Economic Outlook for Southeast Asia, China and India 2024

Cambodia

Introduction

Cambodia is exposed to floods, droughts, tropical storms and landslides (GFDRR, 2017[1]). Floods are the most prevalent type of disaster affecting the country, as shown in the figure below. It is classified as facing high disaster risk by the WorldRiskIndex (8.19, 65^th-highest risk out of 193 countries). Between 2000 and 2022, disasters triggered by natural hazards caused more than 1 200 deaths and affected more than 16 million other people (CRED, 2024[2]).

Cambodia: Disaster occurrences (from 1981 to 2023) and WorldRiskIndex

Source: EM-DAT and WorldRiskIndex.

Statlink

The hazardscape

Cambodia is particularly exposed to flooding, as the low-lying plains along the Mekong River and the Tonlé Sap Lake cover almost three-quarters of the country (Phy et al., 2022[3]). Seasonal riverine floods, which are associated with a steady rise of river levels, occur regularly during the monsoon season as a result of heavy rainfall in the upper catchment hills, and can be aggravated by rainfall around the Tonlé Sap or by cyclone-induced rainfall, especially along the coasts. Flash floods, which typically result from rainfall in mountainous areas flowing into the Mekong tributaries, occur more suddenly and last several days at most (Oudry, Pak and Chea, 2016[4]). Flooding may also occur as a consequence of upstream dam failures, as was the case in 2018 when a dam breach in southern Lao PDR caused catastrophic flooding downstream (Latrubesse et al., 2020[5]). Floods cause the highest disaster-related losses in the country and are estimated to lead to about 100 fatalities annually, as well as to yearly agricultural losses of USD 100‑170 million (Royal Government of Cambodia, 2010[6]). Between 1996 and 2013, floods damaged almost 1.7 million hectares of rice paddy fields, which represented 67% of the total damaged rice paddy fields by area (UNDP, 2014[7]). A 2011 flood affected more than 1.5 million people and destroyed approximately 10% of the country’s agricultural crops (ADB, 2012[8]). The population exposed to riverine floods is projected to increase to 4 million by the 2040s if no further mitigation measures are implemented (World Bank and ADB, 2021[9]).

Cambodia is also exposed to drought, threatening rural populations whose livelihoods are based on subsistence agriculture, as these areas do not use large-scale irrigation (UNDP, 2019[10]). Kampong Speu, Takeo Banteay Meanchey, and Svay Rieng are among the most drought-prone provinces. Droughts are also related to the El Niño Southern Oscillation (ENSO) cycle. In 2015, an El Niño led to the worst drought in 50 years, affecting more than 2.5 million people and threatening national food security (UNDP, 2019[10]). Upstream damming on the Mekong River is affecting drought risk as well and was linked to a severe drought in 2019 (Lu and Chua, 2021[11]). From 1987 to 2007, drought losses were estimated at USD 138 million (Oudry, Pak and Chea, 2016[4]).

Cambodia is also exposed to infrequent tropical cyclone impacts (as most cyclones in the region affect Viet Nam’s coast), though the recorded frequency of such impacts has increased recently. In 2009, Cambodia was struck by Tropical Cyclone Ketsana, one of the most intense storms in the country’s history, affecting 180 000 people and leading to USD 132 million in damage (Royal Government of Cambodia, 2010[6]).

Climate change perspective

Climate change is expected to increase the frequency and intensity of droughts and floods, endangering 10% of Cambodia’s GDP by 2050 (World Bank and ADB, 2021[9]; Thilakarathne and Sridhar, 2017[12]; Nop, 2021[13]). In addition, parts of the Cambodian coastline are projected to face new risks from storm surges due to a southward shift in tropical cyclone tracks (Wood et al., 2023[14]).

Eighty percent of Cambodia’s population lives in rural regions and relies on subsistence agriculture (GFDRR, 2017[1]). While manufacturing and services increasingly contribute to the economy, agriculture and fisheries, which are highly vulnerable to the impacts of extreme weather, still constitute roughly one-quarter of GDP and employ half of the country’s labour force (World Bank and ADB, 2021[9]). Disaster vulnerability is exacerbated by the high prevalence of poverty, with 17.8% of the country’s approximately 17 million inhabitants living below the poverty line of KHR 10 951 per day (Karamba, Tong and Salcher, 2022[15]). Other factors contributing to high vulnerability include a lack of adequate protective infrastructure, inadequate drainage systems and the presence of many informal settlements (UNDRR, 2019[16]).

The capital city of Phnom Penh has approximately 250 000 informal urban dwellers (15% the of the city’s urban population), a significant fraction of whom occupy low-lying, flood-prone areas (Flower et al., 2017[17]). Physical vulnerability is exacerbated by the poor quality of housing. In 2017, almost 10 million people were estimated to lack access to decent housing; this is more than 60% of the national population (Habitat For Humanity Cambodia, 2017[18]). Both exposure and vulnerability are being altered by urbanisation. Rapid development in Phnom Penh’s peri-urban districts increases flood exposure and vulnerability, as construction in these areas involves the filling of marshlands that serve important floodwater and wastewater regulation functions (Flower et al., 2017[17]).

Challenges for disaster risk management policy

The disaster risk management funding allocated in the government’s budget is not always sufficient to cover losses, especially as the country is exposed to the impacts of relatively frequent major events and is heavily reliant on international assistance for disaster response, relief and recovery. Emergency response costs (especially for floods) lead to short-term funding gaps and necessitate reallocation of public funds, which has negative implications for development funding (GFDRR, 2017[1]).

The Cambodian disaster insurance market is still at an early stage, with minimal coverage of private property, public assets or agricultural production. In 2017, it was estimated that non-life insurance penetration is only 0.16% of GDP, the second lowest level in ASEAN, while disaster perils are typically excluded in standard insurance policies (GFDRR, 2017[1]). In the case of small agricultural communities and villages, innovative disaster insurance models, such as community-based catastrophe insurance, could be implemented. The potential advantages of community-based insurance include a more flexible insurance-policy structure, possibly including parametric triggers for payments, lower fixed underwriting and assessment costs and thus better affordability, and the inclusion of risk mitigation incentives (Bernhardt et al., 2021[19]). Ways to increase public asset insurance should also be explored (GFDRR, 2017[1]).

Co-ordination of response and recovery activities needs to be strengthened further. Disaster risk management efforts are also constrained by limited disaster data, with better data required for disaster risk assessments and disaster risk reduction planning (Mochizuki et al., 2015[20]). These requirements include mapping of flood hazards. Given the importance of flooding, additional funding for flood hazard mapping, risk and damage assessment, and projected future flood analysis due to climate change are needed (Phy et al., 2022[3]). Improved disaster data collection more generally, as well as more detailed risk assessments, would greatly benefit Cambodia’s disaster risk management efforts. Flood and drought risk mitigation would also benefit from improvements in water management. The current approach, in the form of irrigation management, is not sufficient and should be complemented by water diversion schemes, large-scale reservoir construction, and increased community-based water management efforts (Sithirith, 2021[21]). These measures may ameliorate both wet-season floods and dry-season water scarcity.

References

[8] ADB (2012), Flood Damage Emergency Reconstruction Project: Preliminary Damage and Loss Assessment, https://www.adb.org/projects/documents/flood-damage-emergency-reconstruction-project-cambodia-rrp.

[19] Bernhardt, A. et al. (2021), Community-Based Catastrophe Insurance: A model for closing the disaster protection gap, Marsh & McLennan, https://www.marshmclennan.com/content/dam/mmc-web/insights/publications/2021/february/Community--Based--Catastrophe--Insurance--(Final).pdf.

[2] CRED (2024), EM-DAT, The International Disaster Database, https://www.emdat.be (accessed on 12 December 2023).

[17] Flower, B. et al. (2017), “Using participatory methods to uncover interacting urban risks: a case study of three informal settlements in Phnom Penh, Cambodia”, Environment and Urbanization, Vol. 30/1, pp. 301-316, SAGE Publications, https://doi.org/10.1177/0956247817735481.

[1] GFDRR (2017), Disaster Risk Finance Country Diagnostic Note: Cambodia, https://www.gfdrr.org/en/publication/disaster-risk-finance-country-diagnostic-note-cambodia.

[18] Habitat For Humanity Cambodia (2017), Building Tomorrow. Annual Report 2017, Habitat for Humanity, http://habitatcambodia.org/wp-content/uploads/2017/05/AR17-EN.pdf.

[15] Karamba, W., K. Tong and I. Salcher (2022), Cambodia Poverty Assessment: Toward a More Inclusive and Resilient Cambodia, World Bank, Washington, DC, http://hdl.handle.net/10986/38344.

[5] Latrubesse, E. et al. (2020), “Dam failure and a catastrophic flood in the Mekong basin (Bolaven Plateau), southern Laos, 2018”, Geomorphology, Vol. 362, p. 107221, https://doi.org/10.1016/j.geomorph.2020.107221.

[11] Lu, X. and S. Chua (2021), River Discharge and Water Level Changes in the Mekong River: Droughts in an Era of Mega-Dams, Authorea, Inc., https://doi.org/10.22541/au.161189206.60684509/v1.

[20] Mochizuki, J. et al. (2015), “Operationalizing Iterative Risk Management under Limited Information: Fiscal and Economic Risks Due to Natural Disasters in Cambodia”, International Journal of Disaster Risk Science, Vol. 6/4, pp. 321-334, https://doi.org/10.1007/s13753-015-0069-y.

[13] Nop, S. (2021), “Climate Change Adaptation in Cambodia”, Climate Change Adaptation in Southeast Asia, pp. 43-56, Springer Singapore, https://link.springer.com/book/10.1007/978-981-16-6088-7.

[4] Oudry, G., K. Pak and C. Chea (2016), Assessing Vulnerabilities and Responses to Environmental Changes in Cambodia, https://environmentalmigration.iom.int/sites/g/files/tmzbdl1411/files/documents/MECC_Cambodia%20report.pdf.

[3] Phy, S. et al. (2022), “Flood Hazard and Management in Cambodia: A Review of Activities, Knowledge Gaps, and Research Direction”, Climate, Vol. 10/11, pp. 162, MDPI AG, https://doi.org/10.3390/cli10110162.

[6] Royal Government of Cambodia (2010), Cambodia - Post Ketsana disaster needs assessment (English), https://documents.worldbank.org/en/publication/documents-reports/documentdetail/918331468017406040/cambodia-post-ketsana-disaster-needs-assessment.

[21] Sithirith, M. (2021), “Downstream State and Water Security in the Mekong Region: A Case of Cambodia between Too Much and Too Little Water”, Water, Vol. 13/6, p. 802, https://doi.org/10.3390/w13060802.

[12] Thilakarathne, M. and V. Sridhar (2017), “Characterization of future drought conditions in the Lower Mekong River Basin”, Weather and Climate Extremes, Vol. 17, pp. 47-58, Elsevier BV, https://doi.org/10.1016/j.wace.2017.07.004.

[10] UNDP (2019), Drought Baseline Study in Cambodia, Strengthening Climate Information and Early Warning System, https://www.adaptation-undp.org/sites/default/files/resources/drought_study_in_cambodia-13102020.docx.

[7] UNDP (2014), CamDi: Cambodia Diasaster Loss and Damage Information System, https://www.undp.org/cambodia/publications/cambodia-disaster-loss-and-damage-analysis-report-1996-2013.

[16] UNDRR (2019), Disaster Risk Reduction in Cambodia, Status Report (July 2019), https://reliefweb.int/report/cambodia/disaster-risk-reduction-cambodia-status-report-july-2019.

[14] Wood, M. et al. (2023), “Climate-induced storminess forces major increases in future storm surge hazard in the South China Sea region”, Natural Hazards and Earth System Sciences, Vol. 23/7, pp. 2475-2504, Copernicus GmbH, https://doi.org/10.5194/nhess-23-2475-2023.

[9] World Bank and ADB (2021), Climate Risk Country Profile: Cambodia, https://www.adb.org/sites/default/files/publication/722236/climate-risk-country-profile-cambodia.pdf.