benefit-cost analysis of with and without certificate of

INTRODUCTION

Bamboo as an Economic ResourceBamboo is an economically important plant – especially for the poor, marginalized sectors of society in most of the developing, tropical countries. The statement

Keywords: bamboo harvesting, bamboo industry, benefit-cost analysis, certificate of verification, private bamboo plantations

Benefit-Cost Analysis of With and Without Certificate of Verification Requirement for Harvesting

in Private Bamboo Plantations in the Philippines

Vivian C. Daracan1*, Analyn L. Codilan2, Edgar E. Devera1, Priscila C. Dolom3, Aresna B. Palacpac3, Hanna Leen L. Capinpin3, Noel L. Tolentino3, Ma. Magdalena B. Villanueva3,

Sofronio C. Camacho3, Lorie M. Alborida3, and Ramon A. Razal1

1Department of Forest Products and Paper Science2Institute of Renewable Natural Resources

3Forestry Development CenterCollege of Forestry and Natural Resources, University of the Philippines Los Baños

College, Laguna 4031 Philippines

To protect the country’s forestlands, the Philippine government requires owners of private bamboo plantations to obtain a certificate of verification (CoV) from the Department of Environment and Natural Resources (DENR) prior to harvesting the bamboo poles. However, this requirement is seen as a disincentive to planting bamboo and as a hindrance to the bamboo industry’s development. The present study investigated whether the economic benefits of removing the CoV would exceed the costs attendant to the absence of such a requirement in various regions where the DENR implements the CoV policy. Using region-specific pricing of labor and bamboo poles, the foreseen benefits of removing the CoV include higher income, avoided costs (on the part of landowners) like application and inspection costs, and other economic advantages associated with the increase in bamboo plantation areas. Computed as costs were the presumed higher forest protection cost and added expenditures that result from increased bamboo plantation areas supposedly encouraged by a less restrictive policy. The findings show that, for all the regions, the stream of incremental benefits (IBs) in the absence of CoV far exceeds the costs. The calculated benefit-cost ratios over a fifty-year study period at four discount rates ( 6%, 8%, 10%, and 12%) showed that the benefits of removing CoV consistently outweighed the costs. Hence, we prescribe that the CoV should no longer be made a requirement for harvesting bamboo from private lands.

attributed to Forester S. King by J. Oliver (1956), author of ‘Bamboo as an Economic Resource in Southern Asia, that “no plant is known in the tropical zone which could supply to man so many technical advantages as the bamboo – without the bamboo, the Indian would be poor, very poor indeed” aptly describes the plant’s significance among the poor.

Philippine Journal of Science148 (4): 765-776 December 2019ISSN 0031 - 7683Date Received: 26 Jul 2019

*Corresponding Author: [email protected]

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Aside from the domestic uses of bamboo, it is also considered an important trade commodity. In 2014, the top five exporters of bamboo products and export value of their respective products are as follows (INBAR 2014): 1) China (USD 1.194B), 2) the EU (USD 193M), 3) Indonesia (USD 149M), 4) Vietnam (USD 102M), and the 5) Philippines (USD 32M). While the Philippines had made it to the top five bamboo exporters, it is a distant fifth – accounting for a mere 2.7% of what China is exporting. Thus, there is a long way to go as far as Philippine bamboo export products are concerned. Something has to be done to push the Philippine bamboo industry forward.

In terms of bamboo products exported in 2014, the most important and the corresponding values are as follows (INBAR 2014): 1) engineered-bamboo products (USD 548M), 2) woven bamboo products (USD 414M), 3) bamboo shoots (USD 285M), 4) bamboo (and rattan) furniture and seats (USD 276M), and 5) bamboo (and rattan) raw materials (USD 116M). Thus, the export market for bamboo is a diversified one, with products ranging from modern such as engineered-bamboo and traditional products (woven), although China has already made considerable advances in weaving technology for mass production of woven bamboo products. There is also some trade on raw bamboo poles, but this is small (about 6.4% of the total bamboo products traded). The Philippines has a lot of catching up to do and must make an important decision to focus on products able to capture a significant slice of the global trade in bamboo. The country’s little contribution to trade is attributed to the inability of the Philippines to maximize its production, harvest, and processing of bamboo.

There are more than 100 species of bamboo in the Philippines (Baja-Lapis et al. 2016), at least 10 of which are commercially important. Six of the commercially important species are a) ‘bayog’ [Bambusa merrilliana (Elmer) Rojo and Roxas comb. nov.], b) ‘bolo’ [Gigantochloa levis (Blanco) Merr.], c) ‘buho’ [Schizostachyum lumampao (Blanco) Merr], d) giant bamboo [Dendrocalamus asper (Schult. & Schult. F.) Backer ex k. Heyne], e) ‘kawayan kiling’ (Bambusa vulgaris Schrad. ex J.C. Wendl.), and f) ‘kawayan tinik’ (Bambusa blumeana Schultes f.). All these species are clumping bamboos.

In a round table discussion attended by twenty bamboo stakeholders held at the Philippine Council for Agriculture and Aquatic Resources Research and Development (PCAARRD) in 2016, the government policy of requiring a CoV was unanimously identified as one of the factors that constrained investment and expansion of bamboo resources, particularly in private lands. The CoV, which is required to transport bamboo poles from private lands, has become burdensome to a lot of bamboo growers and

traders. Plantation owners complain that COV hinders the harvesting and utilization of the bamboo poles planted in their own lands. Likewise, it discourages them from expanding their bamboo plantation and manufacturing businesses.

Benefit-cost Analysis as a Tool in Supporting Environmental Policy Development

Economic and monetary valuation of forest resources, such as the cost and benefits associated with forest plantation establishment and resource harvesting and utilization, provide analysts and policymakers the right and sound decision over an issue at hand. The purpose of such valuation is to incorporate environmental and stakeholders’ concerns that affect the income generated from such resources.

Benefit-cost analysis (BCA) has been used widely to support the development of environmental policies. For example, Begum et al. (2006) analyzed the economic feasibility of waste minimization in Malaysia by reuse and recycling of construction waste materials as well as to save on costs. Meanwhile, Escobedo et al. (2008) used BCA to analyze the effectiveness of urban forest management for air quality improvement in Santiago, Chile. In New Zealand, Jakob et al. (2006) assessed the cost of various forms of transport that individuals use and compare this with what they pay to support the transport system. In the Philippines, Padilla and Janssen (1996) compared the costs and benefits of Pagbilao mangrove preservation with alternative uses such as aquaculture and forestry.

Feuillette et al. (2016) stated that BCA can potentially improve economic efficiency in resource allocation and enhance transparency and rationality in decision-making by forcing decision-makers to make public their implicit assumptions and uncertainties. Munich and Psacharopoulos (2014) also reported that BCA, along with cost-efficiency analysis, is an important tool in informing policymakers and the wider public about the pros and cons of alternative policy options. Farrow and Toman (1998) concluded that BCA has a solid methodological footing and provides a valuable performance measure for an important governmental function, improving the well-being of society.

The present study was undertaken to provide a quantitative basis for a policy that will improve the standing of the Philippine bamboo industry relative to other countries engaged in exporting bamboo and bamboo products. The study will identify and quantify the costs and benefits associated with bamboo poles utilization to lend support to deregulating bamboo products through the removal of CoV as a requirement for transporting bamboo from private lands.

Daracan et al.: BCA of COV Requirement in Private Bamboo Harvesting

Philippine Journal of ScienceVol. 148 No. 4, December 2019

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METHODOLOGY

Data CollectionThe study was undertaken from July 2017 to November 2018 in regions where the DENR implements the CoV policy. Data was collected through interviews (using pre-tested questionnaires) by the project team in all participating regions (Table 1). Site visits validated on the ground the gathered primary and secondary data. Regional and national consultation workshops attended by representatives from the DENR, Department of Agriculture, Philippine National Police, Department of Science and Technology (DOST), local government units, farmers/producers, traders, processors, the academe, private institutions, non-govenment organizations, and Department of Trade and Industry (DTI) were also conducted to gather additional information and to verify initial findings. Simple descriptive statistics such as averages, ranges, and percentages were used to analyze data from the field.

The study also estimated the incremental costs to evaluate the economic feasibility of eliminating CoV. The incremental cost is expressed in Equation 2, which is the difference in costs between Scenarios 1 and 2:

IC = C(S2) − C(S1) (2)

where IC represents the incremental costs, C(S2) is the cost stream without the COV, and C(S1) is the stream of status quo costs.

The total benefits comprise all the advantages, in monetary terms, that are associated with the removal of CoV. This is the sum of all direct, indirect, and intangible benefits. Specifically, it is the sum of all the benefits from improved provisioning and regulating ecosystem services of bamboo, which could result from the removal of CoV. This includes the price of bamboo poles, shoots, and carbon that accrue from increased planting of bamboo, the direct and indirect costs that are not incurred in the absence of a CoV requirement (such as filing and processing fees), and the avoided senescence of unharvested bamboo poles. Thus, the total benefits can be expressed as shown in Equation 3:

TB = Pb + Ps + Pc + Ac + As (3)

Where TB is the total benefits of eliminating CoV, Pb is the price of bamboo, Ps is the price of shoots, Pc is the price of carbon, Ac is the avoided costs from the non-implementation of CoV to include the direct and indirect costs associated in the filing and processing of CoV, and As is the avoided cost of senescence.

On the other hand, the total costs comprise all the incremental costs associated with the elimination of CoV; thus, all direct, indirect, and intangible costs that arise from establishing, developing, and maintaining a bamboo plantation, and the anticipated harvesting and transport of the bamboo products are covered. Eliminating CoV is presumed to entice investors to plant more bamboo in their land. In addition, patrolling the bamboo forest may have to be intensified that will lead to an increase in forest protection cost. So, the total costs can be expressed by Equation (4):

TC = PDC + PMC + HTC + FPC (4)

where TC is the total costs associated with the elimination of CoV, PDC is plantation and development cost, PMC is maintenance cost, HTC is harvest and transport cost, and FPC is additional forest protection cost.

The net present value (NPV) and benefit-cost ratio (BCR) were computed from the incremental cash flows of the two scenarios using the equations below:

(5)

Table 1. Number of interviewed farmers, traders, and processors per region.

Region No. of farmers/growers

No. of processors

No. of traders

CAR 2 1

Region 1 5 8 5

Region 2 5

Region 3 10 9 1

Region 4A 12 3 12

Region 4B 12 20 3

Region 5 5

Region 7 6 5

Region 10 3 5

Total 55 56 21

Data AnalysisTwo policy scenarios were considered: Scenario 1 is the status quo and Scenario 2 is when CoV is removed as a requirement for transport of bamboo from private land.

The study estimated the IBs to evaluate the economic feasibility of removing CoV. This is expressed by Equation 1, which is the difference of benefits between Scenarios 1 and 2:

IB = B(S2) − B(S1) (1)

where IB represents the incremental benefits; B(S2) is the stream of benefits of the new policy scenario i.e., without CoV; and B(S1) is the stream of status quo benefits.



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(6)

where: Bt = benefits in each year, t = 1, 2, …., n;Ct= costs in each year, t = 1, 2, …., n;n = number or years; and r = discount rate.

Assumptions Region-specific assumptions made were common for the two scenarios being compared and are listed in Table 2. Some of these assumptions are based on the chronological and spatial extent of the foreseen impacts and other elements that are relevant to consider for each scenario.

The areas of bamboo plantations in different regions were based on the study of Lanting et al. (2013). The projected additional bamboo plantation areas resulting from the improved policy is computed as a percentage of the number of CoV implementing provinces in the region to the region’s total number of provinces multiplied by the existing bamboo plantation areas. Moreover, a staggered schedule of 5%/yr in the increase in the plantation area due to the improved policy was assumed, with the full establishment set to be completed in Year 20. Other regional variable costs included in the assumptions are minimum wage (as prescribed by the DTI for 2018 per region), cost of CoV application (based on actual receipts obtained per region), and the average price of bamboo poles.

Values for specific parameters used in the benefit-cost ratio computations are shown in Table 3.

Table 3. Values for specific parameters used in the BCA.

Parameter Value Source

Number of poles per hectare 1000 poles/ha DTI (2016)

Number of clumps per hectare 200 clumps/ha DTI (2016)

Value of 1 T CO2–e USD 5 WBE (2018)

USD 1 Php 52 Actual conversion rate

Average biomass density of bamboo (various species)

4.6 tons/ha/yr Patricio and Dumago (2014), Nath et al. (2015)

Average carbon content of bamboo (various species)

47% Patricio and Dumago (2014), Nath et al. (2015)

Value of avoided senescence 5% of the total number of poles/ha Field data

Additional forest protection cost Php 42.64/ha (from total annual budget of DENR for forest protection)

Marcelo (2018)

Plantation and development Cost Php 50,000/ha DTI (2016), ERDB (2013)

Maintenance cost Php 9,600/ha DTI (2016), ERDB (2013)

Transportation cost Based on elf truck with capacity of 200 poles Survey data

Other fees Computed based on the average reported number of checkpoints and average cost of “extra fees,” which ranges from Php 50–500/checkpoint

Survey data

Table 2. General assumptions used in the BCA.

RegionExisting bamboo plantation area,

ha

% increase in plantation area (due to proposed

policy)

Additional plantation area, ha (due to proposed policy)

Minimum wage, PhP

CoV fee, PhP

Average bamboo pole

price, PhP

CAR 349.85 67 233.23 300 395 120

Region 1 201.07 100 201.07 310 86 120

Region 2 189.17 40 75.67 340 86 120

Region 3 1005.29 14 143.61 400 300 150

Region 4A 343.75 60 206.25 400 86 150

Region 4B 78.94 75 59.21 300 86 150

Region 5 162.44 67 108.29 290 86 150

Region 7 3957.38 25 989.35 366 50 130

Region 10 539.49 60 323.69 338 100 120



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RESULTS AND DISCUSSION

Bamboo and the CoV RequirementIn the Philippines, the prevailing policy on the harvesting of bamboo is to impose punitive measures on violators as embodied in DENR Administrative Order (DAO) No. 80 (1987), which stipulates that bamboos that are harvested without a permit are subject to confiscation. In addition, 50% of the forest charges due are added to the original penalty. For bamboo that comes from either private lands or alienable and disposable (A and D) lands, a CoV issued at the DENR Community Environment and Natural Resources Office (CENRO) is required. DAO No. 59 (1993) exempts bamboo planted inside private and/or tax-declared A and D lands from the required certificate of transport agreement for non-timber forest products (NTFPs), on the condition that the CENRO concerned would certify prior to shipment that the NTFP came from such lands. The official receipt for the payment of forest charges levied in accordance with RA 7161 is a required attachment to the CENRO certification.

Field and survey data, along with experts’ inputs in the consultation meetings and regional workshops, reveal a general lack of knowledge on the CoV policy among farmers and traders. It is not well-known, not well-understood, not well-appreciated in intent, and not uniformly implemented in the regions. There is also grudging compliance among traders needing security in terms of documentation to prevent possible harassment, the imposition of penalty, or other inconveniences at the checkpoints. In some regions, the transport within a province of bamboo from private lands does not require a CoV. Such non-uniform execution reveals ambivalence on the part of the DENR about implementing the policy. It is not clear why regional offices appear to have leeway on whether to implement the policy or not. It was also found that where CoV implementation is not strict, bamboo resources tend to be in abundance and communities and enterprises thrive on using bamboo. However, there are DENR field personnel who find the CoV useful in monitoring the gathering and transport of bamboo poles, although there is no meaning in the consolidated bamboo data because of non-uniform implementation.

As mentioned, investors are constrained by the CoV policy. It is burdensome to bamboo farmers in private lands. The irony is that, even with a CoV, bamboo shipments are still subjected to scrutiny at checkpoints, which usually results in additional expenses. This does not only discourage harvesting and transport of bamboo culms but also the expansion of bamboo plantations. This is parallel to the situation in India studied by Mahapatra and Shackleton (2011), who determined that state controls and regulations on the marketing of agricultural or forestry

products could lead to a trade monopoly and restricted competition, resulting in inequitable returns to producers.

Economic Feasibility of the Proposed Policy of Removing the CoV RequirementThe economic feasibility of the proposed policy of removing the CoV requirement was determined using BCA. At the core of the BCA is the proper identification of the stream of benefits and costs attendant to the proposed policy (Table 4). In removing the CoV requirement for bamboo coming from plantations in private lands, the following benefits were identified: 1) increase in the number of poles available for harvest associated with the increase in bamboo plantation areas, 2) consequent increase in number of bamboo shoots available for harvest, 3) increased carbon sequestration, 4) avoided senescence due to continuous harvesting, and 5) avoided costs related to CoV application.

Table 4. Summary of identified benefits and costs of the proposed policy

Benefits Costs

• Increased number of poles available for harvest (Pb)

• Increased number of shoots (Ps)

• Increased carbon sequestration (Pc)

• Avoided senescence (As)

• Avoided costs related to CoV application (Ac)

• Increased plantation establishment and development associated with an increase in plantation areas (PDC)

• Increased maintenance costs associated with an increase in plantation areas (PMC)

• Increased harvesting and transportation costs (HTC)

• Additional forest protection cost (FPC)

On the other hand, the proposed policy is expected to accrue the following costs: 1) increase in plantation establishment and development (PDC) costs due to an increase in plantation area, 2) subsequent increase in annual maintenance costs, 3) increased harvesting and transportation costs (HTC) due to increased number of poles to be harvested and transported, and 4) added forest protection cost to abate poaching and illegal harvesting issues that may result from the removal of the CoV requirement.

A vibrant bamboo industry is one where more farmers and investors go into bamboo plantation development. According to the Philippine Bamboo Industry Roadmap, the doubling of the current plantation development is anticipated. In our work, we considered a gradual increase in the area developed i.e., a 5%/yr increase until the 20th year. All benefits and costs were expressed in monetary



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terms based on secondary sources, interviews and actual values from the field. All costs and benefits were accounted for in the incremental increase in area per year.

Total BenefitsThe direct benefit of removing the CoV requirement is the increase in bamboo plantation area with more investors and farmers engaging in bamboo plantation establishment. Consequently, there will be more bamboo poles and bamboo shoots available for harvest. The increase in biomass is attended by an increase in the carbon sequestration capacity of the bamboo plantations. The indirect benefits, on the other hand, include the value of avoided senescence due to continuous harvesting and the value of avoided fees related to a CoV application.

The total benefits of the proposed policy are calculated using Equation 3 and the resulting values are presented in Table 5. Over a 50-yr period, the most important sources of benefits are the increased number of poles (Pb) and bamboo shoots (Ps) available for harvest. The region with the highest computed benefits is Region 7 (~ Php 11 bn), owing to the huge plantation area to be developed (989.35 ha) in the region.

Bamboo contributes significantly to the economy of Asian countries, directly as a commercial commodity and indirectly as a resource, with its use for housing and other structures replacing timber (Midmore 2009). In the Philippines, bamboo is harvested mainly as a substitute for timber with minimal attention given to its potential as a food source (Midmore 2009). In some provinces and municipalities, the harvest of bamboo shoots is prohibited. Caasi-Lit et al. (2010) noted in their study that bamboo shoots are among the under-utilized food sources across the country. However, there is a potential export market value for bamboo shoots and, with increased supply

along with awareness campaigns, bamboo shoots can become an important food source. In the present study, the total benefits from the increased supply of bamboo shoots range from Php 119 M up to Php 5 bn across regions. These values are not far behind the computed total benefits from an increasing number of harvestable bamboo poles, ranging from Php 285 M up to Php 5 bn across several regions.

Bamboo contributes to climate change mitigation through the sequestration of atmospheric carbon dioxide (Ling 2016). Other studies (Scurlock et al. 2000, Kassahun 2015) have shown that managed stands of bamboo absorb more CO2 than equivalent softwood stands. However, unlike timber stands, bamboo harvesting does not remove the entire clump, thus preventing post-harvest CO2 liberation. Bamboo’s rapid growth allows for frequent harvesting, in turn enabling community access to housing materials that can reduce their exposure and climatic vulnerability. According to Chen et al. (2009), bamboo is one of the fastest-growing plants and has a quick renewing capacity. When bamboo stands become mature and ready for harvest, the biomass can be rapidly replaced by subsequent regrowth of bamboo. Therefore, the biomass of mature bamboo stands can be assumed to be steady-state. At a conservative estimate of USD 5 per 1 T of CO2-e, the additional bamboo plantations to be established when an improved policy is in place could yield up to Php 87 M worth of sequestered carbon.

According to Giordano et al. (2009), many bamboo species have a peculiar life cycle, with long vegetative periods followed by synchronized flowering and senescence of the entire population, over extensive areas and at intervals ranging from 6–120 yr. The signaling mechanism for gregarious flowering and senescence of bamboo species is presently unknown, but field observations show that under-harvesting may be one factor. Many bamboos in private

Table 5. Estimation of total benefits (in millions, Php) from the proposed policy.

RegionBenefits (millions, Php)

Pb Ps Pc As Ac Total benefitsTotal PV of

benefits

CAR 1,112.52 139.07 20.47 55.63 119.23 1,446.91 148.31

Region 1 959.10 119.89 17.65 47.96 160.25 1,304.84 133.73

Region 2 360.94 360.94 6.64 18.05 51.91 798.47 81.76

Region 3 856.29 856.29 12.60 42.81 228.34 1,996.35 204.35

Region 4A 1,229.77 1,229.77 18.10 61.49 310.39 2,849.51 291.69

Region 4B 353.01 353.01 5.20 17.65 – 728.87 74.62

Region 5 645.70 645.70 9.50 32.28 54.93 1,388.11 142.11

Region 7 5,112.44 5,112.44 86.82 255.62 478.21 11,045.53 1,130.96

Region 10 1,544.02 1,544.02 28.41 77.20 159.29 3,352.94 343.34



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lands are not harvested due to the CoV requirement; hence, these resources are left in the area to die naturally. This phenomenon hinders the growth of new bamboo shoots as bamboo needs to be cut to allow new shoots to emerge. The estimated value of avoided senescence due to continuous harvesting ranges from Php 17–255 M.

For the avoided costs related to CoV, we included the actual cost of CoV application, other transaction fees such as checkpoint fees, transportation allowance for DENR staff members who will undertake the inventory (Php 800/d), and other opportunity costs that will be prevented with the proposed policy. In the study of Razal et al. (2007), the documentary requirements in gathering, transporting, and marketing of NTFPs and the processing of such documents are a serious concern among investors and farmers. The number of documents and the length of time needed to process them in order to transport forest products to the market constrict materials flow in the value-chain and results in large expenditures of time, effort, and other resources among applicants. The study included these concerns in the estimation of benefits and the results show that, over a 50-yr period, an

The total costs of the proposed policy are calculated using Equation 4 and the resulting values are shown in Table 6. Over a 50-yr period, the most important sources of costs are HTC and PDC. The region with the highest costs computed is Region 7 (~ Php 7 bn), owing to the huge plantation area to be developed (989.35 ha) in the region.

Net BenefitsNPV and BCR were computed using Equations 5 and 6, respectively, to complete the BCA. The computed values are shown in Table 7.

At a 10% interest rate, the resulting NPV for all regions is positive, indicating that the benefits of the proposed policy exceed the identified costs. In the same manner, the BCR computed across all regions considered in the study is > 1.0, which means that benefits outweigh the costs with a change in policy.

The NPV ranges from Php 42 –683 M, with the highest value obtained from Region 7, where the largest plantation area will be established. As mentioned above, the most important stream of benefit is that of the increased number

Table 6. Estimation of total costs (in millions, Php) from the proposed policy.

RegionCosts (millions, Php)

PDC PMC HTC FPC Total costs Total PV of costs

CAR 12.24 90.68 1,576.07 0.40 1,679.40 177.05

Region 1 10.56 78.18 1,358.73 0.35 1,447.81 152.63

Region 2 3.97 29.42 511.33 0.13 544.85 57.44

Region 3 7.54 55.84 970.46 0.25 1,034.09 109.02

Region 4A 10.83 80.19 1,393.73 0.36 1,485.11 156.57

Region 4B 3.11 23.02 400.08 0.10 426.31 44.94

Region 5 5.69 42.10 731.79 0.19 779.77 82.21

Region 7 51.94 384.66 6,685.50 1.71 7,123.81 751.02

Region 10 16.99 125.85 2,187.36 0.56 2,330.77 245.72

Table 7. Summary of NPV (in millions, Php) and BCR values at carbon price = USD 5 (I = 10%, 1000 poles/ha).

Region NPV (in millions, Php) BCR

CAR 42.89 1.41

Region 1 42.85 1.47

Region 2 47.56 2.39

Region 3 139.44 3.15

Region 4A 198.47 3.13

Region 4B 47.86 2.79

Region 5 93.16 2.90

Region 7 683.78 2.53

Region 10 197.04 2.35

amount ranging from Php 51–478 M can be saved. The savings can be channeled to the increased establishment of bamboo plantation and, on the part of DENR, to fund other development projects.

Total CostsAs mentioned, removing the CoV requirement will spur expansion in bamboo plantations. The increase in plantation areas would entail additional costs for plantation establishment, development, and maintenance, which are considered as direct costs. Consequently, there will also be increases in the HTC of the additional bamboo poles. The indirect costs, on the other hand, include the cost of additional forest protection to prevent poaching and illegal harvesting of bamboo from natural stands.



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of poles and bamboo shoots available for harvest, whose values are highly dependent on the plantation area. On the other hand, Region 3 had the highest BCR value. This can be attributed to Region 3 having the highest reported pole price (Php 150/pole), which positively impinges on the two major benefits from removing the CoV policy.

Sensitivity AnalysisIn addition to the determination of economic feasibility, a sensitivity analysis was conducted to test how the different economic measures behave with corresponding changes in interest rates, price of carbon, price of bamboo, and the number of poles per hectare. The resulting values for the different sensitivity analysis scenarios are shown in Tables 8, 9, 10, 11, 12, and 13.

As expected, with a decrease in the per ton price of CO2, there is a corresponding decrease in NPV and BCR values for all regions. Assuming USD 1 per 1 T CO2-e (instead of US$5), the decrease in regional NPV ranges from 0.87–4.57%, with an average increase of 1.80%. Similarly,

BCR values for the regions slightly decreased to 0.63% from 1.42%, with an average decrease of 0.88%.

On the other hand, increasing the carbon price from USD 5 USD–10 generated higher NPV and BCR values. At the same interest rate of 10%, NPV for all regions increased from 1.96% to 10.75%, with an average increase of 4.16%. The highest jump in NPV is observed in the Cordillera Administrative Region (CAR) and Region 1. In the same manner, BCR increased slightly from 1.27% to 2.88%, with an average increase of 1.82%.

Increasing the assumed number of poles from 1000 poles to 2000 poles per hectare significantly increased the NPV and BCR values across all carbon price scenarios. Using the USD 5 carbon price, NPV increased from 116% up to 214%, with an average for all regions of 148%. In terms of BCR, the increase ranges from 40–58%, with an average increase of 51%.

Similar to the scenario described above, a decrease in carbon price brought a subsequent decrease in NPV and BCR values for all regions. At USD 1 per 1 T CO2-e,

Table 9. Summary of NPV (in millions, Php) and BCR values at different carbon prices (I = 10%, 2000 poles/ha).

RegionUSD 5 USD 1 USD 10

NPV (millions, Php)

BCR NPV (millions, Php)


BCR

CAR 134.82 2.01 132.86 2.00 137.27 2.03

Region 1 122.10 2.07 120.42 2.05 124.21 2.08

Region 2 114.30 3.65 113.66 3.64 115.09 3.67

Region 3 302.00 4.69 300.79 4.67 303.50 4.71

Region 4A 431.92 4.67 430.19 4.66 434.08 4.69

Region 4B 114.87 4.40 114.38 4.39 115.49 4.42

Region 5 215.74 4.50 214.83 4.48 216.87 4.51

Region 7 1,638.75 3.91 1,630.45 3.89 1,649.12 3.92

Region 10 482.51 3.62 479.80 3.60 485.91 3.63

Table 8. Summary of NPV (in millions, Php) and BCR values at different carbon prices (I = 10% and 1000 poles/ha).

RegionUSD 5 USD 1 USD 10

NPV (millions, Php)



BCR

CAR 42.89 1.41 40.93 1.39 45.33 1.43

Region 1 42.85 1.47 41.16 1.45 44.96 1.49

Region 2 47.56 2.39 46.93 2.37 48.35 2.41

Region 3 139.44 3.15 138.24 3.13 140.95 3.17

Region 4A 198.47 3.13 196.74 3.11 200.63 3.15

Region 4B 47.86 2.79 47.36 2.77 48.48 2.81

Region 5 93.16 2.90 92.25 2.88 94.29 2.93

Region 7 683.78 2.53 675.48 2.51 694.15 2.55

Region 10 197.04 2.35 194.32 2.33 200.43 2.37



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Table 12. Summary of NPV (in millions, Php) and BCR values at different % price reduction (I = 10%, carbon price = USD 5, 1000 poles/ha).

RegionCurrent price 20% price reduction 50% price reduction

NPV (millions, Php)



BCR

CAR 42.89 1.41 19.00 1.18 16.84 0.84

Region 1 42.85 1.47 22.25 1.24 8.64 0.90

Region 2 47.56 2.39 32.43 1.95 9.73 1.28

Region 3 139.44 3.15 103.54 2.60 49.69 1.77

Region 4A 198.47 3.13 146.91 2.58 69.57 1.75

Region 4B 47.86 2.79 33.06 2.24 10.86 1.41

Region 5 93.16 2.90 66.09 2.35 25.48 1.52

Region 7 683.78 2.53 469.44 2.05 147.94 1.33

Region 10 197.04 2.35 132.30 1.90 35.21 1.24

Table 11. Summary of NPV (in millions, Php) and BCR values at different interest rates (carbon price = USD 5, 2000 poles/ha).

Region6% 8% 10% 12%

NPV (millions, Php)



NPV (millions, Php)


CAR 360.87 2.75 216.50 2.31 134.82 2.01 86.75 1.80

Region 1 323.57 2.82 195.02 2.37 122.10 2.07 79.06 1.85

Region 2 266.70 4.98 170.79 4.19 114.30 3.65 79.47 3.27

Region 3 686.59 6.40 445.38 5.39 302.00 4.69 212.71 4.20

Region 4A 982.24 6.38 637.08 5.37 431.92 4.67 304.18 4.18

Region 4B 262.64 6.01 169.89 5.06 114.87 4.40 80.69 3.94

Region 5 492.30 6.13 318.76 5.16 215.74 4.50 151.68 4.02

Region 7 3,793.20 5.33 2,438.75 4.49 1,638.75 3.91 1,144.05 3.49

Region 10 1,127.28 4.93 721.45 4.15 482.51 3.62 335.28 3.23

Table 10. Summary of NPV (in millions, Php) and BCR values at different interest rates, (carbon price = USD 5, 1000 poles/ha).

Region6% 8% 10% 12%

NPV (millions, Php)




BCR

CAR 150.74 1.92 80.59 1.62 42.89 1.41 22.10 1.26

Region 1 142.41 2.01 77.85 1.69 42.85 1.47 23.33 1.32

Region 2 120.26 3.27 74.10 2.75 47.56 2.39 31.65 2.14

Region 3 332.52 4.31 210.71 3.62 139.44 3.15 95.84 2.81

Region 4A 473.74 4.28 300.05 3.60 198.47 3.13 136.33 2.80

Region 4B 116.67 3.81 73.15 3.21 47.86 2.79 32.51 2.49

Region 5 225.31 3.97 141.80 3.34 93.16 2.90 63.54 2.59

Region 7 1,703.67 3.46 1,057.06 2.91 683.78 2.53 458.83 2.26

Region 10 500.82 3.21 307.82 2.70 197.04 2.35 130.71 2.10

the decrease, however, is minimal – ranging from 0.40–1.45% – with an average of 0.68%. Similarly, BCR values slightly decreased from 0.23% to 0.97%, with an average of 0.46%.

On the contrary, increasing the carbon price resulted in

higher NPV and BCR values. At an interest rate of 10%, NPV for all regions increased from 0.90% to 3.3%, with an average increase of 1.5%. The highest increase in NPV is observed in CAR and Region 1. In the same manner, BCR increased slightly from 0.64% to 1.5%, with an average of 0.92%.



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Table 13. Summary of NPV (in millions, Php) and BCR values at different % price reduction (I = 10%, carbon price = USD 5, 2000 poles/ha).

RegionCurrent price 20% price reduction 50% price reduction

NPV (millions, Php)



BCR

CAR 134.82 2.01 87.04 1.65 15.37 1.12

Region 1 122.10 2.07 80.91 1.71 19.13 1.17

Region 2 114.30 3.65 84.03 2.95 38.63 1.90

Region 3 302.00 4.69 230.20 3.81 122.50 2.50

Region 4A 431.92 4.67 328.81 3.80 174.13 2.48

Region 4B 114.87 4.40 85.27 3.53 40.87 2.21

Region 5 215.74 4.50 161.60 3.62 80.38 2.30

Region 7 1,638.75 3.91 1,210.08 3.15 567.07 2.01

Region 10 482.51 3.62 353.05 2.91 158.85 1.86

Another scenario used to test the behavior of NPV and BCR values for the proposed policy is the change in interest rates. Generally, lower interest rates (i.e., 6% and 8%) yield higher NPV and BCR values, while a higher interest rate (12%) results in lower NPV and BCR values. At an interest rate of 6%, average increases of 167% and 37% were observed for NPV and BCR, respectively. Meanwhile, at an 8% interest rate, the average increase is 60% for NPV and 15% for BCR. On the other hand, at a higher interest rate of 12%, NPV decreased by an average of 36% while BCR decreased by an average of 11%.

At 2000 poles/ha, the effect on NPV and BCR values is the same. Lower interest rates of 6% and 8% increased NPV at an average of 138% and 51%, respectively. Similarly, there is an average increase in BCR values of 36% and 14% at 6% and 8% interest rates, respectively. On the other hand, a higher interest rate of 12% caused a decrease in NPV and BCR at an average of 31% and 11%, respectively.

An increase in the supply of bamboo poles may lead to the corresponding decrease in bamboo prices. To simulate the impact of changes in price, 20% and 50% price reduction of bamboo poles were tested. As expected, the NPV and BCR values decreased for all regions and for both levels of price reduction. At 1000 poles/ha and 20% price reduction, average decreases of 35% and 18% were observed for NPV and BCR, respectively. On the other hand, when prices would go down by as much as 50%, NPV and BCR decreased on average by 73% and 45%, respectively. When pole prices are reduced by 20%, a bamboo plantation venture when there is no CoV requirement remains profitable. However, at 50% price reduction, NPV is still positive for all regions, although BCR drops to less than 1.0 in CAR and Region I – possibly due to the interplay of low current bamboo price with wages. The subsequent table at 2000 poles/ha, shows that – at 20% price reduction – NPV and BCR values decreased on average by 27% and 19%,

respectively. On the other hand, a 50% reduction in bamboo prices caused NPV and BCR values to dip to about 69% and 47%, respectively, but there is no drop in BCR to less than 1.0. Increased production volume can offset lower revenues due to reduced pole prices. Even with the reduced prices, bamboo plantations are still profitable with positive NPV and BCR values greater than 1.

The sensitivity analysis explored various scenarios involving different interest rates, possible fluctuations in the price of carbon and bamboo poles, and bamboo plantation productivity in terms of the number of poles per hectare. While there were differences found in the computed NPV and BCR values, no movement resulted in unfavorable NPV or BCR for any of the regions to be affected by a policy change in bamboo. The results also suggest mechanisms to be taken to offset the fluctuations in pole prices. This portends that, should any of the test scenarios occur in the future, the benefits would outweigh the costs of removing the CoV requirement as a policy.

CONCLUSION AND RECOMMENDATIONUsing BCA, the study found no strong evidence to retain the CoV as a requirement for the harvesting and transport of bamboo from private lands. Instead, BCA results support the abolition of the CoV requirement. Additionally, survey results indicate that many bamboo industry stakeholders find the policy counterproductive, contributive towards corruption, and inadequate in providing protection for bamboo resources in both public and private lands. This study supports the policy as invoked in the draft DAO§ to simplify requirements for transport and harvesting so that investments in the bamboo sector will not be impeded by unnecessary regulations.



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It is recommended that additional scenarios that include the provision of incentives without totally removing CoV may be explored. Future studies may also be conducted to determine BCA comparing the planting of bamboo with other agricultural crops and related economic activities.

ACKNOWLEDGMENTThe project team members wish to acknowledge the financial support of DOST-PCAARRD.

§Following the conduct of a series of consultations, a draft DAO entitled “Rules and Regulations on the Establishment, Management and Sustainable Development of Bamboo Plantations, and for Other Purposes” was formulated. The draft DAO remains aligned with PD 705, FAO 11, EO 192, RA 7160, 7161 and 879, and other related government policies that directly or indirectly ensure the sustainable productivity of bamboo. The initial draft of the DAO has nine (9) chapters as follows: i) Title, Scope, and Coverage, Objectives; ii) Bamboo Plantation Establishment and Development; iii) Bamboo Harvesting and Transport; iv) Bamboo Processing and Utilization; v) Bamboo Database, Monitoring, and Evaluation; vi) Bamboo Research, Development, Training, and Extension; vii) Incentives; viii) Forest Charges and Fees; and ix) Administrative Provisions. The scope applies to all species of bamboo – whether indigenous, endemic or exotic – which are found to grow, thrive, or planted in private and forestlands, mineral lands, national parks, or agricultural lands, exotic species being subject to pertinent rules and regulations on its propagation in the country. The objectives of the proposed policy are as follows: a) to ensure the sustainable productivity, availability, and access to bamboo resources of dependent industries, communities, and other stakeholders in order to generate livelihood opportunities and additional sources of revenue; b) to provide a system for sustainable harvesting, transport, and efficient utilization of bamboo resources; c) to establish vibrant bamboo enterprises to contribute to the Philippine economy while promoting inclusive growth; and d) to create a policy environment which is supportive to the development of the bamboo industry in order to attain the country’s goal for environmental sustainability and climate change adaptation and mitigation.

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