Climate Change Adaptation Strategies of SMEs in Kratie, Cambodia

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Climate Change Adaptation Strategies of SMEs in Kratie, Cambodia

Cambodia, a country in South East Asia, is vulnerable to climate effects. The country’s climate adaptation has focused primarily on agriculture.

Still, since the government has shifted to manufacturing and services sectors, it also needs to protect its growing sectors like small and medium-sized enterprise (SME’s) in tourism and hospitality.

The study examined climate change impacts in micro-businesses in Kratie Town, focusing on how they have responded and what strategies they used to adapt to climate-induced disasters.

Kratie province is located in the northeast of Cambodia along the Mekong River. Fisheries and agriculture are their primary industry, but their tourism industry is increasingly growing due to critically endangered Irrawaddy dolphins and the province’s incredible diversity of fish and birds that attract tourists in the area.

Its small-scale tourism and hospitality sectors are growing and becoming more critical to its economy: Country-wide, the industry employed over 1.2 million people before the COVID-19 pandemic.

Climate change has increased the frequency and intensity of climatic variability and natural hazards that manifested into intense rainfall, irregular timing of extreme rain, and more prolonged droughts.

Small to medium businesses in Cambodia lack access to capital and resources and operate with marginal profits, making them vulnerable and hard to recover from disasters. Additionally, most of their structures are non-engineered buildings, lacking adequate disaster management, and susceptible to disruptions like mechanical crashes, utility disruptions, and telecommunication breakdown.

In the past, the province has experienced many climate-induced disasters like floods, droughts, storms, riverbank collapse and epidemics, but among these floods, that occurred every three to five years proved to be the most devastating of all, causing significant damages and loss to life and property.

While there are existing studies on SMEs, particularly in developing countries, they do not provide sufficient information or provide distinctions between SMEs location, their supply chains dependence, and linkages among business, factors that can impact their coping and adaptation strategies.

The study randomly selected micro-businesses along the Mekong river, in the town, and some close to the lake, ensuring that the sampling covered businesses within a wide geographical condition.  

Researchers interviewed respondents to gather data like their perceptions on climate change, experience in natural disasters, impacts of climate change in their business, their coping and adaptation strategies in different stages: before, during, and after disasters.

Participants were also asked about their social network access, membership in business cooperation, and any official assistance that can affect their response or adaptation to catastrophes.

Data shows that respondents viewed climate change-induced calamities, particularly floods and storms are affecting their business more than droughts or lightning events. Floods reduced their clients’ number, cut off their supply chains and caused damage to their shop and stocks, resulting in profit loss and stunt business growth.

However, not all businesses are affected negatively; some businesses could profit from floods because of their coping or opportunistic strategies.  For example, a porridge vendor using a boat during floods can continue selling and making more money due to reduced competition.

Businesses located outside of town and not affected by the town’s closure, and others whose suppliers are outside the province and not affected by floods can continue selling and remain open for business.

The study also revealed that business owners who suffered losses and disruptions develop mental health problems.

The study finds that climate impacts and business responses vary according to their type of business. During floods, businesses relying on supply chains within and outside the province were affected more than those who do not rely on suppliers and can continue to operate their business. 

Hospitality businesses such as tour agents, restaurants, accommodation, and niche-food sellers have fewer clients during the flood. Tour agents are significantly affected by the declining number of river dolphins that have been a major tourist attraction in the Kratie province.

Overall, the study’s findings suggest that climate change impacts and micro-business response is complex and nuanced and requires an understanding of their local context. Variations in location and supply chain types also influence their response and climate adaptation strategies. The study suggests that climate adaptation measures should be time- and location-specific.

Opportunistic behaviours and climate-diversification strategies in some businesses such as using a boat to sell goods during floods, having a budget to hire a pumping machine to pump floodwaters out of their shops, building their houses higher than flood levels, can work as an advantage over other business owners.

Finally, the study finds that national and regional policies may not have sufficiently addressed these businesses’ unique coping style. There is also a shortage of information on SMEs specific climate risks and government support to strengthen SMEs climate resilience, issues that the government needs to address to help SMEs shift from short-term and reactive responses to long term and more anticipatory climate adaptation strategies.

To read the entire study, click the link below:

Source Citations:

Ngin, C., Chhom, C., & Neef, A. (2020 April). Climate change impacts and disaster resilience among micro businesses in the tourism and hospitality sector: The case of Kratie, Cambodia. Environmental Research, Volume 186, 2020, 109557, ISSN 0013-9351, https://doi.org/10.1016/j.envres.2020.109557

PHOTO CREDIT: Andreas Neef

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