The World Bank has launched the Cambodia Country Climate and Development Report (CCDR), which provides critical insights into the Kingdom's response to climate change and its impact on development goals.

The CCDR differs from previous analyses of climate change by taking a comprehensive insight into the impacts of climate change, rather than a narrow sector-specific focus. It also connects the impacts of climate change to a country's ability to achieve green, resilient, and inclusive development.

The report concludes with three key priorities to steer the Cambodian economy along a more climate-compatible development path centered around the three Rs. These are to reduce exposure and vulnerability to climate change, realign the economy to seize new opportunities, and re-orient the emissions trajectory.

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It recommends the implementation of seven policy packages to achieve the three Rs with many actions.

The CCDR report said Cambodia is one of the hottest countries in the world, experiencing 65 days each year, with temperatures surpassing 35C.

Mariam Sherman, Country Director for Myanmar, Cambodia, and Laos at the World Bank, said that Cambodia's economy has consistently demonstrated robust growth over the last two decades, resulting in a substantial reduction in poverty and the promotion of shared prosperity among citizens.

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She added that Cambodia aims to achieve upper-middle-income status by 2030 and high-income status by 2050. However, this vision is hindered by significant challenges posed by climate change, impacting the country directly and indirectly.

“As we know, Cambodia is among the nations with the highest vulnerability to floods and extreme heat. Unfortunately, the most vulnerable regions and communities are also the poorest,” Mariam said.

“The changing climate is already disrupting Cambodia's economy and affecting people's lives and livelihoods in numerous ways. Despite not being a major greenhouse gas emitter, Cambodia has rightly committed to the global goal as enshrined in the Paris Agreement for achieving Carbon Neutrality by 2050.”

She emphasized this transition also offers tremendous opportunities for exports and job creation, but requires supportive policies and improved regulatory environments.

Furthermore, the global low-carbon transition is also driving a surge in demand for low-carbon goods and services, which could offer economic opportunities for the private sector as it envisions transitioning to a modern high-income economy.

The CCDR presents crucial findings that underline the urgency of addressing climate change. Mariam said that the positive news is that Cambodia has many options to combat climate change. This could substantially reduce its impact both on economic growth and the well-being of Cambodians.

She also noted that Cambodia has already made great progress in this area, with the adoption of the new Power Development Plan (PDP), long-term Strategy for Carbon Neutrality (LTS4CN), and Environment and Natural Resources Code (ENRC).

“Going forward, mobilizing financing from public, private, and international sources will be critical for Cambodia in reconciling its development ambitions with increasing climate risks,” Mariam said.

The CCDR recommendations will provide critical input to the World Bank's upcoming country partnership strategy discussions. The report also comes at a critical time for informing major climate strategies currently being considered or implemented by the government, as well as the Pentagon strategy.

“The mandate of the World Bank has shifted recently and it's to eradicate poverty on a livable planet. I hope we can now work together to see how to operationalize the recommendations of this CCDR to achieve the vision. Our team stands ready to work with your team,” she added.

Ros Seilava, Secretary of the State Ministry of Economy and Finance, provided the keynote address for the launch of the CCDR, which is a comprehensive report under the overall direction of the East Asia and Pacific Region of the World Bank, and International Finance Corporation (IFC).

He added that climate change took center stage at the recently completed G20 Summit in New Delhi. The subsequent Leaders’ Declaration recognized the need to reduce global greenhouse gas emissions by 43 percent by 2030 relative to 2019 levels.

Furthermore, developing countries need $5.8 to 5.9 trillion in the pre-2030 period, in particular to implement their Nationally Determined Contribution (NDC), as well as $4 trillion annually for clean energy technologies by 2030 to reach net zero by 2050.

Seilava said Cambodia, on its part, is committed to honoring the climate pledges in its NDC and implementing its LTSCN to reduce emissions by 41 percent by 2030 and achieve neutrality by 2050.

“While the transition to green and low-carbon development is our long-term objective, I must point out that our pathway to achieving this will be gradual and balanced with Cambodia’s competitiveness and sustainable economic growth,” he noted.

As the report points out, he emphasized that people live in a highly globally integrated economy, and the global response to climate change will have ripple effects on Cambodia’s trade, investments, financing, and technology costs.

“We, as policymakers, will need to recognize and put more emphasis on this aspect and look at adjusting trade and investment policies to capitalize on the low carbon transition to diversify exports and upgrade manufacturing,” Seilava added.

The report quantifies some of the key impacts that provide insight into the gravity of the situation. The average annual losses of physical and economic assets from floods are projected to increase to between $3.3 billion in the low scenario and $10.6 billion in the high scenario in 2050, from $0.5 billion in 2020.

Crop yields will decline between 21 and 30 percent by 2030-60, Tourism between eight and 17 percent by 2050, and labor productivity between eight and 20 percent by 2050. The macroeconomic modeling carried out by the World Bank Team suggests that these will lower the GDP by up to 9.4 percent in 2050.

Overall, an incremental investment of $36 billion will be required from 2023 to 2050 to address the measures identified in the report. This comprises about $20.1 billion for adaptation and resilience and about $15.4 billion for mitigation measures, representing 1.7 percent of the GDP.

“I must emphasize that this is the incremental additional costs for achieving resilience and carbon neutrality. These added costs will put tremendous pressure on our fiscal space and pose a huge financing challenge for us,” he said.

Cambodia is already experiencing significant impacts from climate change, and it is crucial to adapt to these effects urgently. However, implementing climate change adaptation measures could potentially lead to a reduction of half of Cambodia's GDP. If no action is taken, climate change could result in a decline of 9% in Cambodia's GDP by 2050.

Cambodia is one of the lowest emitters of Greenhouse Gas with its share of global emissions of only 0.14 percent. Seilava also highlighted the country’s per capita Greenhouse Gas emissions are 4.3 tons of carbon dioxide equivalent. This is lower than neighboring and regional countries, except for the Philippines, and under half of the OECD average of 10.8.

The World Bank Group through CCDR claimed that Cambodia has low per capita emissions, but it has the fastest growth rate in Southeast Asia. This growth is expected to result in an increase in low carbon emissions, which could contribute to a 1.5 percent rise in Cambodia's GDP by 2050.

He added that it remains one of the most vulnerable countries prone to disasters from floods, droughts, cyclones, and heat waves, it would be an injustice for Cambodia to bear the burden of the incremental costs for adaptation and mitigation measures.

Seilava noted that developed economies will need to bear a large share of these costs. In this regard, Cambodia is looking to development partners for mobilizing grants, technical assistance, highly concessional loans, and private sector financing.

“It will be very useful and serve as an excellent reference for our policymakers in acquiring a more comprehensive appreciation of the impacts of climate impacts and the real challenges we face,” Seilava said

The recommendations could be the starting point for the Government’s consideration as it formulates the policies and actions for the pathway to Cambodia’s transition to low-carbon development.