Caesar B. Cororaton, Arlene B. Inocencio, Marites M. Tiongco and Anna Bella S. Manalang
De La Salle University, Manila, Philippines
Year: July 2016
Volume: 26 No. 1
Over the years, deforestation in the Philippines resulted in significant reduction in forest cover. Between 1990 and 2013, the Philippines has lost 3.8 million hectares of its forest. This study carries out a quantitative assessment of the potential economic and poverty impacts of the NGP using a computable general equilibrium (CGE) model. In the assessment, a CGE model is specified, calibrated and used to simulate three scenarios: (i) a baseline or a business-as-usual scenario that incorporates the current forest deterioration in the Philippines; (ii) a full NGP scenario which implements a reforestation program that halts and reverses the reduction in the country’s forest cover; and (iii) a partial NGP scenario where only half of the 1.5 million hectare target reforestation is achieved. The assessment indicates that the NGP will result in an improvement in the overall output of the economy. The production of agricultural crops (palay, coconut, sugar, and other agriculture) improves, as well as the processing of these crops into food. Reforestation increases the effective supply of productive land in the country. The factor markets for labor, capital, and land are affected favorably as the overall output of the economy improves. The improvement in factor efficiency decreases the cost of production, which lowers the consumer price of commodities. Food prices decline as agricultural production improves. Lower income groups benefit from declining consumer food prices as their food consumption share in their total expenditure is larger compared to households in higher income groups. Higher household incomes and lower consumer prices lead to reduced poverty. Also, those in extreme poverty benefit the most. Income distribution also improves over time as indicated by a declining GINI coefficient.