Partnership excellence growth 1 ECONOMICS OF ADAPTATION TO CLIMATE CHANGE (EACC) ECONOMICS OF ADAPTATION TO CLIMATE CHANGE (EACC) Vietnam Case Study*

partnership Ÿ excellence Ÿ growth

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ECONOMICS OF ADAPTATION TO CLIMATE ECONOMICS OF ADAPTATION TO CLIMATE CHANGE (EACC)CHANGE (EACC)

Vietnam Case Study*Fisheries & Aquaculture Sector

• World Bank funded

• 5-month study

• WorldFish Center, MCD, CTU, Sub-NIAPP

* Other case study countries: Bangladesh, Bolivia, Ethiopia, Ghana, Mozambique, Samoa

Kam Suan Pheng, Marie-Caroline Badjeck, Robert Pomeroy, Mike

PhillipsNovember, 2009


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Study ObjectivesStudy ObjectivesImpact assessment:

– What is the vulnerability of the aquaculture sector to CC (expected impacts?), what is the vulnerability of dominant aquaculture regions of the country to CC?

– What are the physical as well as economic losses which may be expected over the period 2010 to 2050 as a result of CC?

Adaptation options:– What are the plausible adaptation options?

• planned • autonomous

– What are the costs and benefits?


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The four-step The four-step methodologymethodology

• Examine CC projections, assess exposure, dependency, sensitivity & potential impacts

• Learning from the past: assessment of adaptive capacity & adaptation benefit

• Estimate impacts & adaptation costs

• Macro-level assessment of adaptation to CC

EACC Final Methodology Report, 2009


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Study FrameworkStudy Framework

ADAPTATION OPTIONS- costs & benefits- policy implications

DEVELOPMENT PLANS - aquaculture sector - other sectors

DEPENDENCY- reliance on the aquaculture sector

EXPOSURE- nature and degree to which the aquaculture sector is exposed to predicted CC

ADAPTIVE CAPACITY- ability to cope with climate-related changes

VULNERABILITY- the nature and extent

of losses incurred by the aquaculture sector

due to CC

partnership Ÿ excellence Ÿ growth Scale & area of focusScale & area of focus

Source: Agricultural Atlas of Vietnam

Overall national level Mekong River Delta

• Vulnerability of shrimp farming production systems

• Vulnerability of catfish production systems

• Vulnerability of the aquaculture sector as a whole

• Province-level analysis


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Capture vs culture production in Capture vs culture production in VietnamVietnam

Share of national GDP, %

Capture Culture1996 5.05 2.141997 5.01 2.061998 4.83 2.081999 4.93 2.192000 5.08 2.882001 4.85 3.822002 4.63 4.182003 4.39 4.712004 4.25 5.262005 4.04 5.782006 3.78 6.062007 3.56 6.58

Prel. 2008 3.37 6.61

Source: General Statistical Office of Vietnam


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Production of cultured shrimp and fish

Export of aquatic products

Regional distribution of (a) cultured shrimp, and (b) cultured fish production

(a) (b)

Source: General Statistical Office of Vietnam

Source: VASEP


• Climate change Temperature rise Rainfall patterns

• Sea-level rise & other marine impacts Impact on hydrology Coastal extreme events Marine catch & feed supply

• Infrastructure development Coastal dykes River bunds

ExposureExposure


• Temperature rise (0.03oC per year; 1.2oC from 2010-50) Effect on physiology and growth of cultured species Increased evaporation and salinity of shrimp ponds Increased decomposition of feed in waters pollution

• Rainfall patterns

Direct impacts on aquaculture sector?

Interaction with hydrology

Climate changeClimate change


• Sea-level rise (30 cm by 2050; 75 cm by 2100)• Changes to hydrology in the delta

• Increased flooding in the upper delta in the wet season: impact on freshwater aquaculture

• Increased salinity intrusion in the coastal area in the dry season: impact on brackish-water aquaculture link

• Coastal extreme events• Direct damage to aquaculture structures, especially those

directly exposed

• Marine catch & feed supply

• Supply of trash fish and fish meal

Sea level rise & other CC-Sea level rise & other CC-induced marine phenomenainduced marine phenomena


- modifies the hydrology & aquaculture potential- costs & benefits are multi-sectoral: needs general

equilibrium analysis* to account for inter-sectoral reallocation of resources that could occur due to CC

* e.g. input-output and computable general equilibrium models

Infrastructure developmentInfrastructure development

• Coastal dykes for coast defense

• River bunds for flood protection

• Plans for stage-wise development: how to analyze economics of gradual adaptation?


DependencyDependency

Means something/someone being reliant on the sector in question

This reliance can come in different forms and scales:

At the national scale: “The importance of fisheries to the national economy and food security” (Allison et al. 2009) =>Fisheries dependence index: social, psychological (identity) economic, dimensions, includes post-harvesting (Griffith and Dyer 1996) At the community or local scale: focus on employment & cultural importance (Jacob et al. 2005, Brookfield et al. 2005, Moniz et al. 2000)

partnership Ÿ excellence Ÿ growth DependencyDependencyThe scale and nature of dependency across the value chain varies with sub-sector, e.g. in the Mekong River deltaThe catfish industry employs about 0.5 million people: 250,000 in production; 200,000 in processing; 50,000 people in support services – moving towards vertical integration

The shrimp industry involves about 1 million farmers operating mainly at small scale; extensive to semi-intensive level over large area – high participation in production but lower in processing.


• AC of a country/provinces to drivers of change (including climate change) => broad indicators of socio-economic development

• AC to climate change => specific indicators related to policies/ instruments to reduce vulnerability to climate change (presence/absence of adaptation, DRR, DRM plans etc.)

• AC of the fisheries and aquaculture sector => sectoral indicators: production diversification, reliance on feed imports, labour flexibility

• AC of production systems (catfish & shrimp) => species tolerance limit (salinity, pH etc), flexibility of supply chain?, flooding (ponds vs cages)

What instances of adaptation are already being shown by farmers, communities?

Adaptive Capacity*Adaptive Capacity*

* the ability or capacity of a system (e.g. sector, country, region, etc.) to evolve & adapt to new situations as they arise, and/or to apply novel responses to address the change


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Vulnerability & Economic Vulnerability & Economic AnalysisAnalysisImpact assessment:

– What is the vulnerability of the aquaculture sector to CC (expected impacts?), what is the vulnerability of dominant aquaculture regions of the country to CC? indicators link

– What are the physical as well as economic losses which may be expected over the period 2010 to 2050 as a result of CC?

Adaptation options:– What are the plausible adaptation options, planned &

autonomous? – What are the costs and benefits?

The economic analysis will involve a two-level analysis


Focus on catfish and shrimp; conduct farm-level analysis Identify & describe the production & marketing system

(value chain) Conduct current financial analysis using budget analysis Conduct partial budget analysis to identify changes to

production costs due to CC impacts Marketing system analysis of market channel and costs Household/farm level analysis of impacts on losses to

revenue, income & employment Scale up results to the shrimp & catfish industry

I.I. Economic costsEconomic costs


Identify adaptation options

Compile a list of potential autonomous (private) and public (government-led) adaptation measures and estimate the total impact of these measures in the aquaculture sector.

Estimate the potential impacts as well as costs and benefits of the specified public adaptation measures.

Identify which adaptation measures offer the greatest economic return and the best possibility to climate-proof the aquaculture sector

II. Costs & benefits of adaptationII. Costs & benefits of adaptation


Cost/benefit analysis

Consider 2 scenarios: without (A); with (B) CC

Scenario A is based on planned set of investment over the next 40 years

Scenario B incorporates costs of projects in response to CC

Address mitigation, development, different types of adaptations, uncertainty, time

Conduct costs/benefits analysis on an optimal set of projects with and without CC, using standard CBA methodology

Note: The development of a general equilibrium analysis model (input-output, Computable GE) is beyond the scope of this study

II. Costs & benefits of adaptationII. Costs & benefits of adaptation


Diversity of production systems for aquaculture, fitting into different agro-ecologies, ranging from purely aquaculture activities to integrated production of a variety of aquatic organisms potentially an adaptable sector to respond to CC

Aquaculture, in various forms, competes with and complements other food production systems particularly in the use of water resources “as much as CC mitigation is about energy, CC adaptation is about

water”; this is particularly pertinent in the context of aquaculture Aquaculture production is at different levels of intensity and capitalization

and involves different levels of participation vulnerabilities and adaptive capacities vary

A dynamic and volatile sector subjected to economic booms and busts; export-oriented commodities susceptible to global fluctuations in demand; VN producers and the government are highly market-responsive; 10-15 year planning horizon “Climate is not the only change around”; CC is a “slow variable”We are barely scratching the surface in dealing with the economics of

adaptation of the aquaculture sector to CC

Aquaculture and CCAquaculture and CC


For discussion…

Documents

Partnership excellence growth 1 ECONOMICS OF ADAPTATION TO CLIMATE CHANGE (EACC) ECONOMICS OF ADAPTATION TO CLIMATE CHANGE (EACC) Vietnam Case Study*