Climate Responsive Budgets can help enhance Cambodia’s GDP growth

Cambodia is ranked among the top ten most vulnerable countries to climate change. 17% of communes are rated as being “highly” vulnerable and 32% “quite” vulnerable to climate change (NCSD, 2014). Ultimately, climate change losses could reduce GDP growth by 1.5% in 2030 and by 3.5% in 2050. Without climate change action, GDP growth could be reduced to just 1% per year by 2050 (CCFF, 2014).

Since 2015, CCCA has been working with MAFF, MoWRAM, MPWT, and MRD to help them integrate climate change in their budgeting and planning processes. GIZ has provided similar support to MOE and MOH. Climate-sensitive cost-benefit analysis shows that climate responsive budgets and climate smart planning increase economic benefits and GDP growths.

The figures shown here compare projects included in MPWT’s budget request to MEF for fiscal year 2017 with and without climate proofing.

Analysis made for the rehabilitation of Road 382A in Prey Veng, upgrading from the current laterite structure to Double Bituminous Surface Treatment (DBST) for 1.2km length and 6m width, found that:

• The investment should be justified by taking climate change into account. The analysis shows that the Benefit Cost Ratio (BCR) for regular scheme falls from 2.22 to 1.63 once climate change is factored in while BCR for the climate proofed scheme is maintained at 2.16, which strengthens the case for climate proofing the design of rehabilitation.
• The benefits of climate proofing are in the form of avoidance of climate damage and associated emergency repair and maintenance costs.
• For the case of the pilot bridge construction (yellow lines in the graph), the benefits of climate proofing are less obvious.

The Royal Government of Cambodia has integrated climate change references into the Budget Strategic Plan circular (BSP) 2018-2020 and annual budget law circular 2018. Concerned line ministries can now use cost-benefit analysis to demonstrate the increased benefits of climate-proofed infrastructure over time, and justify the higher initial investment costs. For the recurrent budget, ministries should screen their activities to determine if they are climate relevant and request additional resources for climate proofing where required. Continuous engagement between MEF and line ministries is required to ensure that this information on the economic benefits of climate-responsive budgeting is reflected in government investment decisions.