Vo Thanh Danh
School of Economics and Business Administration, Can Tho University, Vietnam
Vietnam is one of five countries in the world most likely to be seriously affected by the impacts of global climate change and any consequent rises in sea level (SLR). The boundaries of the Vietnamese Mekong Delta (VMD) are marked by the sea and so this area faces a risk of SLR due to global climate change. The necessity of investing in creating a concrete sea dike system in the VMD is still the subject of debate. This study was conducted in Tra Vinh province, which borders the Southeast Asian Sea and so represents an area of the VMD that would typically be affected by an increase in SLR. The purpose of this study is to conduct an economic valuation of creating a concrete sea dike system as an adaptation measure to counter the impacts of a rise in sea level. A risk-based cost-benefit analysis (CBA) framework was used. It uses an ex-ante approach with risk considerations for storms, floods, and salinity by specifying probability distribution functions in a simulation process so as to incorporate these risk factors into the analysis. The study developed five dike options associated with three hypotheses of the scale of different sea dike systems: option 1 represented a dike that could withstand the severity of a storm that occurs once every 20 years, option 2 and option 3 represented a dike that could withstand the severity of a storm that occurs once every 50 years, and option 4 and option 5 represented a dike that could withstand the severity of a storm that occurs once every hundred years. The results showed that the benefits of avoided storm and flood impacts dominated the dike options. The benefit of salinity avoided was also valuable, with avoided losses to annual rice and aquaculture productivity amounting to USD331.25 per ha and USD915 per ha, respectively. Based on the Net Present Value (NPV) decision rule, the results indicated that dike options should be recommended as an appropriate adaptation measure for the VMD’s particular geographic situation. The larger in scale the dike system options were, the higher the estimated NPVs (ENPV) were. Of the dike alternatives applicable to the VMD, initially small-scale dikes that could be subsequently heightened should be a priority choice if the impacts of SLR focus mainly on storms, floods, and salinity factors. The sensitivity analyses showed that the ENPVs of dike options were very sensitive to changes in discount rate but were not at all sensitive to increases in salinized areas. The findings provide evidence to support the necessity of the construction of a concrete sea dike system in the Vietnamese Mekong Delta, given the context of global climate change.