Blue finance: The Philippines declares war on waste

Even if you have never been to the Philippines, you will have seen pictures of Boracay, the country’s flagship island resort. It is – or was – a classic postcard paradise of palms and blinding white sand, and it attracted two million tourists last year. 

That was the problem. Breakneck expansion of tourism facilities came at the expense of proper sanitation, with many places not connected to the island’s sewerage system and with water quality deteriorating dramatically in recent years. Duterte, as always, had a blunt way of putting it: he called it a “cesspool” and closed it for six months on three weeks’ notice. Now you can’t get there without navigating army-staffed checkpoints that won’t let you through unless you are there to decontaminate it. 

“What happened to Boracay is a harsh reminder of how things can go badly in the race to exploit immediate advantage,” says Nestor Espenilla Jr, governor of Bangko Sentral Ng Pilipinas, the central bank of the Philippines. Espenilla remembers seeing the island, pristine, for the first time in 1989 and is dismayed at what has happened to it. “Now it’s like being in a mall, jostling for space. It makes me sad to see Boracay that way.

“But in a way, it’s a wake-up call, a necessary thing we should do. The underlying lesson is we can’t abuse the environment or it will come back to bite you big time.” 

Not everyone thinks the closure well thought through. At least 20,000 people work on Boracay and there is some doubt that the ecosystem can recover sufficiently in six months to make much of a difference anyway. But what the closure did do, both across the thousands of islands of the Philippines and across Asia generally, was highlight the urgent task at hand in dealing with waste management. 

Marine waste isn’t sexy. Excrement treatment; plastic collection and eradication; and bilge water removal – they don’t tend to get the pulse of the private-sector investor going any more than they do that of the tourist. 

But if we are to define blue finance, then it cannot just be about marine protection zones for the turtles of the Seychelles and bringing colour back to the Great Barrier Reef. Waste management is at the heart of it all and is perhaps the most unfortunately democratic part of all marine challenges in that waste can end up anywhere. 

“Marine debris doesn’t stay in one country,” says Ryan Whisnant, director of strategic initiatives at Pemsea, which runs a shared ocean strategy adopted by 14 countries in east Asia. “It moves around.” 

And, like other areas of the blue economy, it needs money. 

“After several years of donor support, we are now at a point where a lot of work has been done to strengthen governance and management systems,” says Whisnant, whose work at Pemsea has been supported by the Global Environmental Facility and is implemented by the United Nations Development Programme.

“What we need now is investment. There are a lot of good plans in place and investment is needed to see more of these plans move into action.”

The fear among environmental specialists in the Philippines is that Boracay’s lessons are not heeded but instead repeated. 

“I’d like to see it as a wake-up call in terms of what could happen,” says Bruce Dunn, senior environment specialist at the Asian Development Bank and a key man in the ADB’s Coral Triangle Initiative programme, which attempts to bring sustainable financing to six countries (the Philippines, Indonesia, Papua New Guinea, Malaysia, the Solomon Islands and Timor-Leste) by supporting coral reefs, fisheries and food security. 

“But already airlines and hotels are trying to mobilize tourists to other locations in the Philippines, and they don’t have the treatment capacity or the management systems in place either,” says Dunn. “The wake up has to be around how to get sustainability into this sector more comprehensively. Otherwise we’re just moving the problem.”

Fortunately, 250 kilometres to the southwest of Boracay on the island of Palawan there are signs of a more enlightened and sustainable approach to development in the municipality of San Vincente, home of the longest white beach in the country. The place has big ambitions as a tourist destination, and until April you might have called it the next Boracay. That is no longer the accolade to go for.

“You could say we work on preventing Boracays,” says Frank Rijsberman, director-general of the Green Global Growth Institute (GGGI) in Seoul. “How do you develop islands sustainably for climate change adaptation, with an economy based on the natural environment, which doesn’t destroy it?”

GGGI is working with the Climate Change Commission, part of the office of the president of the Philippines, to make San Vincente a demonstration model for an eco-town framework it hopes to use more widely. The framework governs every area of society and the environment in the town – a report on the project in San Vincente runs to almost 300 pages – and waste management is a part of it. 

This sort of community-led, bottom-up approach to sustainability is considered essential to combating marine pollution and is commonplace in the Philippines and Indonesia, the two big island nations of southeast Asia.  

Another example is an approach called Payment for Ecosystem Services, whose demonstration project can be found in a place called Taytay, also on Palawan, about an hour’s drive from San Vincente. 

Here, the Coral Triangle Initiative has helped to establish coral and giant clam gardens. In addition to strengthening the reef and its broader ecosystem, this makes the whole area more attractive to tourists, and their spending is partly channelled to an environmental fund. 

The fund is then invested in further protection and maintenance of the reef, including waste management for the surrounding community, which stops filth being sent out and damaging the reefs and the food chain. It is hoped that the whole system will make tourist development on Palawan far more sustainable than it has ever been on Boracay.

Further south again on the island of Mindanao there are also reasons for some optimism. People here have had plenty else to worry about beyond the environment. The province has been the scene of violence and separatism since the 1960s, was placed under martial law by Duterte (who comes from the island) in 2017 following the deaths of over 1,000 people during a siege, and has been economically left behind by the rest of the country. 

The stated priority of the Mindanao Development Authority (MDA), beyond peace, is a shift to a federal system of government in order to bring some power back to Mindanao.

But even amid this, the chairman of the MDA, Datu Abul Khayr Alonto, says that the island’s water systems are a priority and that he wholly supports the closure of Boracay. One of the MDA’s key programmes is called MindaNOW – for Nurturing Our Waters – which establishes a river-basin project-management office for the island’s seven key basins and has already overseen P9.7 billion ($185 million) of flood-control projects.

“We look at Boracay and we don’t want to be it,” says Alonto. “We are also opening up to tourism, but we want to define it in terms of the protection of our environment. We don’t want to see every wetland destroyed.

“Our island is heaven, beautiful, unexplored. So before you bring in tourism, you must first put in the facilities, the sewage systems. That is what we will do.”

The right things are being said in Palawan and Mindanao. Now it is up to those communities and local governments to follow through.

The Maldives is a nation that was surely made for blue finance, given that at least 90% of its territorial area is water. 

The Maldives has a problem with waste – a big problem. It generates 774 tons of waste a day from 32 inhabited islands (the Maldives has a total of 1,192 islands grouped in 26 atolls) – and that waste is not being disposed of as well as it could. 

“A large proportion of that waste is plastic,” says Ahmed Munawar, minister of finance and treasury for the Maldives. “For a country like the Maldives, and for species like turtle who live around it, dealing with waste is very important.”

Euromoney meets Munawar and his delegation at the Asian Development Bank annual meeting in Manila, where they have spent the morning engaging with the ADB on a new waste management project. Today all the waste from Malé – the Maldivian capital and one of the most densely populated cities in the world with a population of 130,000 on an area of 5.8 square kilometres, quite unlike the tourist postcards – goes to an island called Thilafushi to the west of the capital, created as a municipal landfill in 1992. 

Waste disposal on Thilafushi has never been environmentally sound. 

“This is an issue we have never addressed correctly for 30 years,” says Munawar. “The method of disposing of it is very bad. We burn it, but not with the right mechanism.” 

Munawar says that the new project will cost $120 million, with 60% to 70% of the funding coming from the ADB as a grant, in order to build a state-of-the-art incinerator mechanism, possibly allowing for waste-to-energy transfer. 

Reclamation of 10 hectares of land for the project was due to start in May. In land-starved Maldives this carries its own symbolism. 

“Normally he doesn’t give away a lot of land,” says Munawar of his president, Abdulla Yameen. “We are investing for the protection of our environment.”

The ADB itself is more cautious about talking about this project. Dunn says the ADB has supported technical assistance to review options, but that nothing has yet been signed off. He acknowledges, however, that “there’s an existing facility, which is not effectively managing the problems,” and notes that “this is a big challenge for all the small island developing states.

“Availability of land is a big issue; then on coral atolls, unless the facilities are designed well, they are going to leach into the water – sometimes the groundwater.”  

Shipping rubbish elsewhere is always an option, but an expensive one for remote island nations. 

The Maldives also gives us a clue as to how the private sector might become more involved in dealing with challenges around waste. Minister Munawar says that Adidas has been involved in a project to take plastic and turn it into football shirts. 

“We are very interested to work with the private sector as well as the green funds,” Munawar says. But the problem is that at this stage this sort of work is more philanthropic than anything, a demonstration of good intentions. To get the private sector really involved there must be viable projects.

The obvious area where this might appear is waste-to-energy. 

Dunn says: “Public-private partnership models – where you’ve got the government providing some support to get the project up, some other financial incentives to make it all work and then the private sector coming in – work very well in developed countries and could translate to Asia. 

“We’ve been doing a number of waste-to-energy projects in this way in China.” 

In particular, the ADB has worked with China Everbright so successfully that the two are extending their ventures from China to Vietnam. In February, the ADB signed a $100 million loan facility agreement with Everbright to build a series of municipal waste-to-energy plants in primary and secondary cities in the Mekong Delta – the first municipal waste-to-energy PPP in the country. 

Is this green finance or blue? The two overlap. This is a land-based initiative dealing with cities. But the 27.8 million tons of waste Vietnam generates annually goes into poorly managed landfills, and a decent chunk of it ends up in the Mekong and therefore eventually the sea. 

And China Everbright demonstrates that this is big business. Through its China Everbright International Limited arm, it had 43 waste-to-energy projects in operation by the end of 2017, capable of processing over 39,000 tonnes a day and generating 4,300 gigawatt hours of electricity each year by doing so. 

For a group like the ADB, there is a lot to be pleased about here. 

“It provides a way of treating the waste,” says Dunn. “There is a private-sector incentive because of the revenue generation, and now environmental pollution controls are pretty sophisticated, so plants meet air-quality standards. There are some good win-wins. We’re excited to do these. They’ve got potential.”

They are not straightforward however and won’t work commercially everywhere. 

“The first constraint is getting enough of a waste stream of what they call calorific value, which produces the right amount of electricity,” Dunn says. “There is a critical mass of a waste stream that has to go in. That’s where you need linkages to public-sector infrastructure too: can you cost-effectively collect and transfer the waste to the facilities?”

There are also some commentators who are wary of waste-to-energy. 

“From an investment perspective, it is one of the easiest ways to go,” says one environmental specialist. “But it can be complicated. It has to be done right and it can be very location and context-specific.

“I have heard of donor-funded projects that have been sited right next to communities and the effluent from the facility has gone straight into those communities. It has to be done the right way.”

Still, the ADB is not the only place to see the potential. 

Frank Rijsberman, director-general of the Green Global Growth Institute in Seoul

“In many places waste-to-energy is just about commercially viable,” says Rijsberman. At GGGI this is most visible in projects like the sugar factories in Vietnam, where the group has so far helped nine of the country’s 41 factories turn their biogas to energy. But it can work on islands too. 

“Islands tend to have large amount of coconut palms. You take the oil out and the rest tends to be thrown away,” Rijsberman says. “It is possible to have energy from that.”

GGGI has also worked on biomass waste-to-energy with China and hopes to make municipal waste-to-energy commercially attractive too. 

“With that, you would be close to solving the problem,” Rijsberman says. “The issue is keeping waste out of landfills. Once it’s in the landfills, it’s almost unrecoverable.” 

And likewise the seas. 

One challenge that occurs when seeking financing for marine waste developments is that individual islands tend to have reasonably small-scale project needs, which tend not to be attractive to big investors. 

Rijsberman recalls a project to make an island in Fiji 100% solar, which cost about $2.5 million – not big enough for the private sector. 

“But one way around that is to get a group of islands,” he says. “That’s a trick we used in Indonesia, and it could work almost anywhere.” 

In that instance eight Indonesian islands in the Nusa Tenggara Timur group, the country’s southernmost province, were banded together in a structured financing solution. 

“When you put eight islands together, the need becomes $15 million, which is just big enough for the private sector to get out of bed,” Rijsberman says. This project was about solar energy, but the same principle could apply to waste-to-energy.

If we broaden the scope to wastewater treatment, then the private sector is once again relevant. “Wastewater is actually a resource: it can generate energy, fertilizer, clean water, even rare earth minerals,” says Whisnant at Pemsea. “The nice thing about it when you look at it as a financing model is that you have saleable products that come from it, along with the traditional service fee charged by the government for treating the water.”

Part of Pemsea’s work has been to develop an ocean investment facility to identify and develop commercially investable projects in the region, and to offer to step in and reduce investment risk. Pemsea can tap into over 100 integrated coastal management sites around the region, “to identify projects that might attract some private capital,” Whisnant says, “with the hope that if it is commercially investable and can attract this private capital, it has better potential for being sustainable beyond the life of the donor funding.” 

Pemsea will share initial demonstrations of these investment cases at the East Asian Seas Congress in November, to be held in Iloilo City in the Philippines. 

Without revenue streams the funding of waste management will remain a public-sector burden with assistance from multilaterals. 

“Investments in solid waste management water treatment need to increase,” says Dunn. Between 2010 and 2017, he says, the ADB made about $15 billion of investments in the urban sector, but only about $344 million of it was for solid waste management.

 

“We would be very interested to scale that up,” he says. “But there are a few challenges. You’ve got a lack of prioritization by the public sector. When you see countries like the Philippines with its ‘build, build, build’ strategy, there is investment in infrastructure but not enough public environmental infrastructure. There’s a perception that it’s not a revenue-generating area.” 

The issue of land rights when siting facilities can also be a problem. 

In the background to all of this is Belt and Road, the all-consuming Chinese initiative to bring infrastructure development to the world. 

In its original conception, the Road bit of Belt and Road was actually the sea: it was called the 21st Century Maritime Silk Road, which was perhaps sensibly subsumed into the catchier Belt and Road Initiative along the way. But sea trade will be key to the whole idea and China will have a role to play in deciding the sustainability of it all. 

“Blue finance is very important in Belt and Road,” says Guo Dongmei from the China Asean Shanghai Cooperation Organization Centre for Environmental Cooperation, which is backed by China’s ministry of environmental protection and therefore the government. She says her ministry’s responsibilities include marine environmental protection. 

“We have an integrated approach put forward by our president from the top of the mountain to the sea,” she says. “In future, we hope the Chinese government will invest a lot of efforts on marine environmental protection. We try to use the green to include the blue.” 

Time will tell if this is carried through in practice.

While local and micro developments are essential, there is no denying the scope of the monstrous, borderless challenge created by the plastics already in the sea. This subject turns Rijsberman, generally patient and positive, into a darker mood. 

“I have become a vegetarian,” he says. “You can’t eat fish anymore if you’re conscious of your health. 

“This has been going on for decades, but we haven’t realized until recently how sad it was, how pervasive the microplastics really are. That plastic is going to be there close to for ever. I don’t think anybody has an answer for that.” 

Research released in January shows how bad the problem already is. A study led by researchers from the Atkinson Center for a Sustainable Future at Cornell University and co-authored by Douglas Rader, the chief oceans scientist at the Environmental Defense Fund’s Oceans programme, surveyed 159 reefs around the Asia Pacific region. Doing so led them to estimate there are already more than 11 billion plastic items on reefs in Asia Pacific alone, a figure that is expected to grow rapidly.

The consequences go far beyond ruining the view for scuba divers. The risk of disease to corals is 4% on reefs with no plastic and 89% for those with plastic. 

Even here, however, there is still hope. Rader says one of the best ways to fight back on behalf of the reefs is to increase the abundance of fish through fisheries management. 

“It is clear that plastic waste in the ocean is a serious threat to coral reefs,” says Rader, “but there is hope if we act now to mitigate the most significant threats facing corals and the vulnerable human communities who depend on them.”

Also, dismal though the situation is, there is at least progress in trying to stop more plastic joining what is already there. There are plastic bag bans, most ambitiously in Kenya – which has a 536 kilometre coast and a lake that feeds the Nile – but also increasingly by Philippine local government. But it won’t be easy.

“Plastic is so ubiquitous in the global supply chain: all the things that make it attractive – it’s durable, it’s cheap – are also why we have a problem,” says Dunn. 

He cites a study that found that China, Indonesia, the Philippines, Thailand and Vietnam collectively produce 60% of the plastic waste that enters the world’s seas. 

“Working with those countries is going to be a key priority because that is where you need to get the gains,” says Dunn. 

There is a sense that the problem of plastics in the oceans is at a tipping point – it simply cannot be allowed to get any worse. 

Oceans, says Rijsberman, are different to things like southeast Asian hazes caused by burning peatlands – “a problem that is recoverable” – and instead should be bracketed with climate change and the drying of aquifers. 

“Once you ruin the oceans,” he says, “it’s done for ever.”