8. Policy implications

[ Table 6.13 ] Projected changes (in percentage) of seven assessed socio-economic metrices across Viet Nam in a warming climate

Metric RCP26 RCP45 RCP60 RCP85 2050 2075 2100 2050 2075 2100 2050 2075 2100 2050 2075 2100

Hourly wage -9.5 -11.3 -12.4 -12.3 -17.7 -21.8 -5.7 -11.8 -18.6 -15.7 -27.6 -39.5

Hours worked -0.5 -0.6 -0.6 -0.6 -0.9 -1.1 -0.3 -0.6 -0.9 -0.8 -1.3 -1.9

Gender pay gap 0.5 0.6 0.6 0.6 0.9 1.1 0.3 0.6 0.9 0.8 1.3 1.9

Firm revenue -3.1 -3.7 -4.1 -4.0 -5.8 -7.2 -1.9 -3.9 -6.1 -5.2 -9.1 -12.9

Firm TFP -3.3 -3.9 -4.3 -4.3 -6.1 -7.6 -2.0 -4.1 -6.4 -5.4 -9.6 -13.7

Firm output -6 -8 -8 -8 -12 -15 -4 -8 -12 -10 -18 -26

Firm size -2.0 -2.4 -2.6 -2.6 -3.8 -4.6 -1.2 -2.5 -3.9 -3.3 -5.9 -8.4

Note: For each of the greenhouse gas emission scenarios, the mean of all projections was provided.

This chapter has assessed the impacts of changes in temperature and precipitation on economic entities, including workers, businesses, and households. The chapter’s findings add useful information to the literature, and provide evidence to support the process of policy-making in response to climate change. Unlike the results of the sectorial impact assessment, this chapter studies the impacts of climate variability on the welfare of workers, households and firms’ performance. The chapter results provide several policy implications for Viet Nam’s response to climate change, as follows:

uOn the impact assessment of climate change: Various models and analyses in this chapter suggest ways and channels to assess the impacts of climate change on different actors in the economy. Assessing the impacts of climate change is necessary to provide a basis for reviewing, adjusting and promulgating policies to respond to climate change. According to the revised Environmental protection Law in 2020, this assessment needs to be carried out in order to formulate appropriate climate change response policies. Currently, documents to guide local governments in their impact assessments are being prepared. The findings of this chapter show that climate change may have adverse effects on job creation, employment allocation, economic restructuring, household income, and business performance. Therefore, the climate change impact assessment should consider the impacts on these economic entities and aspects. In particular, the results show that the impact on the incomes of some vulnerable groups such as the poor and women should be paid due consideration.

uOn the impacts of climate change on agriculture and structural change: The results of this chapter show the negative impact of increases in temperature on household income from agriculture. These are consistent with

the findings of other studies, particularly the impacts on livestock and fishing5. Specifically, the results indicate that there is a negative impact of weather shock on fruit income, suggesting that more policies to support agricultural sectors are needed. These results — together with findings on the impact of temperature and rainfall changes on the choice of workers to work in agriculture, industry, or services, and on migration — suggest that climate change will have a definite impact on employment and economic restructuring. Therefore, the issue of climate change should be considered when studying policy directions to promote the transformation of employment and economic structure in Viet Nam.

u On climate change and poverty: The chapter findings indicate that climate change has a more negative impact on poor households. It is found that poor households suffered more losses in income. This means climate change may impoverish the poor, so the issue of climate change should be seriously taken into account in poverty reduction policies. In other words, it is necessary to integrate the issue of climate change into poverty reduction policies or, vice versa, to examine the issue of the poor in policies to respond to climate change. Currently, the national target programme on poverty reduction has many poverty reduction policies focusing on poor communes, such as infrastructure development, poverty reduction, livelihood models, communication, etc. but does not pay enough attention to the issue of climate change. In contrast, the national plan of Viet Nam to adapt to climate change for the period 2021–2030, with a vision through to 2050, recognizes that climate change is an

5. For example, research results show that climate change is expected to reduce output of pig production by 1.1% of total pig output in Viet Nam [ Nguyen TTN et al., 2017 ], or negatively impacts the growth of animals, birds, reptiles, etc. [ Nguyen Dac Manh et al., 2020 ]. existential threat to the goals of sustainable development and hunger eradication. The plan includes some actions that indirectly affect poverty (such as through employment, loss and damage reduction, etc.), but does not directly address poverty in relation to climate change. In this regard, it might necessary to study and develop livelihood models to respond to climate change for poor households, and have policies to improve their capacity to adapt to climate change.

uOn climate change and employment: The chapter results show that changes in temperature and rainfall have a negative impact on working hours and the income of workers. The results also show the effects of climate variables on employment allocation and migration. These findings have been verified through the impacts on labour demand (i.e. the increase of average temperature and precipitation lead to a decline in revenue, output, firm size and productivity). They provide evidence for the need to integrate the issues of climate change into employment policy. This is shown in Viet Nam’s National Plan for Climate Change Adaptation for the period 2021–2030, with a vision through to 2050. Specifically, the plan integrates climate change into employment policies with a focus on developing policies to create green jobs, support job transition and develop sustainable livelihoods for people. However, according to the findings of this chapter, in addition to people, the plan may need to pay attention to businesses, and policies to support businesses in adapting to climate change, minimizing its negative impacts and resulting damage.

uOn climate change and gender: One of the notable findings of this chapter is that climate variables may have negative impacts on gender inequality: women tend to work more but earn less when the temperature increases. In

other words, the climate change may increase gender inequality in terms of working hours and pay. This provides evidence for the need to mainstream gender issues into policies to respond to climate change. In Viet Nam, this has been carried out quite well. Current policies emphasise capacity building for women, developing female human resources involved in the climate change adaptation process, and providing soft skills training female workers to participate in new economic sectors in the context of climate change adaptation. Besides, it may worth considering promoting the typical models which suitable for women in the context of climate change.

uOn the role of NGOs in climate change: The results of this chapter, along with the results of many other studies, show that climate change can have adverse effects in many aspects of household well-being, especially for vulnerable groups such as the poor. Therefore, in order to respond well to climate change, it is necessary to approach the issue from multiple dimensions with the active participation of various actors, including proactive state agencies and international partners/organizations, individuals and communities, including non-government organizations (NGOs) and associations. In regard to working with households, many NGOs are currently very active participants in climate change adaptation, and play an important role in raising awareness as well as helping households to respond to climate change6 . Government policies such as the National Plan to adapt to climate change need to mobilize the participation of these organizations more strongly, to join hands with the state and people to reduce negative impacts, strengthen resilience and enhance the adaptive capacity of households to climate change.

6. For example shown in the MPI and UNICEF (2021). Climate landscape analysis for Children in Viet Nam.