Adapting to Climate Change in Vietnam: Insights from a Structural Model

Amr Hosny

Asian Journal of Economic Modelling, 2021, vol. 9, issue 2, 145-152

Abstract: Vietnam is increasingly exposed to climate change. The COVID-19 crisis offers an opportunity to push for green investment and climate-resilient adaptation. In this context, the paper uses a DSGE structural model, calibrated to features of the Vietnamese economy, to simulate the macroeconomic trade-offs of investing in resilient infrastructure. Compared to scenarios of a baseline no policy change and additional standard infrastructure spending, the model findings illustrate the long-term benefits of adaptation infrastructure investments on growth and public debt dynamics. Specifically, while adaptation infrastructure is initially slightly costlier during the scale-up period, it can better withstand natural disaster shocks, and over time, would have lower maintenance costs and higher return than conventional infrastructure. Other model scenarios illustrate the trade-offs of different financing sources as well as the benefits of public financial management reforms that improve investment efficiency.

Keywords: Vietnam; Climate change; DSGE structural models; Resilient infrastructure; Climate change adaptation; Debt sustainability. (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:asi:ajemod:v:9:y:2021:i:2:p:145-152:id:379

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