Investing in forests Enhances ecosystem services and economic Growth in Cambodia: Evidence from the Integrated Economic-Environmental Modelling (IEEM) approach

Cambodia has one of the highest rates of deforestation in the world, which exacerbates local and global impacts of climate change while compromising the supply of critical ecosystem services that provide benefits to society. Cambodia’s Long-Term Strategy for Carbon Neutrality and its Nationally Determined Contributions aim to mitigate climate change and enhance ecosystem service supply contributing to reducing erosion and flood hazards that jeopardize human lives and infrastructure. In this paper, we investigate the economic, social and ecosystem service impacts of these two policy packages by applying the Integrated Economic-Environmental Model (IEEM) for Cambodia linked with spatial Land Use Land Cover change and Ecosystem Services modeling. Focusing on Forest and Other Land Use policies within the Long-Term Strategy and Nationally Determined Contributions, our results show that these policies would reduce cumulative carbon dioxide emissions by 1.6 billion tons by 2050. Cumulative Gross Domestic Product and wealth impacts would be US$3.576 billion and US$118 billion, respectively. Implementation of the policies would enhance regulating and provisioning ecosystem service flows overall by US$6.6 billion. The return on investment would be US$31 billion, though not valuing changes in natural capital and environmental quality would realize only about 12% of this return (US$3.7 billion). Our study demonstrates that working towards carbon neutrality is not only compatible with socioeconomic development but would effectively catalyze it. Further, we demonstrate that the most efficient and cost-effective strategy to meet Cambodia’s emissions targets would be to eliminate deforestation more rapidly than outlined in the Long-Term Strategy, complemented by proactive measures for afforestation and forest restoration. The evidence presented in this study may be used to build the business case for government and private sector investment in achieving Cambodia’s carbon neutrality goal by engaging Forest and Other Land Use sectors.