TA-10009 REG: Accelerating Climate Resilience in Agriculture, Natural Resources and the Environment - 4 Climate Resilient Agriculture (55268-002)

Project Context and Understanding of The Assignment

Climate change and Agriculture in the Philippines

The agricultural sector is vital to the Philippines, employing over 30% of the labor force and contributing approximately 10% to the nation's GDP. However, it faces significant challenges due to climate change, including increased frequency of extreme weather events, rising temperatures, and shifting rainfall patterns. These factors have led to substantial agricultural losses, estimated at PHP 244.6 billion from 2010 to 2019, accounting for 60% of the country's disaster-related damages.

In response, the Philippine government has initiated several programs to enhance climate resilience in agriculture. The Adapting Philippine Agriculture to Climate Change (APA) project, approved in 2023 with a budget of $39.3 million, aims to develop climate-resilient agriculture services and information through low-emission technologies. The project targets at least nine provinces across five regions—Regions 2, 5, 10, 12, and the Cordillera Administrative Region—benefiting 1.25 million poor farming households directly and over 5 million individuals indirectly.

Additionally, the Adaptation and Mitigation Initiative in Agriculture (AMIA) program envisions a climate-resilient Philippine agriculture sector with empowered and prosperous farmers and fisherfolk. This initiative aligns with the Department of Agriculture's commitment to sustainable development and climate resilience.

Despite these efforts, the agriculture sector continues to face challenges. In the fourth quarter of 2024, the Philippine economy expanded by 5.2% year-on-year, falling short of the expected 5.4% growth. This weaker performance was attributed to reduced consumption and adverse weather conditions affecting farm output. The agriculture sector notably contracted for the third consecutive quarter during this period.

To further support climate resilience, the Asian Development Bank (ADB) approved a $500 million loan to the Philippines in November 2024. This funding aims to drive reforms across key sectors, including agriculture, to enhance climate resilience and promote a low-carbon economy.

Through these combined efforts, the Philippines seeks to strengthen its agricultural sector against the impacts of climate change, ensuring food security and sustainable livelihoods for its rural communities.

Understanding of the Assignment

The Climate Resilient Agriculture Package is part of the broader Climate Change Action Program (CCAP), a policy-based loan initiative designed to support the Philippines in implementing its national climate policies and delivering on its climate commitments, including its Nationally Determined Contribution (NDC) under the Paris Agreement. The CCAP focuses on two primary objectives: enhancing climate change adaptation in highly vulnerable sectors (such as agriculture, natural resources, and the environment) and mitigating greenhouse gas emissions in energy-intensive sectors like energy and transport.

This program is a flagship initiative under the Asian Development Bank's (ADB) Country Partnership Strategy for the Philippines (2024–2029). It operates through three key reform areas:

• Strengthening Planning, Financing, and Institutional Linkages for Climate Action: Aims to improve governance structures, resource allocation, and policy coherence across climate-related sectors.
• Enhancing Resilience to Climate Impacts: Focuses on increasing the adaptive capacity of vulnerable communities, especially in agriculture, by promoting climate-resilient practices, technologies, and risk management tools.
• Strengthening Low-Carbon Pathways: Supports the transition towards sustainable and low-emission development strategies in line with the Philippines' climate goals.

The CCAP has already completed the policy actions under Subprograms 1 and 2 (from 2020 to 2024). The current focus is on Subprogram 3, scheduled to be implemented from July 2024 to June 2026, with technical assistance (TA) provided to achieve specific policy actions and outcome indicators by 2027.

Key Focus Areas of the Climate Resilient Agriculture Package

• Institutional Reforms: Strengthening the Department of Agriculture (DA), the Climate Resilient Agriculture Office (CRAO), the National Organic Agriculture Program (NOAP), the Bureau of Agricultural Research (BAR), and the Philippine Crop Insurance Corporation (PCIC) to better manage climate adaptation and agricultural resilience.
• Scaling Up Climate-Smart Agriculture (CSA): Expanding the use of Decision Support Tools (DSTs) such as climate vulnerability assessments, agro-climatic advisory portals, and revised crop calendars to inform local agricultural planning.
• Organic Agriculture Development: Enhancing the regulatory framework through the Organic Agriculture Act of 2020, promoting participatory certification systems, and supporting market linkages for organic products.
• Climate Risk Insurance: Developing and piloting parametric insurance products through PCIC to enhance financial resilience among farmers exposed to climate-related risks.
• Capacity Building and Knowledge Sharing: Conducting over 40 workshops and training sessions nationwide to build local capacities for climate-resilient agriculture, policy advocacy, and digital system management.