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Climate Change, Total Factor Productivity, and the Tanzanian Economy: A Computable General Equilibrium Analysis

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  • Bezabih, Mintewab
  • Chambwera, Muyeye
  • Stage, Jesper

Abstract

This paper analyzes the economic impacts of climate change-induced adjustments on the performance of the Tanzanian economy, using a countrywide CGE (computable general equilibrium) model. The general equilibrium framework enables comparison of the effects of climate change to the overall growth of the economy because responsiveness to shocks is likely to depend on the macroeconomic structure of the economy. Effect of overall climate change on agricultural productivity is projected to be relatively limited until approximately 2030 and become worse thereafter. Our simulation results indicate that, despite the projected reduction in agricultural productivity, the negative impacts can potentially be quite limited. This is because the time scales involved and the low starting point of the economy leave ample time for factor substitutability (i.e., replacing reduced land productivity with increased use of capital and labor) and increased overall productivity. This indicates that policies that give farmers opportunity to invest in autonomous climate adaptation, as well as policies that improve the overall performance of the economy, can be as important for reducing the impacts of climate change in the economy as direct government policies for climate adaptation. The study results can inform policymakers when choosing between direct climate-change adaptation policies or measures aimed at strengthening the fundamentals of the economy, as ways of insulating against external shocks.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-10-14-efd.

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Date of creation: 08 Jun 2010
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Handle: RePEc:rff:dpaper:dp-10-14-efd

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Keywords: climate change; agriculture; total factor productivity; Tanzania; CGE model;

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  1. Margaret Chitiga & Ramos Mabugu, 2008. "Evaluating the Impact of Land Redistribution: A CGE Microsimulation Application to Zimbabwe," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 17(4), pages 527-549, August.
  2. Joseph E. Aldy & Alan J. Krupnick & Richard G. Newell & Ian W. H. Parry & William A. Pizer, 2010. "Designing Climate Mitigation Policy," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 903-34, December.
  3. Juana, James S. & Strzepek, Kenneth M. & Kirsten, Johann F., 2008. "Households’ welfare analyses of the impact of global change on water resources in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(3), September.
  4. Balassa, Bela, 1985. "Exports, policy choices, and economic growth in developing countries after the 1973 oil shock," Journal of Development Economics, Elsevier, vol. 18(1), pages 23-35.
  5. Thurlow, James & Wobst, Peter, 2003. "Poverty-focused social accounting matrices for Tanzania," TMD discussion papers 112, International Food Policy Research Institute (IFPRI).
  6. Bevan, David & Collier, Paul & Gunning, Jan Willem, 1990. "Peasants and Governments: An Economic Analysis," OUP Catalogue, Oxford University Press, number 9780198286219, September.
  7. Deressa, Temesgen Tadesse, 2007. "Measuring the economic impact of climate change on Ethiopian agriculture : Ricardian approach," Policy Research Working Paper Series 4342, The World Bank.
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Cited by:
  1. Shankar Prasad Adharya Ph.D. & Guna Raj Bhatta, 2013. "Impact of Climate Change on Agricultural Growth in Nepal," NRB Working Paper 15/2013, Nepal Rastra Bank, Research Department.
  2. Shankar Prasad Acharya Ph.D. & Guna Raj Bhatta, 2013. "Impact of Climate Change on Agricultural Growth in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 25(2), pages 1-16, October.
  3. repec:nrb:wpaper:nrbwp152013 is not listed on IDEAS

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