ADB Flags Gaps in Philippine Climate Budget Tracking as Health Risks Grow

A climate spending warning meets a changing budget picture

Only 10 percent of Philippine government spending units have consistently used the country's climate expenditure tracking system, according to an Asian Development Bank working paper that calls for stronger financing of health services exposed to extreme weather and rising demand.

The finding comes alongside evidence of wider participation in national budget submissions. A Philippine congressional review records climate tagging compliance of 70.1 percent among national government institutions for the proposed 2026 budget, up from 13.8 percent in 2017. Local government compliance averaged just 23.7 percent from 2016 to 2024.

The ADB figure concerns consistent use by spending units, while the congressional figures concern institutional compliance with budget submissions. The dates and coverage behind the ADB's 10 percent estimate are not specified in the account of its paper, so the figures describe different measures of participation.

Together, the findings point to a practical problem: the Philippines has expanded its ability to label climate spending, yet gaps in participation, accuracy and reporting still complicate decisions about where money should go. For health services, those decisions include protecting facilities, preparing workers and financing care when floods, drought or extreme heat increase demand.

The ADB paper, Closing the Financing Gap for Climate-Resilient Health Systems: High-Level Health Care Climate Action Principle 4, places domestic budgets at the center of the response. International public funding, it says, is unlikely to meet the need on its own, particularly in middle income economies across Asia and the Pacific.

How the Philippine tracking system began

The Climate Change Commission and Department of Budget and Management established the national framework through Joint Memorandum Circular 2013-01, issued on December 27, 2013. The circular required government agencies to identify climate expenditure in their submissions for the 2015 budget.

The commission's climate tagging framework describes a common set of categories and codes for planning, budgeting, monitoring and reporting. In simple terms, agencies attach a climate label to qualifying spending so officials can see which activities support the government's climate priorities.

The World Bank's budget reform review traces that effort to a Climate Public Expenditure and Institutional Review launched in June 2013. Its three reform pillars covered planning and financing, leadership and accountability, and the skills needed to put the changes into practice.

• June 2013: The expenditure and institutional review was launched to guide climate budget reforms.
• December 27, 2013: The Climate Change Commission and budget department issued the circular requiring national climate expenditure tagging.
• 2015 budget cycle: Fifty three national agencies tagged climate spending proposals, while 42 local governments received training for a local pilot.
• 2024: The congressional review records 140 compliant national agencies, compared with 96 in 2023.
• 2026 proposed budget: Compliance among national government institutions reached 70.1 percent.

The early reforms involved the climate commission, budget department, National Economic and Development Authority and Department of Finance. The Department of the Interior and Local Government helped with the local pilot. Technical assistance came from the World Bank with Australian government support.

Early adoption showed what tagging could reveal

Fifty three national agencies identified climate expenditure in their 2015 budget proposals. About 5 percent of their proposed allocations responded to climate change, and roughly 98 percent of that amount went toward adaptation, according to the World Bank review. Flood protection accounted for the largest expenditures.

Adaptation means preparing for climate effects, such as strengthening protection against floods. Mitigation means reducing the emissions that drive climate change. Tagging separates these purposes so a budget can show both how a country is preparing for damage and how it is trying to limit future warming.

The 2015 Cabinet Cluster Program Budget Approach brought together PHP107.3 billion, about 4 percent of the national budget. That program had grown fivefold from 2013 to 2015. More than 80 percent addressed climate risks, and it represented about half of climate expenditure in the national budget.

Local Budget Memorandum 68 encouraged local governments to tag climate spending in their annual investment plans. Joint Memorandum Circular 2014-01 provided guidelines adapted for local use. The pilot trained 42 local governments, with plans at the time to expand the process for the 2016 budget.

The contrast with average local compliance of 23.7 percent during 2016 to 2024 shows how much work remained after the pilot. Consistent local reporting matters because national and local budgets together provide a fuller picture of where climate programs are financed and where gaps persist.

More tagged money, concentrated in a few areas

The Congressional Policy and Budget Research Department's climate expenditure review, Tracking the Flow: A Review of the Philippine Climate Change Expenditures and its Alignment with National Priorities, records a sharp expansion in spending captured by the system.

Recorded climate expenditure rose from PHP199.9 billion in 2019 to PHP568.9 billion in 2023, about 2.8 times the earlier amount. Proposed climate expenditure for 2025 exceeded PHP1 trillion, compared with PHP457.4 billion approved for 2024. The review attributes part of the proposed increase to changes in tagging introduced in 2024 and greater agency participation.

The Department of Public Works and Highways accounted for 72.3 percent of total recorded climate expenditure during 2019 to 2023, according to the review's table. Together, public works and the Department of Transportation accounted for about 87.5 percent, the review states.

Two priorities, Water Sufficiency and Sustainable Energy, represented 93.3 percent of recorded climate expenditure in 2023. Spending across the other priorities fell from a combined PHP47.7 billion in 2019 to PHP37.8 billion in 2023, even as the total climate spending figure increased.

Those figures make the distribution of funding central to the health debate. The ADB calls for stronger financing of health preparedness, while the Philippine budget review shows that most tagged resources have flowed through infrastructure agencies and a narrow group of climate priorities.

Incorrect labels and late records weaken the picture

The congressional review identifies specific classification problems, including PHP4.9 billion for construction of a multipurpose building at Camp Crame and PHP448 million for completion of Mandaluyong City Jail. Both were incorrectly tagged under the system's policy categories.

A solid waste management program also appeared under different categories in different years. Such inconsistencies make it harder to compare spending over time because the same activity can move between categories without its purpose changing.

Some major public works flood control projects had spending recorded in 2022 and 2023, years after their reported completion. The review says the climate commission and budget department lack the capacity to identify precisely which tagged items represent continuing expenditure from previous years. That can inflate recorded utilization in particular years and blur when resources were actually used.

The review also flags the concentration of major flood control projects. Nine of the ten largest were in Metro Manila and Luzon, with one in the Visayas. The top ten represented 94.3 percent of flood control spending during 2019 to 2023, according to the document.

Flood control expenditure reached PHP262.2 billion in 2023. The review questions its alignment with the National Climate Change Action Plan's Water Sufficiency priorities and notes the strong focus on conventional engineering. It also identifies drainage clearing and removal of debris from waterways as other approaches needing attention.

What stronger climate budgets would mean for health care

The ADB paper recommends making public financial management more flexible so health ministries can use climate information in planning and move resources when conditions change. Public financial management covers the rules governments use to prepare budgets, authorize payments and account for expenditure.

For health services, the paper identifies concrete uses for funding: disease surveillance, staff capacity, upgrades to existing facilities, construction of more resilient facilities and expanded coverage for diseases affected by extreme weather, flooding or drought.

Disease surveillance means tracking illness so health authorities can detect changes and respond. A budget that includes climate risks can support that work before an emergency, alongside the staff, buildings and supplies needed when more patients require care.

The ADB also recommends putting climate considerations into purchasing rules, payments to health providers, insurance systems and accreditation standards. Governments expanding electricity access to health facilities could prioritize renewable power, decentralized systems or combinations of energy sources.

For the Philippine tagging system, the paper proposes integration into mandatory budget management processes and broader coverage of how climate change affects expenditure. Its current focus is spending that contributes positively to climate action. A broader approach would also examine how climate damage changes costs across government budgets.

Why domestic funding carries so much weight

Less than 5 percent of international climate adaptation finance includes health as a component or an accompanying benefit, according to a study cited by the ADB paper. Less than 1 percent primarily targets the health sector.

The ADB says fragmented financing makes resources difficult to access and use, particularly when climate funding and health funding remain in separate channels. A health program may therefore need coordination across several agencies and funding processes to finance related needs.

Domestic public finance will provide the foundation for sustainable, resilient health systems in many countries, the paper says. It calls on governments to protect and increase health budgets, connect health services to domestic climate funding and strengthen fiscal policies that shape spending decisions.

The Philippines and Thailand are cited as regional examples of using taxes on products harmful to health. Such taxes can raise revenue while discouraging consumption. The paper presents them as one possible financing tool alongside changes to budgeting and resource allocation.

Finance ministries and central banks have a central role in the ADB's approach. Their involvement can bring climate and health priorities into national fiscal and economic planning, rather than leaving health and environment agencies to seek resources separately.

The costs reach households as well as hospitals

Climate effects on health could cost the global economy between $8.6 trillion and $15.4 trillion by 2050, according to estimates cited by the ADB paper. That includes $1.1 trillion in additional health system costs from damaged infrastructure and greater demand for services.

For Asia and the Pacific, the ADB estimates climate related economic losses could reach around 17 percent of gross domestic product by 2070. Gross domestic product measures the value of goods and services an economy produces. The regional estimate covers economic losses broadly, while the global figures concern health effects.

Households face pressure from both directions: climate change can increase medical bills paid directly by patients while reducing incomes. The paper identifies health effects as the largest contributor to climate related increases in poverty.

Early investment could reduce those pressures. The paper cites estimates that each $1 spent on adaptation could generate up to $10 in benefits through avoided illness and deaths and wider economic, social and environmental gains. Some health adaptation investments have estimated average annual economic returns as high as around 79 percent.

The measures identified include disease prevention, nutrition, reducing illness caused by heat, stronger facilities, reliable supply chains and a better prepared workforce. Building resilient health systems could avoid as much as $290 billion in annual losses worldwide by 2050, according to another estimate cited in the paper.

Five financing strategies, with better tracking at the center

The ADB outlines five strategies: strengthen institutions that coordinate financing; align domestic public finance with resilient health services; improve access to international public funding; engage the private sector; and develop financing mechanisms suited to health system needs.

The Philippine evidence connects those financing proposals to a basic budget task. Wider participation can capture more spending, accurate classifications can show its purpose, and timely reporting can help officials compare allocations with delivery. The congressional review says the most recent monitoring report for the National Climate Change Action Plan covers only 2011 to 2016, leaving later assessments dependent on old information.

The ADB recommendations and congressional findings therefore point to linked priorities: finance health services before climate shocks increase demand, and improve the records used to decide where public money goes. The proposed 2026 budget's higher national compliance rate provides a broader reporting base, while weak local participation and classification errors remain concrete problems to address.

Key Points

• The ADB cites consistent climate tagging use by only 10 percent of Philippine spending units.
• A congressional review records a different measure, national institutional compliance, at 70.1 percent for the proposed 2026 budget.
• Local government compliance averaged 23.7 percent from 2016 to 2024.
• Recorded climate expenditure rose from PHP199.9 billion in 2019 to PHP568.9 billion in 2023.
• The congressional review identifies incorrect classifications, delayed reporting and heavy concentration in infrastructure spending.
• The ADB calls for stronger domestic financing of disease surveillance, health workers, facilities and care affected by climate risks.
• Less than 1 percent of international adaptation finance primarily targets health, according to a study cited by the ADB.