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International Political Economy

Katrine Joy D. Azuelo 24 March 2018


AB Foreign Service 302 Sir Jumel G. Estrañero

A. “Trade Liberalization and Foreign Direct Investment (FDI): Tide of


Globalization and The Aftermath in the Philippine Environment”

B. Chapters

I. Introduction/Abstract

Globalization indeed affects all things – from the international realm to the
individual human life. We cannot stop it and its power to transform the world into a fast
pacing one. It brought integration to the global arena in terms of trade, investments,
information technology, and culture.1 Aforesaid, it affects almost all aspects of life, and
one question arising today in relation to it is whether it has good or bad consequences in
the environment. An assumption is that people tend to view the effects of globalization
process to the environment in a more pessimistic way. However, is it limited to that?
UN General Assembly established World Commission on Environment and
Development in the year 1983. It investigated the conflict between the environment and
the economic system. The Commission asserted that developed countries shall change
their production and consumption to reduce the exploitation of natural resources and
contribute to the mitigation of the environment. Summits such as the Earth Summit in Rio
de Janeiro, Summit in Johannesburg, and Copenhagen are held to address the aforesaid
goals. It was concluded that environmental problems are problems of the world and shall
be addressed. Without much focusing to the issue can be fatal.2
Upon the advent of the issue, it is considerable that some questions regarding its
importance exist. Nowadays, climate change is one of the focal problems that not only
lone states shall address but shall the international community. Natural resources are
known to be the primary source of almost all the productions within the globe. Hence, in
linkages between the production and economy, it is also crucial to consider that the
environment plays a vital role.
Originally, Philippines is an agricultural country, meaning its economy strongly
relies on its natural resources, such as crops, products extracted from mining, and the

1
Staff, Investopedia. "Globalization." Investopedia. January 29, 2018. Accessed February 28, 2018.
https://www.investopedia.com/terms/g/globalization.asp.
2
Romančíková, Eva, and Jana Mikócziová. "Environmental aspects of the globalization process ." Accessed
February 28, 2018. ftp://ftp.repec.org/opt/ReDIF/RePEc/rse/wpaper/19Rev2_17_Romancikova.pdf.
like. In addition, its geographical structure, an archipelago, meaning it is comprised of
islands and surrounded by water, makes it abundant with marine resources. These
factors (being an agricultural and archipelagic state) contribute to the types of products
which it takes advantage from. And these products which it produces has implications to
its economy. Therefore, on the other side, it is important to know that the extractions of
such resources for production and for the economic development has implications to the
changes in the environment. In consideration to this, implementation of good
environmental policies would be important abreast with the trade and investment policies.
Moreover, environmental policies will be much more important in relation to trade and
inflows of FDI. Without effective policies, “environment trap” may arise.3
The purpose of this paper is (a) to understand whether globalization is good or bad
in the Philippine environment (b) to assess how do liberalization of trade and investment
affect the environment of the Philippines, and lastly, (c) to assess whether the Philippine
government adapts to the emerging global demand to address the issue of environmental
sustainability.

3
ibid., (as in n.2)
II. A. Statement of the Problem

1) Is globalization good or bad for the Philippine environment?

2) How do Philippine liberalization of trade and investment affect its environment?

3) How does the Philippine government adapt to the emerging global demand to
address the issue of environmental sustainability?

B. Methodology:

The historical development and descriptive approach on research is used in this study.
Historical method of research is the process of systematically examining an account of
what had happened in the past. It focuses on dynamic accounts of past events which
interprets ideas and events rather than mere description of dates and facts. Since the
present study is concerned with the effects of the globalization, primarily of the foreign
direct investment (FDI) and trade liberalization in environment of the Philippines, the
historical development approach is the most appropriate method to use in finding answers
for the existing problems.

The data were gathered through the maximization of availability of the references on
the internet. The data gathered were reviewed and analyzed in order to answer the
problems that the researcher is attempting to answer. The literatures reviewed contains
information about globalization, its relationship with the environment, specifically the
effects of trade and FDI in the environment in general. A separated section in the reviewed
related literature is on the Philippine context for easier understanding and for a more
organized presentation of data. It includes the development of trade and FDI policies, the
present state of FDI and trade, the effects of the globalization (trade/FDI) in the physical
environment, environmental governance (Paris Climate Agreement, Philippine Strategy
on Sustainable Development, and other existing policies), and the current state of the
environment of the Philippines.
III. Review of Related Literature

Globalization
“Globalization is a process of interaction and integration among the people,
companies, and governments of different nations, a process driven by international
trade and investment and aided by information technology. This process has effects on
the environment, on culture, on political systems, on economic development and
prosperity, and on human physical well-being in societies around the world.”4

Globalization and the Environment


Existing studies about the effects of globalization to the environment do not
conclude to the positive or the negative side. Studies usually assert that there will be
differing effects on different countries; it depends on the factors involved with it. Usually,
people are pessimistic about the upbringings of the increasing global trade and
interactions towards different communities, however, the literature asserts that at some
instances, it can be a mechanism for “what is supposedly to be good”. Furthermore, on
the positive side, it contends that environmental quality may improve as the economy
advances.
Trade and FDI encourage comparative advantage and transfer of resources
across countries. Some theories claim that because of these, effects vary in every
country. One of the said effects of increase in trade is the advancement of environmental
degradation due to the demands in production. However, trade and FDI encourage
cleaner techniques of production which then leads to positive attribution to the
environment. In this scenario, it is evident that the effects are two-faced. Another proof is
the one of the consequences of trade, which is the change in environmental sector. It
could positively affect the environment if it is in terms of industry to agriculture or
negatively in terms of agriculture to industry. Thus, the overall effect of trade and FDI on
the environmental quality of a country can be positive or negative. This is what the
literature is trying to emphasize. It will depend mainly on the specific situation of a
particular country.
Theory and empirical researches assert that environmental policies may affect the
relationship between trade/FDI and environment. As globalization expands through time,
increasing competitions among companies also intensifies. In relation to this, some
countries tend to implement laxer environmental policies for them to be able to compete
internationally. The laxer the environmental policies are, the cheaper the settlement for
operating businesses. This is the reason as to why foreign investors prefer countries with
lower costs of environmental protection. Thus, some countries tend to adjust their
environmental protection policies in order to be competitive and in order to attract more
foreign investors.

4
"What Is Globalization?" Accessed February 28, 2018. http://www.globalization101.org/what-is-globalization/.
The effects of the trade liberalization on the environment can either be direct or
indirect. Indirect effects pertain to those impacts in the income or welfare. As globalization
promotes one country’s comparative advantage, it will allow more efficient allocation of
resources. More efficiency on the allocation of resources will then result to welfare-
enhancing gains, which will then result to increase in national income. As income
increases, usually the demand for public goods provision (better environmental quality,
healthcare, education) does also. The relationship between income and environment
gave birth to discussions. These discussions ended up into assertions that environmental
quality downgrades at low income levels and then improve at higher income levels. As a
country’s economy grows, the more it produces economic activities which will then,
according to the literature results to pollution. Thus, if a point of national income is
achieved, there will be a decline in the pollution as a country will tend to change its
sectoral composition. Additionally, as the national income rises, technological progress
will lead to innovations in lessening the pollution.
The direct effects can be divided into three effects: scale, technique and
composition.
The effects of trade in the environment are as enlisted:
(a) Scale effect – growing economic activity due to the increase in trade will result to
more pollution. On the other side, trade allows technological reforms to contribute
on the mitigation of the environmental degradation
(b) Composition effects – due to the increase of trade, changes in the allocation or
composition of industry will occur. Thus, the identifying factors of the environmental
effects will be dependent on a country’s comparative advantage
(c) Technology effects – trade ties lead to better greener technology
The effects of FDI to the environment are thus enlisted:
(a) Technology effects – foreign investor opens a production plant in the host country
with its corresponding technology. Thus, the investor will rely on newer, greener
technologies which shall lead technology development, diffusion, and transfer. The
scenario here is that in developed countries, they have usually large and abundant
resources for research and development as well as for environmental
management systems (EMS), while developing countries are reliant on advanced
firms.
(b) Composition effects – similar to trade’s effects, effects on environment will depend
to the current situation of the country.

According to Zarsky, the best way to attain best practice production techniques is
through FDI.
Another factor in which economic globalization affects environment is through
environmental regulations or standards. There are two approaches in environmental
standards indicated in the literature. One is the “Race to the bottom”. According to this,
countries may turn into laxer environmental policies in order to (a) protect its industry and
to keep up with the pace of international competition and (b) attract foreign firms and FDI
through lower costs of environmental protection. The second is “Race to the top”. This is
also called the “California Effect”. It asserts that economic liberalization encourages
improvements of international environmental standards. According to Zend and Eastin, in
order to maintain access to foreign markets located in developed countries, other
countries including those especially the developing countries shall fulfil stricter
environmental standards of the former. Thus, it is called the California Effect because it
came to life since the time California introduced stricter car emission controls that is
mandated by US Clean Air Act. Vogel gave examples which are then indicated in the
literature. One is that, when Israel introduced pesticides standards in able for it export on
the EU Market. Vogel supported this approach; however, he is not a hundred percent
optimistic about this. According to him, this has limited implications only, such as it only
implies to products but not on production.5
The Organization for Economic Co-operation and Development (OECD) also
supported the idea that one cannot conclude to one side regarding this problem.
According to it, although globalization is just partly responsible for the environmental
degradation, through national, regional and international policies it pushes through efforts
to address the issue and reduce its negative outcomes. Also, some solutions are found
through globalization as well.
As reiterated by OECD, globalization affects the environment “indirectly”. The
negative effects can be manifested in few aspects. One is that, it contributes to the
greenhouse gas (GHG) emissions. Main sources of emissions are the industrial
production, transportation, and deforestation. It promotes carbon dioxide (CO2) emission
through transport, which as well grew alongside with trade. The emergence of
transnational road transports brought some major impacts, also the reliance of cross-
border trades using aero planes. Sea transports also contributed to the emissions, as it
consumes a large amount of fossil fuels every year. Another negative effect is that
globalization indirectly promotes CO2 emissions in relation to the industrial activity and
consumption. Growth in trade resulted in much broader cross-border trade and
investment which fostered more industrial activity (major source of GHG emissions).
Another effect is that it encourages deforestation. Clearing and logging result to increase
of CO2 at the atmosphere, burning wood does too. Forests are being turned into
agricultural lands, especially in the developing countries. Another is impoverishing
biodiversity, in which some species are getting extinct. Globalization demands creation
of more distribution channels, new needs, and new demands for products around the
world. It encourages industrialization, and with this, there will be exploitation of lands,
subsoil, and resources, which weakens the ecosystems, including habitat of species. The
problem of overfishing also became an issue. However, OECD reiterated that
globalization, despite of its “indirect” contribution to the degradation of the environment
can also be an instrument for environmental solutions. (1) International trade can spread
environmental solutions especially in the issue of global warming. Globalization of trade
and research can help in forming green technologies. Industry, global capital movements,

5
Spilker, Gabriele, Vally Koubi, and Thomas Bernauer. "International Political Economy and the Environment."
Oxford Research Encyclopedia of Politics. May 16, 2017. Accessed March 10, 2018.
http://politics.oxfordre.com/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-172.
and globalized research and innovation, can help promote sources of “green growth”
which is said to be effective for fighting global climate change. An example of this is the
US investment of an amount of USD 28 B in green technologies (biofuels, renewable
energy, wind/solar energy) around the world. With this, public investment in
environmental technology research increased. Dynamism of green research and industry
is promising. Quest for environmental solutions will result to new activities and products,
thereafter, there will be new production processes which globalization’s process can help
circulate quickly. (2) Globalization can make environmental conservation compatible with
development.6
Apart from the “two-faced” views of the effects of globalization, some studies
exclusively depict that globalization affects natural environment adversely. It reiterated
that blaming globalization for the environmental degradations is possible because the
former aims to convert all kinds of value, cultural and natural assets to money. It was with
the industrial revolution when people began to affect the atmosphere. With globalization,
pressures to the environment increased. Globalization contributes to economic growth,
thereby affects the environment as well. It brings changes to the industrial composition of
a country, and thereafter results to increase in resource use and pollution levels. It brings
land degradation, and thereby, cropland, pastures, and forests worldwide have been
degraded for the past 50 years. Desertification is also one of the result of the globalization,
as well as the loss of wetlands and biodiversity. Increase of transportation is also a factor,
which is one of the primary causes of pollution. Moreover, due to the continuous
globalization process, there comes the emergence of developing industrial sectors,
shopping malls, successively established factories and tourism activities which can cause
inescapable environmental problems. The toxic wastes from these industries lead to
environmental pollution and seriously threaten the environmental health of the cities.7

IN THE PHILIPPINE CONTEXT

Development of Philippine Trade and FDI Policy

The Philippines' trade policy had been through major shifts throughout the
decades. During 1950's to 1970's, the government relies on an "import-substituting trade
regime". There were highly protective tariffs, foreign exchange control measures, and
capital market inventions. The government, upon realizing that imposing those are too
restricted, they shifted into a more liberalized trade policy. The Tariff Reform Program
(TRP) of 1980's introduced impositions of tariffs on quantitative restrictions and
simplification and reduction of tariff protection. This was followed by TRP II during 1991

6
"What is the impact of globalisation on the environment?" Economic Globalisation OECD Insights, 2013, 108-25.
doi:10.1787/9789264111905-8-en.
7
Karataş, Abdullah. "Environmental Impacts of Globalization and a Solution Proposal." American International
Journal of Contemporary Research6, no. 2 (April 2016). Accessed February 28, 2018.
http://www.aijcrnet.com/journals/Vol_6_No_2_April_2016/8.pdf.
and TRP III on 1994. The latter focused on the lowering of tariffs on capital goods and
raw materials to improve the competitiveness of private sectors. Another reform in the
trade liberalization of the Philippines is in connection to its adherence on its membership
in World Trade Organization (WTO). It includes lifting of import restrictions on certain
agricultural products, elimination of duties on certain industrial and information technology
products and the creation of a four-tier tariff schedule. In 2000's there were further trade
policy reforms. By 2008, the Japan Philippines Economic Partnership Agreement
(JPEPA) was entered into by the country, which is said to be its first bilateral free trade
agreement. By 2010, duties were eliminated on 99% of products in the Inclusion List of
the Common Effective Preferential Tariff (CEPT) scheme of the ASEAN Free Trade Area
(AFTA).
Investment policy also underwent through a lot of reforms. One important pace during the
1980’s was the passage of the Omnibus Investment Code (OIC) of 1987. it simplified and
consolidated previous laws of investments and imposed two incentives, to wit, the
provision of income tax holiday for enterprises engaged in preferred areas of investment
and taxable income deductions for the use skilled and unskilled workers that satisfy
certain Philippine Board of Investments (BOI) requirements. Other incentives are: tax and
duty exception on certain capital equipment and accompanying parts, tax credits on
domestic capital equipment, employment of foreign nationals for technical and advisory
positions for a certain period, and simplified customs procedures. Other liberalizing
reforms on investment are the: Foreign Investment Act of 1991; in 1994, foreign banks
were allowed to acquire up to 60% ownership of domestic banks; in 1995, Republic Act
7916 allowed greater private sector participation in the development and management of
the country’s special economic zones and expanded the activities permitted within the
zones; in 2000, the General Banking Law and the Retail Trade Liberalization was passed.
Though liberalization policies in FDI were imposed, barriers are still present, especially
on the constitutional provisions which restrict certain industries and foreign ownerships.8

Present State of Trade and Foreign Direct Investments (FDI)

Increasing trade and investments are some of the results of economic


globalization. These two plays an important role in the growth of the economy of the
developing countries.9 FDI is an important factor in the economic growth and is a
valuable capital.10 To further understand, according to the investopedia, Foreign Direct
Investment or FDI is an investment made by a company or individual in one country to
another country. FDI comes in many forms (ownership or controlling interest in a foreign

8
Parcon-Santos, Hazel C. "Trade and Investment in the Philippines ." Accessed February 28, 2018.
http://www.dlsu.edu.ph/research/centers/aki/_pdf/_workingPapers/Parcon-Santos%20-%20FINAL.pdf.
9
"Philippines (the): Foreign investment." Foreign investment in the Philippines - Santandertrade.com. Accessed
February 28, 2018. https://en.portal.santandertrade.com/establish-overseas/philippines/foreign-
investment?accepter_cookies=oui&&actualiser_id_banque=oui&id_banque=7.
10
Balboa, Jenny D., and Erlinda M. Medalla. "State of Trade and Investments in the Philippines." April 2006.
Accessed February 28, 2018. http://www.eaber.org/sites/default/files/documents/PIDS_Balboa_2006.pdf.
company).11 Year 2014, the United Nations Human Development Report (UNHDR)
stated that Philippines has the lowest FDI percentage among ASEAN members.
According to Arsenio Balicasan, the Socio-economic Planning Secretary and Director
General of the National Economic and Development Authority (NEDA) that time, this is
no longer surprising. He reiterated that other ASEAN countries have consistent
economic growth, but not the Philippines. He asserts that businessmen prefer investing
in countries with sustained growth rather than in developing countries such as the
Philippines.12 However, these past few years, FDI of the Philippines has been rising
steadily, based on reports. By 2016, FDI inflows in the Philippines hit USD 8 billion, with
Japan and the United States as the main investors. Yet, the FDI inflow remains
relatively weak, probably due to the comparative advantage of the Philippines (English-
speaking and well-skilled workforce, a strong cultural dependency to US and a
geographical location in a dynamic region) which exhibits that the country is turning into
a service industry with low capital strength.13 In terms of trade, Philippines is the 41st
largest export economy in the world. by the year 2016, Philippines exported $54.3 B
and imported $80.5 B resulting in a negative trade balance of $26.3 B. On the same
year, the GDP of the Philippines was $304 B and its GDP per capita was $7.81 k. its top
exports are the following: integrated circuits, computers, wood carpentry, semi-
conductor devices, and insulated wires. Its top imports are integrated circuits, cars,
refined petroleum, office machine parts, and crude petroleum. The top importers of the
Philippines are Japan, US, Hongkong, China and Singapore. While the Philippines
exports from China, Japan, US, South Korea, and Singapore. 14

Effects of Globalization in the Philippine Environment


One important aspect in international trade is its relationship with the
environmental and labor standards in a country. Race to the bottom is preferable among
countries competing in the arena of international trade. There is a lower production cost
in lower labor and environmental standards. In the competition of exporting firms, the
lower the production cost, the better. On the other side, increasing awareness in
environmental and labor issues and the existence of the foreign competitors that produce

11
"Foreign Direct Investment - FDI." Investopedia. March 06, 2018. Accessed March 11, 2018.
https://www.investopedia.com/terms/f/fdi.asp.
12
Santos, Matikas. "Philippines has lowest FDI percentage among Asean members." Inquirer Business Philippines
has lowest FDI percentage among Asean members Comments. Accessed February 28, 2018.
http://business.inquirer.net/177064/philippines-has-lowest-fdi-among-asean-members.
13
"Philippines (the): Foreign investment." Foreign investment in the Philippines - Santandertrade.com. Accessed
February 28, 2018. https://en.portal.santandertrade.com/establish-overseas/philippines/foreign-
investment?accepter_cookies=oui&&actualiser_id_banque=oui&id_banque=7.
14
"Philippines." OEC - Philippines (PHL) Exports, Imports, and Trade Partners. Accessed February 28, 2018.
https://atlas.media.mit.edu/en/profile/country/phl/.
at higher standards may pressure local producers to adapt higher standards. Studies
regarding this topic in the Philippines are scarce.15
Trade, FDI, and other upbringings of globalization unquestionably affect the
environment. However, debates exist whether these factors lead to increased
environmental degradation. Another important thing to consider is the government’s
capability of managing the environment through implementation of environmental
policies. According to Medalla, trade and industrial policies adopted should not lead to
the degradation of the environment if there are good environmental policies adequately
enforced. She then asserted that the problem is that Philippines’ environmental
management is still far to be called as adequate. Between the trade and the investment
policy in the Philippines, it’s the former which influences the Philippines’ industrial policies
the most. Hence, the search for the answer to the question whether trade and industrial
policy contributes to the environmental degradation would be close to impossible.
However, there are existing theory suggestions and indicators that might help to find the
answer.
Environmental impacts depend on the production of different types of export
products. As types of exports change, environmental effects change as well. The
Philippines’ past trade protectionist regime, exported only the country’s focal products
such as the agricultural crops and other natural resources from mining and forestry. With
this, as explained by the ‘trade theory’ as identified in the literature, contributed to the
environmental degradation. However, after years, implementation of trade reforms
occurred. Such reforms resulted to positive impacts on the environment. Reforms
minimized protectionism on almost all sectors (most to least pollutive). Export became
one of the priorities of the country’s trade, and it became more adaptive compared to the
past protectionist trade which focused only to the exports where it has comparative
advantage. In order for the Philippine exporters to be competitive in the international
market, it must abide to the rules of the world. One emerging rule in the world arena of
trade is the sense of responsibility of businesses, trade and industry to the environment
and resources. This will then have increase in demand for a cleaner and greener
environment. Additionally, the liberalized trade reform tends to minimize the cost of
mitigation of pollution and others. Hence, both industrial and economic policies are
important, and the effects of both cannot be detached from one another. It is assumed
that even though the Philippines has weak environmental laws, the improving situation is
the favorable result of the reforms in the policy.
Thus, trade could improve environmental quality. As income increases, the
capability of countries to generate long-term plans in preserving or enhancing natural
capitals (soils, forests, & fishes) also improves. Assumptions made asserting that for
Philippines to win in both environmental protection and free trade is through the
international “green markets”.16

15
Parcon-Santos, Hazel C. "Trade and Investment in the Philippines ." Accessed February 28, 2018.
http://www.dlsu.edu.ph/research/centers/aki/_pdf/_workingPapers/Parcon-Santos%20-%20FINAL.pdf.

16
Medalla, Erlinda M. "Philippine Trade Policy: Reflecting on its Effects on the Environment." October 1999.
Accessed February 28, 2018. https://dirp3.pids.gov.ph/ris/pn/pidspn9910.pdf.
The literature reviewed below depicts another view of this issue:
The Agreement on the Agriculture (AOA) is a treaty of World Trade Organization
which aims to reduce agricultural subsidies in the North to improve markets of exporters
of agricultural products. The subsidies were not helpful enough and resulted to global
competition. Agricultural liberalization caused the 3rd world countries which exports
agriculture face a higher food import bill.
The membership of the Philippines to the GATT and WTO obliged them to import
agricultural products including those that can be produced locally. Since it is cheaper, it
resulted to an unfair market competition.
The target of the Philippine development plan is the rural areas. The agricultural
areas were turned to commercial and export-oriented production. The production of staple
crops shifted to the high-value crops (HVCs)
During 1990 to 1995, the HVCs contributed a lot to the agricultural export. This
resulted to food insecurity and environmental degradation. Farmers eventually
established contracts with transnational companies (TNCs) to grow specific crops at
specific quality standards. Therefore, the TNCs gained control on the agriculture industry
in the Philippines. Through contracts with farmers, they are engaged with planting to trade
of agriculture products in the Philippines without owning any land. Through contract with
TVCs, farmers are ordered to use fertilizers, pesticides, and the like for quality and
quantity of products. The use of such pesticides and fertilizers are threat to the workers,
especially to the environment. (ex. Use of “Mocap” in Davao for bananas). Furthermore,
it resulted to soil erosion and desertification. The culprit? The growing demand for HVCs.
For the sake of globalization, government permits the conversion of agricultural
lands to industrial centers, and the like. Because of this, there were loss of agricultural
resources and of best soils. Fertile lands were used for businesses and marginal lands
were used for cultivation. Hence, misappropriation of the lands. The lands for rice and
corn decreased as well as the staple crops. Therefore, the production of such goods is
short and not enough to supply the population.
With that, high-yielding varieties (HYVs) are introduced. This is supposedly to support
and increase agricultural productivity in the Philippines, but only promoted TNCs’
agribusiness in the country. The HYVs are high response varieties which only increase
yields if applied and used high volume of fertilizers and chemicals. Farmers under the
World Bank’s Green Revolution was suggested to shift to HYV hybrids (corn and rice).
Too much dependency on the chemicals resulted in:
1) Increased soil acidity.
2) Increased nutrient load of surrounding water bodies due to spill of fertilizers.
3) Decrease pest resistance.
4) Genetic erosion accompanied by increased in crop vulnerability to pests and
diseases.
5) Others such as water pollution, increase in pest resistance, and health risks.
Seed trading also became a thing. This is given to the private seed companies and
traders. The use of fertilizers, chemicals, pesticides, and herbicides is also controlled by
TNCs. TNCs dictate prices of seeds and other farm commodities. In this game, the
farmers are the losers.
From “food first” to “export first” policy. That’s what happened in the Philippines back
there. Small scale sustainable production shifted to large-scale non-sustainable industrial
production. Owners are the large corporate and commercial interests. Farmers are
detached from farming, while commercial interests took over land for industrial-scale
production of export commodities (shrimp, vegetables, and meat).
Shrimp farming upgraded to establishment of factories. Large part of land for
resources and wastes are needed. The upgraded large factories of shrimp are threats to
the environment since it requires fish for shrimp feed, which will later be converted to
wastes in the seas, polluting other areas such as waters and mangroves. It also destroys
coastal agriculture because the factories require pumping of seawater for shrimp ponds.
There’s also the Intellectual Property Rights (IPR) and the Trade Related Intellectual
Property Rights (TRIP) agreement, both can be injurious to the global environment
because of the present lack of controls and accountability in biotechnology research and
application. It will also cause biodiversity loss and thereafter loss of natural ecosystems.
Patents are being filed overseas for the extraction of plants and resources in the
Philippines by foreign entities and individuals. TRIP can also be a threat to the local
agrarian communities, because once a foreign entity discovers and enhances a useful
gene, they are the ones who’ll take advantage from it, not the origin of the gene.
One industry affected by the of the Philippines mostly affected by the ongoing
globalization process is the mining industry. Instead of extracting minerals for own gain,
it became the industry’s “dollar-earner”. The Philippines is one of the world’s major
producers of mining extractions (gold, copper, silver, chromium, and nickel). Mining
causes environmental destructions such as deforestation, slope destabilization, soil
erosion, desertification, water resource degradation, de-fertilization, crop damage,
siltation, air pollution, etc. It is pollutive as well as extractive. One industry of the country
which also contributes to the environmental degradation is the energy development. It
was opened for foreign investors. More industries mean more demand for energy.
Geothermal energy results de-vegetation, soil erosion, land alteration, destruction of
habitat, and water pollution. Oil exploration is also one of the industries of the country
which destroys coral reefs.
Globalization in the Philippines further resulted to population growth and rural poverty.
These resulted to consuming lush tropics, loss of forests, climate change, extinction of
plants and animals, floods and droughts (due to loss of trees). Forests are lost due to the
increasing demand for land, timber, cash crops, gold, and oil.17

17
Alerta-Lim , Aurora. "Globalization: Its Impacts on the Philippine Environment ." 2002. Accessed February 28,
2018. http://asianetwork.org/ane-archived-issues/2002-spring/anex2002-spring-alerta-lim.pdf.
Environmental Governance in the Philippines
The earliest legal material related in this study is the Spanish Law of Water of 1866.
However, this law focused more on the health of the welfare, and not mainly on the
environmental protection. Traditionally, “piecemeal-approaches” to environmental
protection are held, and these approaches are still existing today, or co-existing with the
present environmental laws. One of the major policies implemented upon our political
independence from the US colonizers is the Republic Act No. 3931 (National Water and
Air Pollution Control Commission in 1964) which pertains to the prevention and control of
industrial pollution.
It was during the beginning of martial law on 1970s when “piecemeal-approaches” are
being developed. These developments are upon compliance to the United Nations
Conference on the Human Environment in Stockholm in 1972. The Conference is proved
to be effective in influencing and making an integrated approach to environmental
protection and it encourages more unified national action towards this objective. The
following policies and laws are such enlisted:
 Presidential Decree No. 1151, the “Philippine Environmental Policy” - “an
intensive, integrated program of an environmental protection that will bring about
a concerted effort towards the protection of the entire spectrum of the environment
through a requirement of environmental impact assessments and statements.”
 Presidential Decree No. 1586, the “Environmental Impact Statement System” -
means of reconciling socio-economic undertakings with requirements of
environmental quality. It obliges system to “every proposed project and
undertaking, which significantly affects the quality of the environment” (including
government and private corporations)
 Presidential Decree No. 151, the “Philippine Environment Code” - for basic
standards and programs in the management of air quality, water quality, land use,
natural resources, and waste.
 Presidential No. 1121 - National Environmental Protection Council responsible for
achieving coherence in the activities of government agencies relating to
environmental protection, to propose new policies and laws because of “changes
in the environment status of the country,” and to review impact assessment of
government projects.
 Presidential Decree No. 1181 - “a systematized legal regulation for the prevention,
control, and abatement of air pollution from motor vehicle.”
 Presidential Decree No. 1160, the Local Government Code of 1991 – grants
authority to leaders of barangays (villages) to implement pollution and other
environmental control laws.
 Presidential Decree No. 1121 – creation of National Environmental Protection
Council, whereas the government’s awareness is expressed regarding the
“continuing deterioration of the Philippine environment cause by rapid
urbanization, industrial growth, population expansion, natural resources
extractions, and the use of modern technology.”
After the Marcos administration, Aquino modified some of the existing policies and
structures, in which she established the Department of Environment and Natural
Resources (DENR) under Executive Order No. 192 (1987). DENR operates based on a
management plan to maintain a strategy of protection.18

Philippines on Paris Climate Agreement


What is Paris Climate Agreement? It deals with the mitigation, adaptation and
finance of GHG emissions and is planned to begin on 2020. It is an agreement within the
United Nations Framework Convention on Climate Change (UNFCCC). Its aim is “to limit
global temperature rise to two degrees Celsius above pre-industrial level by 2100”. This
is seen to be a way for global climate policy, and is brought to life on the year 2016, 4 th of
November. As of June 2017, there are already 195 signatories19 and later that year, one
of them is the Philippines.
Despite President Duterte’s initial refusals in signing the agreement, saying it
would affect the country’s industrialization, by November 2017, he signed and supported
the agreement. Upon commitment, Philippines will be obliged to reduce its GHG
emissions of 70% by 2030. It then allowed the country to have access in the Green
Climate Fund which aims to help poor nations in the confrontation of the emerging issue
of climate change.20

Philippine Strategy for Sustainable Development (PSSD)21


The goal of this strategy is to achieve economic growth while protecting or inflicting
less degradation on the country's biological resources and its diversity, vital ecosystem
functions, and overall environmental quality. This aims to resolve and reconcile the
environmental damages cause by the country's development efforts. The strategies are
enumerated below:

1) Integration of environmental considerations in decision-making


2) Proper pricing of natural resources
3) Property rights reform
4) Establishment of an integrated protected areas system
5) Rehabilitation of degraded ecosystems
6) Strengthening of residuals management in industry or pollution control
18
Magalona, Merlin M. , and Ben S. Malayang, III. "Environmental Governance in the Philippines." Accessed
February 28, 2018.
http://site.iugaza.edu.ps/tissa/files/2010/02/Environmental_Governance_in_the_Philippines.pdf.
19
"Paris Climate Agreement: What You Need to Know." Aljazeera. June 3, 2017. Accessed February 28, 2018.
https://www.aljazeera.com/news/2017/06/paris-climate-agreement-170602102754827.html.
20
"Philippines' Duterte Signs Paris Pact on Climate Change." Reuters. March 1, 2017. Accessed February 28, 2018.
https://www.reuters.com/article/us-climatechange-accord-philippines/philippines-duterte-signs-paris-pact-on-
climate-change-idUSKBN1683HX.
21
"Philippines - Philippine Strategy for Sustainable Development : A Conceptual Framework (English)." Accessed
March 21, 2018. http://documents.worldbank.org/curated/en/924571468780914119/Philippines-Philippine-
strategy-for-sustainable-development-a-conceptual-framework.
7) Integration of population concerns and social welfare in development planning
8) Inducing growth in rural areas
9) Promotion of environmental education
10) Strengthening of citizen's participation and constituency building

Other Philippine Climate Change Adaptation Policies


Philippine Agenda 21, this is upon commitment on the United Nations Conference of
Environment and Development (UNCED). One if its agenda is the ecological integrity. It
includes plans on the country’s sustainable development. The Philippine Council for
Sustainable Development was formed to monitor the regulations of commitments of the
country to the UNCED.
Philippine Clean Air Act of 1997, this is upon the commitment in the UNFCCC. This law
monitors and sets standards for GHG emissions known to be the focal source of global
warming. DENR is the one responsible for this.
Presidential Task Force on Climate Change, formed by Arroyo which aims for the
intermediate assessment on the impacts of climate change in the Philippines and to make
sure that establishments comply to air emission standards.
Climate Change Act of 1999, this aims to spread the awareness of climate change and
its adaptation into government policy and established a framework strategy.
People’s Survival Fund (2012), it aims to provide long term financing to projects to
address the problem of climate change
Executive Order No. 174, s.2014, this institutionalize the Philippine Greenhouse Gas
inventory management and reporting system.22

Status of Philippine Environment


The environmental degradation in the Philippines had been progressing through
the years. According to scientific studies, the country’s major rivers are now polluted. 97
percent of the country’s original forests are deforested already. Due to gradual
deforestations, there were less rainfalls, because of this, there were lesser rainwater
stored in the watersheds used for irrigation. Hence, this is linked to the shortage of
production of food. Deforestations are to blame to factors such as illegal logging,
agricultural development, and urbanization projects. This problem caused soil erosions
which then leads to severance of natural calamities such as floods.
Land degradations were severed due to deforestations – converting of forests to
agricultural activities. There were also countless issues of misappropriations of land use
which leads to soil erosion. The problem of soil erosion is a serious one and is very

22
Rey, Aika. "TIMELINE: PH Policies on Climate Change and Disaster Management." Rappler. November 1, 2015.
Accessed February 28, 2018. https://www.rappler.com/move-ph/issues/disasters/111307-climate-change-
disaster-management-policies-philippines.
important to address. One way seen to resolve this problem is through investment in
research and development.23

23
"Status of Philippine Environmental Degradation." Mining and Degraded Areas Rehabilitation Research Center.
Accessed February 28, 2018. https://mdarrcerdb.wordpress.com/mdarrc-roadmap-2017-2022/status-of-
philippine-environmental-degradation/.
IV. Presentation, Analysis, Interpretation, Discussion

Figure 1 Interpretation on
Positive and Negative Effects of
Globalization in the
environment

Figure 2 Other positive and negative


effects of globalization in the
environment

Figure 3 Historical
development of effects of
globalization (trade/FDI) in
the Philippines (more on
positive view)
Figure 4 Historical development of effects of globalization (trade/FDI) in the Philippines (more on negative
view)

Globalization truly contributed to the development of the world, especially in terms


of the economy, and surely as it brings innovation around the world, it also affects the
environment where everyone extracts its capital and resources. According to the data
gathered, globalization has negative and positive effects in the environment. Studies
suggest that people shall not assume or think that globalization can only affect negatively
or positively for this has always two sides. Although, in reality, people tend to think
limitedly of it as an adversary to the environment.
When it comes to identifying the effects of globalization in a particular country, the answer
would always differ, for every country faces different situations. It has different
comparative advantages, different strategies, different composition, and the like.
Countries also have different ways of dealing with the “motor” of globalization – the trade
and FDI. These two are just some of the driving forces of globalization which push a
country up to the extent of its possible prosperity. And these two mostly affect the state
of the environment of a country. According to the studies, trade increases demand in
production, thus, it also increases the amount of environmental degradation. However, as
we reiterate, globalization has two effects, hence, trade and FDI also encourages green
technologies and strategies, which then leads to the mitigation of the environment. One
factor to consider as to why the effects of globalization in the environment varies among
countries is its composition. Just like in the Philippines, it was back then mostly reliant on
its agriculture, but because of globalization with the trade and FDI, it is shifting to industry-
based. Hence, this causes more environmental degradation because agricultural lands
will then be turned into industrial plants. But how about when an industrial country decided
to be an agricultural one? It is then, based on the gathered data will have good effects on
environment.
The main point here is that globalization does negatively affect the environment, yet it
positively affects it through the technologies. It’s like solving the problem using the source
of the problem itself. It negatively affects the environment through the GHG emissions
from the industrial production, transportation and deforestation. These are made severe
by trade and FDIs. The three aforesaid are the main causes of environmental
degradation. Carbon dioxide released by different modes of transportations used in trade
has become grave, and this results to the gradual increase of the temperature. Because
of trade and FDIs brought by globalization, forests are turned into agricultural lands, thus
results to land degradation. On the other hand, trade and FDIs, as they operate can
spread the environmental solutions especially in the issue of global warming. Through
those, green technologies can be transferred from one country to another. Therefore, with
this, we can see that there are more negative effects that are listed than the positive ones.
In the Philippines, the height of the trade liberalization and FDI can be traced back to the
1980’s. Because of globalization, the country became more open in trade, there were
reduction in the protectionist policies, and it imposed other policies to attract more foreign
investors. This had affected the environmental quality of the Philippines.
Back then, before the trade reforms, about 1950’s to 1970’s, Philippines exported only
agricultural crops and others from mining and forestry. Because it is mainly focused on
the extraction on these products, this then, contributed to the environmental degradation
of the country. However, during 1980’s, when there were Tariff Reform Programs and the
Omnibus Investment Code, Philippines started to export other types of products, aside
from the aforesaid. This then, reduced the extraction of the said natural resources and
contributed to the mitigation of the Philippine environment. Abreast, it ignited competition.
The country’s economy became competition-driven, thus with this, there were adaptation
of global rules and businesses started to have a sense of responsibility towards
environment. This minimized cost of mitigation, and cheaper green technologies was
adopted.
However, there’s another side of the story. One depicting more of the negative side. As
the Philippines draws in closer to the globalization, during 1990’s, one part of the country’s
trade liberalization is its adherence to the World Trade Organization. By the year 1995, it
adhered to its treaty, the Agreement on Agriculture. This then started a global competition.
And as the competition arises, the Republic of the Philippines tend to have development
reforms. These reforms focused on the shifting of agricultural areas to export and
commercialized industry. This then started more land degradations as they establish new
plants and agricultural farms were vanished. This also paved the way for transnational
companies. The farmers, in able to be more competitive, established contracts with the
TNCs. However, this opened the opportunity for the entities of FDIs to hold a grip to the
agribusiness of the country. This TNCs demand for qualities and quantity of production,
hence, they ordered farmers to use artificial chemicals to grow highly valued crops. This
then produced environmental concerns. Including soil erosion and desertification. With
this, the production is eroded and the TNC’s demanded for more. Thus, they encouraged
farmers to produce high yielding varieties. Such only produce yields upon the use of many
artificial chemicals. This then resulted to more environmental degradation.
With aforesaid problem of environmental degradation, it is important to consider the
implementation of environmental policies. Here in the Philippines, the dawn of the said
policies was during the height of Marcos regime. This was also when there were trade
reforms and more open economy for the foreign investors. This was also when there were
many infrastructural constructions and the like which contributed to the environmental
degradation of the country. Today we can also assume, through the existing policies that
the government is exerting efforts in addressing this issue.
With such interpretation, the researcher made into an assumption of what might
be the real score in this problem. Thus, presented in this figure:

Figure 5 The researcher assumes that the competition brought by trade and FDIs throughout the history does not effectively
contributed to the mitigation of the environment. Thus, assumed that global development of competition only resulted to
more industrialization of the development plan of the RP – resulted to establishment of more industrial plants and land
degradations. As the country shifts to a more export-oriented and industrialized production, more trade relationships it
establishes, and more foreign investors are attracted. As this occurs, more environmental degradation was caused in the
physical quality of the Philippines. Though there were existing environmental policies, and although there were green
technologies shared by the process of globalization, its implementations do not really have its tooth. Policies though existing
do not really solve the problem of environmental degradation in due time.

Therefore, the openness of the Philippines for trade liberalization and investments
affected the environment adversely. The process of globalization multiplied the demands
and needs of the global market, hence, led to more extraction of resources and alterations
of land uses which brought burden to the environment. Foreign entities had free access
to the production and consumption patterns in the country, creating more problems
especially on land use. The shift from agriculture to export-oriented production is one of
the major factors which affected the worsening of the country’s physical environment
quality. The government has been engaging on many possible solutions and mitigations
on this issue, and there are also new “green” technologies (brought by globalization as
well) that are being used eyeing it as answers in the problem. However, an assumption
is that, for the Philippines, as a developing country, technologies would be costly, and
would take too much time before it brings back what is taken. The commitment of the
Philippines to the Paris Agreement to Climate Change and the Philippine Strategy for
Sustainable Development are just some of the evidences that it is conferring to the
demand of the global community to address the problem of environmental degradation.
However, the effectiveness of these policies is yet to come. On the other hand, if we put
into consideration the present status of the degradation of the environment of the
Philippines, we will know that such policies are not that effective, and that there are more
extractions of resources rather than its mitigation.
V. Summary

The objectives of this research are the following: (a) to know whether globalization is
good or bad in the environment of the Philippines, another is that it aims (b) to answer the
question of how does trade liberalization and FDI affects the environment, and lastly, it
aims(c) to assess whether the Philippines is adhering to the global community’s call for
addressing the issue of environmental sustainability. The answers for these following
objectives or questions are made possible through gathering data from the sources
available in the internet. The gathered references are then reviewed and analyzed and
further inspected to get the relevant points in order to answer the existing problems.
This research found out that there are actually two sides, or two answers in the
question regarding the effects of globalization in the environment. One is that it positively
effects the environment through the technologies and innovations it brings and carries
around the world. In contrary, it brings too much industrializations to the point that lands
were degraded, and the pollution level is aggravating. Same goes as in the Philippines.
Findings show that as the globalization-brought FDI and trade liberalization develops in
the Philippines, the environmental degradations also developed. From the import-
substituting trade regime, whereas the export of goods mainly relied on its comparative
advantage (agricultural goods, mining and forestry), there were vast extractions of these
aforesaid products which resulted to excessive land degradations, pollution, and any form
of dilapidations of the environment. As the Philippines became more open in trade and
foreign investors, it was said that the country also welcomed green technologies,
mitigation processes and the like which contributes to the reduction of environmental
degradations. However, the effectivity of these green processes is clouded with much
more degradations on the environment brought by the process of globalization. As the
country welcomed external entities, or international organizations such as the World
Trade Organization, it was obliged to adhere with its treaties such as the Agreement on
Agriculture. This enticed the country to become more competitive, hence, it attracted
more trade relationships and foreign investors. Upon arrival of investors and multinational
corporations, the farmers became dependent to them, hence giving them grip on
controlling the agri-business in the country. With the global demand and competition,
MNCs demanded the farmers to use artificial chemicals (insecticides, pesticides,
herbicides, and the like) in growing the highly valued crops (from agri-crops). Therefore,
it resulted to the adverse effects in the environment. Also, the process of globalization,
also resulted to other economic developments in the country, there were establishments
of new plants, which contributed to more pollution. Contemporarily, records show that the
environmental quality of the Philippines is continuing to worsen and one of the main
reasons is industrialization, and industrialization is fueled by the engine of globalization,
and its parts such as the FDI and trade liberalization. With the gradual degradation of the
Philippine environment, the government is exerting efforts through implementation of
plentiful environmental policies. Also, since the issue of environmental sustainability has
been introduced as a global issue, the importance of adherence of individual states is
crucial. The Philippines adheres to this by committing to different strategic projects such
as the UNDP’s Sustainable Development Goals and the Paris Agreement on Climate
Change.

Conclusion & Recommendation

“It has been said that arguing against globalization is like arguing against the laws
of gravity.” Stated by Kofi Annan, a Ghanaian diplomat. We cannot really defy the process
of globalization and its ways on transforming the world into a faster pace. It is
unstoppable. As it develops the way of living, it also produces adverse effects – especially
in the environment. One of the world’s greatest problem would be its sustainability. Firstly,
because its degradation is unintentional. Second, no one knows what and how will the
nature come back at us after being the ones who are responsible for its dilapidation.
Globalization’s negative effects on the environment will further affect the individuals, but
before that, will mostly affect the political economy of a state and the sustainable
development of the whole world.
Is globalization good or bad in the environment of the Philippines? The Philippines’
incessant journey of attaining development through the help of globalization welcomed
more trade relationships and foreign investors in the country. It is believed that even
before, when the Philippines is still into agriculture, there are already adverse effects to
the environment. However, the industrialization brought by globalization had severed its
degradation. Trade had changed the production pattern of the Philippines which then
turned into multiplication of solid wastes, land degradations, and pollution. The openness
of the Philippines to the foreign investors had given them the chance to control the
businesses in the state which then gave them also the opportunity to fulfill the international
demands for quality and quantity of products. Hence, the use of artificial chemicals in the
businesses and severance of industrialization was then multiplied. Obviously, it had
affected the environment negatively. On the other hand, we cannot be completely get in
raged with this idea because despite the unintentional degradations, the process of
globalization – in the form of trade and FDIs exerts efforts for the mitigation of the
environment. The government of the Philippines through time since the Marcos regime
had developed environmental policies and improved its environmental governance. Up
until now, the Philippines are into its gradual efforts with addressing the issue of
environmental sustainability through implementation of environmental policies. It also
adheres to the global call of addressing the issue through participation in different
sustainability projects of the international realm such as committing to the Paris
Agreement on Climate Change and in the UNDP’s Sustainable Development Goals.
These policies are assumed to be still lacking, especially because the government lacks
in the part of the execution.
We must face the fact that the problem of environmental degradation, when not
given the enough attention would be detrimental. It would also extremely affect the
political economy of a country and much more. The Philippines shall advance in its
research and development regarding the environmental mitigation. The government shall
seek more effective ways of implementing the existing environmental policies, it should
not only exist in papers, but shall be also properly and effectively executed. In this way,
the resources used in the creation of such policies won’t be thrown in to wastes. The
Philippines shall enhance its capability in regulating the agribusinesses and industries in
the country. It’s good that it is open for trade and foreign investors, but it shall consider
an “environmental sustainability over profit” mindset. After all, we get everything from the
environment and no amount of profit can bring back the losses imparted in it. Also, the
government shall exert more effort in spreading awareness in taking care of the
environment. They shall make the people realize that discipline is one of the most
important factor with this, as well as the sense of responsibility. At the end, everything
starts with the individuals. Lastly, as the green theory asserts, the Philippines must adapt
the “ecocentric” philosophy which asserts that the correct way of economic governance
is not that which is self-centered to humans only, but more specifically to the ecological
communities. The government shalll advocate more cautious and critical approach to the
assessment of new development proposals, new technologies, and practices of risk
assessment.
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