The Country Climate and Development Report (CCDR) for Thailand offers a strategic playbook to support climate action in Thailand, complementing existing national plans. Thailand’s climate and development goals are mutually reinforcing. To achieve its high-income aspirations, Thailand must move swiftly to address the physical and transition risks posed by climate change and to seize the opportunities associated with the global shift toward sustainability. While the costs of required investments are substantial, the costs and risks of inaction are much higher. The CCDR assesses physical risks to the economy, including the impacts of floods, droughts, heat stress, and other climate-related disasters, as well as the potential consequences for trade and private sector activity if progress on emissions reduction falls short. The report outlines concrete actions to help Thailand adapt to the impacts of climate change, reduce its greenhouse gas emissions, and take advantage of green growth opportunities, particularly in sectors where Thailand already holds comparative advantages.
Key findings
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Thailand has achieved remarkable development progress, but the recent experience has been less rosy. Growth has slowed to an average of 2.6 percent annually since 2010, with sluggish investment, stalling structural transformation, and deepening demographic challenges. This is well below the ~5 percent needed to achieve high-income status by 2037.
Climate change compounds these development challenges, and the poorest are most vulnerable. The physical impacts of flooding, coastal erosion, water shortages, and heat stress translate into significant economic impacts on agriculture, industry and tourism.
Thailand also faces transition risks. While not a major contributor to global climate change, Thailand’s per capita emissions surpass those of several neighboring ASEAN countries.
The global shift in demand toward low-carbon goods and services means that Thailand’s future economic competitiveness may be tied to its progress on lowering emissions.
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The physical impacts of climate change could reduce GDP by 7–14 percent by 2050 without decisive adaptation efforts. Climate change also increases the risks of disasters: in any given year economic impacts could be much larger than the estimated annual average loss.
Adaptation investments can significantly reduce but not entirely offset the adverse macroeconomic impact of climate shocks.
The costs of inaction are significantly greater than the costs of action. Recommended investments in flood mitigation, coastal protection, water security, and cooling could raise annual GDP by 4-5 percent by 2050 (relative to a business-as-usual scenario), at an annualized cost of a little over 1 percent of GDP.
Social protection is critical to support the resilience of vulnerable Thais: additional spending, enhanced targeting, improved disaster responsiveness, and reduced fragmentation of social protection systems are all needed. This will help build resilience to climate change; and ensure that more adequate payments can be made to affected households in the aftermath of disasters.
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Becoming a low-emissions economy makes sense for the planet but also for Thailand:
- Lower (lifecycle) costs – EVs, renewable electricity generation
- Greater energy security
- Enhanced air quality and public health
- Improved economic competitiveness against the backdrop of a global net-zero transition.
Carbon pricing is important but insufficient on its own to meet Thailand’s objectives of carbon neutrality by 2050 and net-zero emissions by 2065. Without complementary reforms and investments, emissions reduction will not happen fast enough to meet these targets, and carbon pricing itself will be less effective.
Recommendations include
- Market reform in the power sector, alongside investments in battery storage, grid modernization and regional interconnections
- Investment in charging infrastructure for EVs, coupled with incentives to shift heavy vehicles to biofuels
- Energy efficiency mandates and subsidies for industry.
- Refocusing agricultural subsidies and strengthening farmer education
- Investment in reforestation, alongside strengthened land management practices
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Thailand has significant potential to capitalize on growing international demand for green and climate-adaptive technology.
Thailand already leads in eco-friendly air conditioner exports and supplies 4 percent of global solar PV exports.
Expanding EV, solar PV, and energy-efficient appliance exports could add 2–3 percent to GDP by 2030.
Recommendations include
- Removing market-entry barriers and improving the competitive environment;
- Ensuring FDI builds domestic technological capacity and skills;
- Recalibrating public support for innovation;
- Prioritization of high-tech skill development, in collaboration with the private sector, and including by raising basic education standards.
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Additional investment needs are estimated at USD 219 billion over the next 25 years in discounted net present value terms (≈2.4 percent of cumulative GDP).
This includes USD 105 billion for climate adaptation, USD 96 billion for mitigation, and USD 19 billion for investments in climate smart agriculture and forests, which have both adaptation and mitigation benefits.
Most adaptation spending is expected to come from the public sector, while the private sector will take on the majority of mitigation spending.
Carbon pricing could generate revenues of close to 1 percent of GDP
Revenue reforms (VAT, personal income tax, property tax) could help finance additional public climate spending needs and limit the impacts on public debt.
Private capital can be mobilized by incentivizing financial institutions to deepen their offering of green bonds/loans and derisking instruments, and by strengthening the sustainable finance ecosystem and market infrastructure for carbon credit issuance and trading.
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Five key sets of measures – on flood mitigation, water security, social protection, carbon pricing, and energy – emerge as the highest priority recommendations.
- Flood mitigation: Implement the Chao Phraya “Nine Plans” together with complementary measures to improve land management and zoning, conserve forest areas in the upper basin, and enhance early warning systems.
- Water security: To address water deficits in the EEC, invest in wastewater treatment and storage infrastructure, and increase efficiency of water use. Integrate provincial water resource management and boost water storage in the north and north-east.
- Energy: Pursue market reform to promote competition in the power sector and accelerate adoption of renewable energy (RE). Invest in grid modernization and regional integration to enhance energy security and enable a renewables-led transition.
- Social protection: Increase benefits and enhance targeting of programs such as the SWC. Improve disaster responsiveness. Integrate programs through the establishment of unified social registry.
- Carbon pricing: Expedite the approval of the Climate Change Act to resolve private sector uncertainty and lay the groundwork for a transparent carbon pricing framework.