Climate Change, Agriculture, and Economic Development in Ethiopia

Abstract

Quantifying the economic effects of climate change is a crucial step for planning adaptation in developing countries. This study assesses the economy-wide and regional effects of climate change-induced productivity and labor supply shocks in Ethiopian agriculture. We pursue a structural approach that blends biophysical and economic models. We consider different crop yield projections and add a regionalization to the country-wide CGE results. The study shows, in the worst case scenario, the effects on country-wide GDP may add up to −8%. The effects on regional value-added GDP are uneven and range from −10% to +2.5%. However, plausible cost-free exogenous structural change scenarios in labor skills and marketing margins may offset about 20–30% of these general equilibrium effects. As such, the ongoing structural transformation in the country may underpin the resilience of the economy to climate change. This can be regarded as a co-benefit of structural change in the country. Nevertheless, given the role of the sector in the current economic structure and the potency of the projected biophysical impacts, adaptation in agriculture is imperative. Otherwise, climate change may make rural livelihoods unpredictable and strain the country’s economic progress.

The Role of Agriculture in the Formation of Macroeconomic Indicators of National Economy

“…There are also studies showing that structural changes in a country can contribute to the resilience of the economy to climate change. Otherwise, climate change can make agricultural development unpredictable and disrupt the country's economic progress (Yalew et al, 2018). It is noted that further research should be aimed at helping with food security in the development of the country and the sustainability of the economy, the methodology of measurement, which is largely insufficient in modern research on climate change and the redistribution of resources between industries and countries (Falco et al, 2018).…”

Urban Agriculture in Ethiopia: An Overview

“…This renders an estimated annual cost of about US$ 4.3 billion associated with land degradation that accrue to land use and land cover changes [53] .] Projected climate change and variability add other layers of risks to agriculture in Ethiopia [55][56][57] . In addition, a combination of factors such as the projected population [58] , climate change [59] , and competing water use demands [60] are expected to increase water scarcity in the country.…”

Impact of Climate Change on Food Systems: A Narrative Review

“…This will exacerbate poverty and enhance food insecurity in the country, if no mitigation and adaptation strategies are not put in place for the smallholder farmers. Additionally, climate change is predicted to reduce crop production resulting 8% loss of Ethiopian GDP [32]. Some foods crops such as millet require sufficient sunlight for drying before storage.…”