Vietnam is among the top ten countries most vulnerable to climate change due to its location in the path of numerous storms, extensive coastline, and expansive delta. Climate change leads to an increase in the frequency, severity and duration of extreme weather events, causing significant loss and damage. Critical infrastructure such as sea dike and river dike systems, irrigation projects and saltwater dams play an essential role in protecting local residents from the effects of extreme weather events. Though it has been known for some time that the benefits of reducing climate risk significantly outweigh the cost, climate risk is still insufficiently considered in the planning and implementation of infrastructure projects.
The IKI Global Project ‘Enhancing Climate Services for Infrastructure Investments’ (CSI) assists policymakers in making climate-risk-informed infrastructure decisions through the use of Climate Services. One key tool for this are cost-benefit and cost-effectiveness analyses. They enable the comparison between the cost related to investments in risk mitigation measures and the benefits accruing to both the infrastructure investors and operators as well as the local community that is benefitting the infrastructure services.
In Vietnam, CSI supported its partners in assessing the climate risks for the Cai Lon – Cai Be sluice gate system while it was still in the planning phase. Cai Lon – Cai Be, the biggest sluice gate system of its kind in Vietnam, is located around 15 km from the coastline in Kien Giang province. Its purpose is to protect the area from salt intrusion and flooding. CSI’s partners, the Ministry of Planning and Investment (MPI), the Ministry of Agriculture and Rural Development (MARD), and the Ministry of Natural Resources and the Environment (MONRE), mainly wanted to learn from the climate risk assessment how climate change may impact on the sluice gate system.
The risk assessment was used to identify adaptation measures that were included in the final design of the infrastructure: (1) upgrading the concrete for the pillars and ship locks, (2) using epoxy coating for the sluice gates, and (3) using an underground electric system, which necessitated relocating the ship lock to the shore instead of the middle of the structure (figure 1). To learn how the costs of these measures compare to their benefits, an ex-post cost-benefit analysis was conducted.
The cost-benefit analysis focuses on identifying, quantifying, and comparing the costs and benefits of climate-proofing measures. The main stakeholders were identified as those bearing the costs and reaping the benefits of the climate-proofing measures. In this case that is the infrastructure investors and operators as well as communities benefitting from the infrastructure services (rice farmers, shrimp farmers, neighboring communities, etc.). As part of the analysis, for each year and for each stakeholder, the effects of climate change on the infrastructure – with and without climate-proofing measures – were examined.
On the one the side, there were the cost in the form of higher investment cost and higher maintenance cost for some of the infrastructure elements (e.g. underground wiring). At the same time, the use of more climate-resilient materials benefits the infrastructure owner and operator due to lower maintenance cost in other areas (e.g. due to epoxy coating reducing erosion) and reduction of damages during extreme events (e.g. reduced damages to electrical systems during thunderstorms due to underground wiring). An attempt was also made to estimate the benefits for agricultural households. The main benefit for them is that infrastructure services are not interrupted or eroded due to slow onset and extreme events. To estimate this benefit, 100 farmers were interviewed to gage their willingness to pay for uninterrupted infrastructure services. This methodology was chosen due to the lack of available data. However, results derived using this methodology need to be interpreted cautiously due to its limitations.
Still, even controlling for different variables using sensitivity analysis, the cost benefit analysis estimates that the climate proofing measures have a positive benefit to cost ratio. For example, the analysis estimates that for each USD invested in the concrete upgrading solution for pillars and ship locks, the investor will receive 1.53 USD in benefits. Analysis like this provide an important basis for investing in adaptation for infrastructure decision-makers. By leveraging tools like climate risk assessments and cost-benefit analysis, the CSI project and its partners help infrastructure planners and investors to take decisions based on risk-information. The approach and result of this cost-benefit analysis will be presented in greater detail during the implementation workshop that will be jointly implemented by the CSI project and Climate Resilient Economic Development (CRED) project.
Source: GIZ – CSI project in Vietnam
(Dr.) Nguyen Thi Minh Ngoc, Senior Technical Advisor, GIZ Vietnam firstname.lastname@example.org
Global Project “Enhancing climate services for infrastructure investments” (CSI)
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