Economics of Adaptation to Climate Change (EACC) in Vietnam's Fisheries & Aquaculture Sector

1. ECONOMICS OF ADAPTATION TO CLIMATE CHANGE (EACC)Vietnam Case Study*Fisheries & Aquaculture Sector Kam Suan Pheng, Marie-Caroline Badjeck, Robert Pomeroy, Mike Phillips November, 2009 World Bank funded 5-month study WorldFish Center, MCD, CTU, Sub-NIAPP * Other case study countries: Bangladesh, Bolivia, Ethiopia, Ghana, Mozambique, Samoa

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?

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

4. Study Framework EXPOSURE - nature and degree to which the aquaculture sector is exposed to predicted CC DEPENDENCY - reliance on the aquaculture sector ADAPTIVE CAPACITY - ability to cope with climate-related changes VULNERABILITY - the nature and extent of losses incurred by the aquaculture sector due to CC DEVELOPMENT PLANS - aquaculture sector - other sectors ADAPTATION OPTIONS - costs & benefits - policy implications

5. Mekong River Delta Overall national level Scale & area of focus • Vulnerability of shrimp farming production systems • Vulnerability of catfish production systems Source: Agricultural Atlas of Vietnam • Vulnerability of the aquaculture sector as a whole • Province-level analysis

6. Capture vs culture production in Vietnam Source: General Statistical Office of Vietnam

7. Export of aquatic products Production of cultured shrimp and fish Source: VASEP Regional distribution of (a) cultured shrimp, and (b) cultured fish production (b) (a) Source: General Statistical Office of Vietnam

8. Exposure • 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

9. Climate change • 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

10. Sea level rise & other CC-induced marine phenomena • 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

11. Infrastructure development • Coastal dykes for coast defense • River bunds for flood protection • Plans for stage-wise development: how to analyze economics of gradual adaptation? • 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

12. 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)

13. 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.

14. 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 • 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?

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?  indicatorslink • 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

16. Economic costs • 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

17. II. Costs & benefits of adaptation 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

18. II. 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

19. Aquaculture and CC • 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

20. For discussion…