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Climate change economics in Vietnam: Redefining economic impact

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  • Otto, Christian
  • Schult, Christoph
  • Vogt, Thomas

Abstract

Vietnam, a lower-middle-income economy, faces severe climate risks from heat waves, sea-level rise, and tropical cyclones, which are expected to intensify under ongoing global warming. Using a dynamic general equilibrium model, we analyze economic transition dynamics from 2015 to 2100, incorporating heat-induced labor productivity losses, agricultural land loss, and cyclone-related property damage. We compare a Paris-compatible scenario limiting warming to below 2 êC with a high-emission scenario reaching 4-5 êC. While output and investment impacts remain highly uncertain and statistically indistinguishable across scenarios until 2100, consumption losses are significantly larger under high emissions, mainly driven by heat-related productivity declines, with cyclones contributing most to uncertainty. These findings underscore the importance of considering multiple impact channels beyond output damages in climate-development research.

Suggested Citation

  • Otto, Christian & Schult, Christoph & Vogt, Thomas, 2025. "Climate change economics in Vietnam: Redefining economic impact," IWH Discussion Papers 15/2025, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:325836
    DOI: 10.18717/dpzggv-cs12
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    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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