III. MEASURES AND POLICY INSTRUMENTS USED FOR INTEGRATION
[ III | III-A
| III-B | III-C ]
B. Market-based instruments
[ B | B-1
| B-2 | B-3 | B-4
| B-5]
5. Risk-liability systems
The only experience of the Philippines with risk-liability systems has been the Environmental Guarantee Fund (EGF), which is a financial arrangement placed on certain industries that have highly toxic waste streams (and thus have the potential to cause catastrophic damage to the environment).
The official definition of EGF is "...a negotiated amount, on a per project basis, that covers expenses for information and communication activities by multisectoral teams, any repair or rehabilitation works, and compensation for damages attributable to the operation of the project".
The Philippine EGF comprises three parts:
(a) a multisectoral fund allocated expressly for environmental monitoring by a multiparty monitoring team:
(b) a trust fund set aside for damage compensation to aggrieved parties, and to finance environmental restoration and the rehabilitation of environmental quality caused by project operations; and
(c) a cash fund to be used by companies in implementing environmental management and rehabilitation programmes.
The fund is managed by a multisectoral group made up of community and local government representatives, the Department of Environment and Natural Resources regional office staff, and industry representatives.
The Department of Environment and Natural Resources has reported two contentious issues in the negotiation of EGF arrangements: the basis for computing trust fund amounts; and the opportunity costs of a company for the funds that are put in trust.
As of March 1996, a total of 96 projects had been required by the Department of Environment and Natural Resources to establish an EGF. Twenty-five percent of those ventures were power-generating projects.
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