Problem overview:

     Policies and measures: Industries that have a potential to cause catastrophic damage to environment also have the potential to cause catastrophic damage to themselves. If a company self-destructs and at the same time causes severe environmental harm, who is going to pick up the cost? In the Philippines, an Environmental Guarantee Fund is a kind of industrial insurance fee to pay for monitoring, clean-up costs and compensation damages.

Background in summary:

     Polluter pays, risk liability system for toxic wastes

     Initiation of the Environmental Guarantee Fund (EGF): As part of the implementation of the Environmental Impact Statement System, the Environmental Guarantee Fund (EGF) was created. Department Administrative Order No. 21 s. of 1992 known as 'Amending the Revised Rules and Regulations Implementing ' P. D. 1586 (EISS) paved the way for its creation.

     What is the Environmental Guarantee Fund: The Environmental Guarantee Fund (EGF) is a financial policy aimed at industries that have highly toxic waste streams (and thus have the potential to cause catastrophic damage to the environment). The official definition of the EGF "...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".

     Increase in the number of projects that requires establishing EGF: 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 per cent of those ventures were power-generating projects. The number of projects required to put up an EGF is increasing with an average of 20 projects per year from 1992 to 1995. The government is initiating steps to strengthen the implementation of the EGF, particularly on the need provide a strong legal basis for the fund.

     The Philippine EGF comprises of three parts:

1. A multisectoral fund allocated expressly for environmental monitoring by a multiparty monitoring team:
   
   
2. 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
   
   
3. A cash fund to be used by companies in implementing environmental management and rehabilitation programmes.
   
   

     Management of the EGF: 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.

Peer Review Committee Good practice rating: (1 for the best, 5 for the lowest score)
Sustainability		Efficiency
3	Improvement in either the environment of economic condition with no harm to the other.	2	Cost efficient.
2	Sustainable over time (not one-off)	Process
Adaptability		2	Participation of the community
2	Location adaptability (can the project be done in other places?)	2	Participation of resource owners/users
2	Socio-cultural adaptability.	2	Partnerships between various actors (Governments, NGO, Academia, Private)
3	Level of development adaptability.	2	Degree of coordination and cooperation between government departments.
3	Style of government adaptability.	2	Ability to attract political interest/support
2	Degree of decentralization adaptability.	-	Procedures for feedback and review.
Comments on this example:      In order to implement the Environmental Impact Assessment System (EIAS), the country has a risk-liability system through the Environmental Guarantee Fund (EGF). The EGF is a fund that proponents, required or opting to submit an EIS, will commit to establish when an ECC is issued for projects or undertakings determined by the Department of Environment and Natural Resources (DENR) to pose significant risk to answer for damage to life, health, property and the environment caused by such risk or requiring rehabilitation or restoration measures. The benefits from setting up an EGF was illustrated in response to an incident involving the disastrous seepage of mine tailings of the Marcopper Mining Corporation into the waterways of Marinduque. The EGF was tapped to compensate the affected families and to fund the rehabilitation of damaged areas. Sustainability of the project:      Improvement in either the environment or economic condition with no harm to the other: The Environmental Guarantee Fund does not physically help improve the environment, because it is used more of as a compensation to be paid to the affected parties once an environmental damage has occurred. Hence, the rating is given a 3. However, the fund can be used to stimulate awareness and carefulness in order to prevent any incident that will result in environmental damage to occur. Adaptability of the project to other situations:       A project like this can only work well when the government itself is not a partner of the industry. Process of decision making and implementation:      Policies and measures: Problems with EGF: Inadequacy of data on which to base the cost of environmental damage Resistance of firms to taxes or additional charges on pollutive economic activities since damage cannot easily be traced to a single source Difficulty in estimating and valuing the risks associated with biophysical, health and economic effects of pollution Cost efficiency: