Sustainable Management Of Coastal Wetlands In The Philippines: An

Sustainable Management of Coastal Wetlands in the Philippines

SUSTAINABLE MANAGEMENT OF COASTAL WETLANDS IN THE PHILIPPINES: AN EXPLORATION OF ACCOUNTING FOR SUSTAINABILITY Roger L Burritt, The Australian National University, Australia and Albert Salamanca The Haribon Foundation for the Conservation of Natural Resources, Philippines. ABSTRACT: This article explores the possibility of reducing mangrove degradation in the Philippines, and enhancing attempts to obtain wetland sustainability, through the introduction of an environmental accounting system based on the opportunity cost of mangrove development. Problems relating to this form of ecological accounting are recognised; however, it is argued that it is better to attempt such an accounting, erring on the side of caution with respect to the environment, than to ignore the issue of mangrove degradation through a fear that any monetary accounting will subvert the conservation process. Following a discussion of the costs of conversion caused by development, the article considers the case for introduction of an assurance bond for developers as part of a Rubensteinian accountability mechanism. It is concluded that although an environmental accounting scheme has much to offer there are other hurdles to overcome before improved accountability for mangrove development can be facilitated in practice.

Introduction The future of Philippine coastal wetlands hangs on a precarious balance as the rush towards increased industrialisation by the turn of the century, under the Philippines 2000 program of the present government, gathers pace. Wetlands will be sacrificed for short term economic gains such as their conversion to prawn ponds and their use as a sink for sewage from certain industries. Coastal wetlands will be dredged and filled to give way to power plants while, when they are operational, the water used to cool the turbines will be dumped on the wetlands. The increasing pressure of a burgeoning coastal population is also placing pressure on the remaining 41

Asian Review of Accounting, 3:2, 1995

wetlands as coastal inhabitants scrimp for building materials and fuel. Unless there are changes in the development goals being set to incorporate sustainability, the future of Philippine wetlands, particularly mangrove swamps, looks bleak. Several mechanisms have been promoted as aids in helping to attain sustainability of the coastal wetlands. These include, amongst others, environmental impact assessments, environmental audits, and cost-benefit analysis. During the last decade, there has been a growing interest amongst academics and ecologists in incorporating environmental considerations in environmental reporting in a systematic way, perhaps through environmental accounts (Gray et al., 1993). This article explores the possible contribution of accounting to the attainment of sustainability of the Philippine wetlands. It considers a framework of accounting for sustainability using replacement and opportunity cost measurement systems, combined with an 'assurance bonding system'. Finally, the possibility of providing a balance sheet of 'natural accounts' for the wetlands is examined.

The Meaning and Uses of

Wetlands

The Ramsar Convention (UNEP, 197 1, p. 1) defined wetlands as: '...areas of marsh, fen, peatland or water, whether natural or artificial, permanent or temporary, with water that is static or//owing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed six metres'.

Wetlands are usually at the interface between aquatic and terrestrial environments, accounting for some 6 percent of the global land area (Pearce, 1993, p.68). Mangroves1 are tidal wetlands with the 'characteristic littoral plant formations of sheltered tropical and subtropical coastlines'. They have been variously described as 'coastal woodland', 'mangal', 'tidal forest' and 'mangrove forest'. Where conditions are suitable, they form extensive and productive forests (Hutchings and Saenger, 1987, p.l). Mangroves perform the following ecological functions (Jara, 1985, p.115): • nursery, spawning and breeding grounds for some commercial fish and shellfish; • a buffer against waves and storm surges; • protection for shoreline and sandy beaches; • wildlife sanctuary and recreation areas. According to Jara (1985, p. 114), in the Philippines mangroves are 'one of the primary features of the coastal areas and play a significant role in coastal development'. At least 41 species of mangrove and associated plants have been identified (Jara, 1985). Table I provides some idea of the variety of direct and indirect commercial products of a mangrove forest. The Table illustrates the multifunctional nature of mangrove forests, and the fact that not all functions are priced, even though they might be economically, as well as ecologically important. 42


Table 1: Products that can be derived from a mangrove forest. ""

INDIRECT PRODUCTS

DIRECT PRODUCTS

Use

Product(s)

Source

Fuel

Firewood for cooking, heating, smoking fish, smoking sheet rubber and burning bricks, charcoal, alcohol.

Fishes (many species.)

Construction

Fishing

Timber for scaffolds and heavy construction (e.g. bridges), railroad ties, mining pit props deck pilling beams and poles for buildings. flooring, panelling, boat building materials, fencepost, water pipes, chipboards, glues. Poles for fish traps, fishing floats, fish poison, tannin for net preservation, fish attracting shelters.

Agriculture

Fodder, green manure.

Paper production

Paper of various kinds.

Food drugs and beverages

Sugar, alcohol, cooking oil, vinegar, tea substitutes, fermented drinks, dessert topping, condiments from bark, sweet meats form propagates vegetables form propagates, fruits or leaves, cigarette wrappers, medicines from bark, leaves and fruits.

Household items

Furniture, glue, hairdressing oil, tool handles, rice mortar, toys, matchsticks, incense.

Product(s)

Crustaceans (shrimps, crabs)

Food

Molluscs (oysters, mussels, cockles).

Food

Bees

Honey, wax

Birds Food, feathers, recreation (watching, hunting). Mamals Reptiles Skins, food, recreation other fauna Food, recreation (e.g. amphibians, insects).

Textile and Synthetic fibres, dye for cloth, leather production tannins for leather preservation Others

Packing boxes

Source: Hamilton and Snedakar (1984, p2)

43


Status of Philippine

Mangroves

Among the types of coastal wetlands in the Philippines, mangroves are the most threatened because of the intensity of their multiple uses (DENR, 1989). Table II illustrates the diverse estimates of remaining mangrove and mangrove destruction between 1918 and 1992. It is clear that the area of mangrove forest has been in rapid decline. It also appears that the rate of destruction has been increasing, but some of the observations are from the World Bank, while others are from conservationists in the Philippines. A World Bank Forestry, Fisheries and Agricultural Resource Management Study (ffARM) (1989, p.34), noted that, in 1918, the Philippines had a mangrove area of 450,000 ha. By 1970, however, this had decreased to 288,000 ha. and by 1980 to 242,000 ha. Unfortunately, this data from 1970 and 1980 may not be representative of the remaining mangrove areas because it included 'reproductive brush', or residuals after cutting. A SPOT satellite survey (World Bank, 1989, p. 115) further indicated that, in 1988, the remaining mangrove area was only 149,000 ha., or approx. 33%, of the 1918 mangrove cover. Satellite data from the same year showed that 195,000 ha. of the 205,000 ha. (95 percent) of fishponds were derived from mangroves. Hence, the amount of mangroves converted to fishponds exceeded the estimate of actual mangrove cover in 1987-1988. The ffARM study estimated that in the 1987 to 1988 period 3,700 ha. of mangroves were destroyed, which parallels the increase of 4,100 ha. in fishponds. This increase was in spite of a 'supposedly tight restriction' on mangrove conversion by the government (World Bank, 1989, p.35). In 1992, the DENR reported that, according to 'recent statistics', 139,725 ha. of mangroves remain and the rate of destruction was 10, 694 ha.p.a. (DENR 1992). Table 2: Area of Mangroves and the Rate of Destruction in the Philippines Year

Area of Mangrove (hectares)

1918

450,000(appx.)*

1968

448,310**

1970

288,000*

1980

242,000*

1988

149,000*

3,700* to 20,090**

1992

139,725***

10,694***

Sources:

44

*World Bank (1989) **cited in Rivera and Cao (J992, p.4). ***DENR (1992)

Rate of Destruction (ha.p.a.)

1,006 to 1,077**


Rivera and Cao (1992), based on research at the Asian Development Bank, estimated that a hectare of mangrove swamp with fully developed mangrove species yields a direct harvest annually of 100 kg of finfish, 25 kg of shrimp, 15 kg of crabmeat, 200 kg of molluscs and 40 kg of sea cucumbers. Indirectly, one hectare can provide nearby coastal habitats with up to 400 kg of finfish and 75 kg of shrimp. From this information, they estimated that the Philippines has, between 1920 and 1988, lost an average of 31,028 tons of finfish, 7,757 tons of shrimp, 4,654 tons of crabmeat, 62,055 tons of molluscs and 12,411 tons of sea cucumbers, through mangrove denudation. The State owns and controls the use of coastal wetlands through Presidential Decree number 1067. Coastal wetlands in the Philippines are public in nature, yet commercial use of a wetland by a private entity is possible through a lease agreed with the Department of Environment and Natural Resources - Philippines' environmental authority. A lease involves a contract negotiated between the developer and the government. Although, in principle, enacted legislation should provide protection for the mangrove swamps, such regulation has not actually been successful in curbing mangrove degradation (Balagot, 1992). The public nature of the wetland property rights came about because no market exists in which wetland owners can sell wetland services to buyers. This results in the market prices of wetlands not reflecting the true social value of these services. As such, the value of forgone wetland services accrued with any development are not taken into account (Blarney, 1992).

Accounting Wetlands

and the Sustainability

of

Coastal

Sustainability, according to Jacobs (1991, p.79), means that the: '...environment should be protected in such a condition and to such a degree that environmental capacities (the ability of the environment to perform its various functions) are maintained over time, at least at levels sufficient to avoid future catastrophe, and at most at levels which give future generations the opportunity to enjoy an equal measure of environmental consumption.'

In the case of coastal wetlands, sustainability can be achieved as long as development activities operate within the bounds of the ecosystem. This means that any systemic reduction brought about by development should not reduce the carrying capacity or sustainable yield of the coastal wetlands. Pearce et al. (1989) refer to this notion as the 'maintenance of natural capital'. For instance, a substantial proportion of mangrove swamps should be left undeveloped if vital ecological processes associated with the wetland functions are to remain in place and the productivity of the coastal area is to be maintained. Coastal wetlands serve as effective storm buffers and their absence would result in considerable storm and erosion damage (Hutchings and 45


Saenger, 1987). In Britain, for example, 300 million pounds sterling has been spent on sea defences because marshes have been reclaimed for agriculture. Coastal marshes once effectively reduced damage brought about by wave action, and notions of softengineering have been introduced to assess whether a return to natural coastal boundaries would be of greater benefit (or lower cost) in the long run. Recent studies have shown that maintenance costs could be reduced twelve-fold if sea walls are built behind 80 metres of salt marshes, rather than in direct contact with the sea (Hollis and Bedding, 1994). Sustainability, seen in this light, forces consideration of the integrity of ecosystems in any proposal to develop coastal wetlands. It empowers decision makers to take the 'precautionary principle' into account and err on the side of conservation and preservation wY~~ *u?re is uncertainty about the consequences of development (Blarney, 1992, co ...ts on the limited knowledge available about wetland ecosystems). Depletion of current stocks of coastal wetlands would be permitted as long as 'future catastrophes' were avoided and intergenerational equity was preserved (Jacobs, 1991, p.88). One of the primary functions of environmental accounting is to provide a framework for assisting with the assessment of ecologically sustainable development of natural eco-systems, such as exist in the coastal wetlands. '...accounting measures the resources consumed in producing goods and services for trade and for promoting public welfare, as well as the resources preserved, and wealth created for future use, in accordance with conventions mutually agreed on by both the stewards of their resources and the stakeholders to whom they are accountable (Rubenstein, 1992, p.506).

Accounting provides an important source of information for management decisions and hence, helps define and measure the 'success' of actions (Gray et al., 1993) as well as their consequences. If the information provided by the accounting system is imperfect, or incomplete, the decisions that result are likely to mislead. If, on the other hand, accounting information can be expanded to encompass notions of ecological sustainability, sustainable thinking is more likely to be factored in to management decisions.

Environmental

Accounting

Systems

Accounting for the benefits, values, and costs to society of using mangrove resources is important both for decision-making and accountability. Accounting promotes 'transparency and choices' (Gray et al., 1993) in the use of resources by society. It is an integral part of the drive towards accepting full responsibility for the ecological costs accrued by a company or a government body in pursuit of its goals. Accountability can be encouraged by financial disclosures that reflect full social costs (Gray et al., 1993). For instance, conversion of coastal wetlands into prawn farms needs to take full account of the social costs prawn farming imposes on society, in terms of mangrove habitat destruction, associated biological productivity loss and loss 46


of coastal protection, as well as the foreign exchange earnings it generates for economic prosperity. The idea of incorporating ecological accounting within wetland management does not presuppose that the whole accounting system is without its problems. Understanding of the potential of environmental accounting systems is slowly improving. Maunders and Burritt (1991), Power (1991), Gorz (1989) and Cooper (1992) all criticise the calculative nature of conventional financial accounting and suggest the need to be wary of alternative accounting systems which attempt to infuse green thinking into their structures. On the other hand, Pearce et al. (1989), Pearce (1994, p.68), Gray (1992) and Gallhofer et al. (1994) enthuse over the possibilities of new accountings in the environmental interest, whether driven by market transactions or legislation. In particular, Gray recognises that the reporting system has to reexamine its stance with respect to the environment and move toward the 'reorientation of accounting from ownership towards stewardship...and the redefinition of assets and capital maintenance' to incorporate the capital provided by nature within the balance sheets of individual organisations (Gray 1990, p. 128). Likewise, Rubenstein (1989, 1991, 1992) has recommended the introduction of accounting procedures relating to natural trust accounts that will incorporate environmental assets and liabilities, and their maintenance, in the accounts of companies. Pearce et al. (1989, p.92) summarised the objectives of environmental accounting as: i) prepare a 'balance sheet' giving a profile of resource stocks are available at a given point in time, ii) prepare an account of what uses are made of these stocks, what sources they are derived from and how they are added to or transformed over time, and iii) ensure that the stock accounts and the flow account are consistent so that the balance sheet in any year can be derived from the balance sheet of the previous year plus the flow accounts of that year. Their analysis is couched in terms of attempts to compare the economic values of different wetland uses, for example for shoreline anchoring and feeding a local community, or prawn farming. Attempts are made to identify the opportunity costs of these alternatives as a basis for choice between them. Following Pearce et al. (1989, p.93) and Pearce (1993) wetland accounts can be derived in both monetary and natural units. Wetland accounts represented in physical terms are possible as long as the stock and flow accounts are presented in a clear and identifiable way and are reconcilable at the end of the accounting period (Pearce et al., 1989). However, physical stock and flow accounts require a substantial understanding, on the part of the accountant, of the biogeochemical characteristics of the mangroves in order for a reasonably precise picture to be achieved. Unfortunately, consistent with Blarney's (1992) general observation on the unavailability of wetland data throughout 47


the world, comprehensive biogeochemical data of coastal wetlands in the Philippines are not yet to hand (Jara, 1985).

Cost of

Conversion

Identifying the use and non-use values of coastal wetlands is a basic requirement of any wetland management strategy (Pearce et al., 1989). Several economic tools have been used to place physical and monetary values on wetland goods, services and functions (Pearce and Turner, 1990). Accounting can only proceed with monetary quantification of wetlands after values have been derived from identified physical impacts for the specific wetland uses. Hamilton and Snedaker (1984, p. 116) maintained that: 'Conversion of a mangrove system generally so alters the condition of the mangrove system that all other potential uses are foreclosed. Irreversibility can take the form of biophysical conditions that cannot be reversed or that would be so costly to reverse as to be unacceptable. The value of alternative mangrove uses is lost and represents a cost which must be subtracted from the benefits attributed to the conversion process.'

An opportunity cost approach is used for assessing costs and benefits (Lutz and Munasinghe, 1993, p. 198). In some cases direct valuation from market prices is possible; in others surrogates for market prices can be used; finally, some valuations are based on potential expenditures or willingness to pay (see Lutz and Munasinghe, 1993, p.203). Market prices are usually available for direct uses but, as pointed out earlier, may not reflect true social cost because externalities are excluded. In principle, the opportunity cost of converting mangrove swamps to fishponds is the benefit foregone by not using the mangrove swamps in the best of the available alternatives. Where mangroves have multiple uses this may include the loss of biological productivity associated with habitat clearing, loss of nursery and breeding grounds, decrease in fish catch of local fishing communities and lost amenity and existence value. In total, the opportunity cost of mangrove conversion is the cost foregone of harvestable mangrove products, whether direct or indirect, outlined in Table I. Where market prices exist a direct indication of value is readily on hand, but where it is absent appropriate compensation has to be calculated if alternative uses are lost through the development. Recent economic valuation techniques provide a surrogate for market prices (Pearce et al. 1989, p.64). If restoration of damage already done is the focus of attention a damaged asset can be valued by its replacement cost. For example, conversion of mangrove swamps into fishponds involves the following activities: • mangrove clearing • dredging • landfilling • use of sodium cyanide (NaCN) to remove other organisms • use of inorganic compounds to maintain cultured fish stocks 48


The opportunity cost of conversion would be taken as the cost of constructing an artificial fish nursery (the best alternative) and allowing the wetlands to recover. In principle, replacement cost is applicable only where replacement is possible (El Serafy and Lutz, 1989). Restoration of lost mangrove habitat could be achieved through reforestation; however, it is debatable whether the original ecosystem could ever be fully restored. Replacement cost is, thus, likely to be an underestimate of the full social cost. In his review of various wetland valuation tools, Blarney (1992, p. 124) agreed that a restoration based coastal wetlands policy derived using a replacement cost approach is preferable from an ecologically sustainable development perspective as such a policy could 'potentially result in no net loss of habitat...whilst still permitting development'. Figure 1 illustrates the process of accounting for the sustainable development of mangroves. A policy framework was proposed by Shabman and Batie (1987) for coastal wetlands management which is being adopted and modified to fit with the Philippine context. First, the developer applies for a permit with the Department of Environment and Natural Resources (DENR). Second, DENR reviews the application. Third, DENR determines the replacement cost of the wetland. Fourth, the developer posts a bond based on the estimate of replacement cost. Finally, if a substantial amount of degradation occurs, the government through DENR restores the wetland using the bonded funds.

49


The replacement cost in step four is derived by placing a monetary value on a physical attribute of the coastal wetlands - such as energy input or output. The work of Gooselink et al. (1974) provides one of the bases for this framework. Gooselink et al. (1974) developed an energy/ecosystem approach of wetland valuation for the Louisiana wetlands. In this approach, the dollar value estimate of an acre of coastal wetlands is converted into energy/money units. Then, the rounded productivity estimate is multiplied by 1850 kcal/Ib to get a kcal/acre estimate, and divided by 104 kcal/dollar (or pesos) to get dollar (or pesos)/acre value. Costanza et al. (1989, p.341) have used the energy analysis in their work in the valuation of Louisiana wetlands and open water habitats: 'The energy analysis valuation technique looks at the total biological productivity oj wetland vs. adjacent open water ecosystems as a measure of their total contributory value. Primary plant production is the basis for the food chain which supports the production of economically valuable products such as fish and wildlife. It is converted to an equivalent economic value based on the cost to society to replace this energy source with fossil fuel as measured by the overall energy efficiency of economic production. This technique is comprehensive and does not require a detailed listing of all the specific benefits of wetlands, but it may overestimate their value if some of the wetland products and services are not useful (directly or indirectly to society).'

The physical indicator attribute used by Costanza et al.(1989) in their study is the gross primary production (GPP) of wetlands. The GPP of an ecosystem is an index of the solar energy value captured by the system and converted into a dollar value using a single dollar-energy conversion factor. It is a measure of the solar energy used by plants to transform carbon into organic molecules which is used in the production of energy among the plants and animals in the ecosystem (Costanza et al., 1989). Using the Costanza et al. (1989) study as the basis for deriving the value of Philippine coastal wetlands, the energy analysis procedure is as follows: i) Determine by field measurements and laboratory experiments the GPP of the natural areas in question, under the 'with development' and 'without development' conditions. ii) Convert this estimate (usually measured in grams of carbon fixed per time unit or the heat equivalents (FFE) by considering the fuel efficiency of each source. iii) Convert the FFE into dollars using an economy-wide ratio of economic value per unit of energy, usually the ratio of GNP to total economy energy use (measured in FFE). The uncertainty associated with the above technique is recognised by the investigators but it is pointed out that the GPP achieved is an essential measure of over-all system performance as it measures the value of inputs (or outputs) of ecological systems. 50


Natural

Accounts

Natural accounts represent the stock and flow of biological components of coastal wetlands such as the richness and diversity of mangrove species, amphibians and presence of rare species, guilds and exotics. These components are themselves indicators of ecological integrity. 'Biological integrity is the maintenance of the community structure and function characteristic of a particular locale or demand satisfactory to society' (Woodley, 1993, p.157). Figure 2 presents a natural accounts balance sheet for coastal wetlands in the Philippines using these indicators. Listed are just some of the preliminary factors that have been identified and are reflected in the physical stock indicators highlighted by Keddy et al. (1993) in their work on the Canadian wetlands. Other factors may be added as the need arises and as baseline studies are carried out. Figure 2: Natural Accounts Balance Sheet Using Selected Indicators Before Conversion

After Conversion

Diversity

Diversity

Guilds

Guilds

Exotics

Exotics

Rare Species

Rare Species

Plant Biomass

Plant Biomass

Amphibian Biomass

Amphibian Biomass

The accounting system will take into account the amount these indicators have changed over time. These accounts will be reflected in the journals of both the developer and environmental authority. A similar natural asset trust account was proposed by Rubenstein (1989, 1991, 1992) in the aftermath of the Love Canal and Exxon Valdez tragedies; to ensure that funds are available to restore environmental problems if they arise. Rubenstein was particularly concerned with disclosures about the maintenance of natural capital by corporations possibly involved in future asset transfers, or financial failure. Diversity is used as an indicator of ecosystem integrity because it is a 'common sense observation that all systems designed to persist through time have redundancy in them' (Keddy et al., 1993, p.67). For instance, in the mangrove ecosystem various ecological entities are performing photosynthetic functions (i.e. mangrove plants and algae) in order to ensure that when one is lost others can replace it and within a single species various individuals are carrying out the same function (in Keddy et al., p. 1993). 51


The presence of guilds in mangroves, according to Severinghaus (1981) and Karr (1987), indicates that a 'particular function is being carried out or that the habitat requirements of that particular guild were being maintained' (Keddy et al. 1993, p.69). Guilds are groups of species exploiting a common resource base in a similar fashion (Root, 1967). Humming birds and other nectar-feeding birds, for example, in tropical areas form a guild exploiting a set of flowering plants (Krebs, 1985). Exotics are organisms that are not native in the area where it occurs (Hanson, 1962). For example, rabbits and foxes in Australia are exotics. Keddy et al.( 1993, p.72) maintained that the 'presence of rare species is often an indicator of a system with integrity because they have been found to be sensitive to human induced changes in their environments and thus may indicate how much human stress is affecting the environment'. However, its absence does not directly indicate the erosion of integrity. Plant biomass, although not easy to monitor, performs a good function as an indicator of the trophic dynamics of primary producers while amphibians, owing to their use as important consumers of invertebrates and being a food source for many organisms on higher trophic levels, are also indicators of ecosystem integrity. A decline in their population may indicate a disturbance (Keddy et al., 1993). Keddy et al.(1993, p.75) concluded that these indicators are 'only a starting point for measuring the degree of integrity in wetlands'. Clearly, extended research and refinement are still needed to expand these physical measures of ecological stocks and flows.

Assurance

Bonding

System

At the stage when values are already determined, accounting practice steps in again to establish the 'assurance bonding system' (Figure 1). This system requires the developer (who is applying for a wetland conversion permit) to post a bond for replacement of the habitat loss due to conversion (Costanza et al., 1990). Such a replacement bond needs to be equal to the 'worst case' cost, as determined by the opportunity cost approach, including replacement cost as the value of one of-the alternatives considered. The bond will represent the developer's assurance that natural capital (wetland) used to generate a financial gain will be adequately maintained. The assurance bond will be refunded to the developer if the 'worst case' level destruction is not reached and if all mitigation strategies are carried out. The developer in this system takes on the cost of reestablishing the coastal wetlands. 'The value of the bond at the date of posting would be a function of the environmental authority's estimate of the costs and environmental repair or rehabilitation if the worst happened between the date of posting and refund. The value of the bond would be higher, the greater the estimate of the worst case costs (Costanza et al, 1990, p.68).

If the assurance bond appears too heavy for the developer until sufficient cash flow is generated, the developer may choose to pay the bond in increments as output 52


taxes (Blarney, 1992). This means that for every output generated from the use of the wetland by the developer a portion will be deducted as payment of the assurance bond until the amount pegged as bond is fully paid prior to the end of the contract. However if the bond is insufficient to pay for theworst-case destruction as shown by the natural accounts, the actual value of the worst case will be charged to the developer. Each accounting period, increments and decrements for accretion and destruction of natural capital will be shown in the natural accounts. Each period the developer will be alerted to any actual and potential depreciation in the value of the bond if ecological decay is not mitigated. This process will increase the developer's overheads, but the intent is to bring home the point that coastal wetlands are important ecosystems whose processes are vital to the integrity of the coastal areas; that degradation of the wetlands has been too rapid in the recent past; and that restoration, rather than further degradation, is acceptable behaviour. Furthermore, as conversion can be an irreversible form of utilisation that threatens ecological sustainability, the 'burden of proof that an activity has not resulted in the effects identified by the environmental authority would rest with the resource user' (Costanza et al., 1990, p.68). The intent is that, through the application of environmental accounting, any costs of conversion will be kept to a minimum. Then, at least in the case of Philippine mangroves green accounting will have a practical contribution to make in (i) developing the efficacy of environmental regulations designed to internalise externalities, and (ii) contribute to the 'broader project' of putting a halt to the destruction of ecological resources (see Gallhofer et al., 1994, p.23).

Implications

for Law, Policies and

Practices

The information derived from the simple framework explored here has implications for the laws, policies and thrusts of the Philippine government on natural resources management and utilisation. Foremost among the policies of the government is the Philippine Strategy for Sustainable Development which was enacted on 29 November 1989. The policy was conceived to '...address specifically the adverse impact of growth and development such as, but not limited to, pollution from factories and pesticide build-up from agriculture; and the depletion and degradation of natural resources due mainly to misuse and over-exploitation' (DENR, 1989,

p.xtt The accounting framework explored here has the potential to contribute to the realisation of this strategy as the underlying aim of the framework is sustainability. A full accounting of the stocks and flows of natural and human-produced capital would help provide decision-makers with necessary information for management of the coastal wetlands. 53


Second, pursuant to DENR Administrative Order No. 32 issued on May 5, 1988: '...all timber licences are required to make an annual reafforestation deposit to be used for the reafforestation of open and denuded areas within their working units. The deposit seeks to insure that the licensees concerned have enough money to undertake reafforestation activities within their respective concession areas.'(DENR, 1992).

This deposit mechanism is similar to the one explored here for mangroves except that it encompasses conversion per se. Hence, the accounting framework can be used to substantiate this reafforestation deposit in terms of deriving the amount to be pegged as a deposit. Finally, there has been a clamour among fishing community organisations to revise the Philippines Fisheries Code of 1974 in order to incorporate, inter alia, the declaration ending the conversion of mangroves. Disclosure and knowledge of the cost of conversion in terms of opportunity costs derived through the natural and physical accounting frameworks could strengthen the position of the fishing communities on the no conversion issue. It would help implementation of the polluter pays principle through add-ons for externalities hitherto ignored (OECD, 1975), and by making a charge proportional to any damage done. The Bill promoting this issue has been overthrown once, and there is a fear that it will not survive congress dominated by logger and commercial fishing operators.

Conclusion Some tentative ideas have been explored in this paper on the use of accounting systems in attaining sustainability of wetland use. However, there still exists a need to translate these ideas into practical operating systems. As such, there are some limitations on the applicability of the framework: i)

Accountants in the Philippines may still be pessimistic about environmental accounting, and as it is such a recent development they may be reluctant to adopt it. It may take many years for Filipino accountants to be in a position to assimilate these developments into their accounting practices.

ii)

The framework explored in this paper is a multidisciplinary endeavour requiring scientists from various disciplines (such as biology, ecology and chemistry) as well as managers and accountants. The need for a team-based approach is fundamental to the successful introduction of environmental accounting.

iii) Quantifying the physical processes of an ecosystem and transforming these into monetary terms is a difficult and painstaking undertaking because of (a) the inadequacy of baseline information and understanding of the mangrove ecosystem and (b) the exploratory nature of accounting measurement techniques aimed at providing surrogate market values, and opportunity costs in multiple use settings. Both of these observations lead to the conclusion that it will take several years before viable results are achieved. 54


jv) A major determinant of the successful implementation of improved accountability for mangrove development is the financial cost involved. As the Philippine government is in need of cash, and as private individuals may not gamble the level of costs will help determine whether environmental disclosures are adopted. v)

Unfortunately, there appears to be a lack of political will among bureaucrats charged with implementing sustainable environmental practices. Noteworthy though their goals may be, environmental accounting will just end up in the dustbin if the bureaucrats are unwilling participants.

Environmental accounting can potentially ensure sustainability in wetland utilisation if the limitations are addressed and proper economic frameworks are in place. Replacement and opportunity cost as well as the assurance bonding system are some of the steps in that direction. Other valuation tools and 'eco technologies' may improve the framework explored here.

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Endnotes 1 There are two ways in which the word mangrove is used. Firstly, it could be used to mean an individual species of plant or a stand. Secondly, it could mean the forests (as in mangrove forests), which are areas that contain many species (Hutchings and Saenger: 1987). In this article the word mangrove is given a broad interpretation, unless specified (eg. mangrove swamps).

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