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  1. FINANCING for MPAs The Philippine Environmental Governance 2 Project

  2. Workshop Objectives • Present costing and revenue elements in the establishment and implementation stages of an MPA • Present comparative MPA costing of 6 Eco-Gov sites • Participants able to do costing exercises based on their respective MPA action plans • Orientation on Ring-Fencing and CCIF Financial Model

  3. Expected Output • Better understanding of the financial aspects of an MPA • Action Plan with corresponding cost items and revenue sources • Knowledge on concept of Ring-Fencing and the CCIF Financial Model

  4. Part 1 Presentation of Concepts and Case study Part 2 Workshop on Action Plan (identification of activities, costs, and sources of funds) Part 3 Introduction to CCIF Financial Model 45 Minutes 1 hour & 45 Minutes 30 Minutes Session Outline

  5. MPA Costs

  6. Two Types of MPA Costs • Establishment Cost • Start-up costs in establishing an MPA • Implementation/Recurring Operating Cost • Costs incurred for the operation and maintenance of an MPA

  7. MPA Costs • Establishment Cost • Administrative/Organization • (MS Mgt Planning Workshop, ground working, action planning, • cross visits, Forming and Organizing Enforcement team, etc) • Site Development/Habitat Enhancements • (Construction of Guard house, Delineation of Marine Sanctuary • and Installation of buoys and markers, posting of signages) • Acquisition of Equipment • (Patrol boat, binoculars, paddle boats, diving gears, rechargeable • flashlights, hand-held radio, etc)

  8. MPA Costs • Establishment Cost • Baseline Survey (Reef and bio-physical Assessments) • Capability Building (Deputation of Bantay-Dagat, alternative livelihood, monitoring and evaluation, paralegal and Municipal CLE training, IEC, etc.)

  9. MPA Costs • Recurring Operating Costs • Regular coastal clean-up activities • Annual Bio-physical monitoring • Regular patrolling and guarding • IEC activities • Regular meetings • Repairs and maintenance of buoys and markers • Office maintenance and operating cost

  10. MPA Costs • Recurring Operating Costs • Salaries / Honoraria of personnel • Traveling Expenses • Fuel and oil • Follow-up trainings • Supplies and Materials (Office and Other Supplies) • Repairs and maintenance of guardhouse, pump boats and other equipment

  11. MPA Fund Sources

  12. MPA Fund Sources • LGU Allocations (Mun. / Bgy. / Prov.) • 20% Dev. Fund • General Fund (CRM Regular Allocation, Mayor’s Office and Intelligence Fund) • National Government (including PDAF) • Fines and Penalties • User fees (diving, educational, entrance, etc.) • Fund-Raising activities • Grants and Donations • Non-Government Organizations • Private Institutions • Private Individuals

  13. Phases Pilar MPA Program Implementation

  14. Sustainability Concerns of MPAs • High investment costs • Escalating operational and maintenance costs • Highly subsidized program • Limited financing • Funds compete with other basic services of government

  15. Tips to MPA financing • Secure buy in of the program from Local leaders to be prioritized in budget allocation • Prepare Work and Financial Plan • Update local leaders on status of implementation and utilization of fund • Secure external sources of fund

  16. Case Study on MPA Financing

  17. Case Study - MS Profile

  18. Case Study - MS Profile

  19. Case Study - Cost

  20. Case Study - Labor Cost

  21. Insight on Cost • Cost vary with the nature of materials or labor (i.e. opportunity cost) • Phase (e.g. establishment, implementation sustaining) and activities of MPA affect cost • Size matters, i.e. large MPAs are more economical to manage than small MPAs (“economies of scale”) • Cost-sharing results in smaller expenditures for each of the parties involved in co-management

  22. Case Study - Sources of Fund

  23. Case Study - Sources of Fund

  24. Case Study - Sources of Fund

  25. Case Study - Sources of Fund

  26. Case Study - Sources of Fund

  27. Case Study - Sources of Fund

  28. Insight on Fund Sources • Municipalities and barangays tend to allocate more funds to MPAs that they themselves manage or co-manage • MPA share not highly prioritized in municipal and barangay 20% DF • Co-management between barangays and municipalities results in greater total budget for the MPA

  29. Salient Observations • Critical role of external assistance to sustain MPA, at least in the initial phases • NGAs contribute minimally, MPA are functionally largely as local responsibility • High dependency on LGU budget and external funding makes MPAs vulnerable to changes in political leadership and withdrawal of donor support • Revenue generation is as yet at initial stage, but critical to sustainability • Incentives for local resource managers and volunteers key also to sustainability

  30. Ring Fencing

  31. Ring Fencing - Definition Ring-Fencing means • Separation/isolation or fencing-off of financial accounts of specific programs of LGUs to enable • exclusive use of resources earmarked for these programs • retention and plow back of revenues generated by the program for use in implementation or investments

  32. Ring Fencing - Definition • In operational terms, it means either • setting up a special account for the program under the General Fund of LGUs, with subsidiary accounting system, or • operating as an autonomous economic enterprise

  33. Why Ring-Fence? • General Objectives: • To build a more sustainable and financially viable program or operations. • To improve governance and promote sound management practices: transparency, accountability, and informed decision-making

  34. Legal Basis • The Local Government Code allows LGUs to create special accounts under the General Fund for public utilities and economic enterprises, development projects funded by its internal revenue allotment and other special accounts created by law or ordinance. • Sec. 105, Chapter 6 (Special Accounts) of the New Government Accounting System (NGAS) states that “LGUs shall maintain special accounts in the General Fund for public utilities and other economic enterprises, loans, interests, bond issues, and other contributions for special purposes

  35. Why ring-fence ENR Programs ? • ENR-related activities are assigned to different LGU units especially if LGU has no environment office • program budget/expenses are lodged in various LGU units and are not tracked on a program basis • LGUs are often unable to properly program activities (e.g., start refo at the right time) or respond immediately to “emergency” needs of programs (e.g., repair of equipment for solid waste management) • revenues become part of the General Fund and can be used by the LGU for purposes unrelated to ENR • revenue potentials are not fully tapped; revenue collection is also not tracked on a program basis

  36. Why ring-fence ENR Programs? Specific Benefits: • Establishes information on LGU “investments” in the ENR sector or a specific ENR program. • Budget allocated by the LGU for the program and revenues generated from related services are kept within the program to sustain/improve operations. • Better monitoring and tracking of the performance of the program through separate and reliable financial reports. • Better and transparent basis for setting fees • Facilitates private sector engagement in the program • Promotes “enterprise” thinking within LGU

  37. Thank You!