For Vietnam, Greener Growth Can Reduce Climate Change Risks

IMF News, January 9, 2018

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By 2100, climate change could impact more than 12 percent of the Vietnamese population and reduce growth by 10 percent.
Vietnam’s 2,150-mile-long coastline and proximity to the tropics increase vulnerability.
Vietnam’s 95 million people and the bulk of its economic assets are concentrated in coastal lowlands susceptible to typhoons.
Every year since 1990, natural disasters have cost on average about one percent of GDP and caused 500 casualties.
In 2017, Vietnam was affected by 12 major storms, causing deadly floods and destroying hundreds of thousands of homes and hectares of crops.
More frequent and more intense storms could affect crop yields and production, impacting rural incomes, food security, and commodity exports.
Increased rainfall intensity will damage roads and railroad networks; higher temperatures will raise demand for electricity.
Risks will weigh disproportionately on the poor, who could be forced to migrate inland or towards large cities.

Rapid industrialization since the late 1980s has relied on intensive and unsustainable exploitation of forests, fisheries, and other renewable and nonrenewable natural resources.
Vietnam’s stock of natural capital has declined as mineral and nonmineral resources were depleted; agriculture and industry have contributed significantly to degradation of natural capital.
Extensive use of fertilizers contributes to polluting land and water and adds to legacy environmental issues.
Vietnam is among the top ten countries affected by air pollution: in large cities and industrial zones, levels of fine particulate matter are much above safe levels and comparable to that of China.
Greenhouse gas emissions are expected to double between 2010 and 2020 and triple by 2030.
Electricity production from coal-fired plants is a major contributor to air pollution, with a quarter of the domestic supply produced from coal.

Vietnam ratified the 2016 Paris Agreement on Climate.
The government committed to reducing greenhouse gas emissions by at least 8 percent by 2030 and to achieving the United Nations Sustainable Development Goals (SDGs) by 2030.
A recently created National Committee on Climate Change, chaired by the Prime Minister and including key ministers, oversees climate change and green growth programs.

Lower the intensity of fossil fuels in Vietnam’s GDP:
- Raise the contribution of renewable energy to break the link between greenhouse gas emissions and output.
Provide stronger incentives for households, firms, and government to pursue green growth:
- Taxation of fossil fuels that fully prices environmental and health externalities would nudge energy demand toward renewables and generate revenue to finance adaptation and mitigation plans.
Invest in climate-resilient infrastructure:
- Help households and firms cope with storms.
- The expected cost of natural disasters could be usefully included in public debt sustainability analyses.
Promote research and development and other innovation policies:
- Provide further incentives to investment in existing clean energy sources and improvements in clean technologies.
Shift transport toward autonomous, electric, shared vehicles (as already planned in Singapore):
- Would help reduce congestion and pollution in cities.
- Improved government capacity to coordinate technological change and promote innovation and green growth will be key.

For Vietnam, Greener Growth Can Reduce Climate Change Risks — January 9, 2018