Impacts to Cambodian economy from climate change could be worse than first predicted

Phnom Penh, Cambodia, 05 June 2018 – If the global rise in temperatures is kept below 2°Cby 2100 and Cambodia maintains current levels of investment in climate change adaptation, climate change will reduce Cambodia’s GDP by 9.8 percent in 2050 according to a new report.

The macro-economic report titled “Cambodia Climate Economic Growth Impact Model” was prepared by the Ministry of Finance and the National Council for Sustainable Development with technical support from UNDP. It estimates that reduced labour productivity – caused by workers slowing down or becoming fatigued due to higher temperatures – will be the main cause of GDP loss – accounting for 57 percent of the economic loss and damage caused by climate change in the country in 2050.

This GDP loss is significantly higher than previous modelling work done in Southeast Asia. Much of the focus of climate change spending has been on mitigation and adaptation measures in relation to natural disasters – but rising temperatures pose a bigger threat when it comes to the economic impact of climate change in Cambodia.

“In Cambodia, sectors such as construction, manufacturing and agriculture account for 52 percent of GDP (2016) and 75 percent of the employed population (2013). Current adaptation activities underestimate the importance of heat stress on these industries where air-conditioning is a rarity and workers are highly vulnerable,” said Nick Beresford, UNDP Country Director for Cambodia.

He said more research needs to be done on ways to protect supply chains and workers from heat stress.

Cambodia’s GDP in 2015 was already 4.6 percent lower than it would have been without climate change over the 1993-2015 period.

The full report, which was financed by Sweden and the European Union and is the first of its kind, was launched by Ministry of Economy and Finance (MEF) on April 27. “The Ministry will be able to use the results to inform the new five-year development strategy, budgetpriorities and policy reforms for Government,” said H.E. Ros Seilava, Under Secretary of State of MEF, in his remarks at the launch.

“The methodology is fully transparent, using existing climate change macro-economic models and simplifying them. It integrates local evidence and case studies on the impacts of climate change, and has been calibrated using national data and interviews in key sectors,” said H.E. Tin Ponlok, Secretary General of the National Council for Sustainable Development.

Results indicate that additional research and evidence is needed on the impacts of high levels of heat in various working conditions so that new technological solutions and labour regulations can be put in place to protect workers and the economy.

“This report offers an opportunity to identify the most critical actions to protect Cambodia’s key economic sectors from the impacts of climate change. The EU and its member states are committed to supporting Cambodia in this endeavour,” said HE George Edgar, Ambassador of the European Union in Cambodia.

The report concluded that, if maintained, current levels of spending on adaptation in Cambodia would help to avoid 33 percent of impact by 2050 – but that strengthened policies could help avoid up to 66 percent.

“This analysis confirms the need for Government and development partners to increase their engagement. International climate finance has an essential role to play and private sector investment in adaptation needs to increase, with the right incentives from Government,” said HE Maria Sargren, Ambassador of Sweden in Cambodia.

The full report (in English) can be viewed HERE.


Tuesday, June 5, 2018