Financing Viet Nam’s flood fighting efforts

In the spring of 2023, we taught a graduate level course titled “Agri-food Systems and Economic Development” at Georgetown University’s Global Human Development Program. As one of the assignments, we asked the students to write a policy brief on the impact of a major shock on food systems. This post by Vanessa is based on that assignment, and is a great example of the systems thinking with which future generations will tackle multiple global crises.—Devesh Roy, IFPRI Senior Research Fellow, and Ekin Birol, Associate Professor of the Practice, Georgetown University. 

Viet Nam is one of the countries most vulnerable to the impacts of climate change. Its long coastline and river deltas are dangerously exposed to sea level rise. An estimated 10 million people will be affected in the next 15 years just from flooding alone. Climate-related flooding presents a formidable long-term challenge to Viet Nam’s agricultural production, economic development, food security, and poverty reduction efforts.

The Vietnamese government is keenly aware of these vulnerabilities and has been proactive in devising responses. Its 2020-2030 National Adaptation Plan (NAP) includes strategies on reducing greenhouse gas emissions, upgrading flood control infrastructures, and mobilizing financial resources to pay for it all. The latter is crucial, as the government has limited funds for massive, multi-decade projects. How can Viet Nam pull financing levers from international organizations and regional governments to buttress its response to the climate crisis?

The threat of climate-related flooding

Agriculture contributes 18% to Viet Nam’s GDP and employs 47% of the labor force. A majority of the population lives in rural areas and depends on agricultural production. At the same time, Viet Nam has the world’s highest exposure to floods, ranked first with Bangladesh. The three main agricultural hubs of the country—the Northern Red River Delta, the Central Coast, and the Southern Mekong River Delta—border major bodies of water and are thus susceptible to sea level rise and various forms of flooding. The potential loss of agricultural production due to rising flood risk is a significant threat to the country’s progress on poverty reduction and economic development.

Rice is Viet Nam’s dominant crop, occupying 94% of arable land; it is a key domestic staple, and the country is also the world’s third largest rice exporter. Three extreme flooding events in 2004, 2007, and 2009 drowned more than 40% of wet rice production in Quang Nam province and collectively cost $11 million in lost yields. Given that Quang Nam’s GDP per capita was $560 in 2010, the three major floods devastated the livelihoods of local Vietnamese.

Flooding and other climate-driven disasters have already dramatically decreased Viet Nam’s food security, agricultural production value, per capita calorie intake, and diet diversity. Figure 1, showing declines of agricultural and food indices associated with environmental risks in the 2010-2014 period, indicates that flooding has a particularly damaging impact on food security and agricultural production value. Given that around 10% of the Vietnamese population—10 million people—still faces hunger, these impacts will push more people into the cycle of hunger and poverty.

Figure 1

^{Source: Thuy Le Toan, Nguyen Huu, Michel Simioni, Hoa Phan, Hironori Arai, et al., Agriculture in Viet Nam under the impact of climate change. 2021. ffhal-03456472f}

Funding gaps

The NAP outlines a number of flood responses:

• Formulate relocation and settlement plans for residents impacted by floods.
• Improve the capacity of search and rescue and disease prevention.
• Develop and distribute a flood risk map to regions exposed to inundation.
• Protect and upgrade infrastructures that control and prevent floods.

The fundamental challenge to reaching NAP goals, however, is money. Carrying out the plan requires an estimated budget of $27.5 billion to $64.2 billion over a decade. The government has planned to spend 3%-5% of 2020 GDP on climate mitigation and adaptation in this period—which translates to $10 billion to $17 billion. That leaves a huge funding gap that would have to be filled through some combination of international investments and loans.

Many low- and middle-income countries like Viet Nam lack the resources to invest in climate technologies at the scales required. At the same time they disproportionately bear the burdens of decades of high carbon emissions from richer countries. Protests over these inequities led to the creation of the Loss and Damage fund at the COP27 climate summit in 2022—a dedicated fund to help in developing countries address climate impacts. Nonetheless, the details of the Loss and Damage fund are still undecided, and previous attempts to meet the $100 billion pledge for climate strategies by developed countries have fallen short. Viet Nam as of now still must rely on its own effort to raise financial support.

Data collected from these and other climate projects will also provide key markers for future mitigation efforts. The Vinh Long city project plans to integrate a flood risk management information system and a geospatial sharing platform to inform experts and the public on flood risks in the area. Because of the emphasis on data-driven technologies, the United Nations Development Programme (UNDP) and government of Viet Nam are investing a total of $1.7 million to enhance the capacity of data integration into NAP and to standardize monitoring and evaluation of the country’s climate responses.

Innovative agricultural technologies can help Vietnamese smallholder farmers adapt to climate impacts. In Can Tho, a province by the Mekong Delta, farmers struggled with the unpredictable drought and flood seasons in recent years. Precision farming uses Internet of Things (IoT) technologies to analyze soil conditions and groundwater levels. This information helps farmers optimize water use according to the season, rice variety, and the crop’s growth cycle. The Korean World Bank Partnership Facility, partnering with Tra Vinh University, sponsored the necessary technologies and skills training for Can Tho farmers to integrate precision farming on their paddy. Farmers who applied IoT used between 13% to 20% less water than those who did not. Among the farmers who participated in the program, 95% wanted to continue using the IoT system.

From a big picture perspective, Viet Nam needs to sustain economic growth while also reducing reliance on fossil fuel consumption. Among the world's top 20 coal users and one of the fastest growing economies, Viet Nam is the third country to participate in the Just Energy Transition Partnership, after South Africa and Indonesia. The Partnership will mobilize $15.5 billion in public and private funding from the European Union, United Kingdom, United States, and other developed countries to support Viet Nam’s energy transition. The deal includes bringing forward the country’s projected peak date for greenhouse gas emissions from 2035 to 2030 and accelerating the adoption of renewable energy.

Work to do

Viet Nam has many options to collaborate with international organizations and other countries to fund projects and support its climate responses. Current internationally-funded projects have helped reduce the government’s burden bearing the costs of climate responses, and the data they provide can help with future climate projects in Viet Nam and elsewhere.

The fundamental challenge to Viet Nam’s National Adaptation Plan is money, but the ultimate test is commitment. New challenges may arise, so it remains unclear whether the Vietnamese government will be able to sustain its focus and spending on climate mitigation and adaptation, and whether international donors will follow through with necessary future grants and loans. The international community has the responsibility to hold global leaders responsible for their commitments to climate action. COP28 in Dubai later this year, for example, has the opportunity to push forward with specific guidelines for the Loss and Damage fund.

As global temperatures continue to rise, significant challenges remain; it will take a sustained effort both by the government and international community to keep funding flowing to new projects—and to protect Viet Nam’s coastal agricultural economy and population from climate disaster.

Hương (Vanessa) Lê, a Vietnamese native, is currently a second-year Master’s candidate in the Foreign Service program at Georgetown University. She focuses on development and sustainability issues in Southeast Asia. Opinions are the author's.