Highlights:

The Cambodia Country Climate and Development Report (CCDR) provides analysis and recommendations on how Cambodia can achieve sustained development while responding to climate change and the low-carbon transition. Climate change could amplify existing development challenges, with potentially sizable impacts on growth, trade, debt, and poverty reduction, as Cambodia faces one of the world’s highest levels of exposure to floods and extreme heat.

While successful at achieving rapid growth and significant poverty reduction, Cambodia’s current development path has increased, rather than reduced, vulnerability to both physical and transition risks from climate change. Current land-use patterns have led to high deforestation rates, with a 30 percent loss of forest cover over the past two decades, although there are recent signs of improvement. This has reduced the ability of ecosystems to regulate climate shocks, while also curtailing natural carbon sinks.  Cambodia has also lost almost 45 percent of its natural wetland area, which has increased exposure to floods, droughts, and wildfires.

Focus on agriculture

Agriculture is a major contributor to economic growth, employment, and livelihoods, although its share of GDP and employment is declining. More than 5 million people in Cambodia still depend on agriculture and fishing for their livelihoods, income, and food security.

The percentage of total employment in agriculture has fallen dramatically in recent decades from a high of 73 percent in 2000 to 35 percent in 2019. The agriculture sector is highly fragmented and dominated by smallholder farmers and oriented toward subsistence, rather than commercialization. With limited diversification, the sector remains highly concentrated in rice and cassava production. Rice contributes to about 60 percent of agriculture GDP and is grown on over 3.2 million hectares of Cambodia’s agricultural land (about one-third of the total).

Climate change is projected to cause substantial losses to crop yields, livestock, and fisheries. Climate change is projected to lower yields for rice, maize, and cassava, with particularly strong negative impacts for rainfed rice (yield losses of 21–30 percent on average between 2030 to 2060 under different climate scenarios). This represents one of the most negative climate change impacts on rice in Southeast Asia. Rainfed maize and cassava production will also be affected. Climate change is also projected to negatively affect fisheries, posing challenges for nutrition and food security as fish accounts for about 80 percent of animal protein in household diets.

The formulation of the Climate Change Priority Action Plan for the agriculture sector (CCPAP III) is currently underway, with the vision to make Cambodia’s agriculture resilient by 2030 as it moves toward a sustainable agrifood system using climate-smart technology and innovations.

The adoption of climate-smart agriculture, and particularly irrigation, has been identified as a major opportunity to change production practices and attain farming efficiency, higher productivity, and higher incomes among farmers in Cambodia. Irrigated lands produce 60 percent greater yields than rainfed agriculture.

However, no more than 20–26 percent of farmers are currently known to apply improved climate-smart technologies and practices (such as resilient crop varieties) to address climate risks. The main reasons for low adoption are: (i) lack of capital for initial upfront investment to purchase climate-smart agricultural technologies; (ii) lack of awareness of and limited access to extension services; and (iii) lack of financial services.

Recommendations “Adaptation to Climate change”

1. Develop programs and introduce incentives to modernize and expand irrigation.

2. Support alternate wetting and drying (AWD) production.

3. Introduce incentives and expand extension services to diversify from high-risk crops toward climate-resilient, high-value, marketable crops (e.g. cashews, vegetables, and fruits). This should also include the promotion of agro-ecological practices, which will have multiple co-benefits.

4. Support farmers and small landholders in adopting climate-smart agricultural practices with improved financial instruments and insurance products.

5. Fund community-level investments that improve the capacity of poor and smallholder farmers to cope with natural disasters (e.g. shared agricultural storage facilities, collective rainwater harvesting facilities, and flood protection infrastructure).

6. Improve fisheries management, promote climate-resilient aquaculture, and protect critical mangrove habitats.

Building a climate-resilient agriculture sector would require an investment of US$3.6 billion (NPV) cumulatively from 2023–2050.

Tackle inefficient agricultural practices

Inefficient agricultural practices both increase emissions and lower productivity in the agriculture sector, while having negative consequences for climate adaptation. Methane emissions from rice production account for 65 percent of all GHG emissions from agriculture.

The drivers of high methane in Cambodia’s rice production include: (a) inefficient water use for irrigation; (b) very high seeding density and inefficient and high fertilizer application rates; (c) improper management of rice residues such as rice straw and husks;

Recommendation “Mitigation of climate change”

1. Incentivize the shift toward low-carbon rice production practices. A shift from continuously flooded irrigation to irrigation with just one single drainage (AWD) can reduce the emission intensity of rice by 40 percent, bring about beneficial water savings of up to 30 percent, and reduce fertilizer use and methane emissions. Instead of burning rice straw, farmers should practice the incorporation of rice straw as an organic amendment to improve soil health and boost yields, while reducing GHG emissions from rice production.

2. Promote sustainable livestock production through production intensification and waste management.

3. Promote the practice of integrated agriculture. Integrated agriculture will not only help to enhance productivity and diet diversity and increase profitability, but can also fight against deforestation and agriculture emissions. Multi-level agroforestry and intercropping can build the potential for soil carbon sequestration, restore degraded land and associated ecosystem functions, and increase farmer resilience. However, integrated agriculture has high initial costs, which remain significant constraints to increasing pro-poor adoption and diffusion. The government should take advantage of opportunities for carbon finance and other forms of green finance to incentivize farmers to adopt integrated agriculture practices.

4. Repurpose environmentally harmful subsidies. There is also a need to urgently review the policy framework to assess the feasibility of phasing out the most distorting and environmentally and socially harmful fertilizer subsidies. Redirecting subsidies toward providing training and goods and services to enable farmers to adopt more productive and profitable production practices that also produce adaptation/mitigation benefits is necessary.