Cambodia: Climate vulnerability spurs the adoption of new budgets

In recent years, Cambodia has suffered from severe flooding and drought and, once again, it is being seriously affected by these natural disasters. According to a recent United Nations Office for the Coordination of Humanitarian Affairs report (3 November 2020), more than 792 000 people have been affected by flooding and are in need of humanitarian assistance, over 388 000 of whom are recognised as poor and vulnerable households.

 

Village

About 80 % of Cambodia’s population lives in rural areas and about 50 % work in the agricultural sector, which remains 80 % dependent on rain irrigation. According to the Ministry of Agriculture, rice alone accounts for about 26 % of GDP and employs more than 3 million people in a total population of 16 million.

Cambodia has long-standing experience in responding to climate change. In 2013, it was one of the first countries to launch a Climate Public Expenditure and Institutional Review in preparation for a Climate Change Strategic Plan (CCSP). The priorities defined then were reinforced in 2015 by the preparation of the nationally determined contribution to the Paris Agreement. The process involved launching a Climate Change Financing Framework (CCFF), a groundbreaking instrument which was unique in combining an analysis of climate change expenditure, an assessment of adaptation effectiveness, and future financing scenarios.

The ambition was to guide future policy and climate-change-related expenditure for nine line ministries and agencies in sectors particularly sensitive to climate change and, ultimately, to reduce climate-negative impacts on the economy. These public organisations prepared sectoral Climate Change Action Plans (CCAPs) with a total of 117 actions, including investment projects, policy and institutional strengthening.

In a further step, the Ministry of Economy and Finance and the National Council for Sustainable Development recently developed a Climate Economic Growth Impact Model (CEGIM) which interprets the economic impacts of climate change at the sector level. The CEGIM and its antecedents, including the CCSP, CCFF and CCAPs, were directly supported by the EU-funded Global Climate Change Alliance (GCCA).

CEGIM projects that climate change will reduce average GDP growth from 6.9 % to 6.6 % in the period 2017–2050. It also concludes that a stronger focus on adaptation could avoid over half of the estimated loss and damages, without having a major impact on development investment.

Recently, Cambodia increased its budget for climate change resilience to about EUR 750 million, a four-fold increase over previous years. This reflects the country’s awareness of the impacts caused by climate change and its efforts to rehabilitate flood-damaged infrastructure, find solutions for drought-affected farmland, and to support affected households.