Benefits

At the project site, fish catches have reportedly decreased by 30-40% since 2018. The income from fishing in the wet season is between USD 250 to 1000 per household, while there are about 1,700 households in three communes where interviews were conducted and whose primary source of income is fishing. Research in Tonle Sap Lake found that fish populations fell by 88% between 2003 and 2019^[1] and recent estimates indicate that the economic value of Mekong fishery dropped by more than a third between 2015 and 2020^[2]. The estimated annual value of fish catch was estimated between USD 7.13 billion and USD 8.37 billion in 2019-2020.^[3]

These figures show the large economic importance of fisheries. For the CBA it is, however, not possible to quantify and monetise the impact of the project as it is not known how much the project would change the fisheries production rates, increase the fish biomass and hence change the fishing revenue.

As a very rough estimate, it could be assumed that at the local level, the project would partly reverse the decline since 2018 – e.g., assume 15% – as other factors, such as dam construction, climate change and impacts from outside the project site also affect fish catch within the site. Hence, taking the average income from fisheries per household (USD 625 during the wet season) as reported during the field visit, and 1,700 households, the benefits would amount to about USD 160,000 per year (note that there are more households than in the three villages that would benefit from more fish and there are also households whose main source of income is rice or crops that would benefit, so this is likely an underestimate).

At the basin level, it is more difficult to estimate the impact of larger areas of flooded forests on fisheries income. But taking a strongly conservative estimate, if implementing it in 25% of the highly suitable areas resulted only in a 1% increase in fisheries, the revenues would generate about USD 77.5 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] Chevalier M, Ngor PB, Pin K, Touch B et al., (2023) Long-term data show alarming decline of majority of fish species in a Lower Mekong basin fishery. Science of The Total Environment, Volume 891.

[2] 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.

[3] Ibid

At the project site, there is no known harvesting of non-timber forest products, or at least it was not reported during the field visit. Yet, studies show that products such as resin, bamboo, rattan, wild honey and fuelwood are collected from forests in Cambodia.^[1],[2] However, data on the amounts and values of these products is limited. A study by Sophanna et al. (2022) conducted a survey in 22 villages in the Tonle Sap Lake area that are located within 500 metres of a flooded forest to assess ecosystem services. They found the following annual economic benefits per person per year from flooded forests: fuelwood – USD 12; wild food – USD 8; traditional medicine – USD 1; honey – USD 1, hence in total USD 22 per person per year.^[3] This is USD 121 per household per year at an average household size of 5.5 (as reported in the same study). It is, however, not known how many households at the site and in the basin are located within 500 metres of flooded forests and how restoration of flooded forests would affect this benefit. To still reflect these benefits, it is conservatively assumed that 10% of the households at the site (493 households) live within 500 meters of the flooded forest and that by restoring the flooded forest 25% of the annual value of non-timber forest products (USD 30) can be regained. Hence, the benefit at the site is USD 14,790 annually. At the basin level, the amount from the site will be scaled based on the area to be purchased, i.e., 50 times USD 14,790 is USD 739,500.

[1] Chou, P. (2017) The importance of Non-timber Forest Products in Rural Livelihoods and Ecosystem Services at Phnom Princh Wildlife Sanctuary, Cambodia. International Journal of Environmental and Rural Development, 8-1.

[2] Sophanna et al. (2022). Flooded Forests. in: C. Yoshimura et al. (eds.), Water and Life in Tonle Sap Lake, Chapter 32. Springer Nature Singapore.

[3] They also find an economic value for fisheries of USD 5021 per household per year, which is considerably higher than in the case study area.

In the case study area, there is no tourism at this moment. Based on other ecotourism sites, the assumption was made that the project site could attract 1000 to 5000 (average 3,000) tourists per year, of which half would stay overnight. Tourists would spend (added value, excluding costs of the tourism offering) on average USD 10 per person, while tourists that stay overnight would spend an additional USD 20. Hence, the total annual benefits would be USD 60,000.

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 60,000 per year, hence in total USD 360,000 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. Measuring this would require an estimate of carbon sequestration in the project area without and with the project. For this, newly established vegetation, restored degraded forest and avoided deforestation could be considered. Calculating the amount of carbon sequestered is complex and falls outside the scope of this study. Yet, using a ballpark calculation, an indication of the benefit could be obtained. Assuming carbon sequestration is 5.5 tCO₂ ha⁻¹yr^{−1 [1]} and the value of a tonne of CO₂ is USD 5 ^[2], benefits would be USD 27.50 per ha per year, or USD 6,875 per year for the 250 ha planted area.

At the basin level, the planted area (assumed 12,325 ha, see below) would generate USD 338,938 as a ballpark figure.

[1] Based on Sasaki et al (2016). Forest reference emission level and carbon sequestration in Cambodia. Global Ecology and Conservation, Volume 7, July 2016, Pages 82-96

[2] The value of one tCO₂ varies widely: the recent social costs of carbon are estimated at USD 225 per tCO₂, the price of carbon under the EU ETS varied from about EUR 100 in February 2023 to EUR 50 in March 2024, and the value of REDD+ carbon credits under the voluntary market (most relevant in this context) were on average USD 4.7 per tCO₂, in 2021 and USD 1.46 at the time of writing this report.

By restoring the flooded forests, the floodplain water storage capacity will increase. This could potentially lead to lower peak flood water levels and a reduction in flood damages and flood protection costs (e.g., lower requirements for levees). Moreover, there would be more water available in the dry season.

In terms of water storage, it is estimated that flooded forests could store 490 million m³ of flood waters, leading to a flood depth reduction of 0.5 meters in the Mekong River, see Appendix A. However, assessing the quantitative impact of restoring hydrological connectivity on flood damage and flood protection is complex,^[1] 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] Assuming 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/

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.

The non-use values are not included in the CBA as no good studies are available for flooded forests in Cambodia.

The change in non-use values could be linked to the potential value of biodiversity credits. Biodiversity credits are a verifiable, quantifiable and 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 or ocean-based biodiversity units over a fixed period.^[1] 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] World Economic Forum: https://initiatives.weforum.org/financing-for-nature/home

Clearing of flooded forests in the study area partly happened because fish catches were reducing over time while growing rice provides a higher income of about USD 1,500 per ha per year. The purchase of land for flooded forest restoration would reduce the agricultural land available for rice cultivation and hence should be included as a disbenefit (cost). For the 500 ha to be purchased in the case study area this would amount to an annual disbenefit of USD 750,000. At the basin level, this would amount to almost USD 37 million annually.

It should be noted that the purchase of land (listed under costs) incorporates compensation for the loss of income. Hence, including both the cost and the disbenefit in the CBA would lead to double-counting. The cost of land is equivalent to about 12 years of income from growing rice (at a 6% discount rate of future revenues).  In the CBA only the costs of the purchase of land are included, as the data on costs of land are better, and loss of agricultural revenue could partly be compensated by changing agricultural practices, such as implementing flood-based agriculture in the wet season.

The table below provides a summary of the benefits