Risk from climate change

Based on a USAID Values at Risk (VAR) report released this week, researchers from the World Resources Institute (WRI) examined the economic impact of climate change on key livelihood sectors - such as agriculture, fisheries, and rural infrastructure - of the Lower Mekong River Basin (LMB) which covers areas of Cambodia, Laos, Thailand and Vietnam.

The report estimates that these economies could collectively risk $16 billion annually from climate change impacts on these sectors, and potentially another $18 billion annually in infrastructure damage due to flooding, storms and intense heat projected for the region.

A 2013 USAID Climate Change Impact and Adaptation Study for the Lower Mekong Basin found that by 2050, annual precipitation is projected to increase throughout the basin, predominantly during the rainy season. Additionally, in many areas of the LMB, the dry season is expected to become even drier, increasing the annual period of drought despite the overall increase in total annual rainfall.

Moreover, average temperatures are expected to increase in the range of 2 to 4 degrees Celsius with the most extreme temperature rise occurring in the southeastern portion of the basin, encompassing areas such as eastern Cambodia and the Central Highlands of Vietnam.

In a DW interview, John Talberth, a senior economist and lead author of the recently released USAID VAR report, explains how strongly he believes the region's economies will be affected by climate change and what governments can do to limit the level of economic risk associated with it.

DW: How is climate change affecting Southeast Asia, particularly the Mekong River basin?

John Talberth: The most authoritative study on the impacts of climate change in the Lower Mekong River Basin (LMB) is the Climate Change Impact and Adaptation (CCIA) Study commissioned by USAID. That study describes the likely impacts on key livelihood sectors of the LMB including agriculture, capture fisheries and aquaculture, livestock, natural systems, health, and rural infrastructure.

Impacts for each sector vary, but the overall message is clear - the livelihoods of tens of millions are at risk. For example, with respect to agriculture, the report finds that "Climate change will seriously affect the lives and livelihoods of more than 42 million people in the basin who depend entirely on agriculture and major shifts in crop suitability will be seen by 2050."

How is this likely to impact the region's economies?

Estimating the likely economic impacts of climate change in the LMB is a work in progress but a task that must be prioritized by governments in the basin so that they will be able to determine the requisite levels of investment in adaptation needed to head off the worst impacts.

As part of the USAID team, WRI completed a preliminary analysis of economic values at risk. The values-at-risk approach identifies the existing economic importance of sectors that are likely to experience significant climate related costs, in this case, those sectors identified in the USAID CCIA for the Lower Mekong Basin.

We found that the value of worker productivity, infrastructure services, agricultural output, hydroelectric power, and ecosystem services at risk from climate change in the LMB is at least $16 billion per year. We also found that infrastructure assets at risk in both rural and urban areas have a value of $18 billion.

Which areas of the economy are likely to be the hardest hit and why?

Of the sectors that will be affected by climate change, worker productivity represents the largest share (52 percent) of annual economic values at risk. This is because so much of the LMB's economy depends on outdoor workers engaged in construction, agriculture, fisheries, and collection of non-timber forest products.

These workers are likely to be exposed to a greater incidence and severity of health disorders including heat rash, transient heat fatigue, heat syncope, heat cramps, heat exhaustion, and heat stroke if nothing is done to protect them.

Infrastructure assets at risk are also a significant concern. There is at least $18 billion worth of infrastructure in areas that will be newly inundated by sea level rise or flooded more frequently and severely as climate change unfolds.

What can the government and the people in the region do to mitigate the impact of climate change?

Governments can take immediate action to reduce the level of economic risk associated with climate change for each sector. For example, with respect to worker productivity in cities, governments need to start rethinking urban design in a serious way.

We need to reduce, not add to, the amount of pavement in our urban areas so as to combat the urban heat island effect. This will require an immediate redirection of subsidies that are now going towards conventional urban growth towards green cities that can make life more habitable as temperatures soar.

To help safeguard infrastructure, governments should refrain from building out new urban infrastructure in areas with anticipated increases in freshwater flooding and sea level rise.

To protect ecosystem services and the livelihoods that depend on them, the decades-long policy of converting climate resilient natural ecosystems to climate vulnerable commercial crops for export needs to be reversed with a robust program of ecological restoration.

John Talberth is Senior Economist at the World Resources Institute (WRI).