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Impacts of considering climate variability on investment decisions in Ethiopia

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  • Paul J. Block
  • Kenneth Strzepek
  • Mark W. Rosegrant
  • Xinshen Diao

Abstract

Extreme interannual variability of precipitation within Ethiopia is not uncommon, inducing droughts or floods and often creating serious repercussions on agricultural and nonagricultural commodities. A dynamic climate module is integrated into an economy‐wide model containing a detailed zonal level agricultural structure. This coupled climate‐economic model is used to evaluate the effects of climate variability on prospective irrigation and infrastructure investment strategies, and the ensuing country‐wide economy. The linkages between the dynamic climate module and the economic model are created by the introduction of a climate‐yield factor (CYF), defined at the crop level and varied across Ethiopian zones. Nine sets of variable climate (VC) data are processed by the coupled model, generating stochastic wet and dry shocks, producing an ensemble of potential economic prediction indicators. Analysis of gross domestic product and poverty rate reveal a significant overestimation of the country's future welfare under all investment strategies when climate variability is ignored. The coupled model ensemble is further utilized for risk assessment to guide Ethiopian policy and planning.

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  • Paul J. Block & Kenneth Strzepek & Mark W. Rosegrant & Xinshen Diao, 2008. "Impacts of considering climate variability on investment decisions in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 171-181, September.
    • Handle: RePEc:bla:agecon:v:39:y:2008:i:2:p:171-181
    DOI: 10.1111/j.1574-0862.2008.00322.x
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    11. Nicole D. Peterson, 2012. "Developing Climate Adaptation: The Intersection of Climate Research and Development Programmes in Index Insurance," Development and Change, International Institute of Social Studies, vol. 43(2), pages 557-584, March.
    12. Yang, Meijian & Wang, Guiling & Lazin, Rehenuma & Shen, Xinyi & Anagnostou, Emmanouil, 2021. "Impact of planting time soil moisture on cereal crop yield in the Upper Blue Nile Basin: A novel insight towards agricultural water management," Agricultural Water Management, Elsevier, vol. 243(C).
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    14. Berger, Thomas, 2015. "Adaptation of farm-households to increasing climate variability in Ethiopia: Bioeconomic modeling of innovation diffusion and policy interventions," 2015 Conference, August 9-14, 2015, Milan, Italy 229062, International Association of Agricultural Economists.
    15. Block, P. J., 2008. "Mitigating the effects of hydrologic variability in Ethiopia: an assessment of investments in agricultural and transportation infrastructure, energy and hydroclimatic forecasting," IWMI Working Papers H042798, International Water Management Institute.
    16. Kostandini, Genti & La Rovere, Roberto & Abdoulaye, Tahirou, 2013. "Potential impacts of increasing average yields and reducing maize yield variability in Africa," Food Policy, Elsevier, vol. 43(C), pages 213-226.
    17. Blankespoor,Brian & Ru,Yating & Wood-Sichra,Ulrike & Chambers,Thomas Timothy & You,Liangzhi & Kalvelagen,Erwin, 2022. "Estimating Local Agricultural GDP across the World," Policy Research Working Paper Series 10109, The World Bank.

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