Climate change and the Ethiopian economy: a CGE analysis

The paper analyzes the economic impacts of climate change-induced fluctuations on the performance of Ethiopia's agriculture, using a countrywide computable general equilibrium (CGE) model. We model the impacts on agriculture using a Ricardian model, where current agricultural production is mode...

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Bibliographic Details
Published in:Environment and development economics 2016-04, Vol.21 (2), p.205-225
Main Authors: Gebreegziabher, Zenebe, Stage, Jesper, Mekonnen, Alemu, Alemu, Atlaw
Format: Article
Language:English
Subjects:
Adaptation
Agricultural economics
Agricultural production
Agriculture
Climate change
Computer simulation
Crop diseases
Developing countries
Economic activity
Economic analysis
Economic growth
Economic impact
Economic reform
Economics
Environmental impact
Environmental policy
Equilibrium
Farmers
Farming
Farms
GDP
Greenhouse effect
Gross Domestic Product
LDCs
Livestock
Market equilibrium
Mathematical analysis
Mathematical models
Nationalekonomi
Poverty
Productivity
Reduction
Simulation
Studies
Variation
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Summary:The paper analyzes the economic impacts of climate change-induced fluctuations on the performance of Ethiopia's agriculture, using a countrywide computable general equilibrium (CGE) model. We model the impacts on agriculture using a Ricardian model, where current agricultural production is modelled as a function of temperature and precipitation, among other things, and where future agriculture is assumed to follow the same climate function. The effect of overall climate change is projected to be relatively benign until approximately 2030, but will become considerably worse thereafter. Our simulation results indicate that, over a 50-year period, the projected reduction in agricultural productivity may lead to reductions in average income of some 20 per cent compared with the outcome that would have prevailed in the absence of climate change. This indicates that adaptation policies – both government planned and those that ease autonomous adaptation by farmers – will be crucial for Ethiopia's future development.
ISSN:1355-770X
1469-4395
1469-4395
DOI:10.1017/S1355770X15000170