Attachments
JOINT SITUATIONAL ANALYSIS
All four Mekong countries involved in this plan—Cambodia, Laos, Thailand, and Viet Nam—score differently on the Human Development Index (Viet Nam 0.70, Thailand 0.77, Laos 0.61, and Cambodia 0.59). Despite these differences, they share common challenges and emerging risks, including rapid urbanization, climate change, and environmental pressures. They also face recurring disasters, health risks, rising inequalities, migration, gender discrimination and violence, and the effects of the COVID-19 pandemic.
Cambodia
Having sustained high levels of economic growth over the last two decades, Cambodia is on the path to becoming a higher middle-income country by 2030. However, high inequality and the impact of the COVID-19 pandemic on local economies are hampering growth. This is particularly true for vulnerable, marginalized rural populations, who were significantly harder hit by the pandemic’s effects on employment, household wages, and non-wage incomes than macroeconomic trends suggest.
Cambodia is one of the world’s more disaster-prone countries, particularly due to seasonal flooding and droughts. Over the last decade, these events have resulted in significant loss of life and economic loss. As a less developed, agrarian country where more than 75 percent of people live in rural areas, Cambodia has a strong dependency on climate-sensitive sectors such as agriculture, land, water resources, forestry, and fisheries. These factors make Cambodia particularly vulnerable to climate change, further exacerbated by weak adaptive capacity, poor infrastructure, and limited institutional capacity. The government recognizes floods and droughts as the main drivers of poverty, and rural households, particularly women, are especially vulnerable to climate change and struggle to adapt.
Climate change may be increasing the risk of water- and vector-borne diseases and the likelihood of epidemics. Droughts, rains, and floods are linked with an increased risk of outbreaks of diseases, including diarrhoea, cholera, dengue, malaria, and respiratory tract infections, putting additional strain on local health services. High temperatures also drive vector-borne diseases such as dengue.
Laos
Like its neighbours, Laos has made impressive development gains in recent years, halving poverty and reducing malnutrition.
The challenge now is to enable all Lao people to benefit from the country’s development, ensuring that the results of high economic growth, which have averaged more than 4.9 per cent for the past five years, are evenly distributed and translated into inclusive and sustainable human development.
Communities across the country are affected by frequent small-scale, recurrent disasters which have significant socio-economic impacts, making poor populations increasingly vulnerable and undermining their existing coping mechanisms. Laos also continues to deal with unexploded ordnance and bombs in many areas.
In 2022 after achieving a high vaccination rollout rate, most of the measures put in place to slow the spread of COVID-19 were relaxed, including the opening of international borders. However, this coincided with a period of global macroeconomic instability, with soaring prices of food, fertilizer, fuel, and finance (4F Crisis) and a sharp depreciation of the national currency. This affected all aspects of national development. The country depends on imports for key commodities, such as fuel, food, and medicines. This resulted in a rapid increase in domestic inflation, reaching a record 39 per cent by the end of the year. Moreover, the new Prime Minister of Lao PDR was appointed and committed immediately to efforts to improve macroeconomic stability, pursue sustainable development, poverty alleviation, and to narrow inequalities in the country.
Thailand
Over the last four decades, Thailand has made remarkable progress in social and economic development, moving from a low-income country to an upper-income country in less than a generation. It has the second-largest economy in Southeast Asia, driven by manufacturing, agriculture, and tourism. While poverty has declined over the last three decades (from 65 per cent in 1988 to nearly 10 per cent in 2018), income inequality has increased.
Thailand remains at risk of major disasters such as floods, tropical cyclones and droughts, as well as other risks related to health issues, which can cause economic loss as well as costing lives. Major health risks include pandemics, non-communicable diseases, infectious diseases such as malaria and tuberculosis, and traffic accidents.
Viet Nam
Viet Nam has one of the fastest-growing economies of the 21st century. Economic and political reforms launched in 1986 have spurred rapid economic growth and development, transforming Viet Nam from one of the world’s poorest nations to a lower-middle-income country. It has made significant progress towards its sustainable development goals, with poverty rates dropping from nearly 10 per cent in 2015 to less than seven per cent in 2017, and a primary net enrolment rate of 99 per cent.
STRATEGIC PRIORITIES
Climate and environment
The four Mekong countries face increasing levels of risk in both rural and urban areas, due to massive urbanization, climate change and the growth of megacities in low-lying flood plains.
Cambodia is projected to experience a warming of 3.1 degrees Celsius by the 2090s under the highest emissions pathway (RCP8.5), with increases in annual maximum and minimum temperatures exceeding average temperature rises. This will heighten pressures on health, livelihoods, and ecosystems, particularly threatening outdoor labourers and urban populations due to the urban heat island effect. Climate change may also increase the transmission of water and vector-borne diseases, though further research is needed. Without action, the population exposed to extreme river floods could grow by around 4 million by the 2040s, with human factors like Mekong River damming potentially altering flood dynamics. Upstream dam construction and deforestation threaten the productivity of Tonle Sap Lake and Cambodia’s fisheries, crucial for many poor, rural communities. Projected climate trends indicate more severe floods and droughts, potentially affecting Cambodia’s GDP by nearly 10 per cent by 2050. Significant adaptation efforts are needed to manage yield losses due to extreme heat during staple crop growing seasons, particularly for subsistence-level, rain-fed agriculture. These impacts may exacerbate wealth and income inequality, hindering poverty alleviation efforts.
Laos is among the most vulnerable countries to climate change, facing significant climate-related hazards exacerbated by poverty, malnutrition, and high exposure of marginalized communities. Increased extreme heat threatens human health, particularly for outdoor laborers and urban populations amid rapid urban migration. Without action, the population exposed to river flooding is projected to double to over 80,000 people by the 2030s, with potential for even greater impacts from flash flooding and landslides. Projected warming of 3.6 degrees Celsius by the 2090s under the highest emissions pathway (RCP8.5) will likely increase pressure on health, livelihoods, and ecosystems. These impacts will disproportionately affect
Viet Nam is also one of the countries most affected by climate change and is at continuous risk of disasters caused by natural hazards such as floods, tropical cyclones, landslides, droughts and heatwaves.