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