PH ranks most disaster-prone globally, faces USD 9-12B annual climate finance gap

By Francis Allan L. Angelo

The Philippines, ranked the world’s most disaster-prone country for four consecutive years, faces an annual climate finance shortfall of between USD 9 billion and USD 12 billion, according to a December 2025 assessment by the Philippine Institute for Development Studies.

The study, titled “Climate Change Perceptions and Climate Finance Mechanisms in the Philippines: A 2025 Assessment,” was authored by Jose Ramon G. Albert, Sonny N. Domingo, Deanne Lorraine D. Cabalfin, Mohammad A. Mahmoud, and Roselle F. Guadalupe.

The Philippines scored 46.56 in the 2025 World Risk Index, the highest among 189 countries and well above regional neighbors Indonesia (39.80), Myanmar (36.31), and Vietnam (25.92).

The research draws on the Asian Development Bank’s 2024 Climate Change Perception Survey, which covered approximately 13,500 respondents across 14 Asian economies, and on key informant interviews with officials from the Climate Change Commission, Bangko Sentral ng Pilipinas, the Department of Economy Planning and Development, the Department of Environment and Natural Resources, and the Department of Energy.

The study comes as climate risks continue to intensify across the country.  According to the data cited in the report, the Philippines has experienced hotter-than-normal temperatures  since the 1980s, with annual mean temperature increasing by 0.75°C between 1951 and 2021.

Ninety percent of Filipino respondents considered climate change a serious problem, with 81% viewing it as “very serious” — the highest proportion among all 14 surveyed economies.

Flooding was the top climate concern, cited by 71.1% of Filipino respondents, followed by heat waves at 54.37% and unpredictable weather patterns at 45.62%.

Despite high public awareness, only 23.8% of Filipino respondents believed their government considered climate change an urgent national priority with sufficient resource allocation, making Philippine respondents the most disapproving of their government’s climate response among surveyed ASEAN countries, according to the ISEAS Southeast Asia Climate Outlook 2024 Survey cited in the study.

Current annual climate finance flows are estimated at USD 2.5 billion to USD 3.0 billion, against a requirement of USD 12 billion to USD 15 billion annually to implement Nationally Determined Contribution commitments across sectors, according to the Department of Finance’s Sustainable Finance Roadmap.

The Philippines received USD 3.13 billion from multilateral development banks in 2023 for climate-related projects, ranking 11th among 126 countries and second in ASEAN after Indonesia, which received USD 3.8 billion.

The country has accessed USD 206 million from the Green Climate Fund across eight projects since 2015, a fraction of available international climate finance.

The study identified the legal prohibition on BSP developmental financing mandates as the most critical institutional barrier, limiting the central bank’s ability to deploy direct climate finance support — unlike Malaysia and Singapore, whose central banks have established green finance facilities totaling billions of dollars.

BSP research cited in the study found that a 1-degree Celsius increase in annual mean temperature reduces aggregate output growth by 0.37 percentage points and raises inflation by 0.46 percentage points in the short run.

The Philippines’ updated Nationally Determined Contribution, submitted in April 2021, commits to a 75% reduction in greenhouse gas emissions by 2030 relative to the projected business-as-usual scenario — with only 2.71% unconditional and the remaining 72.29% conditional on approximately USD 72 billion in international support.

Renewable energy accounted for 22.2% of total power generation in 2024, up from 21.2% in 2020, with installed RE capacity reaching 32.3% of the national total by mid-2025. Coal remained the dominant fuel at 62.5% of generation.

The Philippines’ green, social, and sustainability bond market reached USD 18.24 billion as of July 31, 2025, a 13.58% increase from USD 16.06 billion at the end of June, outpacing all other ASEAN members, which recorded no change during the same period.

The study recommended legislative reform to grant the BSP limited developmental financing capacity for climate objectives, accelerated alignment with International Sustainability Standards Board disclosure standards, expanded capacity to access international climate funds, and development of adaptation-focused finance mechanisms prioritizing flood protection and early warning systems.

The national budget for climate change adaptation and mitigation rose in absolute terms from PHP 195 billion in 2017 to PHP 289 billion in 2022, but its share of total national expenditure declined from 6.99% to 5.77% over the same period, according to the Department of Economy Planning and Development.

The People’s Survival Fund, institutionalized in 2012, had approved only 24 local climate adaptation projects and project development grants as of its 23rd board meeting on July 18, 2025, indicating persistent bottlenecks in translating local climate priorities into funded implementation.