The Mekong River Commission (MRC) took an important step towards creating a fund to aid residents most affected by climate change, combined with water infrastructure development, at the 56th meeting of the MRC joint committee in the Laotian capital Vientiane, on September 27.

The committee approved in principle the funding model and trial-run for the Mekong Fund, which will launch in 2025, endorsing its core design, funding mechanism, governance structure and likely beneficiaries.

The testing phase will focus on the ecosystem component of the fund, creating grant-giving opportunities for projects that strengthen livelihoods and safeguard the environment. The MRC secretariat is partnering with Germany to finance this segment, through its Federal Ministry of Economic Cooperation and Development and KfW Development Bank.

The pilot is expected to evolve into permanent innovative financing for the MRC within five years, the secretariat said, in a September 29 press release.

“We must not only mitigate the impact of development and climate change, but support those communities suffering the most from changes to the river’s flow across the lower Mekong basin,” said the 2023 chairperson of the MRC joint committee, Nguyen Thi Thu Linh, who is also director general of the Vietnam National Mekong Committee.

Through the 1995 Mekong Agreement, the MRC was primarily founded to balance the trade-off between the economic benefits of development, while minimising any impact to the river’s ecosystem and the millions of fishing and farming families relying on it.

“Flooding and drought cause by climate change has since exacerbated the situation. In addition to pushing for mitigation policies, procedures and projects, the MRC aims to introduce a compensatory component through the Mekong Fund,” it said.

The test run of the ecosystem branch of the fund will specifically “disburse capital to support and facilitate local community engagement in wetland and watershed biodiversity conservation and related livelihood improvement in and around regionally significant ecosystems,” the statement noted.