Why the URC Bais Molasses Spill Demands an Official Economic Valuation

On October 26, 2025, the tailing pond of the URC Bais Distillery collapsed. As a result, thousands of cubic meters of molasses wastewater spilled into the Tañon Strait. This spill polluted over 3,000 hectares of marine waters between Negros Oriental and Cebu. The spill killed fish and discolored the water. It forced tourism operators in Bais and Manjuyod to suspend dolphin-watching and sandbar activities. What unfolded was more than an ecological crisis. It was an economic crisis as well. This crisis rippled through coastal communities. Their livelihoods depend on clean water, healthy fish stocks, and tourism income. Yet, despite the extent of the damage, there has been no official economic valuation. Without valuation, harm remains visible to the eye but invisible to the law.

Economic valuation is not about assigning a price to nature. It is about recognizing the real value of ecosystem services that sustain livelihoods and well-being. It transforms abstract losses into measurable, actionable data that policymakers and courts can use to demand accountability and rehabilitation. In the absence of valuation, justice often fails to materialize. The Clean Water Act requires the government to quantify and integrate environmental costs into planning and policy. The Philippine Ecosystem and Natural Capital Accounting System (PENCAS) Act also imposes this duty. However, in many cases these studies are never conducted. As a result, environmental disasters become administrative events instead of economic wrongs.

This failure is not theoretical. In the case of Ang Aroroy ay Alagaan, Inc. v. Filminera Resources Corp., environmental advocates in Masbate filed a petition. They aimed to stop gold mining operations. These operations were alleged to have caused water pollution and marine degradation. The case was dismissed. The petitioners did not provide scientific evidence linking the mining activity to the harm. They also failed to provide valuation evidence. The courts held that while the right to a balanced and healthful ecology is self-executory, it cannot rest on speculation. Without measurable data, there was no causal proof, and therefore no justice. This shows that when environmental damage is not quantified, the legal system has nothing to compensate. It has no foundation to impose liability. There is also no guide to direct restoration.

The law, however, provides a way to act amid scientific uncertainty through the precautionary principle. This principle is enshrined in Rule 20, Section 1 of the Rules of Procedure for Environmental Cases. It allows courts to act even when causation is not fully proven. It shifts the burden of proof to the polluter once a prima facie case of environmental risk is shown. In the landmark case Resident Marine Mammals of the Tañon Strait v. Reyes, the Supreme Court ruled that complete scientific certainty is unnecessary. Action should not be postponed if it can prevent environmental harm. In practice, however, the Filminera case demonstrates that courts hesitate to apply this principle. This happens when there is no baseline data or valuation study to demonstrate measurable harm. The absence of valuation deprives the precautionary principle of its factual footing.

In the URC Bais Distillery spill, the Environmental Management Bureau itself confirmed the contamination of thousands of hectares. They also confirmed the presence of fish kills and the closure of tourism activities. These are not speculative claims—they are facts. The prima facie case for environmental harm already exists. Therefore, failing to conduct an economic valuation at this stage runs counter to the very spirit of the precautionary principle. The principle demands preventive and remedial action even amid uncertainty, and valuation is the mechanism that gives it economic expression. Quantifying losses in fisheries, tourism, and household costs is necessary not just to demand accountability. Estimating non-market ecosystem values is also essential to guide rehabilitation and compensation.

When valuation is absent, the government cannot compute what justice demands. Victims receive no restitution, ecosystems receive no quantified restoration, and polluters face no cost proportional to the damage they cause. Without numbers, there are no remedies. Without valuation, there is no justice. And without accountability, pollution becomes merely another cost of doing business. The precautionary principle tells us to act before harm becomes irreversible. For that action to have meaning, it must be backed by measurement.

The Tañon Strait is not just a channel between two islands. It is a living system that feeds communities. It attracts tourism and anchors the regional economy. Its value is not speculative but measurable. Government agencies such as DENR, NEDA, BFAR, and local governments have a duty. They must translate this value into policy through formal economic valuation. Only then can we ensure that environmental protection is not symbolic but substantial. The spill in Bais should be a turning point. It should teach us that when damage has no price, accountability disappears. To value nature is to defend it. To measure loss is to make justice possible.

To value nature is not to commercialize it but to defend it. Measurement gives law and policy their moral weight. When damage has no price, accountability disappears. But when we count every lost fish, canceled tour, and poisoned tide, we remind the nation that ecology is economy. Justice begins with knowing what we have truly lost.

Further reading:

Love letter to Tanon Strait

The Philippines’ New Forest Policy: A Green Revolution or a Risky Gamble?

The Philippines is a nation blessed with incredible biodiversity. However, it is plagued by deforestation. The country is embarking on a new chapter in forest management. Environment Secretary Raphael P.M. Lotilla recently launched the Sustainable Forest Land Management Agreement (SFLMA). He hailed it as a “major shift.” It promises to revolutionize how the country’s 15.8 million hectares of forest land are managed.

On the surface, SFLMA sounds like a win-win. It streamlines seven fragmented forest tenure instruments into a single, renewable 25-year contract. It also encourages diverse uses like agroforestry, tourism, and conservation. The goal? Foster job creation, cut red tape, and promote inclusive economic growth. The DENR even rolled out complementary initiatives: “Forest for Life: 5 Million Trees by 2028” and mapping over 1.18 million hectares as “Potential Investment Areas (PIAs)” ready for private-sector cash.

Officials are calling it a “new era where conservation and commerce go hand-in-hand.” But is it truly a green revolution? Or does it hold hidden risks for the environment? What about the very communities dependent on these forests?

Legal and Economic Foundations: Operationalizing PNEACAS

The SFLMA is not merely a land-use policy; it is the operational execution of the Philippine National Ecosystem and Climate Accounting System (PENCAS) Law (Republic Act No. 11995). PENCAS legally mandates the integration of the environment’s economic value into national policy. It provides the foundational framework for the SFLMA’s valuation requirement. The agreement requires the calculation of the Total Economic Value (TEV) of the forest. It moves beyond traditional resource extraction models. This TEV approach is guided by the United Nations System of Environmental-Economic Accounting (SEEA) standards mandated by PNEACAS. It ensures that forest stewardship is financially incentivized.

The TEV calculation is divided into two distinct components, which define the roles of financial experts and environmental economists. The first, Valuation of Tangible Assets (Market Value), uses financial methods to evaluate profitability. These methods include Discounted Cash Flow (DCF) and Real Options Analysis (ROA). They determine commercial profitability from timber, non-timber products, and fixed user fees. This component is essential for attracting investment and securing financing.

The second and more innovative component is the Valuation of Intangible Services (Non-Market Value). This component monetizes public environmental goods, directly supporting the goals of PNEACAS. By converting ecological preservation into a quantifiable revenue stream, the SFLMA attempts to align conservation with long-term financial interest.

The Critical Role of the Economist

The economist’s function is to serve as the translator between ecological sustainability and financial viability. They achieve this by monetizing non-market benefits. This process directly addresses the core mandates of the PENCAS Law. They generate the data required for policy alignment and incentive design. Specifically, the economist calculates the value of carbon sequestration by applying the Social Cost of Carbon (SCC). This application turns stored carbon into tradable financial assets, known as carbon credits. This conversion establishes a critical revenue stream for reforestation. They apply the Replacement Cost Method to value watershed services. This method involves estimating the expense of building man-made infrastructure to replace the forest’s natural function. Furthermore, they use the Contingent Valuation Method (CVM) in surveys. These surveys quantify the public’s Willingness To Pay (WTP) for biodiversity. They also assess ecotourism. Through these processes, the economist ensures the SFLMA valuation is consistent with the SEEA framework. They guarantee the environmental statistics are credible and can be integrated into the national economic accounts. This demonstrates that the forest is worth more when preserved than when depleted.

Structural Incentives and Regulatory Risks

The SFLMA’s structural benefits include bureaucratic simplification. This reduces red tape. The 25-year long-term tenure provides the necessary security for substantial, sustainable investment. It mandates an integrated management plan, theoretically ensuring holistic management across production and protection uses.

However, critics cite significant policy risks. A primary concern is the potential for elite capture. This concern is driven by unequal land caps. These caps allow corporations to secure up to 40,000 hectares while capping People’s Organizations (POs) at 1,000 hectares. The technical complexity of TEV calculation adds an additional barrier. It requires sophisticated financial modeling such as DCF, ROA, and CVM. This complexity effectively excludes marginalized Indigenous Cultural Communities (ICCs) and POs that lack extensive external technical and financial support.

Furthermore, the policy faces criticism regarding its environmental oversight. The provision allows proponents to secure an Environmental Compliance Certificate (ECC) after the SFLMA is awarded. This reverses standard environmental procedure. It creates a potential loophole for environmentally damaging activities. The broad allowance for “special uses,” including industrial facilities, raises fears. There is concern about the industrial conversion of biodiverse areas into monoculture plantations or logistical hubs. This could potentially undermine the conservation goals inherent in the PNEACAS framework. The unresolved ambiguity surrounding the ownership of benefits from carbon credits also poses a risk. There may be disputes and unfair distribution of benefits among the state, investors, and local communities.

Safeguards and the Critical Path Forward

The DENR has attempted to mitigate these risks by articulating key safeguards. Key safeguards include the strict requirement for Free, Prior, and Informed Consent (FPIC) in ancestral domains. They also involve using Performance-Based Renewal. In this system, the 25-year contract renewal depends on stringent performance against specific Environmental, Social, and Governance (ESG) metrics. SFLMA holders are also mandated to include social development programs to ensure local employment and fair wages.

The success of the SFLMA hinges entirely on the rigorous enforcement of these social and environmental safeguards. For the policy to truly be a green revolution, it must overcome significant institutional challenges. It must ensure that the benefits quantified through the PNEACAS-mandated valuation framework are equitably shared. Community groups must be empowered to participate effectively. They should not be marginalized by the very system designed to value the resources they steward. Without this transparency, the SFLMA cannot succeed. Equitable implementation is essential. Despite its sophisticated economic design, it risks becoming a vehicle for resource consolidation and further environmental degradation.

Reference:

  1. Sustainable Forest Land Management Agreement (SFLMA)
  2. Philippine Ecosystem and Natural Capital Accounting System (PENCAS) Act

The Impact of the WorldRisk Report on Philippine Real Estate

The Philippines, a nation of islands situated in the typhoon belt, remains one of the world’s most disaster-prone countries. The WorldRisk Report 2025 is a publication of Bündnis Entwicklung Hilft. It is also published by the Institute for International Law of Peace and Armed Conflict (IFHV) of Ruhr-University Bochum. It places the country among those with the highest global risk exposure. This conclusion is once again highlighted. The report has a special focus on floods. Floods are the most frequent and destructive natural hazard worldwide. Between 2000 and 2009, floods accounted for 44 percent of all global catastrophes, affecting more than 1.6 billion people and causing losses exceeding USD 650 billion. In the Philippines, flood vulnerability continues to rise because of climate-related rainfall intensification. Unregulated urbanization contributes to the risk. The degradation of natural buffers such as wetlands and mangroves exacerbates the situation.

These recurring flood events are no longer isolated environmental phenomena. They are now central to understanding how real estate functions. They are also central to understanding how real estate is valued. Climate risk directly influences property demand, development feasibility, and investment decisions. What once defined value purely in economic terms—location, accessibility, and market trends—now includes resilience, adaptability, and sustainability. Floods not only damage structures and displace communities but also recalibrate the long-term performance and desirability of land.

The Real Property Valuation and Assessment Reform Act (RA 12001), enacted in 2024, reflects this changing reality. It establishes a uniform national valuation framework, standardizes market-based approaches, and introduces mechanisms for adaptive reassessment. Among its provisions, Section 18 explicitly recognizes that disasters and calamities can alter property market values. It authorizes local government units to revise their Schedules of Market Values. This occurs whenever “significant changes” happen due to calamities or disasters. These changes can be man-made or natural. This provision marks a significant legal milestone. It integrates disaster risk into valuation governance. It acknowledges that climate events are legitimate economic variables. These variables can affect land and building worth.

This legal recognition aligns with the 2025 WorldRisk Report findings. The report calls for an integrated response. It combines four key perspectives: political, technological, social, and ecological. Political measures emphasize decentralized governance and the inclusion of risk management in land-use planning. Technological innovation encourages the use of satellite data, LiDAR mapping, and AI-based flood forecasting to inform planning and decision-making. Social resilience underscores community preparedness and traditional knowledge systems that reduce vulnerability. Ecological solutions advocate for mangrove reforestation, wetland restoration, and nature-based flood control, which simultaneously protect biodiversity and buffer human settlements.

In real estate valuation, these four dimensions translate into practical implications. Under the cost approach, flood exposure accelerates physical deterioration. It shortens the remaining economic life of improvements. Appraisers must apply higher depreciation rates. They also need to use more conservative estimates of useful life. The income approach must consider flood-induced operating expenses. It should also factor in reduced rentability and risk-based capitalization rates. These considerations help to account for uncertainty in income streams. Meanwhile, the market approach must segregate comparable sales based on hazard exposure. This is important since properties within flood-prone zones typically transact at discounted prices. These properties also exhibit longer marketing periods.

Beyond appraisal technique, the relationship between flood risk and property value also reflects broader behavioral and institutional adjustments. Developers now prioritize elevation, drainage systems, and green design. Lenders are requiring flood-risk assessments before approving mortgages. Insurers have introduced differentiated premiums based on hazard classification. These market adjustments demonstrate that resilience has become a form of economic capital—one that safeguards value and attracts investment.

Yet the transformation brought by the WorldRisk Report and RA 12001 extends far beyond valuation methodology. It is reshaping the Philippine real estate sector as a whole. Urban planning now integrates flood risk into Comprehensive Land Use Plans (CLUPs). Developers incorporate retention ponds and elevated designs as standard practice. Financial institutions are embedding environmental risk into credit assessments. The convergence of scientific data, legal frameworks, and market adaptation signals a new era in property governance. In this era, resilience is not peripheral but central to defining and protecting value.

In this evolving landscape, real estate valuation has likewise been methodologically reshaped. It is no longer a static appraisal of economic worth but a dynamic assessment of risk, sustainability, and adaptive capacity. Properties are now judged by their performance under pressure. This includes how they resist, how they recover, and how they remain useful during climate events. The very meaning of “value” has expanded: it now includes the ability to endure.

Ultimately, the 2025 WorldRisk Report and RA 12001 together redefine the fundamentals of real estate in the Philippines. The former provides the global scientific context for understanding hazard exposure. The latter establishes the national legal mechanism to respond to this exposure. Together, they transform how property is developed, managed, financed, and valued. In the age of climate uncertainty, the true measure of real estate is no longer limited to its square meters. It is also not defined by its location. Instead, it lies in its resilience per square meter.

In this century of rising tides and shifting ground, resilience is not just protection—it is value itself.


References

Bündnis Entwicklung Hilft & IFHV Ruhr-University Bochum. WorldRiskReport 2025. Available at: https://weltrisikobericht.de/worldriskreport/
Republic Act No. 12001. Real Property Valuation and Assessment Reform Act of 2024. Official Gazette of the Republic of the Philippines.
Department of Finance – Bureau of Local Government Finance. Philippine Valuation Standards (PVS 2023).

On BBM’s Right of Way Policy Proposition

President BBM’s recent proposition to return to a previous system for handling right-of-way issues, where the government would pay only 15 percent of the property value upfront and resolve any subsequent valuation disputes in court, has significant implications not only for landowners but also for the general public.

Key infrastructure flagship projects currently facing right of way (ROW) issues include the Cagayan de Oro Diversion Road Extension, the Davao City Bypass Construction Project, the Samal Island-Davao City Connector Bridge, the Light Rail Transit-1 Cavite Extension Project, and the EDSA Greenways Project.

One of the primary motivations behind President BBM’s proposal is to expedite infrastructure projects. Projects could proceed without delay by taking possession of the property with an initial 15 percent payment and allowing valuation disputes to be settled later. This could lead to quicker completion of essential infrastructure such as roads, bridges, and public utilities, benefiting the public by improving transportation, connectivity, and access to services.

However, this expedited process might come at a cost. The reliance on courts to resolve valuation disputes can increase the judicial system’s burden, potentially causing delays in other legal proceedings. Additionally, the cost of prolonged litigation could ultimately be borne by taxpayers, increasing public expenditure.

The public perception of the government’s commitment to fair and just practices could be affected. If the policy unfairly favors infrastructure development at the expense of property owner’s rights, it could lead to public dissent and erode trust in government institutions. Ensuring a transparent and fair process is crucial for maintaining public confidence.

Efficient and timely infrastructure development can have positive economic impacts, such as stimulating investment, creating jobs, and boosting economic growth. Improved infrastructure enhances the overall business environment, making it easier for companies to operate and expand. However, if the process is perceived as unjust, it might deter investment, particularly in real estate and property development sectors, due to concerns about property rights and fair compensation.

The rapid acquisition of property for infrastructure projects can lead to community displacement. This has social implications, as displaced families and communities may face significant challenges in finding new homes, and jobs, and adjusting to new environments. Ensuring displaced individuals are adequately compensated and supported through the transition is essential to mitigate these impacts.

A system that prioritizes quick project completion over fair compensation may disproportionately affect vulnerable populations. Lower initial compensation could exacerbate the financial instability of low-income families and marginalized communities. Ensuring equitable treatment for all property owners, regardless of their socio-economic status, is critical for social justice.

Therefore, President BBM’s proposal to modify the right-of-way process has the potential to accelerate infrastructure development, benefiting the public through improved services and economic growth. However, it also raises significant concerns about legal and financial burdens, public trust, social impacts, and equity. A balanced approach that maintains fairness, transparency, and support for affected individuals is essential to ensure that the benefits of infrastructure projects are realized without compromising the rights and welfare of property owners and the broader community.

AB Agosto was named to the Environmental Impact Assessment Review Committee

In a significant development, Gus Agosto has been listed as a member of the newly established Environmental Impact Assessment (EIA) Review Committee in Region 7. The EIA process, aimed at foreseeing the environmental impact of a development, involves the preparation of an Environmental Impact Statement (EIS). This document, submitted by the project proponent or EIA consultant, serves as the application for an environmental compliance certificate (ECC).

“I am deeply honored and humbled by the appointment to serve in the EIA Review Committee. The importance of responsible and sustainable development cannot be overstated, and I am committed to contributing my expertise to ensure that development projects in our region align with environmental standards,” commented the Environmental Planner.

The ECC is granted based on a comprehensive study of a project’s significant impacts on the environment and the proposed environmental management plan. Agosto’s role in the committee involves contributing to the thorough analysis required during the review of EIS. This analysis includes evaluating data accuracy, the soundness of analysis, and the appropriateness of proposed mitigation measures.

According to DENR Administrative Order 2003-30, the Environmental Management Bureau (EMB) is entrusted with implementing the Philippine Environmental Impact Statement System (PEISS). The EMB can commission independent professionals, academic experts, and representatives from relevant government agencies as members of the EIA Review Committee (EIARC).

The EIARC, a body of independent technical experts and professionals of known probity from various fields, evaluates EIA reports and provides recommendations on the issuance or non-issuance of an ECC. It plays a crucial role in ensuring the environmental sustainability of development projects.

Project proponents are mandated to secure an ECC before commencing any development initiative. The issuance of this certificate is contingent upon a positive review of the EIS by the EIARC, highlighting the significance of this committee in upholding environmental standards in development projects.

“I believe that fostering a balance between development and environmental preservation is crucial for the well-being of our communities,” Mr. Agosto concluded.