Constraints in Public Environmental Expenditure Analysis in Philippine Government

The United Nations Development Program has embarked on the Philippine Poverty-Environment Initiative (PPEI), a project that links environmental management to poverty alleviation. The PPEI seeks to integrate pro-poor climate and environmental concerns into development planning and economic-decision making. One aspect of the PPEI is the historical analysis of the environmental expenditures that was conducted through an extensive review of documents, specifically the annual budgets and other financial reports of a number of government agencies. The analysis aimed to find out how government spending has contributed to environmental and poverty outcomes and to explore the manner by which the level of environmental expenditure data could be incorporated in the Medium Term Expenditure Framework. This paper presents the constraints that were uncovered during the initial review, most of which deterred even the mere process of analysing historical data on environmental expenditures. The study found out that analysing the government spending on environment is problematic in the absence of a clear definition of environmental expenditure and the absence of details in the national government’s annual budget. But it is more problematic to link environmental expenditure with environmental outcomes in the absence of an accounting system that keeps tract of which spending has been used for which environmental programs and projects. The problem has become more pronounced in the absence of specific environmental domains that absorb the disbursements taken from the national budget. The analysis also revealed the improper allocation of funds among government agencies performing environmental functions. Short-term recommendations to improve the analysis of environmental expenditures in Philippine bureaucracy include (a) coming up with a common definition of environmental expenditures; (b) clarifying the environmental domains for financial reporting purposes; (c) enhancing the current budgeting and accounting systems to include a parallel enumeration of environmental expenditures; (d) integrating environmental expenditures in recording and reporting of expenditures; and (e) enhancing the current financial reporting structure. Medium-term recommendations include (a) the establishment of benchmarks for the budgeting of environmental expenditures; (b) linking environmental outcomes with poverty reduction; and (c) mainstreaming environmental accounting in both national and local government