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Climate Change in the Lower Mekong Basin: An Analysis of Economic Values at Risk

This VAR Report assesses the current-day values of key assets at risk to climate change in the Lower Mekong Basin countries.

Climate Change in the Lower Mekong Basin: An Analysis of Economic Values at Risk

The USAID Mekong Adaptation and Resilience to Climate Change (USAID Mekong ARCC) project announces the release of an economic research report entitled, “Climate Change in the Lower Mekong Basin: An Analysis of Economic Values at Risk.” The report assesses the current-day values of key assets at risk to climate change in the Lower Mekong Basin (LMB) countries of Cambodia, Laos, Thailand and Vietnam to present a preliminary picture of the potential economic toll of anticipated alternations in climate on the region.

A 2013 USAID Mekong ARCC analysis of climate change impacts and vulnerabilities in the LMB found that by 2050 annual precipitation is expected to increase throughout the basin, predominantly during the wet rainy season, while the dry season is expected to become drier and last longer in many areas of the LMB. Based on this scientific assessment, analysts from the think-tank World Resources Institute were engaged by the USAID Mekong ARCC project to examine the economic impacts of climate change on key livelihood sectors in the region–such as agriculture, fisheries, and rural infrastructure.

Key findings from the report:

  • The economic impacts of climate change in the LMB are expected to be wide-ranging, significant and mostly negative. Of most concern are significant reductions in the yield of crops, fish and non-timber forest products critical for livelihoods of over 60 million people, damages associated with floods and sea level rise, and an increase in the incidence and severity of heat-related illnesses for workers.
  • Based on current values, impacts from climate change could cost the economies of Cambodia, Lao PDR, Thailand and Vietnam approximately $34 billion per year. This includes at least $16 billion per year in damages to natural resource assets and infrastructure services (which represents between 7 and 30 percent of rural GDP in the LMB), and an additional $18 billion of potential infrastructure damage or loss from flooding and other extreme weather events.
  • Worker productivity across the LMB is significantly threatened by climate change, accounting for more than $8 billion at risk annually in lost work days resulting from heat-induced illness. High temperatures, already affecting open-air workers such as farmers and construction workers, will likely increase as a result of climate change, causing spikes in cases of heat stress and other heat-related illnesses in the dry seasons.
  • Built infrastructure services ($3.42 billion), crop production ($2.54 billion), ecosystem services ($1.24 billion) and hydroelectric power (US$430m) are also at risk from climate change impacts.
  • Eleven hydro-electric power facilities at risk in the LMB were identified by overlaying the location of facilities with the USAID Mekong ARCC’s modeled spatial data showing locations of projected increases in temperature and changes in agricultural drought months due to climate change.
  • The magnitude of values at risk in the LMB justify significant investments in adaptation measures for workplace heat assessments and protection measures; eco-resilient or ‘climate smart’ agriculture techniques to protect crops from heat stress, water logging and other anticipated impacts from significant changes projected in temperature and precipitation; and green infrastructure to prepare for the effects of increasingly large storms, flooding, rising sea levels, and structural stress caused by increasing temperatures.

Figure 3 from report: Minimum Value of Ecosystem Services at Risk from Climate Change in the Lower Mekong Basin

Next Steps

This report presents a rough, first pass at VAR for the LMB largely to demonstrate the approach. Data underlying the values at risk estimates were based on publically available information that is often aggregated up to broad geographic regions (i.e. the value of crop production is averaged country-wide) and so are limited in their accuracy and scope. A more rigorous assessment could include, for example, original valuation studies of ecosystem services at risk in particular places based on actual use patterns by local communities, such as the Gerrard (2004) assessment of ecosystem services provided by the That Luan Marsh. Vulnerabilities to hydroelectric facilities could be informed by better data on the likely increase in upstream irrigation demands in portions of the LMB that will be affected by an increase in agricultural drought months. Effects on worker productivity could be better refined through analysis of how various heat stresses related disorders are already being manifested in multiple outdoor occupations, not just agriculture and construction. The magnitude of values at risk quantified in this rough first cut suggests that additional research along these lines could be of great worth in informing the scale and scope of adaptation programs in the years ahead.

You can download the full Values at Risk report, a brief overview of Values at Risk report, and learn more of the author’s perspective of the Values at Risk report findings from an exclusive Q&A blog here.


John Talberth, Ph.D., Senior Economist and Katie Reytar, Research Associate

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