Resilience gap threatens Philippine growth as typhoons intensify

By Chloe Mari A. Hufana, Reporter

THE Philippines can sharply reduce the economic toll of typhoons and floods by overhauling how it designs, procures and verifies public works — turning disaster resilience from a planning assumption into a measurable obligation, analysts said.

As climate risks intensify, the focus of infrastructure policy must shift from project costs to whether projects perform under stress, Krista Danielle S. Yu, a professor at De La Salle University Carlos L. Tiu School of Economics, said. Ms. Yu, a leading expert in the economics of disasters in the Philippines, said that future reforms must focus on filling this gap.

“Substandard public works change the way we estimate economic losses from typhoons and floods such that they are quietly worsening the model inputs that resilience projects are supposed to improve,” Ms. Yu said via e-mail.

“When flood control or drainage projects have substandard construction and inadequate maintenance, they fail to reduce vulnerability as assumed in the project appraisal. This can also create a false sense of security.”

The country was hit by a series of typhoons in October and November last year, including Typhoon Kalmaegi (locally named Tino), which claimed more than 200 individuals, and Fung-Wong (Uwan), which reached super typhoon category.

As the Philippines braces for stronger ones and more intense flooding, Ms. Yu said the next phase of climate resilience may hinge less on how much the government spends and more on whether public works deliver real protection when storms arrive.

For decades, billions of pesos have been poured into flood control systems, drainage networks and related public works, all intended to shield households, firms and supply chains from climate shocks. Yet weak construction, poor maintenance, and political interference have quietly turned some of those investments into sources of economic fragility rather than resilience.

As climate change accelerates and urban development pushes deeper into flood-prone zones, the gap between planned infrastructure projects and their actual performance on the ground is becoming harder to ignore. This is even more compounded by a graft scandal that has implicated lawmakers, contractors, high-ranking government officials, including President Ferdinand R. Marcos, Jr. himself, of allegedly conspired to divert billions in public funds.

Mr. Marcos’ exposé of the rampant corruption within the bureaucracy, particularly in flood control projects, sent the economy and markets into a frenzy. Economic growth slowed to 4% in the third quarter, marking the weakest expansion in more than four years, or since the height of the coronavirus disease pandemic. For the first nine months of the year, gross domestic product grew at an average of 5%, undershooting the government’s 5.5%-6.5% target.

Growth was weighed down by a sweeping controversy linking public works officials, lawmakers and private contractors to alleged multibillion-peso corruption involving anomalous flood control projects, which dampened government spending and household consumption.

The botched infrastructure projects also dented the labor market as successive typhoons disrupted local economies, forcing temporary closures of businesses and displacing workers. Construction delays and the failure of flood control systems meant that jobs in affected areas were stalled, while disruptions to transport and logistics further constrained employment in services and manufacturing.

The Philippines’ unemployment rate rose year on year in November 2025, defying the usual boost from holiday-season hiring, as disruptions from bad weather and job cuts in key sectors offset fourth-quarter gains, according to the Philippine Statistics Authority. Preliminary Labor Force Survey data showed around 2.25 million unemployed Filipinos were unemployed during the month compared with 1.66 million in November 2024 and 2.54 million a month earlier.

The President in November vowed to ramp up state spending to ensure the government reaches its target growth by yearend. Despite differing views and cautious signals from his economic team, the Presidential Palace maintained confidence that the country can still meet its growth target.

SMARTER INFRASTRUCTURE, SAFER ECONOMY
The presence of flood defenses signals safety, encouraging households and firms to invest in hazard-prone areas, according to Ms. Yu. If those defenses are unreliable, exposure expands while vulnerability remains high. And when severe weather strikes, losses are larger not only because protection fails, but also because more economic activity has been drawn into harm’s way — a dynamic Ms. Yu described as risk-induced exposure.

The economic upside is substantial. Global estimates from the United Nations Office for Disaster Risk Reduction suggest that every dollar invested in disaster prevention yields multiple dollars in avoided losses, with a 2025 assessment placing returns as high as $15. Capturing those gains, Ms. Yu said, depends less on spending more than on spending smarter.

Looking ahead, Ms. Yu said reforms can reverse that cycle by aligning infrastructure spending with verified performance. Disaster-risk frameworks already show the path forward: losses stem from the interaction of hazard, exposure, and vulnerability. Well-built, well-maintained infrastructure lowers vulnerability, while credible performance standards prevent excessive exposure from accumulating.

Over time, Ms. Yu said, risk-based procurement analytics could help shift public investment toward quality and durability. Data tools can flag patterns associated with failure, including repeat contract winners, clustered unit prices and abnormal bidding behavior, automatically triggering audits before losses materialize. Stronger blacklisting mechanisms would further protect public capital.

Institutionalizing quality assurance is another forward step with long-term economic payoffs. Independent quality-control checks, random field audits, third-party materials testing and geotagged as-built documentation — particularly for long, linear assets such as dikes and drainage canals — could reduce lifecycle costs and limit future disruptions to production and services.

Beyond construction, Ms. Yu said the next frontier is risk-informed planning. Environmental impact assessments can evolve from compliance tools into economic safeguards by explicitly testing residual disaster risk and downstream impacts.

Over time, climate and hazard scenario testing — covering rainfall intensity, sea-level rise, and compound shocks — can become mandatory inputs in project appraisal, improving the reliability of fiscal forecasts and insurance markets.

“The Philippines has a climate change expenditure tagging mechanism for tracking climate-related spending,” she said.

“This can be strengthened further through requiring every resilience-tagged project to report risk indicators such as expected annual damage reduced, number of households protected, and hours of downtime avoided. This could include accountability and tie it with the performance-based metrics tied to retention payments.”

GOVERNANCE REFORMS
Governance reforms will determine whether those technical upgrades take hold, said Jean S. Encinas-Franco, a political science professor at the University of the Philippines. Without credible enforcement, she warned, the economy will continue to absorb the cost of failed projects through repeated losses and reconstruction.

Ms. Encinas-Franco said future reforms must include accountability for past failures.

“People who are found to be perpetrators of the flood control scandal must be jailed, including the so-called big fish,” she said via Viber.

Looking ahead, she called for removing political discretion from project identification and replacing it with a science-based menu developed through scientific studies and community consultation. Projects should be periodically monitored and evaluated so that public spending is actually reducing economic risk.

Building state capacity will also matter. Strengthening monitoring and evaluation units across agencies would allow the government to track outcomes rather than just outputs. Congress, she said, must also be equipped to conduct rigorous oversight, while insertions and unprogrammed funds — often linked to waste and distortion — should be curtailed.

Ms. Encinas-Franco tied these reforms to deeper economic stakes. High election costs and entrenched political dynasties, she said, raise the risk of corruption and weaken the efficiency of public investment. Lowering barriers to political participation could help reduce the incentive to extract rents from infrastructure projects.

For an economy increasingly exposed to climate shocks, the payoff from reform is not just fewer disasters — it is steadier growth, stronger investor confidence and lower long-term fiscal risk. As storms intensify, experts say the real question is whether the Philippines can turn resilience into an economic asset rather than a recurring liability.