Floods threaten Philippines' hard-earned economic gains

by Jose M. Galang

Posted at Aug 22 2013 11:18 AM | Updated as of Aug 23 2013 07:36 PM

What lies beneath -- and -- beyond the floods

MANILA, Philippines - With more than 1.25 million people in the nation’s capital and 16 provinces in Luzon affected, this week’s torrential rains and widespread flooding threaten the country’s hard-earned economic gains of the past couple of years.

As of dawn today, five days after typhoon Maring entered with its above-normal heavy downpours, residents in 112 towns and 31 cities from Ilocos in the north to Calabarzon and Mimaropa south of Metro Manila have been hit by floods of varying severity.

While media reports have focused on flooded streets and residences mainly, the impact of the massive inundation on farms and factories is yet to be known. It will take a few more days to determine the extent of the damage, although there are early indications it could be staggering.

Sharp increases in prices of basic consumer goods already mean shortages—some manufacturers apparently cannot produce volumes needed and distributors cannot move products to markets and other retail outlets. The most severely affected communities, many of them isolated by high floodwaters, obviously can only rely on relief goods.

And if people’s despair over the massive devastation combines with an explosion of outrage over the pork barrel scandal, the Aquino administration could be facing a testy situation in the coming days and weeks.

Some analysts compare the current situation to the ravages of “habagat” (southwest monsoon) just a year ago and to Ondoy-Pepeng twin storms in 2009. Damage from Maring, which according to weather specialists dumped far more copious rains, could be worse.

The flooded Pasay Rotonda on EDSA corner Taft Avenue. Photo by Fernando Sepe Jr. for ABS-CBNnews.com

Scenes from the calamity areas of the past few days are reminiscent of the Great Floods of July 1972 that virtually erased from the map Central Luzon and a few nearby provinces. The effect of that epic disaster was widespread despair among a large section of the population that later turned into unrest owing to slow response from government—which subsequently was used by then president Marcos as an excuse to impose martial law.

The response to this week’s calamity seems to indicate a better level of preparedness in many communities. Evacuation procedures were promptly initiated in many barangays even before floodwaters reached catastrophic levels. Based on media reports, distribution of relief goods was on the main timely and efficient.

At the stock market, trading came back to life Thursday after a halt since the start of the week due to the suspension of bank clearing operations owing to the floods.

After the first hour of trading, however, it became clear that investors were wary about listed companies’ prospects—share prices were down by 416 points or 6.4 percent on the PSE Composite Index compared to the preceding session’s closing. Bargain-hunting could reverse this decline, however.

In terms of national output, this week’s calamity, if last year’s damage from the habagat is replicated, could make a dent on GDP growth. In the third quarter of last year (habagat-induced floods struck in August), GDP growth rose to 7.3 percent, then slowed somewhat to 7.1 percent in the following quarter—which normally should post the highest growth because of robust consumer spending towards the year-end.

In terms of household consumption expenditure, the growth rate in the third quarter last year was 6.7 percent, just slightly faster than the 6.6 percent in the preceding quarter, but slightly weaker than the year-before 6.8 percent growth. Household consumption has in recent years benefited from robust growth in remittances sent by Filipinos working abroad to their families back home.

In the third quarter of 2009, when Ondoy struck, GDP inched up by just 0.5 percent, markedly slower than the preceding quarter’s 1.6 percent growth. However, national income for that quarter, bolstered by remittances, still grew by 6.2 percent, which was slower from the preceding quarter’s 7.6 percent. Consumption expenditure in the third quarter of 2009 was just 2.6 percent higher than the year before.

Clearly, there is a lot that will need the government’s attention in the coming weeks. As the floods subside, the magnitude of the damage will become clear.

Farmers will obviously need financial support for them to be able to restart damaged crops that as of this morning were valued by NDRRMC at around P22.3 million (not including estimates for Central Luzon, which is a major agricultural region). There are seed distribution programs that can be tapped for this, along with infrastructure support.

Beyond repair and rehabilitation, the task of “building better”—the catch-phrase of advocates of sustainable development—must be the priority for all. This should not be confined to roads or bridges but also to communities that can withstand calamities like the one experienced this week.

For instance, a rethinking of urbanization strategies should now be taken seriously. There are areas in Metro Manila, for instance, that have long been identified as “unsuitable for development” but are still attracting speculative property investment.

These areas, according to one study submitted to the Department of Public Works and Highways not too long ago, are said to be primarily in flat coastal areas to the north of Manila where extensive areas are described as liable to flooding and where increased pressure for reclamation are likely to exacerbate the problem.

Recent reports produced by economists at the Asian Development Bank have also indicated the vulnerability of the Philippines to climate change, which has been tagged as a factor behind massive flooding, landslides, and droughts in Asia as well.

Climate change, according to one ADB study, is also exacerbating water shortages in many areas, constraining agricultural production and threatening food security, causing forest fires and degradation, damaging coastal and marine resources, and increasing the risk of outbreaks of infectious diseases.

This week’s calamity and those caused by Ondoy and last year’s habagat should now lead to more effective mitigation schemes from both the government and the communities.

“Building back better" is the ideal strategy in reconstruction efforts, a recent World Bank report pointed out. After the initial humanitarian relief operations, the bank said, the longer-term work of reconstruction and restoring people’s livelihoods often continues for months or years after a disaster.

It is possible that bad decisions can get locked in early on during the reconstruction process, the bank said, and urged that governments get involved in the “building back" process as soon as a disaster occurs.

“If people are living in an unsafe area and their houses are destroyed, for example, it is important to make sure that they rebuild their homes in less vulnerable places," the World Bank report said. “No one can control natural hazards like storms and earthquakes, but a well-planned reconstruction can prevent people from living in the flood plain or building houses that are unsafe."