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Overview

The purpose of this report is to help Cambodia’s policy makers and stakeholders prepare for future El Niño–Southern Oscillation (ENSO) events. It does this by providing information on ENSO’s poverty, economic, and agricultural impacts in Cambodia and outlining ways forward. The report finds that ENSO’s impacts vary from region to region and harm Cambodia’s people, economy, and agricultural sector. The country has made inroads in preparing for climate events like floods and other natural disasters, but more could be done to prepare for ENSO specifically. Being proactive to prepare for ENSO in Cambodia is important because of the country’s high exposure to climate shocks, the prominence of the agricultural sector in the national economy, the large rural population and its climate vulnerability. Furthermore, it is likely that Cambodia will face another El Niño by the winter of 2018/2019.

ENSO has important impacts on Cambodia’s climate, agriculture, economy, and society

Cambodia is vulnerable to ENSO-related climate shocks. Between 1980 and 2015, there were eight El Niño events in Cambodia. Historical data show that ENSO’s two phases, the cool La Niña phase and the warm El Niño, see increased and decreased average rainfall, respectively (Figure A). This has led to major flooding and severe water shortages. During the 2014–2016 El Niño, Cambodia saw major droughts. By 2016, water levels in Cambodia’s rivers fell to 50 to 70 percent of the interannual average. This made 2016 one of the driest years in the country’s history, with one of the worst droughts of the last 50 years. Droughts affected almost every province and 2.5 million people experienced water shortages. That said, it is flooding that causes the greatest climate-related economic damage in Cambodia. In 2015, ENSO was blamed for torrential rains of 50 to 100 millimeters per hour in Phnom Penh, causing flashfloods and infrastructure damage.

El Niño events have negative effects on agricultural production in Cambodia, while La Niña events have a slightly positive effect. Most of Cambodia’s agricultural production occurs in the Mekong River area in the Plains region (Map A). The lower Mekong is mainly cultivated with rice and the upper Mekong with agro-industrial crops, such as rubber and cassava. The Lake region focuses more on freshwater fisheries. The Coastal region includes coastal and marine fisheries and some crops. The Mountain region includes agro-industrial crops, like rubber and cassava, and forestry. Combining all ENSO events together and de-trending historical data reveals that, on average, rice production declines by 10 percent during El Niño and increases by five percent during La Niña. From 1997 to 2002, droughts caused a 20 percent decline in rice production.6 2010’s El Niño–related droughts damaged 14,000 hectares of transplanted rice, 3,500 hectares of rice seedlings, and 5,500 hectares of other crops. Additionally, rice production may be adversely affected in flood-prone areas in La Niña years.

ENSO events likely contribute to declines in Cambodia’s livestock and fishery sectors. La Niña contributes to more days with high humidity temperatures per year, which can cause heat stress for livestock. From 1951 to 2010, La Niña years have 16 more such days than neutral and El Niño years, which have about 100 such days per year. Poultry are sensitive to heat stress, with strong declines in feed intake, egg size, and egg quality. Swine and cattle are also sensitive to heat stress, with negative outcomes when temperatures are higher. Overall, cattle are the most heat tolerant, followed by poultry, then pigs, which are the least heat tolerant. ENSO contributions to livestock feed declines and flooding can also affect livestock health and production. Fisheries, which are central to the livelihoods of millions of Cambodians and account for about 80 percent of animal protein in household diets, are also impacted by ENSO events. The 2016 El Niño–related drought caused Cambodia’s fish production to decrease by 17 percent, leading to higher fish prices. Dry conditions and extreme heatwaves in the center of the country also killed about 65 tons of fish in Lake Tonle Chhmar.

ENSO’s impacts on Cambodia’s agricultural sector has economy-wide ramifications. Agriculture in Cambodia contributes to 30 percent of gross domestic product (GDP) and accounts for 45 percent of employment. This rises to 36 percent of GDP and over 50 percent of employment when one considers the entire Agricultural Food System (AFS), which includes downstream economic activities like food processing and the trading and transporting of agriculture-related products. This makes agriculture the country’s largest source of employment, especially for the poor. As such, any shocks from ENSO to agriculture has major impacts on welfare, food security, and national poverty levels.

Cambodia experiences notable economic losses during El Niño events, but these are nearly offset by gains during La Niña events. Total economic losses from three El Niño–related historical droughts (1994, 2002, and 2005) were estimated at $138 million. According to simulations conducted for this report, national GDP falls by 0.4 percent during a typical El Niño event relative to a neutral non-ENSO year. Even small percentage reductions in national GDP can imply substantial monetary losses. For example, a 0.4 percent drop in national GDP is equal to $61 million in lost value-added. Losses are most pronounced in the agriculture sector, where GDP falls by 1.4 percent, and in the mountainous region of the country, where crop and livestock GDP falls by 2.5 percent. By contrast, during a typical La Niña year, the economy expands. Simulations indicate national GDP gains of $55 million during La Niña events, which almost offset GDP losses during El Niño events.

Poor rural households consume less and suffer more from ENSO events than nonpoor households. Cambodia’s rural population is 79 percent of the total population, high by both regional and global standards. Further, the rural poverty headcount ratio of 21 percent exceeds the urban poverty headcount ratio of only 6 percent. Given the large rural population, this means that poverty is rampant in Cambodia: 14 percent are poor while another third are “near-poor.” Household surveys find that rural consumption is only 38 percent of urban consumption levels, while the rural poor’s consumption is only 23 percent of urban consumption levels. Food insecurity is a major concern that ENSO threatens to make worse. Simulations show that both urban and rural household consumption declines during El Niño. Rural households are more likely to be farmers who benefit from higher food prices. This is not true for poor rural households who have less access to land than wealthier rural households and, therefore, earn fewer returns from farming. Poor households also tend to spend more of their incomes on food, meaning that when ENSO affects cereal production and increases prices, it has larger implications for poorer consumers.

Women suffer disproportionately from El Niño. In Cambodia, just as many women work in agriculture as men. Women play an important role in water resource management, both in the home and on the farm. Simulations show slightly more femaleheaded households than male-headed households fall into poverty during strong El Niño events. This is true in both rural areas and nationally. Also, reports show that female households tend to own smaller plots of land, are more indebted, and are more likely to be poor, compared to their male counterparts. Female-headed households are less likely to have access to agricultural lands than male-headed households. Moreover, for every five male-headed agricultural households that receive loans, only one female-headed agricultural household receives the same.

Cambodia prepared for ENSO, but there is room for improvement

Cambodia’s government is committed to responding to weather-related shocks, but could do more to prepare for ENSO. Cambodia has contingency plans for floods and droughts, and receives overseas development assistance (ODA) to respond to natural disasters. But, ENSO awareness and its effects on drought and floods remains limited. Consultations with representatives of relevant ministries and other stakeholders reveal that government resources for climate change and natural disasters are mostly for ex post risk interventions, such as relief operations, but there are fewer resources for early warning and ex ante mitigation and preparation. This was evident during the El Niño that began in 2014. It was only in 2016 that emergency response measures where implemented, but these only helped affected regions cope and recover. They did little to prepare the country for future events. That said, in recent years the country has prioritized climate resilience and gender equity through various strategy documents and action plans.

The 2014–2016 El Niño response exposed areas to strengthen in Cambodia’s ENSO preparedness efforts. These include the following:

Government areas to strengthen

• Many government plans and strategy documents associated with ENSO or slow-onset droughts have not been fully implemented, including plans to improve agricultural infrastructure, human capacity, and early warning systems.

• There could be better cooperation on ENSO-related issues among government agencies at all levels and nongovernmental partners. There are many local and national level agencies that carry out work in climate resilience, but only one ministry focuses specifically on ENSO.

General data areas to strengthen

• Cambodia would benefit from better data and comprehensive vulnerability maps.
  Although the government has collected data on drought and ENSO, there are still no ENSO vulnerability maps.

• There is a lack of ENSO-related information in Cambodia. Most of the climate-related data and information that exists in Cambodia is on natural disasters and not specifically related to ENSO. This appears to have impeded the response to past ENSOs because policy makers were not adequately informed of potential ENSO events, despite information existing on when ENSOs would likely occur.

General capacity areas to strengthen

• Cambodia lacks sufficient human and institutional capacity to properly prepare for ENSO events. More specifically, there is not enough technical expertise to manage ENSO—or disaster-related databases and other systems that could produce timely information on impending disasters. This is especially true at the local or village level where El Niño and La Niña remain unfamiliar concepts.

• It has been a challenge to scale up good practices and make them sustainable. There are many good nongovernmental organization (NGO) initiatives and internationally funded projects that could be expanded, but there are no dedicated institutions for learning from these efforts and no funding sources to scale up the best practices.

• Efforts have been made by the government to integrate gender into disaster prevention, but more could be done, especially in terms of ENSO. This partly reflects the general lack of a codified focus on ENSO, and the general under-representation of women in climate and natural resource management interventions.

Policy interventions help negate ENSO-related losses

Introducing drought-tolerant varieties is an effective policy intervention to mitigate GDP losses from a strong El Niño. In depth modeling carried out under this study of six policy interventions—including introducing drought-tolerant crop varieties, expanding irrigation, restricting rice exports, storing and distributing grains, expanding social protection coverage (social transfers), and applying all of these policy interventions simultaneously—show that on-farm investments, like droughttolerant seeds and irrigation infrastructure, are the most effective interventions at limiting El Niño–related GDP losses in Cambodia. Introducing drought-tolerant varieties reduces national GDP losses from $61 million to $34 million. Expanding irrigation use is not as effective, but also significantly offsets GDP losses by making crop production more resilient to climate shocks. Overall, when all simulated interventions are combined and implemented concurrently, there are still national GDP losses equal to $31 million and food system GDP losses of $46 million during El Niño events. In contrast, distributing stored grains, restricting rice exports, and providing social transfers to poor households are less effective options for mitigating El Niño–related GDP losses. These three interventions improve consumer access to food by curbing price increases or income losses, rather than limiting declines in GDP or agricultural production.

Providing social transfers and introducing drought-tolerant seed varieties are among the most effective policies to mitigate poverty and consumption losses during El Niño. Without interventions to mitigate impacts, a typical El Niño event causes the national poverty rate to increase by 1.4 percentage points, which is equivalent to an additional 210,000 people living below the poverty line. Simulations show that introducing drought-tolerant varieties prevents consumption losses for all households and reduces the number of households that fall into poverty during El Niño. Social transfers—represented by cash transfers in the modeling—by contrast, do not reduce consumption declines during El Niño for all households, but drastically reduce consumption declines for poor households. Cash transfers are also effective at mitigating poverty increases during El Niño. This is because cash transfers target poor households but are financed by more affluent households through higher tax payments. When all policy scenarios considered for this report are implemented concurrently, poverty increases and total consumption losses are almost eliminated during El Niño.

The impacts from policy interventions on poverty outcomes during El Niño vary across regions and genders. Simulations show El Niño causes poverty increases in all regions, but the most in the Lake and Mountain regions. That said, poor households in the Lake and Mountain regions benefit the most when all policies are applied. Introducing drought-tolerant crop varieties benefits households in all regions, but this is especially effective in the Lake region. Irrigation, export restrictions, and stored grain distribution have little effect on poverty in the Mountain region, but these policies mitigate poverty increases substantially in the Lake region. That said, storing and distributing grains and restricting exports create market distortions that can harm producers and trading partners. Simulations also show both male- and female-headed households benefit from policy interventions, but when all policies are applied, female-headed households benefit the most. Again, introducing drought-tolerant seed varieties is the most effective in mitigating poverty losses during El Niño. Social transfers, which directly target the poorest, who in this case are female-headed households, are also very effective. Distributing stored grains is slightly more beneficial for male-headed households.

The government can take action to improve ENSO preparedness in Cambodia

There are many opportunities to improve ENSO preparedness and resilience. In Table A, recommendations are divided into two groups: preparedness and resilience. Preparedness are measures specifically geared toward ENSO and should, ideally, be in place before the next ENSO event occurs. These actions will significantly empower people to cope, respond, and recover from damaging ENSO events. Resilience, by contrast, are measures that are not specifically tailored to ENSO, but that will build individuals’ and organizations’ ability to adapt to multiple forms of risks and shocks without compromising long-term development. Recommendations in green are a high priority, recommendations in orange are a moderate priority. The last two columns denote which actions are short term (S), or should be completed within a year, and which actions are medium-to-long term (M/L), or would not be achievable in less than a year.