.4 persons per square kilometer in 1903 to 43 persons per square kilometer in 1995. It is expected to be at 52.99 individuals per square kilometer in 2000.

A great majority of the population of Palawan lived in the rural areas

although more and more people, in absolute and percentage terms, resided in the urban areas in recent (Table 9). Given that mining and quarrying activities were located in the rural areas, the sector has the potential to affect the lives of a great number of people in the province. The biggest contributor to the GDP of Palawan for the 1994 to 1998 period, in current prices an on average annually, was the agriculture, fishery and forestry sector (Tables 10, 11 and 12). In the agriculture, fishery and forestry sector, fishery and agricultural crops were the major contributors; fishery and poultry were the fastest growing; while agricultural crops were declining on average annually. In the services sector, wholesale and retail trade was the most important while finance was the fastest growing on average yearly. The most significant industrial activities were manufacturing and mining while construction and manufacturing were the fastest growing on average annually. It should be noted that the percentage share of the mining and quarrying sector to the GDP was much larger in Palawan than at the national level (Tables 1 and 11). This indicates that mining and quarrying was a relatively more significant sector in the province than in the entire country. 8.2 Profile of the Mining and Quarrying Sector of Palawan

Based on PCSD computations, of the total output of the mining and

quarrying sector in Palawan in current prices, about 26 percent came from nickel mining, 5 percent was generated from quarrying, and 69 percent came from oil in 1988 (Table 13). By 1994, the output of the sector was 46 percent nickel mining, 3 percent quarrying and 51 percent oil. No computations were available from the agency for later years. In percentage terms, the share of nickel mining has increased while those of quarrying and oil have fallen between 1988 and 1994.

While nickel is the only significant metallic mineral output of Palawan, the province has deposits of several other mineral resources, including copper, mercury, iron, manganese and chromite (PIADPO 1999). Chromite and mercury were mined in the past but due to decreasing world prices, the activities stopped. Palawan also has various non-metallic resources other than sand and gravel, such as silica sand, limestone, coal and oil. Silica sand is presently exploited while limestone and coal have not encountered major quarrying yet.

A significant amount of oil and natural gas have been found in the west

coast of Palawan and is in the process of exploitation. For this purpose, the U.S. $4.5 billion Malampaya Deep Water Gas-to-Power project was established. This project was planned to generate natural gas that will provide 2,700 megawatts of power for a period of 20 years starting January 2002 and reduce foreign fuel dependence by 30 percent. In addition, it was expected to generate substantial long-term revenues of about U.S.$10 billion to the Philippine Government over its lifetime. The development of the project started in 1998 and is continuing. In terms of the environment, a controversial issue related to mining in Palawan was the case of the Palawan Quicksilver Mining Inc. (PQMI) that operated from 1953 to 1976. This firm deposited mercury laden mining wastes into Honda Bay located close to Puerto Princesa. Benoit et al. (1994) cited the high concentrations of mercury were found in wastes and sediments originally coming from the mine. Later, Williams et al. (1996), however, contradicted the earlier finding and argued that the concentrations were not as high and dangerous as reported. Whichever is the case, the incident showed to the people of the province that mining has potentially significant impacts on them and the environment. It was due to the great concern for the conservation of the natural resources and environment of Palawan that the SEP was enacted. Among the measures of this plan was the subdivision of the area into various zones of development and environmental protection. The GIS-generated ECAN map of Palawan (Figure 5 and List 1) shows that that while the province and various municipalities have substantial areas open for economic development activities, including mining and quarrying, it also has significant hectarage where these are either strictly disallowed or highly restricted. The main intent of this zoning approach is to attain a more sustainable form of development where economic progress is made more compatible with environmental protection and management. IX. Case Studies of the Mining and Quarrying Sector

Case studies were undertaken both the mining and quarrying sub-sectors of

Palawan. For mining, nickel mining was chosen since it was the only major mining activity. For quarrying, sand and gravel quarrying was selected since these were the most important quarrying products.

There is only one firm into nickel mining in Palawan, the Rio Tuba Nickel Mining Corporation (RTNMC). This firm and the households it affected were covered in the mining case study. The quarrying firms and the affected households in Puerto Princesa and Aborlan were covered in the quarrying case study. Due to budget constraints, only the two municipalities were included. They were selected because quarrying activities there were the most intense in the province.

9.1 Methods

As earlier mentioned, RRA techniques were used because of specific reasons. In addition to these, the techniques were suited for gathering data and information about rural life in a short span of time. They were also highly applicable in a multidisciplinary fashion that fits the nature and composition of the study team. The techniques included secondary data analysis, direct observation and semi-structured interviews. For the mining case study, senior officers of the RTNMC at the site and at the head office in Makati City were interviewed to generate various primary data and information. These were enhanced by secondary data taken from the firm and institutional sources. Aside from the officers of the firm, the households affected by mining were also interviewed to generate various data and information. The households were selected at random and available time and resources limited the coverage. There were 33 households covered, of which 21 were located close to the rivers affected by mining, 5 resided beside the main road used by the mining firm for transport and 2 lived in the coastal area where the mouth of the affected rivers were located. For the quarrying case study, firms and households living close to quarrying sites in Puerto Princesa and Aborlan were interviewed to get primary data and information. These data were enhanced by information from the institutional sources. As in the mining case study, the quarrying firms and households were selected at random and the numbers covered were limited to the available time and resources at hand. There were 19 quarrying firms interviewed, 9 from Puerto Princesa and 10 from Aborlan. There were 74 households covered, 48 from Puerto Princesa and 26 from Aborlan. Of the households interviewed, 60 lived downstream of the rivers affected by quarrying, 7 resided upstream and 7 lived in the coastal areas close to the mouth of the affected rivers. The quarried rivers where the households were located were the Bacungan river, Tanabag river, Maoyon river and Iratag river in Puerto Princesa and the Iraan river and Aborlan river in Aborlan (see Table 29).

To augment primary data from the mining and quarrying firms and

households, interviews with key government and private sector informants were further conducted. All in all, the specific primary data and information collected were the socio-economic and demographic data for profiling, environmentally-related data for the assessment of the environmental impact of mining and quarrying, and the macroeconomic policy-related data to evaluate the environmental impact of macroeconomic policies on the mining and quarrying sector.

As expected, the mining and quarrying firm and household respondents

were not very knowledgeable and conversant about the various macroeconomic policies and their potential impacts on their activities and the environment. Thus, many of the interview questions were asked in an open-ended and indirect manner to generate as much data and information as possible. Some of the questions raised were not answered either because individual respondents had no answers for them or were hesitant to provide answers. The study team conducted the actual interviews on October-November 2000.

9.2 Case Study on Mining Profile of The Rio Tuba Nickel Mining Corporation

The RTNMC is located in the barangay of Rio Tuba in the municipality of Bataraza in the southern tip of Palawan. The firm has a total land area of mining claim of 5,265 hectares, of which 353 hectares are currently operated (RTNMC 2000). Bataraza has 23 barangays and Rio Tuba is located in its middle portion (Figure 6). Rio Tuba had the largest population of the barangays of the municipality in 1995 (Figure 7). It had an estimated population of 6,000 individuals, of which more than 700 are employees of the mining firm.

The nickel deposit in Rio Tuba was discovered in 1969. Mine

construction and development of the RTNMC commenced in 1975 and two years later, the first shipment was made to Japan. The operation does not process its ore but sends it directly to its foreign buyers. Since the start up to the present, an estimated total of 11 million wet metric tons (WMT) of beneficiated nickel silicate ore has already been produced and shipped out of the country by the company.

From 1977 to the third quarter of 2000, the average annual shipment of

RTNMC was at 491,585 WMT and growing at an annual rate of 1.85 percent (Table 14). The noticeably lower shipments in 1998 and 1999 were attributed to the La Nina that brought in a higher than average rainfall in the area. The weather phenomenon made it more difficult for the company to meet the moisture content of the ore required. Data on nickel production, in value terms, indicates that on average annually, from 1985 to 1997, the nickel production of Palawan comprised approximately 76 percent of the total annual national production (Table 15). This made the province of Palawan and the RTNMC the most important nickel producer of the entire country specifically in terms of production volume.

Profile of Households Affected by Mining

The profile of the household respondents for the mining case study indicates that most were the father of the family although a good number were mothers (Table 16). Some of them were community officials but most were ordinary citizens. A few of the respondents worked in the mining company but most did not. Most were

educated only below the high school and college levels but all had at least an elementary education.

The profile of the households show that most originated from outside Palawan. The average annual household income level among the households was low. Comparing with income figures in Israel et al. (1999), this household income in mining was lower that the average household income in Palawan, Southern Tagalog and the Philippines. Most of these mining households also belonged to the lower income brackets than the higher income brackets.

In retrospect, since mining households heads had at least some level of

education, they were expected to have at least some knowledge and awareness of the environmental and other problems created by the mining firm in their area. The low level of the incomes of the mining affected households may have a bearing on their willingness to pay for environmental improvement and their dependence on natural resources for survival.

RTNMC and the Environment

The ECAN map of Bataraza showing the barangay subdivisions is

presented in Figure 8. As is the case of Palawan as a whole, Bataraza and Rio Tuba have substantial areas where environmentally critical economic activities were either strictly disallowed or highly controlled. The ECAN map of the municipality of Bataraza showing the mine claim and currently operated mine area of the RTNMC is presented in Figure 9 while a blown-up ECAN map of the mine area is presented in Figure 10. As shown, the mining claim covered mainly controlled use zones and restricted use zones. Thus, part of the mining claim was located in restricted use zones where either only non-consumptive activities or controlled forest extraction, not necessarily mining, are allowed by the SEP. The currently operated area, however, clearly included only multiple use zones, traditional use zones and controlled use zones where mining activities are allowed.

There were various environmentally related issues concerning the operation of the RTNMC. One of these was air pollution. As in many other mining areas, the main road used by the firm for ore transport was unpaved. Because of this, passing vehicles produced significant amounts of dust particularly during the summer months. Inside the mine site, substantial dust and air pollution were also produced when the ore dug from the ground was crushed to smaller sizes. Health-wise, the inhabitants of Rio Tuba were at risk because of the dust, including the employees of the mining firm. As in other mining areas also, pollution, siltation and sedimentation of downstream water bodies and areas were consequences of the RTNMC operations. The mine site was located close to two rivers, The Ocayan River and the Rio Tuba River, and the coast. Although the mine established 5 siltation ponds to divert, store and treat effluents, the danger of polluted runoffs flowing into the rivers during the rainy season remains. These runoffs add to the natural silt and sediments carried down from the upstream area. The net effect is the reduced viability of the nearby rivers and the coast

for fisheries and other activities that are economically and recreationally important to the inhabitants living in the downstream areas and the coast.

Soil erosion and deforestation were other environmental problems also existing in the RTNMC operations. The mine was an open-pit operation and substantial scraping of the land cover has occurred over time. This led to soil erosion, deforestation and the destruction of the topography and aesthetic value of the mining area. The scope of these problems could be significant enough to also cause problems to affected inhabitants and even society as a whole. In order to validate the extent of the environmental problems caused by the RTNMC, the study team visited the mining site. The interviewed key personnel mentioned that indeed, dust have been significant in the main road used by the mine, a fact that was validated through personal observation by the study team. The interviewed personnel mentioned that the problem has been alleviated by the constant spraying of water and the installation of humps to control vehicle speed. They also asserted that inside the plant, chutes and dust collector boxes in the screening and crushing plant area were also installed, as well as windbreaker. A tour around the mining area showed that the equipment were in place.

To control pollution, siltation, sedimentation and soil erosion, the interviewed personnel mentioned that the firm conducted various activities. These included slope stabilization, slope engineering, boulder toe dressing, and the construction of silt collector sump, proper drainage, dikes and siltation ponds. They also asserted that the firm was aggressively addressing the problem of deforestation through reforestation. Of the total current mining area of 353 hectares, 114 hectares were rehabilitated and extensively planted with various types of trees. Through a tour of the relevant facilities and sites, the study team found that reforestation was indeed done by the RTNMC in the mining area. It also observed that the other activities and equipment mentioned by the interviewed personnel for the control of siltation, sedimentation, soil erosion and related problems were in place. There were no technical records that can help ascertain the extent of air pollution caused by the RTNMC but the interviewed personnel mentioned that their tests showed that the pollution levels meet the standards. For water pollution, the firm submits a monthly report on the water quality analysis of collected samples, in compliance to the requirements of the DENR and as embodied in the ECC. Effluent was being tested to determine how the concentration levels of chromium, lead, nickel, cobalt and iron from the siltation ponds, rivers, coastal area and other selected sampling sites. The resulted were then compared with the standard set by the DENR. A summary of these reports for a 15-month period between April 998 to September 2000 was made available by the interviewed personnel to the study team. For chromium, the maximum allowable concentration was 0.2 milligrams per liter set by the DENR. Based on the available reports for 15 months, the concentration levels exceeded the standard at certain periods for only two of the sampling points (Table 17). The study team was informed that in the two sampling points, the heavy rains lasted for several days during the sampling and this

agitated the siltation ponds resulting to the detection of more traces of chromium in the water. To address the problem, the firm diluted the effluent to the allowable level as it flowed along the spillway before discharging to the Rio Tuba River. Overall, the data showed that the concentration of chromium due to the RTNMC operations met the allowable limit in most sampling points.

For lead, the maximum allowable concentration set by the DENR was 0.3

milligrams per liter. Except for tests done in August 1998 in two sampling points, the lead levels in the water samples due to the RTNMC were all below the standard (Table 18). For nickel, cobalt and iron, the department, set the maximum allowable concentration at 1.0 milligrams per liter. Results for these metals showed that concentration levels were generally below the limit (Tables 19, 20 and 21). However, traces of iron beyond the allowable limit however, were observed during the October and December 1998 monitoring period for two sampling points. Overall then, the operation of the RTNMC met the standard for the concentration levels for various pollutants set by the government. The interviewed personnel and other informants explained that as mandated by the IRR of the new mining law, the RTNMC has set up funds (Table 22) for its Environmental Protection and Enhancement Program (EPEP). Specifically, it pays for a Contingent Liability and Rehabilitation Fund (CLRF) that includes a Mine Waste and Tailings Fee (MWTF) and Mine Rehabilitation Fund (MRF). The MRF is further composed of the Rehabilitation Cash Fun (RCF) for rehabilitation and similar purposes and the Monitoring Trust Fund (MTF) to finance environmental monitoring. In addition, the firm was recently mandated to set up the Environmental Trust Fund (ETF) that serves as guarantee for environment-related damages. The interviewed firm personnel and other informants further explained that the RTNMC was among the first mining firms in the country to have a Multipartite Monitoring Team (MMT) that monitors its compliance to its environmental commitments as stipulated in its ECC. The MMT for the firm was comprised of representatives from the different regional MGB, LGUs, NGOs and RTNMC. It started its work in 1998 and has produced quarterly reports detailing its findings and recommendations related to the environmental performance of the firm.

The MGB-Region IV has been compiling the RTNMC MMT quarterly reports (e.g. MGB 2001b). Key informants at this office mentioned that the reports showed that the firm has been complying with its environmental commitments. This positive observation was strongly supported by another key informant who is serving as a current member of the MMT. A look at the reports by the study team, however, showed that in general they do not contain categorical statements as to the overall performance of the firm in relation to compliance to its environmental commitments but contains findings and recommendations for specific activities only. To further validate the environmental effects of RTNMC operations, similar information were gathered from the affected households (Table 23). The average

distance of the household residence from the mining site was 5 kilometers. The study team was informed that this was close by rural standards. Although only a minority of the households lived by the main road used for mining activities, many of them indicated that they were affected by the air pollution caused by mining vehicles passing through the road. Of those affected, all asserted that they experienced sickness in the form of respiratory and skin problems. Some households mentioned that the mining company addressed the problem of air pollution by sprinkling water, but only on an irregular basis. Most of the households reported that the mining operations caused pollution, siltation and sedimentation in the water bodies. However, a much fewer number cited that they were directly affected by the problem. Of these, a few mentioned that it caused sickness among humans and death among fish among fish and animals. Many households reported that the water affected by mining was used for irrigation and this caused the siltation of ricelands. Some households also said that because of mining, coastal waters were polluted which resulted to low fish catch and a silted coast. Several mentioned that RTNMC constructed dikes and diversion canals to address the pollution of water bodies. A few cited that mining also caused the soil erosion in riverbanks that was mitigated by the construction of diversion canals. Some mentioned that deforestation was a problem and the mining company addressed this problem through reforestation. From the above discussions, it was apparent that although the RTNMC has been conducting some activities for environmental improvement, the households affected perceived that the problems continued to exist and that in some instances, these caused health and economic problems on their part. There was an implied suggestion that the firm should do more, particularly related to the air pollution in the main road used by the firm and the pollution, siltation and sedimentation in the water bodies downstream of the mine.

Macroeconomic Policies, Mining Firm and Households and the Environment

A key firm official in Makati City was interviewed about the potential impact of various macroeconomic policies on the operation of the RTNMC, including those that have environmental implications. The key official mentioned that in general, the RTNMC does not borrow money from banks and other institutional sources to invest into its mining operations. He also believed that the prevailing interest rates have been stable in recent years, except during the economic crisis. He pointed out, however, that this was not a factor in the decision of the firm to invest more, including in areas related to environmental protection and improvement.

The key official cited that RTNMC exports all of its beneficiated ore output

to Japan. Therefore, on the one hand, the firm benefited from the devaluation as its proceeds increased in peso terms. On the other hand, the same devaluation raised their expenses on oil, spare parts and other imported inputs and this had a dampening impact on earnings. Overall, since most of the production inputs of the firm were locally

sourced and only about 20 percent at most was imported, the devaluation on the net benefited the firm by raising its earnings. The key official mentioned that like other firms involved in exportation, the abolition of controls related to foreign exchange transactions benefited the firm since it decreased government control over the handling of dollar proceeds of exporters. The key official said that in recent years, RTNMC has been selling its ore to only one buyer and because of this, production is contracted based on the demand of the buyer. This means that the level of production and exportation by the firm is not affected by the devaluation and the elimination of controls on foreign exchange transactions. The key official also mentioned that the firm makes its investment in machinery and equipment, including those that are environment-related, based on requirement and not on market price. Therefore, even when they are imported, such as the laboratory equipment for environmental monitoring, the devaluation and the elimination of controls did not affect the decision of the firm to buy the equipment. For the same reasons, he said that the reduction in tariffs and import restrictions has not affected the RTNMC in its decisions related to levels of production and export. It also has not affected the decision to purchase imported equipment, including those intended for environmental protection and management. The key official explained that the RTNMC is now proposing to the government the establishment within its mining site of a processing facility for low-grade nickel ore. This facility will be about 80 percent owned by Japanese investors and the other 20 percent by the local investors. He opined that the policy of investment promotion by the government as manifested by the granting of various incentives through the new mining law could have a positive impact on the decision of both the foreign and local investors involved of investing in the processing facility. He also mentioned that under the law, their company has benefited from certain incentives offered by the government, including the reduction of excise taxes from 5 percent to about 2 percent and income tax holidays. The incentives, however, have been balanced by the stricter financial requirements set by the government for environmental protection and management, particularly the setting up of the CLRF. The key official mentioned that the RTNMC realized that because of tightening public resources, the national and local governments were not in the position to fully meet the basic social services in their area. To assist the government, the firm established various infrastructure and facilities that were open for use by mining employees and the general public. These included a 20-bed hospital, school for kindergarten, elementary and high school, farm to market roads, dry and wet market, church and mosque and many other facilities (RTNMC 2000). He added, however, that their investment in facilities related to environmental improvement is programmed based on requirements and not on the inability of the government to provide for said facilities. The key official mentioned that the level of monitoring and enforcement by the government did not appear to have waned due to the tight fiscal policy. He asserted that there has been good synergy between the government and the RTNMC in

activities related to environmental monitoring, particularly through activities related to the MMT. This encouraged the firm not to violate environmental rules and regulations and instead follow them as much as possible. This also motivated the firm to agree to put up the specific funds for aggressively addressing the environmental problems in the mine site. The data and information generated from the households affected by the mining operations of the RTNMC also provided interesting insights about the interactions between macroeconomic policies, the households and the environment. All households did not save in banks while a few borrowed from them (Table 24). Those who borrowed mentioned that the interest rate either increased or remained the same in recent years. The study team learned that there was no bank in Rio Tuba and Bataraza although there were a few in Brookes Point, a municipality located kilometers away. Key informants mentioned that this could be a factor influencing the households to have a low level of use of banks as source of funds.

Practically all of the households did not earn dollar currency. Furthermore, most of the household respondents mentioned that the peso devaluation made their lives worse by raising the prices of commodities and transport. The increase in the price of energy, however, did not force households to use wood as substitute for fuel oil. According to key households informants, if there was an environmental effect of the devaluation among households, it was negative. They mentioned that the higher cost of living made the households even poorer and less willing to spend anything for environmental protection and management. The households simply hoped that the RTNMC, which caused the environmental problems in their area, is responsible enough to do something positive about them. Some households cited that the inflow of imported consumers goods in their localities benefited them in the form of increased availability and lower prices of these commodities. On the other hand, key household informants mentioned that while this increased availability and lower prices improved their purchasing power, they have no impact on the willingness of households to pay for environmental protection as they were already very poor in the first place.

All households did not receive any kind of financial investment from the government and thus had no investment made as result of financial incentives. Key informants argued that the households were too poor to indulge in any major financial investment. It was difficult to get information from the households on their violation of environmental rules and regulations. Some said that the government was not significantly involved in the environmental management in their areas but this did not encourage them to violate rules and regulations. Key informants mentioned that the households in general paid little taxes and were not were affected by increased taxation by the government. Their willingness to spend for environmental protection and management was not influenced by taxation as well.

Overall, the households mentioned that they were economically worse off now than five to 10 years ago. All also said that they have not spend on environmental improvement in their areas.

9.3 Case Study on Quarrying

Profile of Quarrying in Palawan River quarrying is the most prevalent quarrying practice in Palawan. The rivers of the mainland alone have estimated reserves of sand and gravel materials of about 5.36 million cubic meters. The exploitation of these reserves was granted to various construction firms, business enterprises and private individuals. From 1990 to 1999, the average annual production of sand and gravel in the province was 35,902 cubic meters while the average annual reserves were about 5.6 million cubic meters (Table 25). This means that only a minimal portion of the sand and gravel reserves in the province was actually exploited. The provincial production of sand and gravel also comprised only a very insignificant .13 percent of the average annual national production (Table 26). The production data, however, reflected an increasing production over the years. Key informants said that an important reason for this was that in recent years, sand and gravel and concrete materials became substitutes for lumber in construction when the log ban was implemented. Another reason was that the construction of roads, bridges, buildings and other forms of public infrastructure greatly intensified in recent years. An example of this is the ongoing concreting of the national highway from the capital city to the northern portion of the province. Briefly, river quarrying in Palawan is generally operated as follows. First a loader extracts the sand and gravel and other filling materials from the riverbed. The materials are then stockpiled by the loader in the riverbank or loaded into a dump truck and transported to the stockyard or construction site. As in other areas, in Palawan, the sand and gravel were sold by the operator through its own outlets, used in its own construction activities such as the building of structures and roads, or used in the construction activities of other firms. If the sand and gravel were not directly used in construction, they were utilized in the production of building materials such as hollow blocks and concrete electrical posts. Quarrying operators in Palawan can be classified into three types: (a) operating permittees; (b) non-permittee operators who paid the royalty fee to exploit quarry sites of non-operating permittees; and (c) buyers who collected aggregates from different quarry areas and pay for said materials. There were two types of permits, the commercial permit and industrial permit. The usual volume applied and approved for extraction under a commercial permit was 500 cubic meters annually. An industrial permit allowed a volume that ranged from the 2,500 cubic meters to as much as 10,000 cubic meters. The number of sand and gravel permittees increased in recent years and Puerto Princesa and Aborlan had the most number (Table 27). This rising number of operations in the entire province was consistent with the increasing production in recent years.

There were various fees and expenses paid by the quarrying operators

during the application of the permit (Table 28). Key informants mentioned that some of these fees and the length of time to process the applications discouraged applicants to file and application and instead just operate without a permit. When a firm operates, various fees have to paid as well. These included road right of way of about P80.00 to P100.00 per 6 cubic meter load truck, road maintenance of about P200.00 to P100.00 per cubic meter of aggregates, barangay fee of about P20.00 per truck. If one operated by paying a royalty fee, this ranged from P300.00 to P1000.00 per truck or was based on a 50:50 sharing arrangement between the permittee holder and the actual non-permittee operator.

The maps of the city showing the barangays and their populations are presented in Figures 11 and 12. The ECAN map that also shows the location and names of owners of the quarrying applications with commercial and industrial permits is presented in Figure 13. The maps of Aborlan showing the barangays and their populations are presented in Figures 14 and 15. The ECAN map that also shows the location and names of owners of the actual quarrying operations with commercial permits is presented Figure 16. The ECAN maps for both Puerto Princesa and Aborlan indicate that the sand and gravel quarrying operations were located in multiple use zones and other areas where they are generally allowed under the SEP. Also, all the commercial permittees in the two areas had one-hectare operations while the industrial permittee in Puerto Princesa had a five-hectare operation. It can be noted further that the actual quarrying operations with permits numbered less than those granted permits (see Table 27). This was because some permittees may have opted not to actually exploit their quarries.

While in theory the quarrying operations in Palawan were conducted in allowed areas, in reality this was not the case. According to key informants, quarrying operations in the province were infested with illegal operators that either have no permits at all or do not renew expired permits. These illegal operators were estimated to comprise one-third of the sub-sector in terms of number and two-thirds in terms of production volume. They violated rules by quarrying not just in riverbeds but also in riverbanks, hauling more volume than what was allowed in a given site, and extending their quarrying operations into sites not allowed by the SEP. Key informants mentioned that from time to time, illegal operators were caught and their equipment impounded. However, they were allowed to retrieve their equipment for a measly fee and not anymore brought to court and prosecuted. Of the rivers quarried in Puerto Princesa and Aborlan, most were quarried intensively and a majority had a high concentration of illegal mining operations (Table 29). Profile of Quarrying Firms and Households

All of the quarrying operations interviewed were Filipino-owned and all except one were sole-proprietorships (Table 30). The average number of years of operations was 4 years in Puerto Princesa and 2 years in Aborlan. Most of quarries covered a hectare or less and so were below the allowed five hectares. The average

number of employees was 3 to 4 individuals that included the operator of the loader, driver of the truck and helper(s). Specific data on the compensation of workers in the quarrying were difficult to generate from the respondents but many of them mentioned that they were paid better than the average worker in their fields. This was because quarrying operators were said to pay incentives and other bonuses to their workers. Many of the operations were fully mechanized but a few were both mechanized and manually operated. Key informants said that approximately 40 percent of the quarrying operations were vertically integrated where the quarrying operator also owned retail outlets for the quarrying products and/or a construction company that utilizes the products.

Most of the operations had a permit to operate but one in Aborlan had no permit. All had commercial permits and none had an industrial permit. Several of the quarrying operations were intermittent but others continuously operated the whole year round. The average annual income of the operations was lower in Aborlan than in Puerto Princesa. The levels of income generated in the interviews were probably undervalued because of the fear of the respondents that their answers will be utilized for tax purposes. Key informants mentioned that the estimated average net income required for quarrying operations in the province to continue operating was about P200,000.00 a year. In general, the quarrying operations can be considered small-scale as reflected by the average area of the quarry, the number of years of operation, length of years of operations, and average income of operators.

For the households affected by quarrying, the interview respondents were

either the father or mother of the family (Table 31). A few respondents in Puerto Princesa were community officials but most in both areas were ordinary citizens. Practically all respondents were not involved in quarrying operations so it was hoped that this will make them talk more openly about the quarrying operations. Most of the respondents were educated below the college level but all have attained some education. Thus, as in the case of the mining households, they were expected to have some awareness of the environmental problems caused by quarrying in their areas. The households came from different ethnic backgrounds indicating more diversity compared to mining households. The average annual household income was even lower than those for mining households. Again, most of the households belonged to the lower income brackets than higher income brackets.

Quarrying and the Environment

Most of the quarrying operations interviewed acquired an ECC but one in Aborlan did not comply with this requirement (Table 32). Only a few of the operations had a staff assigned to attend to environmental concerns. All of the firm respondents mentioned that their quarrying vehicles did not cause any significant air and noise pollution in the roads used for transport. A few mentioned that they did something to minimize any air pollution they caused, through the calibration and maintenance of vehicle engines and water sprinkling. Only a few accepted that their operations resulted to pollution, siltation and sedimentation downstream in the river where their quarries

were located. A significant number of respondents mentioned that they mitigated the environmental problems they caused in the river by quarrying at the riverbed only or by re-routing and re-channeling the water flow.

Only a few of the firm respondents mentioned that they caused significant

soil erosion and asserted that any erosion that occurred was mitigated through the re-routing and re-channeling of the water flow in the river. Most operations did not construct the roads leading to the quarry sites since these were already existent before they operated in their areas. To validate the information coming from the quarrying firms, environment-related data and information were gathered from the households. All of the households lived less than a kilometer from the quarrying site (Table 33). Most of the households in Puerto Princesa and many in Aborlan also lived close to the roads leading to the quarry site. A significant number of the household respondents indicated that the dust caused by quarrying vehicles passing through the roads affected them and caused problems in the form of respiratory and skin illnesses. Some also reported that the quarrying firms did nothing to address the problem although others said otherwise. Of those who said that firms did something, the reported action taken was water sprinkling but only irregularly. Most of the household respondents reported that the quarrying operations in their area caused pollution, siltation and sedimentation in the rivers. They said that because of these, the water in the rivers could not be used for everyday activities and sometimes even flooding occurs. Only a few respondents said that the pollution of the rivers caused sickness to humans and mortality to fish and animals. Some mentioned that the river water affected by quarrying was used for irrigation and this has caused the siltation of ricelands. Some further reported that because of quarrying, coastal waters were polluted and silted. Most respondents said that the quarrying firms did nothing to alleviate the pollution, siltation and sedimentation of the rivers their operations have affected. A few said that firms actually did something to address the problem, in particular, by deepening the riverbeds and installing boulders along the riverbanks. Some respondents cited that quarrying also caused the soil erosion in riverbanks while a few mentioned that operations did something about this by constructing siltation ponds and diversion canals. As in the case of mining, there was disagreement between the firms and households on the extent of the environmental problems caused by quarrying and the degree of the activities done by the firms to abate them. The households suggested that firms should do more to address the environmental hazards which have been them significant health and economic problems. The ocular inspection revealed that indeed, the extent of the problems caused by quarrying, particularly pollution, siltation and sedimentation, in some quarrying areas was significant. Up to the present, there has been no water quality monitoring done by any national or provincial agency in the rivers affected by quarrying in Palawan that could

have validated the contentions of either the firms or households. These could have helped confirm the extent of the water pollution caused by quarrying activities. The PCSD has promised to initiate this year a monitoring effort in at least two rivers in Puerto Princesa and results will be made available to the IMAPE as soon as they are ready. Key informants mentioned that an MMT for quarrying has already been set up but is still not operational at the moment. Putting this team into action is considered by the concerned LGUs and the PCSD.

Macroeconomic Policies, Quarrying Firms and Households and the Environment

Quarrying firms were asked questions related to the potential impact of various macroeconomic policies on their operations, including those that have environmental implications. The number of banks in Puerto Princesa and Aborlan increased in recent years (Table 34). However, only a few of the quarrying firms borrowed money from banks to invest or finance its operations (Table 35). Those who borrowed said that the interest increased or stayed the same in the last three years. Some mentioned that the interest rate level discouraged them from expanding operations and/or spending on environment-related activities.

Many of the quarrying firm respondents mentioned that they were affected by the devaluation in the form of reduced demand and increased operating costs. Several said that the devaluation discouraged them from expanding operations but none said it affected their decision to spend on environment-related activities. All of the firms also did not maintain dollar accounts for their operations through which they could have benefited from the devaluation.

All the firm respondents mentioned that they did not export any of their

products and did not import their equipment. They also thought that trade liberalization had no direct effect in their decision to produce or spend on environment-related activities. Key informants also said that there were no imported substitutes to the quarrying products and so, this aspect of trade liberalization could not have directly affected the operations of quarrying firms as well.

All of the firm respondents mentioned that they did not receive any

financial incentive from the government. All also thought that the investment promotion thrust had no effect on their decisions on investment and production in general and on their activities related to the environment in particular. All the firm respondents suggested that both the local and national governments were actively involvement in the environmental management in their areas. All also mentioned that the tight fiscal policy did not influence their decisions related to production and spending on environment related activities. Key informants, however, mentioned that in terms of monitoring and enforcement, the LGUs were weak and this led to the growth of illegal quarrying activities and the further exploitation of mineral resources and environmental degradation in quarrying areas. They mentioned that the weak presence of government in the quarrying sub-sector also encouraged firms to violate environmental rules and regulations

and spend little efforts on environmental protection and management than what they ought to do.

Overall, only one of the respondents said that the operations of his firm

expanded in the last three years. The various reasons forward include high interest rates, too many requirements and low demand. Key firm informants also mentioned that corruption in government, particularly in the processing of permit renewals and payment of fees, played a major role in the decision of firms not to expand their quarrying operations. It is interesting to note that while the individual firms professed that their operations did not expand, the overall production of sand and gravel operations in the province significantly increased in recent years (Tables 25 and 26). Key informants opined that the increased production could have come from the illegal operations or due to the increasing number of both legal and illegal operators. Furthermore, informants believed that some of the respondents did not admit that they expanded operations for their fear that it may be utilized for tax purposes. For the households affected by quarrying, practically all did not save in banks while only a few borrowed from banks (Table 36). Those who borrowed mentioned that the interest rate either increased or remained the same. All of the quarrying households did not earn dollar currency. Most said that the peso devaluation made them worse off by raising the price of commodities and transport. More importantly, most of the households said they used wood as fuel substitute. Key informants mentioned that the use of wood for fuel has been a popular practice in Palawan because of the deteriorating economic situation of the people and the increased employment of charcoal in restaurants and other establishments catering to the tourism sector.

A few of the households mentioned that the inflow of imported

consumers goods in their areas benefited them in the form of increased availability and lower prices of these commodities. According to some informants, this is an important positive effect of trade liberalization for households in general. Key informants, however, opined that this has no discernible impact on the willingness of households to pay for environmental protection and management since they are still poor even with these changes.

All households said that they made no investments due to any incentives

offered by the government. A majority mentioned that the government was actively involved in the environmental management in their areas. However, Key informants argued that monitoring and enforcement by the government was actually weak and this encouraged households to violate rules and regulations, such as in the case of illegal cutting of trees for firewood. Key informants also mentioned that the households in general paid no or little taxes and were not affected by increased taxation by the government. As in the case of mining, only a minority of the households said that they

were better off now than five to 10 years ago and none mentioned that they have spend on activities related to environmental protection and management in their particular areas. X. Summary and Conclusions

To summarize, the study generated the following general findings related to the

environment in the mining and quarrying sector in Palawan. First, there was a significant divergence of opinion between mining and quarrying firms on one side and the affected households on the other side on the environmental effects of mining and quarrying activities. The firms argued that the problems were less serious than thought to be and that significant efforts have been done already to address them. In contrast, the households asserted that the problems were very disturbing and that more have to be done by the firms to mitigate them. The differences in the opinion between firms and household were expected and reflected the great divide separating various stakeholders in the environmental debate.

While it was beyond the scope of the study to serve as arbiter in the mining and

quarrying sector, the study team found technical evidence that showed that the single firm in the mining sub-sector in Palawan has been meeting at least some of the environmental standards set by the government. Furthermore, the existence of an operating MMT for the firm is a strong sign that its environmental commitments will be seriously pursued in the future. For quarrying, the team found that no similar technical evidence and MMTs were in place.

As to the impacts of macroeconomic policies on the mining and quarrying sector of Palawan, important caveats first must be mentioned before conclusions are made. The results generated by the study should be taken as preliminary and validated further. In particular, since the study only looked into the direct effects of policies and disregarded the indirect effects and overall effects, a more detailed and comprehensive future evaluation could lead to different conclusions. Furthermore, the results here only reflect on the mining and quarrying in Palawan and not that of the entire country. The province does not represent other areas where mining and quarrying are practiced more intensively and macroeconomic policies may have more profound impacts on the different microeconomic units in the sector.

The results indicate that a direct and positive impact of financial liberalization

was the increase in the number of banks in the province that cater to the investment and financial needs of local businesses and households. This advantage, however, was minimized by the fact that mining and quarrying firms and households in general did not use the banking system to source their investment and financial needs. Hence, financial liberalization for the time being did not result to increased investment and production in the mining and quarrying sector in the province. By the same reasoning, it has no significant influence on the rate of mineral extraction and environmental degradation in the sector.

A direct and positive result of foreign exchange liberalization was the financial windfall to the lone mining firm due to the increased peso value of its exported product that the devaluation brought about. The abolition of controls in foreign exchange transactions also benefited the firm as an exporter and dollar earner. The firm, however, had pre-set production and exports based on the demand of the single foreign buyer of its output which were unaffected by devaluation. While the devaluation provided significant financial windfall, it did not motive the mining firm to increase its purchase of environment-related equipment since this was also based on programmed requirements and needs.

The devaluation raised the cost of production of the quarrying firms who served

only the domestic market and did not earn foreign currency. It also caused the contraction of some quarrying firms and this may have reduced the rate of extraction and helped the environment. The devaluation, however, increased the cost of living of households and forced some quarrying households to depend more on wood for their fuel needs to the detriment of the environment. It may also have made both quarrying firms and households who are already poor even less willing to spend for environmental improvement.

Trade liberalization positively impacted the mining firm by lowering the cost of

some of its production inputs. But for both mining and quarrying firms, again, this was not a factor in their decisions related to production and the purchase of environment-related equipment. Some households were benefited by the inflow of imported consumers goods in the form of increased availability and lower prices of these commodities and this was an important direct positive impact of trade policy. In terms of the environment, however, these gains did not make households any more willing environmental protection and management since they are still poor even with the changes.

Investment promotion directly benefited the mining firm through the availed tax-

based incentives and could have helped motivate investors to think of getting into nickel processing. Thus, the policy has an environmental role to play if it can help lead to an environmentally safe nickel processing facility in the future. The quarrying firms and households in general did not receive any form of incentives so this policy may have no direct bearing in terms of the willingness to pay for environmental improvement among these groups.

Tight fiscal policy may have benefited environmental protection and management

in the mining sub-sector as the mining firm has fill in the gap by setting up the necessary funds for the purpose. The existence of the CLRF helps ensure that the environmental commitments of the company will be strongly pursued. The setting up of the MMT with funding from the MTF also makes effective monitoring possible even with limited resources coming from the government. The case of quarrying was different. The lower resources for monitoring and enforcement that tight fiscal policy has resulted to may have contributed to a significant extent to the proliferation of illegal quarrying in the province.

To conclude, macroeconomic policies have some important positive impacts on the mining and quarrying sector and the environment in Palawan. To some extent, these impacts have been tempered by the inability of the firms and households to take advantage of the positive changes that the policies brought about. Policies brought negative impacts on the sector and the environment as well. The devaluation, in particular, increased the cost of operations of firms and the cost of living of households making them less willing to spend on environmental improvement and more dependent on natural resources for survival.

X. Recommendations

For the mining and quarrying sector in general, much remains to be done to improve the environmental conditions in the mining and quarrying sites. Yet, in recent years, the budgets of national agencies doing the work on the environment in general and on the mining and quarrying sector in particular have decreased. For instance, the annual budget of the DENR has been falling since 1997, particularly that for operations (Table 37). Except for 1998, the budget of the MGB Region IV overall and for operations has likewise decreased (Table 38). At the local level, the budgets of environmental agencies in the province have been fluctuating (Table 39). The increased provision of government funds and their judicious use for environmental management in the mining and quarrying sector of Palawan is much needed.

In order to effectively monitor the environmental conditions in the mining and quarry sites, pertinent government agencies have to do the following: a) establish the physical, economic, social and environmental data base in all mining and quarrying areas and watersheds; b) process these data and produce related maps using the GIS technology; and c) periodically update the data to monitor changes over time. The mining and quarrying firms may do part of these activities in collaboration with the agencies. At present, these activities are not done in quarrying so at the least, the PCSD should start its planned efforts for water quality monitoring in a few o the intensely quarried rivers. Monitoring is an important area of work in mining and quarrying where improvement is clearly needed. The MMT for the mining firm should be strengthened and continuously supported to ensure success. On the part of quarrying, the creation and operation of MMTs for specific quarrying firms or areas should now be done. An MMT for individual quarrying firms may be expensive to finance so perhaps firms located in the same rivers can be banded together for monitoring under a single MMT. A fund similar to the MTF in mining should be set up to ensure continued funding for monitoring in the quarrying sub-sector.

To improve on the mining situation in particular, the local and national governments should strictly screen mining applicants in Palawan, including the nickel processing project proposed by RTNMC. The screening, however, should be in a fair and judicious manner so that worthwhile mining projects that fit into the SEP can be accommodated. It is to the best interest of the country that the natural environment of Palawan is well protected but not too zealously so that viable economic development projects and activities that can still continue provide employment and incomes to the population. Illegal quarrying operations are a major source of environmental problems in Palawan. The problem is difficult to address because it is multi-faceted with different actors on both sides of the fence. One thing certain is that illegal quarrying must be contained if the environment is to be protected. An obvious approach is to impose higher fines and penalties to violators. Key informants mentioned that currently, those who are caught violating the terms and conditions of their permits are rarely brought to court. Another reason for the proliferation of illegal operations is the difficulty in securing a permit, particularly related to the length of time one has to get it. There is a lot of duplication in the processes used by local and national agencies for processing applications. A thorough study should be done to reduce this duplication. For instance, a way of shortening the processing of permit applications is to streamline the requirements of the LGUs, DENR and PCSD.

Still another reason for the existence of illegal operations is the high investment needed in securing the permit, both in terms of the legitimate and illegitimate costs involved. The so-called “grease money” in particular has become an integral part of the whole application process that discourages permit applicants. If this cost is reduced, quarrying proponents may be encouraged to apply for a permit. Solving corruption, which is endemic in society, is clearly better said than done. For a start, the government, together with the business sector and civil society, can institute a values formation program not just for the mining and quarrying sector but the entire population. This program should fit well with the moral recovery pronouncements of the newly installed national administration

In quarrying, the environmental problems can be minimized if monitoring and enforcement is made more efficient through the involvement of local communities. At present, some residents adjacent to the quarry areas have been vigilant in monitoring the activities of the operators. For instance, they check the volume of aggregates taken out to ensure that it does not exceed the allowable limit. They also ensure that the extraction methods employed do not cause undue harm to the environment, particularly the riverbed and the surrounding area. This type of participation should be promoted and institutionalised by the LGUs for effective monitoring and enforcement at the ground level.

Lastly, the negative effects of devaluation and economic crisis on the plight of households in the mining and quarrying sector should be given particular attention by the government. Rural upland households are among the poorest of the poor and the

unwelcome impacts of policies bear on them much more than in other sectors. The intensifying resource extraction that poverty forces on households reinforces this argument. The national government should plan and implement some effectively safety nets and poverty alleviating projects to mitigate the negative impact of macroeconomic policies on mining and quarrying households and in so doing reduce the pressure on the environment.

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TABLES

Table 1. Philippine Gross National Product (GNP), Gross Domestic Product (GDP) and Gross Value Added (GVA) of Mining and Quarrying, 1985-98 (Million Pesos, Constant 1985 Prices)

Year GNP GDP GVA of Mining Percentage of GVA Percentage of GVA and Quarrying of Mining and Quarrying of Mining and Quarrying

to GNP to GDP

1985 551,428 571,883 11,893 2.16 2.081986 571,492 591,423 12,313 2.15 2.081987 600,907 616,923 11,232 1.87 1.821988 644,229 658,581 11,704 1.82 1.781989 684,231 699,448 11,389 1.66 1.631990 716,929 720,690 11,091 1.55 1.541991 720,218 716,522 10,770 1.50 1.501992 731,396 718,941 11,495 1.57 1.601993 746,921 734,156 11,571 1.55 1.581994 786,136 766,368 10,763 1.37 1.401995 824,525 802,224 10,035 1.22 1.251996 884,226 849,121 10,166 1.15 1.201997 930,658 893,151 10,338 1.11 1.161998 934,386 887,905 10,624 1.14 1.20

Average 737,692 730,524 11,099 1.56 1.56

Source: National Statistical Coordination Board (2000, 1994)

Table 2. Philippine Mineral Production, 1985-98 (Million Pesos)

Year Metallic Minerals % of Metallic Minerals Non-Metallic Minerals % of Non-Metallic Totalto Total Mineral Minerals to Total

Production Mineral Production

1985 12,919 78.86 3,463 21.14 16,382 1986 14,644 80.51 3,546 19.49 18,189 1987 16,153 82.81 3,353 17.19 19,506 1988 17,637 78.81 4,743 21.19 22,380 1989 17,341 74.66 5,887 25.34 23,229 1990 16,392 73.28 5,977 26.72 22,369 1991 17,045 70.82 7,022 29.18 24,067 1992 14,672 59.49 9,992 40.51 24,664 1993 14,757 62.96 8,682 37.04 23,439 1994 15,127 61.53 9,459 38.47 24,586 1995 15,226 54.38 12,775 45.62 28,001 1996 14,080 45.30 16,999 54.70 31,079 1997 13,594 41.09 19,486 58.91 33,080 1998 16,596 44.46 20,730 55.54 37,326

Average 15,442 64.92 9,437 35.08 24,878

Source: National Statistical Coordination Board (2000, 1996)

Table 3. Philippine Nickel and Other Metallic Mineral Production, 1985-98 (Million Pesos)

Year Nickel/a % of Nickel to Others % of Others to (Beneficiated Ore) Total Metallic Total Metallic

Mineral Production Mineral Production

1985 239 1.85 12,679 98.15 1986 238 1.63 14,405 98.37 1987 145 0.90 16,008 99.10 1988 294 1.67 17,343 98.33 1989 812 4.68 16,529 95.32 1990 686 4.19 15,706 95.81 1991 648 3.80 16,397 96.20 1992 596 4.06 14,076 95.94 1993 351 2.38 14,406 97.62 1994 376 2.49 14,751 97.51 1995 598 3.93 14,628 96.07 1996 480 3.41 13,600 96.59 1997 514 3.78 13,080 96.22 1998 793 4.78 15,803 95.22

Average 484 3.11 14,958 96.89

Source: National Statistical Coordination Board (2000, 1996) Mines and Geosciences Bureau (Various Years)/a There are data on the quantity of nickel produced in metal form from 1985-98 but there are no data on its production value.

Table 4. Sand and Gravel and Other Non-Metallic Mineral Production, 1985-98 (Million Pesos)

Year Sand & Gravel % of Sand and Gravel Others % of Others to Total Non-Metallic to Total Non-Metallic

Mineral Production Mineral Production

1985 1,071 30.92 2,392 69.08 1986 1,221 34.44 2,324 65.56 1987 1,392 41.51 1,961 58.49 1988 1,707 35.98 3,037 64.02 1989 2,074 35.23 3,813 64.77 1990 2,194 36.71 3,783 63.29 1991 2,257 32.15 4,765 67.85 1992 2,400 24.02 7,592 75.98 1993 3,389 39.03 5,293 60.97 1994 4,050 42.82 5,409 57.18 1995 6,601 51.67 6,174 48.33 1996 8,733 51.37 8,266 48.63 1997 10,062 51.64 9,424 48.36 1998 8,945 43.15 11,785 56.85

Average 4,007 39.33 5,430 60.67

Source: National Statistical Coordination Board (2000, 1996)

Table 5. Philippine Production and Estimated Reserves of Nickel, 1985-96

Estimated Reserves Ratio of Nickel Production of Nickel to Total Estimated

Year Beneficiated Ore Metal (Thousand Metric Ton) Nickel Reserves/b

(Thousand Dry Metric Ton) (Thousand Metric Ton) (Percent)

1985 483.80 28.20 1,605,874 0.111986 504.80 12.70 1,569,869 0.071987 367.80 8.50 1,566,101 0.051988 444.60 10.40 1,585,536 0.061989 658.40 15.40 1,586,928 0.081990 608.10 15.80 1,215,119 0.111991 557.20 13.70 1,171,970 0.101992 593.90 14.00 1,172,999 0.101993 346.90 7.90 1,084,586 0.061994 429.00 9.90 1,079,938 0.081995 647.30 15.10 956,107 0.141996 656.70 15.00 1,088,854 0.121997 814.30 18.13 - -1998 959.90 - - -1999 631.00 - - -

Average 580.25 14.21 1,306,990 0.09

Source: National Statistical Coordination Board (2000, 1999, 1996) Mines and Geosciences Bureau (Various Years)

/a Data on nickel production were available up to 1999. Data on nickel metal production were available up to 1997. Data on nickel reserves were available up to 1996. Thus, the above presentation.

/b Metal production is converted to dry metric ton of ore using the ratio 1 DMT of ore = 43.48 metal metric ton. Then the value of metal in DMT is added to the value of beneficiated ore. The total nickel production is then divided by the total reserves to get the ratio of nickel production to total estimated nickel reserves.

Nickel Production/a

Table 6. Philippine Production and Estimated Reserves of Sand and Gravel, 1993-96

Year Sand and Gravel Estimated Reserves Ratio of Sand and GravelProduction of Sand and Gravel/a Production to Total

(Million Cubic Meters) (Million Cubic Meters) Estimated Reserves(Percent)

1985 11.14 - -1986 12.48 - -1987 13.78 - -1988 14.84 - -1989 15.14 - -1990 15.67 - -1991 15.68 - -1992 15.79 - -1993 16.69 28.96 57.631994 16.48 84.17 19.581995 28.16 82.86 33.981996 37.45 84.17 44.491997 40.03 - -1998 35.63 - -1999 32.42 - -

Average 29.55 70.04 38.92

Source: National Statistical Coordination Board (2000, 1999, 1996) Mines and Geosciences Bureau (Various Years)

/a Data on sand and gravel production were available up to 1999 but data on sand and gravel reserves were only up to 1996. Data on the estimated reserves of sand and gravel for 1990 to 1992 were available but production exceeded estimated reserves and thus were inaccurate. Hence, the above presentation.

Table 7. Municipalities in Palawan with their Corresponding Area, Classification, and Number of Barangays, 2000

City/ Land Area Classification Number of Municipality (Square Kilometers) Barangays

Aborlan 908.80 5th 19Agutaya 32.90 6th 10Araceli 176.80 6th 13Balabac 581.66 5th 20Batarasa 957.00 5th 22Brooke's Point 850.60 3rd 18Busuanga 395.60 5th 16Cagayancillo 15.40 6th 12Coron 1,026.50 5th 23Cuyo 57.30 5th 17Culion 187.88 6th 11Dumaran 435.00 5th 16El Nido 465.10 5th 18Kalayaan Island 0.25 6th 1Linapacan 155.20 6th 10Magsaysay 27.70 6th 11Narra 700.00 4th 22Puerto Princesa City 2,106.70 1st 66Quezon 935.50 4th 14Rizal (Marcos) 977.30 4th 11Roxas 1,220.30 5th 31San Vicente 842.50 4th 10Sofronio Española 449.80 6th 9Taytay 1,390.50 5th 31

Total 14,896.29 431

Source: PCSD and PPDO Files

Table 8. Population, Annual Growth Rate and Population Density for Palawan, 1903-2000

Censal Year Population Annual Population Growth Rate Density

(Percent) (Per Square Kilometer)

1903 35,696 - 2.40 1918 69,053 4.5 4.64 1939 93,673 1.46 6.29 1948 106,269 1.41 7.13 1960 162,669 3.61 10.92 1970 236,635 3.82 15.89 1975 300,065 4.86 20.14 1980 371,782 4.38 24.96 1990 528,287 3.58 35.46 1995 640,486 3.67 43.00 2000a/ 789,417 4.27 52.99

Average 303,094 3.56 20.35

Source: NSO (1996a) and NSCB (1999)a/ Figures for 2000 were estimated based on an annual growth rate of 4.27% provided by the Provincial Development Council (2000)

Table 9. Urban-Rural Composition of the Population of Palawan, by Sex, 1970, 1975, 1980, 1990, 1995 and 2000

Area Classificationand Sex Number % Number % Number % Number % Number % Number %

Total 236,635 100.00 300,065 100.00 371,782 100.00 528,287 100.00 640,486 100.00 789,417 100.00 Urban 46,521 19.66 55,611 18.53 83,889 22.56 164,459 31.13 211,724 33.06 295,707 37.46 Rural 190,114 80.34 244,454 81.47 287,893 77.44 363,828 68.87 428,762 66.94 493,710 62.54

Source: NSO (1996a, 1996b)a/ Figures for 2000 are estimated based on the projected growth rate of 6.91% for urban population provided by the Provincial Development Council (2000)

1995 2000a/1970 1975 1980 1990

Table 10. Gross Domestic Product of Palawan at Current Prices, 1994-1998

1994 1995 1996 1997 1998

Agriculture, Fishery and Forestry 4,000,831 4,228,215 5,334,163 5,124,609 5,642,324 Agricultural Crops 1,682,028 1,244,700 1,145,124 1,171,564 913,819 Livestock 565,171 248,675 395,393 304,453 459,724 Poultry 165,069 259,158 313,581 304,174 355,884 Fishery 1,582,842 2,471,449 3,476,340 3,337,284 3,904,622 Forestry 5,721 4,233 3,725 7,134 8,275

Industry 1,162,551 1,111,743 1,554,233 1,991,296 2,010,145 Mining and Quarrying 511,734 285,741 292,170 366,487 384,881 Manufacturing 384,843 502,220 924,587 1,201,963 1,081,767 Construction 37,604 72,575 49,351 45,403 124,535 Electricity, Gas and Water 228,370 251,207 288,125 377,443 418,962

Services 2,895,195 3,141,578 3,768,089 4,816,502 5,406,666 Transport, Storage and Communications 367,859 406,645 526,039 647,028 666,439 Wholesale and Retail Trade 948,718 806,410 887,051 1,303,964 1,538,677 Finance 70,202 42,121 85,506 129,404 222,957 Real Estate and Ownership and Dwellings 506,626 552,222 452,822 729,043 656,139 Private Services 546,555 683,194 1,113,606 1,057,926 1,079,085 Government Services 455,235 650,986 703,065 949,137 1,243,369

Gross Provincial Domestic Product 8,058,577 8,481,536 10,656,485 11,932,407 13,059,135

Source: PPDO Files

Industry Group

Table 11. Gross Domestic Product of Palawan, Percent Distribution, 1994-1998

1994 1995 1996 1997 1998 Average

Agriculture, Fishery and Forestry 49.65 49.85 50.06 42.95 43.21 47.14 Agricultural Crops 20.87 14.68 10.75 9.82 7.00 12.62 Livestock 7.01 2.93 3.71 2.55 3.52 3.95 Poultry 2.05 3.06 2.94 2.55 2.73 2.66 Fishery 19.64 29.14 32.62 27.97 29.90 27.85 Forestry 0.07 0.05 0.03 0.06 0.06 0.06

Industry 14.43 13.11 14.58 16.69 15.39 14.84 Mining and Quarrying 6.35 3.37 2.74 3.07 2.95 3.70 Manufacturing 4.78 5.92 8.68 10.07 8.28 7.55 Construction 0.47 0.86 0.46 0.38 0.95 0.62 Electricity, Gas and Water 2.83 2.96 2.70 3.16 3.21 2.97

Services 35.93 37.04 35.36 40.36 41.40 38.02 Transport, Storage and Communications 4.56 4.79 4.94 5.42 5.10 4.96 Wholesale and Retail Trade 11.77 9.51 8.32 10.93 11.78 10.46 Finance 0.87 0.50 0.80 1.08 1.71 0.99 Real Estate and Ownership and Dwellings 6.29 6.51 4.25 6.11 5.02 5.64 Private Services 6.78 8.06 10.45 8.87 8.26 8.48 Government Services 5.65 7.68 6.60 7.95 9.52 7.48

Gross Provincial Domestic Product 100.00 100.00 100.00 100.00 100.00 100.00

Source: PCSD Files

Industry Group

Table 12. Gross Domestic Product of Palawan, Average Annual Growth Rates, 1994-1998 (In percent)

1994 1995 1996 1997 1998 Average

Agriculture, Fishery and Forestry - 5.68 26.16 (3.93) 10.10 9.50 Agricultural Crops - (26.00) (8.00) 2.31 (22.00) (13.42) Livestock - (56.00) 59.00 (23.00) 51.00 7.75 Poultry - 57.00 21.00 (3.00) 17.00 23.00 Fishery - 56.14 40.66 (4.00) 17.00 27.45 Forestry - (26.01) (12.00) 91.52 15.99 17.38

Industry - (4.37) 39.80 28.12 0.95 16.12 Mining and Quarrying - (44.16) 2.25 25.44 5.02 (2.86) Manufacturing - 30.50 84.10 30.00 (10.00) 33.65 Construction - 93.00 (32.00) (8.00) 174.29 56.82 Electricity, Gas and Water - 10.00 14.70 31.00 11.00 16.67

Services - 8.51 19.94 27.82 12.25 17.13 Transport, Storage and Communications - 10.54 29.36 23.00 3.00 16.48 Wholesale and Retail Trade - (15.00) 10.00 47.00 18.00 15.00 Finance - (40.00) 103.00 51.34 72.30 46.66 Real Estate and Ownership and Dwellings - 9.00 (18.00) 61.00 (10.00) 10.50 Private Services - 25.00 63.00 (5.00) 2.00 21.25 Government Services - 43.00 8.00 35.00 31.00 29.25

Gross Provincial Domestic Product - 5.25 25.64 11.97 9.44 13.08

Source: Table 10

Industry Group

Table 13. Gross Domestic Product of Mining and Quarrying of Palawan at Current Prices,1988 and 1994 (In Million Pesos)

1988 % to Total 1994 % to Total

Metallic Resources/Nickel Mining 83.47 25.91 234.37 45.80

Non Metallic/Quarrying 16.40 5.09 15.78 3.08

Oil 222.31 69.00 261.58 51.12

Total 322.18 100.00 511.73 100.00

Source: PCSD Files

Subsectors

Table 14. Summary of Annual Shipment of Rio Tuba Nickel Mining Corporation (RTNMC), 1977-2000

Year Wet Metric Ton Growth Rate

1977 374,975 -1978 660,354 76.111979 727,899 10.231980 599,766 (17.60)1981 630,417 5.111982 430,925 (31.64)1983 437,036 1.421984 538,792 23.281985 620,427 15.151986 442,240 (28.72)1987 510,148 15.361988 475,979 (6.70)1989 560,622 17.781990 451,189 (19.52)1991 511,944 13.471992 453,717 (11.37)1993 408,855 (9.89)1994 356,305 (12.85)1995 510,444 43.261996 508,203 (0.44)1997 518,158 1.961998 417,496 (19.43)1999 327,269 (21.61)

2000 (Jan-Aug) 324,879 (0.73)

Average 491,585 1.85

Source: RTNMC (2000)

Table 15. Nickel Production of Palawan and Philippines, 1985-97 (Million Pesos)

Year Palawan Philippines % of Palawan to Philippines

1985 176 239 73.561986 183 238 76.851987 120 145 82.291988 228 294 77.721989 679 812 83.651990 450 686 65.571991 429 648 66.171992 486 596 81.501993 248 351 70.831994 230 376 61.041995 320 598 53.581996 380 480 79.281997 370 514 71.99

Average 331 460 72.62

Source: National Statistical Coordination Board (2000) Mines and Geosciences Bureau (Various Years)

Table 16. Profile Information on Households Affected by Mining in Rio Tuba, Bataraza, Palawan, 2000

SurveyArea

Father Mother Others Total Community Official Ordinary Citizen Total Yes No TotalRespondents Respondents

Frequency 19 13 1 33 7 26 33 6 27 33Percentage 57.58 39.39 3.03 100.00 21.21 78.79 100.00 18.18 81.82 100.00

Position of Respondent in Household Position of Respondent in Community Is respondent working in a mining firm?

Continuation…

Survey

Area

Elementary High School College Total Native Bicolano/Ilocano Others Total Average P20,000 >P20,000 >P40,000 >P60,000 >P80,000 Total

Level Level Level Respondents Palaweño Ilonggo/Cebuano Respondents Annual & less to 40,000 to 60,000 to 80,000 Respondents

Tagalog Income

P46,967

Frequency 19 9 5 33 2 31 0 33 33 9 9 8 2 5 33

Percentage 57.58 27.27 15.15 100.00 6.06 93.94 0.00 100.00 100.00 27.27 27.27 24.24 6.06 15.15 100.00

Educational Attainment of Household Ethnicity Average Annual Income of Households

Respondents

Table 17. Concentration Levels of Chromium at Different Sampling Points at the Rio Tuba Nickel Mining Corporation, 1998-2000

Apr. Aug. Oct. Dec. Feb. Apr. June Aug. Oct. Dec. Jan. Mar. May Aug. Sept.1998 1998 1998 1998 1999 1999 1999 1999 1999 1999 2000 2000 2000 2000 2000

1. Gadsan Bridge <0.05 <0.05 0.05 nd nd nd nd 0.05 nd nd nd nd nd nd nd2. Togpon Pond Effluent <0.05 0.20 0.05 0.29 nd nd 0.16 0.12 nd nd nd 0.07 0.11 nd 0.063. Lower Kinurong Pond Effluent <0.05 <0.05 0.05 0.18 nd nd 0.23 0.13 0.08 nd nd ND nd nd 0.124. Confluence of Sample 2&3 - - - - - - 0.13 0.09 nd nd nd 0.05 0.10 nd 0.085. Fifty meters upstream - - 0.05 - - - nd nd nd nd nd 0.05 nd nd nd6. Discharge point of (1) along

Rio Tuba River - - - nd nd nd - - - - - - - - -7. Discharge point of (3) and (4) - - 0.05 nd nd nd - - - - - - - - -8. Ocayan Bridge <0.05 - - - - - - - - - - - - - -9. Togpon Bridge <0.05 0.10 - - - - - - - - - - - - -10. Sito Buhoi - <0.05 - - - - - - - - - - - - -11. Rio Tuba River (pier) - <0.05 - - - - - - - - - - - - -

nd means non-detectable."-" means no sampling was done.Source: RTNMC Reports

Table 18. Concentration Levels of Lead at Different Sampling Points at the Rio Tuba Nickel Mining Corporation, 1998-2000

Apr. Aug. Oct. Dec. Feb. Apr. June Aug. Oct. Dec. Jan. Mar. May Aug. Sept.1998 1998 1998 1998 1999 1999 1999 1999 1999 1999 2000 2000 2000 2000 2000

1. Gadsan Bridge <0.1 <0.1 <0.1 nd nd nd nd nd nd nd nd nd nd nd nd2. Togpon Pond Effluent <0.1 <0.1 <0.1 nd nd nd nd nd nd nd nd nd nd nd nd3. Lower Kinurong Pond Effluent - - - nd nd nd nd nd nd nd nd nd nd nd nd4. Confluence of Sample 2&3 - - - - - - nd nd nd nd nd nd nd nd nd5. Fifty meters upstream from

discharge point of tributary to Rio Tuba River - - - - - - nd nd nd nd nd nd nd nd nd

6. Rio Tuba river (upstreams) - - 0.17 - - - - - - - - - - - -7. Discharge point of 3&4 con-

fluence along Rio Tuba River - - 0.13 nd nd nd - - - - - - - - -

8. Kinurong Pond <0.1 0.3 <0.1 - - - - - - - - - - - -9. Ocayan Bridge <0.1 - - - - - - - - - - - - - -10. Togpon Bridge <0.1 <0.1 - - - - - - - - - - - - -11. Sitio Buhoi - <0.1 - - - - - - - - - - - - -12. Discharge of sample 1 of Rio-

Tuba river - - - nd nd nd - - - - - - - - -13. Rio Tuba River (pier) - 0.40 - - - - - - - - - - - - -

nd means non-detectable."-" means no sampling was done.Source: RTNMC Reports

Table 19. Concentration Levels of Nickel at Different Sampling Points at the Rio Tuba Nickel Mining Corporation, 1998-2000

Apr. Aug. Oct. Dec. Feb. Apr. June Aug. Oct. Dec. Jan. Mar. May Aug. Sept.1998 1998 1998 1998 1999 1999 1999 1999 1999 1999 2000 2000 2000 2000 2000

1. Gadsan Bridge - - 0.076 nd nd nd nd 0.02 0.02 nd nd nd nd nd nd2. Togpon Pond Effluent - - 0.24 0.095 nd nd nd 0.03 0.05 nd 0.03 0.09 0.05 0.04 0.033. Lower Kinurong Pond Effluent - - 0.33 0.175 nd nd nd 0.03 0.02 nd 0.03 0.08 0.11 0.08 0.054. Confluence of Sample 2&3 - - - - - - 0.06 0.04 0.04 nd 0.03 0.07 0.04 0.03 0.045. Fifty meters upstream from

discharge point of tributary to Rio Tuba River - - - - - - nd nd nd nd nd 0.03 nd nd nd

6. Rio Tuba river (upstreams) - - 0.084 - - - - - - - - - - - -7. Discharge point of 3&4 con-

fluence along Rio Tuba River - - 0.099 0.16 nd nd - - - - - - - - -

8. Ocayan Bridge - - - - - - - - - - - - - - -9. Togpon Bridge - - - - - - - - - - - - - - -10. Sito Buhoi - - - - - - - - - - - - - - -11. Rio Tuba River (pier) - - - - - - - - - - - - - - -12. Discharge of sample 1 of Rio-

Tuba river - - - nd nd nd - - - - - - - - -

nd means non-detectable."-" means no sampling was done.Source: RTNMC Reports

Table 20. Concentration Levels of Cobalt at Different Sampling Points at the Rio Tuba Nickel Mining Corporation, 1998-2000

Apr. Aug. Oct. Dec. Feb. Apr. June Aug. Oct. Dec. Jan. Mar. May Aug. Sept.1998 1998 1998 1998 1999 1999 1999 1999 1999 1999 2000 2000 2000 2000 2000

1. Gadsan Bridge 0.02 - 0.05 nd nd nd nd nd nd nd nd nd nd nd nd2. Togpon Pond Effluent 0.02 - 0.05 nd nd nd nd nd nd nd nd nd nd nd nd3. Lower Kinurong Pond Effluent 0.02 - 0.05 nd nd nd nd nd nd nd nd nd nd nd nd4. Confluence of Sample 2&3 - - - - - - nd nd nd nd nd nd nd nd nd5. Fifty meters upstream from

discharge point of tributary to Rio Tuba River - - 0.05 - - nd - - nd nd nd nd nd nd nd

6. Discharge point of sample 1 along Rio-Tuba River - - - 0.07 nd - - - - - - - - - -

7. Discharge point of 3&4 con- fluence along Rio Tuba River - - 0.05 0.06 nd nd - - - - - - - - -

8. Ocayan Bridge 0.02 - - - - - - - - - - - - - -9. Togpon Bridge 0.02 - - - - - - - - - - - - - -

nd means non-detectable."-" means no sampling was done.Source: RTNMC Reports

Table 21. Concentration Levels of Iron at Different Sampling Points at the Rio Tuba Nickel Mining Corporation, 1998-2000

Apr. Aug. Oct. Dec. Feb. Apr. June Aug. Oct. Dec. Jan. Mar. May Aug. Sept.1998 1998 1998 1998 1999 1999 1999 1999 1999 1999 2000 2000 2000 2000 2000

1. Gadsan Bridge 0.12 0.97 0.27 0.23 nd nd nd 0.31 nd nd nd nd nd nd 0.062. Togpon Pond Effluent 0.62 0.29 1.10 0.505 0.12 0.22 0.27 0.06 0.09 nd nd 0.21 0.09 0.07 nd3. Lower Kinurong Pond Effluent 0.59 0.43 1.9 1.205 0.14 0.33 0.25 nd 0.06 0.48 nd 0.36 0.20 0.14 0.174. Confluence of Sample 2&3 - - - - - - 0.23 nd 0.07 0.15 nd 0.20 0.12 0.08 0.085. Fifty meters upstream - - 0.38 - - - 0.15 nd nd nd nd nd nd nd nd6. Discharge point of (1) along - - - - - - - -

Rio Tuba River - - - 0.995 0.19 0.16 - - - - - - - - -7. Discharge point of (3) and (4) - - 0.33 1.17 0.20 0.20 - - - - - - - - -8. Ocayan Bridge 0.48 - - - - - - - - - - - - - -9. Togpon Bridge 0.32 0.26 - - - - - - - - - - - - -10. Sito Buhoi - 0.089 - - - - - - - - - - - - -11. Rio Tuba River (pier) - 0.12 - - - - - - - - - - - - -

nd means non-detectable."-" means no sampling was done.Source: RTNMC Reports

Table 22. RTNMC Funds Under the Environmental Protection and Enhancement Program (EPEP)

Funds(In Pesos)

I. Contingent Liability and Rehabilitation Fund (CLRF)

A. Mine Waste and Tailings Fee (MWTF) P 0.10/DMT of TailingsP 0.05/DMT of Mine Waste

B. Mine Rehabilitation Fund

1. Rehabilitation Cash Fund (RCF) 5,000,000

2. Monitoring Trust Fund (MTF) 50,000

II. Environmental Trust Fund (ETF) 200,000

Source: RTNMC

Type of Fund

Table 23. Environment-Related Information on Households Affected by Mining in Rio Tuba, Bataraza, Palawan, 2000

Average distance ofhousehold residence

Survey from mining siteArea

(kilometers) Yes No Total Yes No No Response TotalRespondents Respondents

5

Frequency 33 7 26 33 13 14 6 33Percentage 100.00 21.21 78.79 100.00 39.39 42.42 18.18 100.00

Is the household residence close to road Does the air pollution caused by vehiclesleading to mining site? of mining firm affect the household?

Continuation…

SurveyArea

Yes No Total Respiratory Skin Ailments Others Total Yes No No Response Total

Respondents Illness Respondents Respondents

Frequency 13 0 13 11 1 1 13 16 2 15 33

Percentage 100.00 0.00 100.00 84.62 7.69 7.69 100.00 48.48 6.06 45.45 100.00

If yes, does the household experience sickness due to If yes, what are the kinds of sickness experienced by Does the mining firm carry out measures to mitigatethe air pollution caused by vehicles of mining firm? the household? the air pollution from vehicles?

Continuation…

SurveyArea

Sprinkle Water Others Total Yes No No Response Total Yes No No Response Total

but Irregularly Respondents Respondents Respondents

Frequency 13 3 16 22 8 3 33 6 27 0 33

Percentage 81.25 18.75 100.00 66.67 24.24 9.09 100.00 18.18 81.82 0.00 100.00

If yes, what are the measures carried out by the Does the mining firm cause pollution, siltation and Do pollution, siltation and sedimentation caused bymining firm to mitigate pollution from vehicles? sedimentation of water bodies? the mining firm affect household activities?

Continuation…

If yes, how?

SurveyArea

Skin Low Farm Polluted Water Cannot Others Total Yes No Total Yes No TotalDisease Production be Used for Everyday Respondents Respondents Respondents

Activities

Frequency 2 2 1 1 6 4 29 33 4 29 33Percentage 33.33 33.33 16.67 16.67 100.00 12.12 87.88 100.00 12.12 87.88 100.00

Have you heard of any sickness Does water pollution kill fish or animalscaused by water pollution in the river? in the river?

Continuation…

SurveyArea

Yes No No Response Total Yes No Total Yes No No Response TotalRespondents Respondents Respondents

Frequency 17 13 3 33 14 3 17 13 17 3 33Percentage 51.52 39.39 9.09 100.00 82.35 17.65 100.00 39.39 51.52 9.09 100.00

Is the water from the river used If yes, does the use of water from the river Does mining result to the pollutionfor the irrigation of ricelands? cause siltation in the ricelands? of coastal waters?

Continuation…

SurveyArea

Lower Fish Silted Others Total Yes No No Response Total Construction of Construction of Others Total

Catch Coast Respondents Respondents Dike Diversion Canal Respondents

Frequency 4 1 8 13 15 5 13 33 10 2 3 15

Percentage 30.77 7.69 61.54 100.00 45.45 15.15 39.39 100.00 66.67 13.33 20.00 100.00

If yes, what are the manifestations of Does the mining firm do something If yes, how?the pollution of coastal waters? to mitigate pollution of water bodies?

Continuation…

SurveyArea

Yes No Total Yes No No Response Total Construction of Others Total

Respondents Diversion Canals Respondents

Frequency 12 21 33 18 2 13 33 9 9 18

Percentage 36.36 63.64 100.00 54.55 6.06 39.39 100.00 50.00 50.00 100.00

Does mining result to soil erosion in the Does the mining firm do something If yes, what were the measures done by miningbanks of the river? to mitigate soil erosion? firm to mitigate soil erosion?

Continuation…

SurveyArea

Yes No No Total Yes No No Total Reforestation No TotalResponse Respondents Response Respondents Response Respondents

Frequency 7 25 1 33 19 2 12 33 8 11 19Percentage 21.21 75.76 3.03 100.00 57.58 6.06 36.36 100.00 42.11 57.89 100.00

Is deforestation a problem in Does the mining operation do If yes, how?the mining site? something to mitigate deforestation?

Table 24. Macroeconomic Policies-Related Information from Households Affected by Mining in Rio Tuba, Bataraza, Palawan, 2000

SurveyArea

Yes No Total Yes No Total Increased Decreased The Same TotalRespondents Respondents Respondents

Frequency 0 33 33 5 28 33 2 0 3 5Percentage 0.00 100.00 100.00 15.15 84.85 100.00 40.00 0.00 60.00 100.00

If yes, did interest rate increase, decreaseor stay the same in the last three years?

Does your household save in banks? Does your household borrow money frombanks?

Continuation…

SurveyArea

Yes No Total Yes No No Total Higher Prices Increase in Others TotalRespondents Response Respondents of CommoditiesTransport Costs Responses

Frequency 1 32 33 31 0 2 33 24 17 18 59Percentage 3.03 96.97 100.00 93.94 0.00 6.06 100.00 40.68 28.81 30.51 100.00

Does the household earn dollar currency? Has the peso devaluation affected the If yes, how?household?

Continuation…

Survey

Area

Yes No Total Yes No Total Cheaper Others Total

Respondents Respondents Prices Respondents

Frequency 0 0 0 15 18 33 3 12 15

Percentage 0.00 0.00 0.00 45.45 54.55 100.00 20.00 80.00 100.00

Does the household use wood as fuel Has the inflow of imported consumer goods If yes, how?

for cooking? benefited the household?

Continuation…

SurveyArea

Yes No Total Yes No No Total Yes No The Same TotalRespondents Response Respondents Respondents

Frequency 0 33 33 14 16 3 33 1 26 6 33Percentage 0.00 100.00 100.00 42.42 48.48 9.09 100.00 3.03 78.79 18.18 100.00

Does the household have financial investment Is the household better off now than fiveas a result of government incentives? to ten years ago?

Is the government involved in managingenvironmental problems in your area?

Continuation…

Survey

Area

Yes No No Total

Reply Respondents

Frequency 0 26 7 33

Percentage 0.00 78.79 21.21 100.00

Has your household spent on activities related to

environmental improvement in your area?

Table 25. Sand and Gravel Reserves and Production of Palawan, 1990-1997 (In Cubic Meters)

Year Reserves Production % of Production to Reserves

1990 5,719,913 19,158 0.331991 5,700,755 19,125 0.341992 5,681,630 18,944 0.331993 5,662,686 20,031 0.351994 5,642,655 22,197 0.391995 5,620,458 34,585 0.621996 5,585,873 45,998 0.821997 5,539,873 49,172 0.891998 5,490,703 59,006 1.071999 5,431,697 70,808 1.30

Average 5,607,624 35,902 0.65

Source: PCSD Files

Table 26. Sand and Gravel Production of Palawan and Philippines, 1990-1998 (In Cubic Meters)

Year Palawan Philippines % of Palawan to Philippines

1990 19,158 15,676,600 0.121991 19,125 15,676,600 0.121992 18,944 15,786,600 0.121993 20,031 16,692,700 0.121994 22,197 16,477,800 0.131995 34,585 28,155,100 0.121996 45,998 37,446,300 0.121997 49,172 40,030,100 0.121998 59,006 35,626,800 0.17

Average 32,024 24,618,733 0.13

Source: National Statistical Coordination Board (2000) PCSD Files

Table 27. Sand and Gravel Permits Issued by Local Government Units (LGUs) in Palawan, 1998-2000

City/Municipality 1998 1999 2000

Aborlan 2 6 6Agutaya 0 0 0Araceli 0 0 0Balabac 0 0 0Batarasa 0 3 0Brooke's Point 0 0 0Busuanga 0 0 0Cagayancillo 0 0 0Coron 0 1 0Cuyo 0 0 0Dumaran 0 0 0El Nido 0 0 1Kalayaan Island 0 0 0Linapacan 0 0 0Magsaysay 0 0 0Narra 0 2 0Puerto Princesa City 3 5 15Quezon 0 0 0Rizal (Marcos) 0 0 0Roxas 1 2 1San Vicente 0 0 0Taytay 0 0 0

Total 6 19 23

Source: PCSD Files

Table 28. Permit Fees for Quarrying in Palawan, 2000

Agency/list of fees required Amount (in peso) Amount (in peso)commercial permit1 Industrial permit2

1 Prov'L ENROP (Prov'l Treasurer)a. Filling fee 25.00 25.00b. Application fee 30.00 30.00c. Processing fee 50.00 50.00d. Projection fee (for new applicant) 50.00 50.00e. Verification fee 500.00 3,000.00f. PD 1856 10.00 10.00g. Excavation fee Aborlan = P12/cu.m. PPC = P 14/cu.m.h. Delivery receipt4 105.00 105.00 P52.50 per booklet

2 City ENRO (City Treasurer)3

a. Filling fee 25.00 150.00b. Application fee 30.00 150.00c. Processing fee 50.00 50.00d. Projection fee (for new applicant) 50.00 50.00e. Verification fee 500.00 3,000.00f. PD 1856 10.00 10.00g. Excavation fee P15,000 per 500 cu.m. 15,000.00 75,000.00h. Delivery receipt5

P52.50 per booklet 105.00 105.00

3 DENR (Thru CENROs)a. Filling fee 460.00 460.00b. Processing fee 2,100.00 2,100.00c. Procedural Screening fee 200.00 200.00d. Legal research fee 240.00 240.00

4 PCSDSa. Filling fee 10.00 10.00b. Evaluation fee 290.00 290.00c. Inspection fee 900.00 900.00

Notes:1

Commercial permit (maximum area is 5.0 hectare for 1 year duration).2

Industrial permit (maximum area is 5 hectares within the Provincial Governor's authority; beyond 5 ha up to 20 ha approval

DENR Regional Director; both for a period of 5 years renewable up to 25 years).3

Proponent for Puerto Princesa City apply with the City ENRO while those from the municipalities apply with the Prov'l ENRO.

All delivery receipts are purchased from the Prov'l ENRO.4

Before 2001, required minimum delivery receipt amounted to P450.00.5

To be purchased from Prov'l ENRO.

Table 29. Rivers Affected by Quarrying in Puerto Princesa and Aborlan, 2000

River Location of Quarry Degree of Quarrying Concentration ofOperation Intensity Illegal Quarrying

Puerto Princesa

1. Tagbarungis River Sitio Tagbarungis, Barangay Inagawan High High2. Montible River Barangay Montible High High3. Bulilao River Barangay Iwahig High High4. Lapu-Lapu River Barangay Montible Average Low5. Bacungan River Sitio Kasikaan, Barangay Bacungan High High6. Tanabag River Barangay Tanabag High None7. Taytayen River Barangay Inagawan Light None8. Maoyon River Barangay Maoyon High None9. Tarabanan River Sitio Tarabanan, Barangay Concepcion Average Low10. Malinao River Barangay Sta. Lucia High High11. Tacduan River Barangay Inagawan High High12. Matnor Creek Barangay Inagawan Average Low13. Nagsaguipe River Sitio Nagsaguipe, Barangay Sta. Cruz High High14. Iratag River Sito Iratag, Barangay Irawan High High15. Inagawan River Barangay Inagawan High Low

Aborlan

1. Aborlan River Barangay Gogognan High High2. Iraan River Sitio Mamonmon, Barangay Iraan Average Low

Source: Key Informants

Table 30. Profile Information on Quarrying Firms in Puerto Princesa and Aborlan, Palawan, 2000

SurveyArea

Filipino Others Total Sole Corporation TotalOwned Respondents Proprietorship Respondents

Puerto Princesa

Frequency 9 0 9 8 1 9Percentage 100.00 0.00 100.00 88.89 11.11 100.00

Aborlan

Frequency 10 0 10 10 0 10Percentage 100.00 0.00 100.00 100.00 0.00 100.00

Total

Frequency 19 0 19 18 1 19Percentage 100.00 0.00 100.00 94.74 5.26 100.00

Ownership Status Type of Ownership

Continuation…

Average Number of Average NumberYears in Operation of Employees

SurveyArea

(Years) <1 1 2 No Total Mechanized Mechanized/ TotalResponse Respondents Manual Respondents

Puerto Princesa 4 4

Frequency 9 2 6 0 1 9 9 8 1 9Percentage 100.00 22.22 66.67 0.00 11.11 100.00 100.00 88.89 11.11 100.00

Aborlan 2 3

Frequency 10 0 7 1 2 10 10 6 4 10Percentage 100.00 0.00 70.00 10.00 20.00 100.00 100.00 60.00 40.00 100.00

Total

Frequency 19 2 13 1 3 19 19 14 5 19Percentage 100.00 10.53 68.42 5.26 15.79 100.00 100.00 73.68 26.32 100.00

(hectares)Total Quarry Area Type of Quarrying Operation

Continuation…

AverageIncome

SurveyArea

Yes No No Total Intermittent Continuous Total (Pesos)Response Respondents Respondents

Puerto Princesa P 35,301

Frequency 9 0 0 9 5 4 9 2Percentage 100.00 0.00 0.00 100.00 55.56 44.44 100.00 22.22

Aborlan P 34,301

Frequency 7 1 2 10 10 0 10 2Percentage 70.00 10.00 20.00 100.00 100.00 0.00 100.00 20.00

Total

Frequency 16 1 2 19 15 4 19 4Percentage 84.21 5.26 10.53 100.00 78.95 21.05 100.00 21.05

Type of OperationDoes quarrying operation have permit to operate?

Table 31. Profile Information on Households Affected by Quarrying in Puerto Princesa and Aborlan, Palawan, 2000

SurveyArea

Father Mother Others Total Community Official Ordinary Citizen Total Yes No TotalRespondents Respondents

Puerto Princesa

Frequency 22 23 3 48 7 41 48 1 47 48Percentage 45.83 47.92 6.25 100.00 14.58 85.42 100.00 2.08 97.92 100.00

Aborlan

Frequency 8 17 1 26 0 26 26 0 26 26Percentage 30.77 65.38 3.85 100.00 0.00 100.00 100.00 0 100.00 100.00

Total

Frequency 30 40 4 74 7 67 74 1 73 74Percentage 40.54 54.05 5.41 100.00 9.46 90.54 100.00 1.35 98.65 100.00

Position of Respondent in Household Position of Respondent in Community Is respondent working in a quarrying firm?

Continuation…

SurveyArea

Elementary High School College Total Native Bicolano/Ilocano Others Total Average P20,000 >20,000 >40,000 >60,000 >80,000 No TotalLevel Level Level Respondents Palaweño Ilonggo/Cebuano Respondents Annual & less to 40,000 to 60,000 to 80,000 Response Respondents

Tagalog Income

Puerto Princesa P33,356

Frequency 27 15 6 48 16 30 2 48 48 24 10 1 7 4 2 48Percentage 56.25 31.25 12.50 100.00 33.33 62.50 4.17 100.00 100.00 50.00 20.83 2.08 14.58 8.33 4.17 100.00

Aborlan P36,842

Frequency 10 11 5 26 12 14 0 26 26 5 8 2 4 0 7 26Percentage 38.46 42.31 19.23 100.00 46.15 53.85 0.00 100.00 100.00 19.23 30.77 7.69 15.38 0.00 26.92 100.00

Total

Frequency 37 26 11 74 28 44 2 74 74 29 18 3 11 4 9 74Percentage 50.00 35.14 14.86 100.00 37.84 59.46 2.70 100.00 100.00 39.19 24.32 4.05 14.86 5.41 12.16 100.00

Educational Attainment of Household Ethnicity Average Annual Income of HouseholdsRespondents

Table 32. Environment-Related Information about Quarrying Firms in Puerto Princesa and Aborlan, Palawan, 2000

SurveyArea

Yes No No Total Yes No No Total Significant Not No TotalResponse Respondents Response Respondents Significant Response Respondents

Puerto Princesa

Frequency 7 0 2 9 3 5 1 9 0 7 2 9Percentage 77.78 0.00 22.22 100.00 33.33 55.56 11.11 100.00 0.00 77.78 22.22 100.00

Aborlan

Frequency 6 1 3 10 2 7 1 10 0 9 1 10Percentage 60.00 10.00 30.00 100.00 20.00 70.00 10.00 100.00 0.00 90.00 10.00 100.00

Total

Frequency 13 1 5 19 5 12 2 19 0 16 3 19Percentage 68.42 5.26 26.32 100.00 26.32 63.16 10.53 100.00 0.00 84.21 15.79 100.00

Does vehicles of quarrying operation contributesignificantly to air pollution?

Does quarrying operation have If not, does quarrying operations have somebodyan ECC? assigned to attend environmental concerns?

Continuation…

SurveyArea

Calibration and Water None/ Total Yes No No Total Quarrying at the Re-routing/ No TotalMaintenance of Sprinkling No Response Respondents Response Respondents Riverbed Only Re-channeling Response Respondents

Engines

Puerto Princesa

Frequency 2 1 6 9 1 8 0 9 4 0 5 9Percentage 22.22 11.11 66.67 100.00 11.11 88.89 0.00 100.00 44.44 0.00 55.56 100.00

Aborlan

Frequency 0 0 10 10 2 6 2 10 4 1 5 10Percentage 0.00 0.00 100.00 100.00 20.00 60.00 20.00 100.00 40.00 10.00 50.00 100.00

Total

Frequency 2 1 16 19 3 14 2 19 8 1 10 19Percentage 10.53 5.26 84.21 100.00 15.79 73.68 10.53 100.00 42.11 5.26 52.63 100.00

cause pollution, siltation and sedimentation pollution caused by vehicles? downstream in the river where quarry is located?

Does the quarrying operation's extraction activitiesWhat are the mitigating measures being done by the quarrying operation to reduce air

in the river caused by quarrying?quarrying operation to reduce environmental problems

What are the mitigating measures done by the

Continuation…

SurveyArea

Yes No No Total Rechanelling Others Total Yes No TotalResponse Repsondents Respondents Respondents

Puerto Princesa

Frequency 1 8 0 9 0 1 1 0 9 9Percentage 11.11 88.89 0.00 100.00 0.00 100.00 100.00 0.00 100.00 100.00

Aborlan

Frequency 1 6 3 10 1 0 1 2 8 10Percentage 10.00 60.00 30.00 100.00 100.00 0.00 100.00 20.00 80.00 100.00

Total

Frequency 2 14 3 19 1 1 2 2 17 19Percentage 10.53 73.68 15.79 100.00 50.00 50.00 100.00 10.53 89.47 100.00

cause significant amount of soil erosion? by the quarrying operation to reduce soil leading to quarry site?Does the quarrying operation's extraction activities What are the mitigating measures being done Did the quarrying operation constructed road

soil erosion caused by quarrying?

Continuation…

SurveyArea

Open Area Coconut Land TotalRespondents

Puerto Princesa

Frequency 0 0 0Percentage 0.00 0.00 0.00

Aborlan

Frequency 1 1 2Percentage 50.00 50.00 100.00

Total

Frequency 1 1 2Percentage 50.00 50.00 100.00

the road?If yes, what was the original vegetation of

Table 33. Environment-Related Information on Households Affected by Quarrying in Puerto Princesa and Aborlan, Palawan, 2000

Average distance ofhousehold residence

Survey from quarrying siteArea

(meters) Yes No Total Yes No No Response TotalRespondents Respondents

Puerto Princesa 876

Frequency 48 39 9 48 12 36 0 48Percentage 100.00 81.25 18.75 100.00 25.00 75.00 0.00 100.00

Aborlan 442

Frequency 26 11 15 26 10 12 4 26Percentage 100.00 42.31 57.69 100.00 38.46 46.15 15.38 100.00

Total

Frequency 74 50 24 74 22 48 4 74Percentage 100.00 67.57 32.43 100.00 29.73 64.86 5.41 100.00

the household?

Is the household residence close to road Does the air pollution caused by vehiclesleading to quarrrying site? of quarrying operation affect

Continuation…

SurveyArea

Yes No Total Respiratory Skin Ailments Total Yes No No Response TotalRespondents Illness Respondents Respondents

Puerto Princesa

Frequency 12 0 12 11 1 12 9 9 30 48Percentage 100.00 0.00 100.00 91.67 8.33 100.00 18.75 18.75 62.50 100.00

Aborlan

Frequency 6 4 10 5 1 6 1 9 16 26Percentage 60.00 40.00 100.00 83.33 16.67 100.00 3.85 34.62 61.54 100.00

Total

Frequency 18 4 22 16 2 18 10 18 46 74Percentage 81.82 18.18 100.00 88.89 11.11 100.00 13.51 24.32 62.16 100.00

If yes, does the household experience sickness due to If yes, what are the kinds of sickness experienced by Does the quarrying operation carry out measures to the air pollution caused by vehicles of quarrying operation? the household? mitigate the air pollution from vehicles?

Continuation…

SurveyArea

Sprinkle Water Others Total Yes No No Response Total Yes No No Response Totalbut Irregularly Respondents Respondents Respondents

Puerto Princesa

Frequency 9 0 9 32 9 7 48 23 23 2 48Percentage 100.00 0.00 100.00 66.67 18.75 14.58 100.00 47.92 47.92 4.17 100.00

Aborlan

Frequency 0 1 1 19 6 1 26 7 19 0 26Percentage 0.00 100.00 100.00 73.08 23.08 3.85 100.00 26.92 73.08 0.00 100.00

Total

Frequency 9 1 10 51 15 8 74 30 42 2 74Percentage 90.00 10.00 100.00 68.92 20.27 10.81 100.00 40.54 56.76 2.70 100.00

If yes, what are the measures carried out by the quarrying Does the quarrying operation cause pollution, siltation Do pollution, siltation and sedimentation caused byoperation to mitigate pollution from vehicles? and sedimentation in the river? quarrying operation affect household activities?

Continuation…

SurveyArea

Polluted Water Cannot Occasional Total Yes No No Response Total Yes No No Response Totalbe Used for Everyday Flooding Respondents Respondents Respondents

Activities

Puerto Princesa

Frequency 20 3 23 0 47 1 48 3 44 1 48Percentage 86.96 13.04 100.00 0.00 97.92 2.08 100.00 6.25 91.67 2.08 100.00

Aborlan

Frequency 7 0 7 2 23 1 26 3 22 1 26Percentage 100.00 0.00 100.00 7.69 88.46 3.85 100.00 11.54 84.62 3.85 100.00

Total

Frequency 27 3 30 2 70 2 74 6 66 2 74Percentage 90.00 10.00 100.00 2.70 94.59 2.70 100.00 8.11 89.19 2.70 100.00

If yes, how? Have you heard of any sickness Does water pollution kill fish or animalscaused by water pollution in the river? in the river?

Continuation…

SurveyArea

Yes No No Response Total Yes No Total Yes No No Response TotalRespondents Respondents Respondents

Puerto Princesa

Frequency 8 34 6 48 2 6 8 12 30 6 48Percentage 16.67 70.83 12.50 100.00 25.00 75.00 100.00 25.00 62.50 12.50 100.00

Aborlan

Frequency 5 12 9 26 1 4 5 2 17 7 26Percentage 19.23 46.15 34.62 100.00 20.00 80.00 100.00 7.69 65.38 26.92 100.00

Total

Frequency 13 46 15 74 3 10 13 14 47 13 74Percentage 17.57 62.16 20.27 100.00 23.08 76.92 100.00 18.92 63.51 17.57 100.00

Is the water from the river used If yes, does the use of water from the river Does the quarrying operation result to the for the irrigation of ricelands? cause siltation in the ricelands? pollution of coastal waters?

Continuation…

SurveyArea

Brownish Silted Others Total Yes No No Response Total Deepening of Install Boulders TotalSeawater Coast Respondents Respondents River Bed Along Riverbank Respondents

Puerto Princesa

Frequency 3 6 3 12 1 36 11 48 1 0 1Percentage 25.00 50.00 25.00 100.00 2.08 75.00 22.92 100.00 100.00 0.00 100.00

Aborlan

Frequency 1 0 1 2 1 17 8 26 0 1 1Percentage 50.00 0.00 50.00 100.00 3.85 65.38 30.77 100.00 0.00 100.00 100.00

Total

Frequency 4 6 4 14 2 53 19 74 1 1 2Percentage 28.57 42.86 28.57 100.00 2.70 71.62 25.68 100.00 50.00 50.00 100.00

If yes, what are the manifestations of Does the quarrying operation do something If yes, how?the pollution of coastal waters? to mitigate pollution of water bodies?

Continuation…

SurveyArea

Yes No Total Yes No No Response Total Construction of Others TotalRespondents Diversion Canals Respondents

Puerto Princesa

Frequency 19 29 48 0 45 3 48 0 0 0Percentage 39.58 60.42 100.00 0.00 93.75 6.25 100.00 0.00 0.00 0.00

Aborlan

Frequency 10 16 26 6 13 9 28 4 2 6Percentage 38.46 61.54 100.00 21.43 46.43 32.14 100.00 66.67 33.33 100.00

Total

Frequency 29 45 74 6 58 12 76 4 2 6Percentage 39.19 60.81 100.00 7.89 76.32 15.79 100.00 66.67 33.33 100.00

Does quarrying operation result to soil Does quarrying operation do something If yes, what were the measures done by quarryingerosion in the banks of the river? to mitigate soil erosion? operation to mitigate soil erosion?

Continuation…

SurveyArea

Yes No No Total Yes No No TotalResponse Respondents Repsonse Respondents

Puerto Princesa

Frequency 8 39 1 48 0 26 22 48Percentage 16.67 81.25 2.08 100.00 0.00 54.17 45.83 100.00

Aborlan

Frequency 2 22 2 26 0 6 20 26Percentage 7.69 84.62 7.69 100.00 0.00 23.08 76.92 100.00

Total

Frequency 10 61 3 74 0 32 42 74Percentage 13.51 82.43 4.05 100.00 0.00 43.24 56.76 100.00

Is deforestation a problem in Does the quarrying operation do somethingyour area? to mitigate deforestation?

Table 34. Number of Banks in Puerto Princesa and Aborlan, 1990, 1995, 2000

YearGovernment Commercial/ Rural Total Government Commercial/ Rural Total

Thrift Thrift

1990 3 5 2 10 0 0 0 01995 3 7 4 14 0 0 0 02000 4 11 4 19 0 0 1 1

Total 10 23 10 43 0 0 1 1

Sources: Provincial Planning and Development Office (PPDO) of Palawan, City Planning and Development Office (CPDO) of Puerto Princesa and National Statistics

Office (NSO)

Puerto Princesa Aborlan

Table 35. Macroeconomic Policy-Related Information about Quarrying Firms in Puerto Princesa and Aborlan, Palawan, 2000

SurveyArea

Yes No Total Increased Decreased The No Total Yes No No TotalRespondents Same Response Respondents Response Respondents

Puerto Princesa

Frequency 5 4 9 3 0 1 1 5 3 2 4 9Percentage 55.56 44.44 100.00 60.00 0.00 20.00 20.00 100.00 33.33 22.22 44.44 100.00

Aborlan

Frequency 1 9 10 0 0 0 1 1 5 3 2 10Percentage 10.00 90.00 100.00 0.00 0.00 0.00 100.00 100.00 50.00 30.00 20.00 100.00

Total

Frequency 6 13 19 3 0 1 2 6 8 5 6 19Percentage 31.58 68.42 100.00 50.00 0.00 16.67 33.33 100.00 42.11 26.32 31.58 100.00

Does the quarrying firm borrow money from If yes, did borrowing rates increase or Did the interest rate level discouraged quarryinglocal banks to finance operations? decrease in the last three years? firm from expanding operations?

Continuation…

SurveyArea

Yes No No Total Yes No Total Reduced Increased Operating No TotalResponse Respondents Respondents Demand Costs Response Respondents

Puerto Princesa

Frequency 1 0 8 9 8 1 9 4 3 1 8Percentage 11.11 0.00 88.89 100.00 88.89 11.11 100.00 50.00 37.50 12.50 100.00

Aborlan

Frequency 0 7 3 10 8 2 10 5 1 2 8Percentage 0.00 70.00 30.00 100.00 80.00 20.00 100.00 62.50 12.50 25.00 100.00

Total

Frequency 1 7 11 19 16 3 19 9 4 3 8Percentage 5.26 36.84 57.89 100.00 84.21 15.79 100.00 112.50 50.00 37.50 100.00

Does the interest rate level discourage quarrying Did the peso devaluation affect the If yes, how?firm to spend on environment-related activities? operations of quarrying firms?

Continuation…

SurveyArea

Puerto Princesa

FrequencyPercentage

Aborlan

FrequencyPercentage

Total

FrequencyPercentage

Yes No Total Yes No Total Yes No TotalRespondents Respondents Respondents

6 3 9 0 9 9 0 9 966.67 33.33 100.00 0.00 100.00 100.00 0.00 100.00 100.00

5 5 10 0 10 10 0 10 1050.00 50.00 100.00 0.00 100.00 100.00 0.00 100.00 100.00

11 8 19 0 19 19 0 19 1957.89 42.11 100.00 0.00 100.00 100.00 0.00 100.00 100.00

Did the peso devaluation affect the quarrying Does the quarrying firm have dollarDid the peso devaluation affect the quarrying firm's decision to expand firm's decision to spend on environment- account or used dollars in its

production? related activities? operations?

Continuation…

SurveyArea

Puerto Princesa

FrequencyPercentage

Aborlan

FrequencyPercentage

Total

FrequencyPercentage

Yes No Total Yes No No Total Yes No No TotalRespondents Response Respondents Response Respondents

0 9 9 0 6 3 9 1 8 0 90.00 100.00 100.00 0.00 66.67 33.33 100.00 11.11 88.89 0.00 100.00

0 10 10 0 4 6 10 2 7 1 100.00 100.00 100.00 0.00 40.00 60.00 100.00 20.00 70.00 10.00 100.00

0 19 19 0 10 9 19 3 15 1 190.00 100.00 100.00 0.00 52.63 47.37 100.00 15.79 78.95 5.26 100.00

Does the quarrying firm export any Does the quarrying firm import equipment Does the policy of trade liberalization influence of its products? the operation's decision to expand production?for its operations?

Continuation…

SurveyArea

Puerto Princesa

FrequencyPercentage

Aborlan

FrequencyPercentage

Total

FrequencyPercentage

Yes No No Total Yes No Total Yes No No TotalResponse Respondents Respondents Response Respondents

0 5 4 9 0 9 9 0 6 3 90.00 55.56 44.44 100.00 0.00 100.00 100.00 0.00 66.67 33.33 100.00

0 5 5 10 0 10 10 0 6 4 100.00 50.00 50.00 100.00 0.00 100.00 100.00 0.00 60.00 40.00 100.00

0 10 9 19 0 19 19 0 12 7 190.00 52.63 47.37 100.00 0.00 100.00 100.00 0.00 63.16 36.84 100.00

Does the quarrying firm receive any Does the policy of investment promotion influence thefinancial incentive from the government? operation's decision to expand production?

Does the policy of trade liberalization influence the

related activities?operation's decision to spend on other environment-

Continuation…

SurveyArea

Puerto Princesa

FrequencyPercentage

Aborlan

FrequencyPercentage

Total

FrequencyPercentage

Yes No No Total Yes No No Total Yes No TotalResponse Respondents Response Respondents Respondents

0 5 4 9 6 1 2 9 0 9 90.00 55.56 44.44 100.00 66.67 11.11 22.22 100.00 0.00 100.00 100.00

0 6 4 10 7 1 2 10 0 10 100.00 60.00 40.00 100.00 70.00 10.00 20.00 100.00 0.00 100.00 100.00

0 11 8 19 13 2 4 19 0 19 190.00 57.89 42.11 100.00 68.42 10.53 21.05 100.00 0.00 100.00 100.00

Does the policy of investment promotion influence theoperation's decision to spend on other environmentally

related activities?

Is the government involved in managingenvironmental problems in your area?

Does the tight fiscal policy influence theoperation's decision to expand production?

Continuation…

SurveyArea

Puerto Princesa

FrequencyPercentage

Aborlan

FrequencyPercentage

Total

FrequencyPercentage

Yes No Total Yes No No Total High Interest Too Many Low No TotalRespondents Response Respondents Rate Requirements Demand Response Respondents

0 9 9 1 5 3 9 1 0 0 4 50.00 100.00 100.00 11.11 55.56 33.33 100.00 20.00 0.00 0.00 80.00 100.00

0 10 10 0 8 2 10 0 4 1 3 80.00 100.00 100.00 0.00 80.00 20.00 100.00 0.00 50.00 12.50 37.50 100.00

0 19 19 1 13 5 19 1 4 1 7 130.00 100.00 100.00 5.26 68.42 26.32 100.00 7.69 30.77 7.69 53.85 100.00

If no, what are the reasons for not expanding?Did the quarrying firm expand production within the last three years?

Does the tight fiscal policy influence theoperation's decision to spend on other

environmentally-related activities?

Table 36. Macroeconomic Policies-Related Information from Households Affected by Quarrying in Puerto Princesa and Aborlan, Palawan, 2000

SurveyArea

Yes No No Total Yes No Total Yes No TotalResponse Respondents Respondents Respondents

Puerto Princesa

Frequency 1 47 0 48 2 46 48 2 0 2Percentage 2.08 97.92 0.00 100.00 4.17 95.83 100.00 100.00 0.00 100.00

Aborlan

Frequency 0 25 1 26 2 24 26 1 1 2Percentage 0.00 96.15 3.85 100.00 7.69 92.31 100.00 50.00 50.00 100.00

Total

Frequency 1 72 1 74 4 70 74 3 1 4Percentage 1.35 97.30 1.35 100.00 5.41 94.59 100.00 75.00 25.00 100.00

Does your household save in banks? Does your household borrow money from If yes, did interest rate increasebanks? in recent years?

Continuation…

SurveyArea

Yes No No Total Yes No No Total Higher Prices Increase in Others TotalResponse Respondents Response Respondents of Commodities Transport Costs Responses

Puerto Princesa

Frequency 0 48 0 48 43 3 2 48 43 3 7 53Percentage 0.00 100.00 0.00 100.00 89.58 6.25 4.17 100.00 81.13 5.66 13.21 100.00

Aborlan

Frequency 0 26 0 26 24 2 0 26 22 0 4 26Percentage 0.00 100.00 0.00 100.00 92.31 7.69 0.00 100.00 84.62 0.00 15.38 100.00

Total

Frequency 0 74 0 74 67 5 2 74 65 3 11 79Percentage 0.00 100.00 0.00 100.00 90.54 6.76 2.70 100.00 82.28 3.80 13.92 100.00

Does the household earn dollar currency? Has the peso devaluation affected the If yes, how?household?

Continuation…

SurveyArea

Yes No Total Yes No Others Total Cheaper Others TotalRespondents Respondents Prices Respondents

Puerto Princesa

Frequency 47 1 48 9 38 1 48 3 6 9Percentage 97.92 2.08 100.00 18.75 79.17 2.08 100.00 33.33 66.67 100.00

Aborlan

Frequency 26 0 26 6 20 0 26 4 2 6Percentage 100.00 0.00 100.00 23.08 76.92 0.00 100.00 66.67 33.33 100.00

Total

Frequency 73 1 74 15 58 1 74 7 8 15Percentage 98.65 1.35 100.00 20.27 78.38 1.35 100.00 46.67 53.33 100.00

Does the household use wood as fuel Has the inflow of imported consumer goods If yes, how?for cooking? benefited the household?

Continuation…

SurveyArea

Yes No Total Yes No No Total Yes No The Same TotalRespondents Response Respondents Respondents

Puerto Princesa

Frequency 0 48 48 17 6 25 48 6 31 11 48Percentage 0.00 100.00 100.00 35.42 12.50 52.08 100.00 12.50 64.58 22.92 100.00

Aborlan

Frequency 0 26 26 10 6 10 26 7 16 3 26Percentage 0.00 100.00 100.00 38.46 23.08 38.46 100.00 26.92 61.54 11.54 100.00

Total

Frequency 0 74 74 27 12 35 74 13 47 14 74Percentage 0.00 100.00 100.00 36.49 16.22 47.30 100.00 17.57 63.51 18.92 100.00

Does the household have financial investment Is the household better off now than fiveas a result of government incentives? to ten years ago?

Is the government involved in managing environmental problems in your area?

Continuation…

SurveyArea

Yes No No TotalResponse Respondents

Puerto Princesa

Frequency 0 31 17 48Percentage 0.00 64.58 35.42 100.00

Aborlan

Frequency 0 16 10 26Percentage 0.00 61.54 38.46 100.00

Total

Frequency 0 47 27 74Percentage 0.00 63.51 36.49 100.00

Has your household spent on activities related to environmental management in your area?

Table 37. Budget Appropriations of the Department of Environment and Natural Resources (DENR), 1994-2000

Programs and Projects 1994 1995 1996 1997 1998 1999 2000

Office of the Secretary

A. Programs

I. General Administration and Support

a. General Administration and Support Services 514,979,000 538,311,000 645,636,000 656,765,000 839,326,000 885,358,000 864,966,000 b. Productivity Incentive Benefits - - - 38,478,000 38,146,000 38,898,000 -

Sub-total, General Adminstration and Support 514,979,000 538,311,000 645,636,000 695,243,000 877,472,000 924,256,000 864,966,000

II. Support to Operations

a. Coordination, formulation and integration of ENR 95,856,000 84,097,000 86,236,000 100,657,000 118,368,000 143,104,000 133,412,000 sector plans and policiesb. Coordination, monitoring and evaluation of ENR 43,963,000 53,850,000 57,078,000 63,541,000 70,852,000 43,469,000 49,262,000

programs and projects including those devolved to Local Government Unitsc. Information system development and maintenance 26,399,000 15,715,000 37,943,000 58,071,000 19,715,000 19,641,000 23,159,000 d. Statistical services 8,836,000 8,641,000 11,633,000 13,572,000 14,674,000 12,613,000 15,289,000 e. Production and dissemination of technical and 33,154,000 34,697,000 92,909,000 41,633,000 69,900,000 48,592,000 61,528,000 popular materials in the conservation and development of natural resources including environmental educationf. Legal services 35,164,000 41,674,000 45,486,000 51,197,000 63,469,000 71,135,000 72,445,000 g. Conduct of special studies, design and development in - - 27,000,000 28,000,000 55,520,000 23,014,000 68,833,000 support of forestry and environmental management operationsh. Provision for operations against illegal forest resources 5,500,000 10,000,000 8,100,000 10,500,000 8,460,000 9,460,000 7,269,000 extraction/utilization activitiesi. Laboratory services 27,047,000 20,267,000 25,159,000 40,702,000 33,445,000 7,223,000 1,753,000 j. Adjudication of pollution cases 2,383,000 3,800,000 3,957,000 4,077,000 3,507,000 3,208,000 - k. Implementation of locally-funded projects 24,675,000 27,984,000

Sub-total, Support to Operations 302,977,000 300,725,000 395,501,000 411,950,000 457,910,000 381,459,000 432,950,000

III. Operations

a. Forest management 893,964,000 963,911,000 1,655,358,000 2,025,587,000 1,610,430,000 1,467,692,000 1,504,805,000 b. Land management 358,467,000 403,557,000 555,784,000 628,663,000 689,061,000 666,378,000 675,931,000 c. Protected areas and wildlife management 109,932,000 130,484,000 149,700,000 300,136,000 268,760,000 193,826,000 199,515,000 d. Environmental management 182,117,000 219,976,000 295,461,000 305,403,000 141,975,000 168,601,000 1,750,000 e. Ecosystem research and development 73,497,000 92,950,000 111,765,000 146,068,000 257,355,000 228,192,000 229,271,000 f. Mines and Geosciences Development 94,965,000 102,393,000 115,408,000

Sub-total, Operations 1,712,942,000 1,913,271,000 2,883,476,000 3,405,857,000 2,967,581,000 2,724,689,000 2,611,272,000

Total, Programs 2,530,898,000 2,752,307,000 3,924,613,000 4,513,050,000 4,302,963,000 4,030,404,000 3,909,188,000

Programs and Projects 1994 1995 1996 1997 1998 1999 2000

B. Project

I. Locally-Funded Project(s)

Sub-total, Locally-Funded Projects - - 10,000,000 19,194,000 169,750,000 - 38,600,000

II. Foreign-Assisted Project(s)

Sub-total, Foreign-Assisted Project(s) 1,707,833,000 479,593,000 392,031,000 228,840,000 235,121,000 242,398,000 597,634,000

Peso Counterpart 304,772,000 143,835,000 148,697,000 92,506,000 135,586,000 151,235,000 319,530,000 Loan Proceeds 1,403,061,000 335,758,000 243,334,000 136,334,000 99,535,000 91,163,000 278,104,000

Total, Projects 1,707,833,000 479,593,000 402,031,000 248,034,000 254,315,000 412,148,000 636,234,000

Total New Appropriations, Regular 4,238,731,000 3,231,900,000 4,326,644,000 4,761,084,000 4,727,028,000 4,442,552,000 4,545,422,000

GENERAL AGREEMENT ON TARIFF AND TRADE

A. Projects

I. Foreign-Assisted Project(s)

Sub-total, Foreign-Assisted Project(s) - - - - - 683,976,000 312,558,000

Peso Counterpart - - - - - 220,116,000 226,600,000 Loan Proceeds - - - - - 463,860,000 85,958,000

Total, Projects - - - - - 683,976,000 312,558,000

Total New Appropriations, GATT - - - - - 683,976,000 312,558,000

TOTAL NEW APPROPRIATIONS 4,238,731,000 3,231,900,000 4,326,644,000 4,761,084,000 4,727,028,000 5,126,528,000 4,857,980,000

Source: Congress of the Philippines (1994-2000)

Table 38. Budget Appropriations of Mines and Geosciences Bureau, Region IV, 1997-2000

Programs 1997 1998 1999 2000

A. Programs

I. General Administration and Support - - 5,305,000 4,970,000

II. Operations

a. Mineral Lands Administration 12,848,000 23,403,000 15,565,000 14,482,000 b. Geoscience Development and Services 1,797,000 4,841,000 9,810,000 7,172,000

Sub-total, Operations 14,645,000 28,244,000 25,375,000 21,654,000

TOTAL NEW APPROPRIATIONS 14,645,000 28,244,000 30,680,000 26,624,000

Source: Congress of the Philippines (1997-2000)

Table 39. Annual Budget by Agency and by Fund Source, 1998-2000

Agency 1998 1999 2000

Provincial ENRO (LGU) Regular Fund 1,868,719 4,581,460 7,567,402 20% Development Fund 600,000 2,150,000 3,000,000

City ENRO (LGU) Regular Fund 3,518,474 4,480,826 3,412,201

PCSDS Strategic Environmental Plan 43,683,000 33,087,000 48,143,000 PTFPP 11,867,000 11,867,000 11,867,000

Source: PCSD Files

FIGURES

Figure 1. Framework for Analyzing the Environmental Impact of Macroeconomic Policies in the Mining and Quarrying Sector

Macroeconomic

Policies

World Economy

National Economy

Labor and

Capital Market

Provision of Public Goods

Goods &

Services Market

State of the Environment

Relative Prices

Income

Purchasing Power

Mining and Quarrying

Firms

Mining and Quarrying

Households

Environmentally Related Activities

Environmentally Related Activities

Figure 2. Potential Direct Effects of Specific Macroeconomic Policies on Mining and Quarrying Firms and Households and the Environment

Policies Economic Effects Environmental Effects

Financial Liberalization - Lower interest rates - Increased credit availability

Foreign Exchange Liberalization - Devaluation - Abolished controls

Increased investment by firms

Increased investment by firms

Increased exportation by firms

(if tradable)

Lower production by firms

(if non-tradable)

Higher mineral extraction and environmental degradation

Higher mineral extraction and environmental degradation

Increased cost of living among

households

Higher mineral extraction and environmental degradation

Lower mineral extraction and environmental degradation

Higher environmental degradation and resource extraction

Policies Economic Effects Environmental Effects

Trade Liberalization - Lower tariffs - Reduced import restrictions

Increased consumption of

imported substitutes by users

Higher investment in imported

equipment by firms

Increased exportation by firms

(if tradable)

Investment Promotion

- Granting of various incentives by the government

Increased investment

by firms

Increased investment in environmental protection and

management by firms

Lower mineral extraction and environmental degradation

Higher mineral extraction and environmental degradation

Higher mineral extraction and environmental degradation

Higher mineral extraction and

environmental degradation

Lower environmental

degradation

Policies Economic Effects Environmental Effects

Fiscal Policy - Reduced expenditures by

the government - Higher taxation by the

government

Increased violation of rules and

regulations by firms and households

Lower expenditures on

environmental protection and management by firms and

households

Higher mineral extraction and

environmental degradation

Higher mineral extraction and

environmental degradation

LIST

List 1. Definition of the Zones in the Environmentally-Critical Areas Network (ECAN) Map of Palawan

a) Core Zone – a primitive wilderness area fully and strictly protected and maintained

free of human disruption. In the network these areas are mossy/cloudy forests, areas above 1,000 meters elevation and areas with very steep gradients or peaks of mountains. This zone would be a strictly no-touch area where the greatest effort of control and monitoring would be applied. Included in this category will be endangered habitats and the habitats of endangered and rare species. Exceptions, however, may be granted to traditional uses of tribal communities of these areas for minimal and soft impact gathering of forest species for ceremonial and medicinal purposes.

b) Restricted Use Zone – generally surrounding the core area. This provides the inner

barrier for the protection of the core areas. Limited and non-consumptive activities will be allowed such as gathering of wild honey, almaciga tapping, and soft-impact recreational activities.

c) Controlled Use Zone – encircling the core and restricted area. This is the area that

provides an outer barrier and is more extensive than the maximum protected area. Controlled forest extraction will be allowed, for example the controlled collection of minor forest products such as rattan, and controlled logging and mining. Activities in this area are closely tied up with catchment management – since this area is where the headwaters of most rivers are located.

d) Traditional Use Zone – areas where traditional land use is already stabilized or is

being stabilized. These are the fringes and edges of the intact forest where tribal and other upland communities till the hills and mountain sides. Management and control will be indirect and carried out through integration with the catchment management program, upland stabilization program and hillside farming.

e) Multiple/Manipulative Use Zone - area where the landscape has been modified for

different forms of land use such as intensive timber extraction, grazing and pastures, agriculture and infrastructure development. Control and management would be strictly integrated with Palawan Integrated Area Development Project’s (PIADP) development programs and other similar programs that may be started. This area would contain: 1) rehabilitation areas such as the reforestation sites of degraded catchments, 2) human settlements areas, 3) agricultural areas, and 4) areas where infrastructure developments are being undertaken.

f) Mangrove Forest – coastal areas which are sites of mangrove ecosystems.