Benefits

At the local scale, increases in fishing and aquaculture revenues are captured under the change in income from agriculture due to the change in the agricultural model.

At the basin level, recent estimates indicate that the economic value of the Mekong fishery dropped by more than a third between 2015 and 2020^[1]. The estimated annual value of fish catches was estimated between USD 7.13 billion and USD 8.37 billion in 2019-2020.^[2] While it is difficult to estimate the impact of flood-based agriculture on wild fisheries income in the basin in the absence of quantitative data, assuming that implementing the project in 25% of the highly suitable areas would only result in a 0.1% increase in fisheries, the revenues would generate about USD 7.75 million in annual benefits if the middle of the range of the 2019-2020 estimated annual value of fish catch (USD7.75 billion) is taken as a base.

[1] Cowx IG, Lai TQ and So N (2024). Fisheries Yield Assessment by Habitat Type at The Landscape Scale in The Lower Mekong

River Basin 2020. Vientiane: Mekong River Commission Secretariat.

[2] Ibid

At the local scale, the project could include components to attract tourists to the area. Tram Chim National Park received, pre-Covid, about 100,000 visitors per year, while the number of visitors in 2023 was about 60,000. Tram Chim is, however, a large well-known national park, while at Lang Sen Wetland Reserve there is no specific ecotourism component, although there are some simple visitor facilities. At this moment, Lang Sen is not open to the public, and only accessible to groups with academic- and/or research- purposes. However, it could be made suitable to open to the public in the future. If opened for tourism, it is assumed that the project would result in 10,000 additional visitors per year (10% of Tram Chim pre-Covid), who are assumed to generate an added value of USD 10 per visitor. Hence, the total annual benefit would be USD 100,000.

At the basin level, ecotourism cannot be implemented at all sites, as the total market demand for ecotourism is limited and not all sites are suitable, e.g., in terms of accessibility. In total, it is assumed that there would be 5 additional ecotourism sites throughout the basin, each would generate USD 100,000 per year, hence in total USD 600,000 per year.

Through the creation and protection of habitat, the project could contribute to increased carbon sequestration. Increased carbon sequestration reduces greenhouse gases in the atmosphere, mitigating climate change, and hence benefiting people as a reduction in climate change and associated effects compared to a baseline without the project. This benefit can be valued through the amount of carbon sequestered by vegetation and a social price for carbon. However, rice production causes significant emissions of methane, nitrous oxide and carbon dioxide.^[1] A change to flood-based agriculture likely impacts these emissions, but further research is required to determine exactly the changes in emissions. Hence, at this stage, it is not possible to assess the net impact of the project on greenhouse gases and the resulting benefit of climate change mitigation. As such, it cannot be quantified in the CBA.

[1] https://blogs.worldbank.org/en/eastasiapacific/greening-rice-we-eat

Non-use values are numerous and different for each person. Such values include bequest values (leaving something for the next generation), existence values (attaching value to knowing that something exists, for instance, expressed to donations to charity) and option values (not using it now, but maybe in the future). A monetary estimate of non-use values can generally only be obtained by asking people for their willingness to pay to conserve or enhance certain habitats, ecosystems or ecosystem services.

While there are some studies on non-use values of wetlands in the Lower Mekong Basin, the results cannot be easily translated for use in the CBA in this study, as they are site-specific and because of methodological issues in using values derived from site studies at a larger, basin, scale. An example is an estimation of the biodiversity values of Tram Chim National Park (Do and Bennett, 2007)^[1] which found that the aggregated values for a wetland conservation program resulting in an increase in healthy vegetation, an increase in the number of Sarus cranes and an increase in the number of fish species are about USD 3.9 million. This gives a clear indication that there are significant non-use values that could support the decision to implement projects.

The change in non-use values could be linked to the potential value of biodiversity credits. Biodiversity credits are a verifiable, quantifiable and potentially tradeable financial instrument that rewards positive nature and biodiversity outcomes (e.g., species, ecosystems and natural habitats) through the creation and sale of either land, freshwater or ocean-based biodiversity units over a fixed period.^[2] The market for biodiversity credits is, however, still at an early stage of development and the pricing of biodiversity credits is still largely unknown.

[1] Thang Nam Do and Jeff Bennett, Estimating Wetland Biodiversity Values: A choice modelling application in Vietnam's Mekong River Delta, Australian National University Economics and Environment Network Working Paper EEN0704, 2007.

[2] World Economic Forum: https://initiatives.weforum.org/financing-for-nature/home

Agricultural production and resulting agricultural income is evaluated together with the change in quality and quantity of agricultural outputs, as they both ultimately lead to a change in agricultural income for households and potentially the private sector through supply chains.

The impact on income from agriculture and aquaculture is the result of many individual effects. Firstly, there are changes in inputs, including labour, fertiliser, pesticides, irrigation, rice seeds, and fish seedlings, that in the aggregate lead to cost savings. Secondly, there are changes in outputs including changes in the quality and quantity of the yield, new outputs such as fresh and dried fish, and products from water hyacinth. In total, this leads to a change in incomes for households and the private sector through supply chains. WWF conducted a pilot study under the Climate Resilient by Nature programme that can be used to gauge the impacts of the project on income from agriculture. Table 3-4 shows the financial results of flood-based agriculture for a full production cycle for 2022 and 2023 and intensive triple rice crops for 2022 as a comparison. The table shows that the production costs for flood-based agriculture are considerably lower than for intensive triple rice crops. However, revenues are also substantially lower, leading to a lower profit, or income from agriculture for households.

While in those two years, the financial benefit from the project was negative, these results need to be seen in the context of the pilot project. It is expected that soil health will increase over time as a result of flood-based agriculture, thereby increasing the productivity of conventional rice crops and floating rice crops over time. As supply chains for the products from fisheries and aquaculture have not been established yet, the production resulted in a local, temporary oversupply, resulting in low prices. The global price of rice also increased by about 3% in 2022 and 21% in 2023 due to geopolitical tensions (War in Ukraine) and adverse weather conditions (El Nino) making intensive triple rice crops relatively more attractive due to higher output. Hence, the results are very much determined by market conditions.

In the CBA it is conservatively assumed that the change in income from farming due to the project is zero. The following arguments support this. Firstly, as value chains become more established (e.g., good distribution channels for outputs), prices for fish and other aquaculture products would be more stable and higher. Secondly, rice from flood-based agriculture could command a premium price that might be sufficiently large to bridge part of the gap caused by the higher output from intensive triple rice crops. This will depend, however, on global market conditions and the right value chains and marketing/certification of flood-based rice. Thirdly, the required input from fertiliser would increase over time due to deteriorating soil conditions in the intensive triple rice cropping system, while productivity would decrease due to soil degradation and pesticide use. Fourthly, households in the pilot study also earned from harvesting water hyacinth and water hyacinth knitting and fish trap making, which also makes up part of the difference from conventional agriculture. Hence, over time it is expected that flood-based agriculture can compete with intensive triple rice cropping.

An intangible income-related benefit is that flood-based agriculture could provide a more stable household income as it is more climate and flood-resilient. Besides intangible social benefits from a more stable income, it could also support economic development. As the risk of loss of income or investments due to natural hazards decreases, households would be more inclined to invest their incomes, rather than saving for bad times. However, it is outside the scope of this study to estimate such benefits.

For private sector companies, upgrades in the value chain could lead to improved product quality and value, new sources of income, reduction of unit cost and increased scale of production and consumption.^[1] This would lead to increased income and value-added from the private sector. The rice value chain in the Mekong Delta is, however, a large and complex system, linking thousands of small-scale rice farmers to large numbers of traders, processors, wholesalers, retailers, and exporters. Hence, it is difficult to quantify the change in revenues of the private sector due to the project. In line with the assumption for household income, it is assumed that there may be some shifts in revenues between products (e.g., less fertiliser sold, more fisheries revenues), but overall it is assumed that the net effect is zero.

[1] Source: Report on solutions for upgrading the value chains of products from livelihood activities in the project area – Tan Hung district, Long An province, Vietnam.

If farmers and other people in the local community are less exposed to chemicals, this would lead to health benefits. Theoretically, health benefits could be quantified and monetised as reduced medical expenditures, avoided loss of working days due to illness, or an increase in expected healthy living years. However, as data on the impact of specific chemicals on health is not available, this benefit cannot be quantified in this study.

The introduction of the NbS at the basin level would lead to flood risk reduction downstream, as the storage capacity for flood waters increases. In addition, increased inundation would result in the deposition of sediments, partly mitigating the effects of land subsidence and aiding in maintaining the elevation of the delta. Almost every year, floods cause damage to agriculture, infrastructure and buildings and lead to loss of lives, which might be reduced with greater water storage upstream to reduce peak flows. Reduced flood levels could result in lower required protection levels, and hence lower costs for flood protection infrastructure.

In terms of water storage, it is estimated that flood-based agriculture could store 740 million m³ of flood waters in Vietnam and 300 million m³ in Cambodia, leading to a flood depth reduction of 0.7 and 0.3 meters respectively in the Mekong River, see Appendix A. However, assessing the quantitative impact of implementing flood-based agriculture on resulting flood damage reduction and flood protection is complex.^[1]    and hence only a very rough indication of the benefits can be given. The average annual cost of floods in the Lower Mekong Basin ranges between USD 60 to 70 million.^[2] Assume the project would contribute to a 1% reduction in damages this would be USD 600,000 to 700,000 annually.

[1] See for instance Thanh, V. Q., Roelvink, D., Van Der Wegen, M., Reyns, J., Kernkamp, H., Van Vinh, G., & Linh, V. T. P. (2020). Flooding in the Mekong Delta: the impact of dyke systems on downstream hydrodynamics. Hydrology and Earth System Sciences, 24(1), 189-212 on the complexity of modelling and considerations to assess changes in the floodplain on flood levels.

[2] Mekong River Commission: https://www.mrcmekong.org/our-work/topics/flood-and-drought/

Closely related to the reduction of flooding, the NbS would also lead to increased resilience to drought through groundwater replenishment. There is, however, no data available to quantify this effect. Groundwater replenishment however is very important to mitigate further subsidence, and thereby also indirectly positively affects flood risk.

A flood-based agricultural model would reduce the dependency on pumping and hence reduce the pumping costs. It is assumed that the benefits of energy savings are included under the change in agricultural income as a reduction in the costs of inputs.

The table below provides a summary of the benefits.