Taal’s economic impact minimal

The eruption of Taal Volcano last week resulted in an estimated P4.3 billion in foregone income across four important industries in Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon) region, but the state planning agency National Economic and Development Authority (Neda) expects the negative impact on the regional and national economy as well as poverty-reduction to be minimal.

Based on Neda’s preliminary assessment of Taal Volcano’s impact on economic activities, the total foregone income within the 14-kilometer radius danger zone was equivalent to only 0.17 percent of Calabarzon’s 2018 gross regional domestic product (GRDP).

Last week, Socioeconomic Planning Secretary and Neda chief Ernesto M. Pernia said a preliminary assessment showed the economic impact in terms of GVA of Taal Volcano’s eruption in Batangas province alone amounted P7.63 billion.

“You may notice that [the latest estimate] is lower compared to what was announced by Secretary Pernia—that’s because we had a larger estimate at that time for the services sector because our assumption then was based on the fear that there will be violent volcanic eruptions, so we assumed a longer closure period of the establishments, thereby affecting many tourism establishments. But as we have observed in Tagaytay, some establishments there have started their operations again and a we also got a clear picture on the effects on the manufacturing sector and on electricity and water utilities sector,” Neda Undersecretary Adoracion M. Navarro explained.

The Philippine Institute of Volcanology and Seismology (Phivolcs) has identified the high-risk areas within the 14-km radius to include the following cities and municipalities in Batangas and Cavite: Agoncillo, Alitagtag, Balete, Cuenca, Laurel, Lemery, Lipa City, Malvar, Mataas Na Kahoy, San Jose, San Nicolas, Santa Teresita, Taal, Tagaytay City, Tanauan City and Talisay.

Based on 2015 Philippine Statistics Authority data, the population in evacuated barangays totaled 393,863.

Citing Department of Agriculture data, foregone income in the agriculture and fishery sectors amounted to P3.2 billion or 2.32 percent of the 2018 gross value added (GVA) of Calabarzon’s agriculture, fishery and forestry sectors.

“There are about 2,761 sustenance fisherfolk in Taal Lake whose livelihood depends on the lake (such as gathering finfish, crustaceans and mollusks),” Neda said.

“The lake is predominantly used for fisheries but has multi-resource uses such as recreation, tourism, navigation, water source for Tagaytay, irrigation and source of feeds for ducks. As a major tourist destination area, the lake is used for sight-seeing, boating, swimming, sailing, and water skiing,” Neda added.

In the industry sector, foregone income reached P357.3 million or 0.02 percent of the sector’s GVA in the Calabarzon region two years ago.

As for the services sector, foregone income amounted to P789.1 million or 0.08 percent of the 2018 GVA for services in Calabarzon.

In terms of impact on economic growth, Navarro said that so far, “we don’t see it [last week’s eruption of Taal Volcano] having a major effect unless there will be a violent eruption.”

“Note, however, that these are economic foregone income. But it doesn’t include the damages to infrastructure, public and also private assets, so that hasn’t been calculated yet,” Pernia added.

Moving forward, Pernia said: “Note also that any disaster like typhoons and the aftermath of typhoons and volcanic eruptions, there’s going to be a lot of economic activity, in terms of reconstruction and rehabilitation, and that’s going to create jobs and stimulate the economy. Government spending will be substantial. The multiplier effects [will] at least partly compensate for the foregone income, and then maybe some of infrastructure and asset damages.”

Taal’s eruption will also “have a momentary or passing effect on poverty, but in the end poverty will continue to [go] down,” Pernia said.

“If some of them will slide to poverty, it will be temporary,” the Neda chief said, citing that the government was already working to rehabilitate the affected areas. INQ