partnership  excellence  growth 1 ECONOMICS OF ADAPTATION TO CLIMATE CHANGE (EACC) ECONOMICS OF ADAPTATION TO CLIMATE 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 Phillips November, 2009

partnership  excellence  growth 2 Study Objectives Impact 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?

partnership  excellence  growth 3 The four-step methodology 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

partnership  excellence  growth 4 Study 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  excellence  growth Scale & 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

partnership  excellence  growth 6 Capture vs culture production in Vietnam Share of national GDP, % CaptureCulture Prel Source: General Statistical Office of Vietnam

partnership  excellence  growth 7 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

partnership  excellence  growth 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 Exposure

partnership  excellence  growth Temperature rise (0.03 o C per year; 1.2 o C from )  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 change

partnership  excellence  growth 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 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-induced marine phenomena

partnership  excellence  growth -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 development Coastal dykes for coast defense River bunds for flood protection Plans for stage-wise development: how to analyze economics of gradual adaptation?

partnership  excellence  growth Dependency  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  excellence  growth Dependency The scale and nature of dependency across the value chain varies with sub-sector, e.g. in the Mekong River delta  The 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.

partnership  excellence  growth 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* * 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

partnership  excellence  growth 15 Vulnerability & Economic Analysis Impact 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 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

partnership  excellence  growth  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.Economic costs

partnership  excellence  growth 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 adaptation

partnership  excellence  growth 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 adaptation

partnership  excellence  growth  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; 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 CC

partnership  excellence  growth For discussion…