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Climate change and the Ethiopian economy: a CGE analysis

Published online by Cambridge University Press:  05 June 2015

Zenebe Gebreegziabher ,
Jesper Stage Open the ORCID record for Jesper Stage [Opens in a new window] ,
Alemu Mekonnen  and
Atlaw Alemu
Zenebe Gebreegziabher
Affiliation:
Department of Economics, Mekelle University, Adi-Haqui Campus, P.O. Box 451, Mekelle, Tigrai, Ethiopia. Tel: + 251344410349. E-mail: zenebeg2002@yahoo.com
Jesper Stage
Affiliation:
Department of Business Administration, Technology and Social Sciences, Luleå University of Technology and Department of Business, Economics and Law, Mid Sweden University, Sweden. E-mail: jesper.stage@itu.se
Alemu Mekonnen
Affiliation:
Department of Economics, Addis Ababa University, Ethiopia. E-mail: alemu_m2004@yahoo.com
Atlaw Alemu
Affiliation:
Department of Economics, Addis Ababa University, Ethiopia. E-mail: atlawalem@yahoo.com
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Abstract

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.

Type
Research Article
Information
Environment and Development Economics , Volume 21 , Issue 2 , April 2016 , pp. 205 - 225
Copyright
Copyright © Cambridge University Press 2015 

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References

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