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The economic costs of extreme weather events: a hydrometeorological CGE analysis for Malawi

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  • PAUW, KARL
  • THURLOW, JAMES
  • BACHU, MURTHY
  • VAN SEVENTER, DIRK ERNST

Abstract

Extreme weather events such as droughts and floods have potentially damaging implications for developing countries. Previous studies have estimated economic losses during hypothetical or single historical events, and have relied on historical production data rather than explicitly modeling climate. However, effective mitigation strategies require knowledge of the full distribution of weather events and their isolated effects on economic outcomes. We combine stochastic hydrometeorological crop-loss models with a regionalized computable general equilibrium model to estimate losses for the full distribution of possible weather events in Malawi. Results indicate that, based on repeated sampling from historical events, at least 1.7 per cent of Malawi's gross domestic product (GDP) is lost each year due to the combined effects of droughts and floods. Smaller-scale farmers in the southern region of the country are worst affected. However, poverty among urban and nonfarm households also increases due to national food shortages and higher domestic prices.

Suggested Citation

  • Pauw, Karl & Thurlow, James & Bachu, Murthy & Van Seventer, Dirk Ernst, 2011. "The economic costs of extreme weather events: a hydrometeorological CGE analysis for Malawi," Environment and Development Economics, Cambridge University Press, vol. 16(2), pages 177-198, April.
  • Handle: RePEc:cup:endeec:v:16:y:2011:i:02:p:177-198_00
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    1. Wiebelt, Manfred & Breisinger, Clemens & Ecker, Olivier & Al-Riffai, Perrihan & Robertson, Richard & Thiele, Rainer, 2011. "Climate change and floods in Yemen: Impacts on food security and options for adaptation," IFPRI discussion papers 1139, International Food Policy Research Institute (IFPRI).
    2. Nicholas Kilimani, 2015. "Vulnerability to Climatic Variability: An Assessment of Drought Prevalence on Water Resources Availability and Implications for the Ugandan Economy," Working Papers 201562, University of Pretoria, Department of Economics.
    3. Channing Arndt & Karl Pauw & James Thurlow, 2016. "The Economy-wide Impacts and Risks of Malawi's Farm Input Subsidy Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 962-980.
    4. Glyn Wittwer & Marnie Griffith, 2011. "Modelling drought and recovery in the southern Murray‐Darling basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 342-359, July.
    5. Pauw, Karl & Beck, Ulrik & Mussa, Richard, 2014. "Did rapid smallholder-led agricultural growth fail to reduce rural poverty? Making sense of Malawi's poverty puzzle," WIDER Working Paper Series 123, World Institute for Development Economic Research (UNU-WIDER).
    6. Breisinger, Clemens & Ecker, Olivier & Thiele, Rainer & Wiebelt, Manfred, 2012. "The impact of the 2008 Hadramout flash flood in Yemen on economic performance and nutrition: A simulation analysis," Kiel Working Papers 1758, Kiel Institute for the World Economy (IfW).
    7. Siddig, Khalid & Stepanyan, Davit & Wiebelt, Manfred & Grethe, Harald & Zhu, Tingju, 2020. "Climate change and agriculture in the Sudan: Impact pathways beyond changes in mean rainfall and temperature," Ecological Economics, Elsevier, vol. 169(C).
    8. Nicholas Kilimani & Jan van Heerden & Heinrich Bohlmann & Louise Roos, 2016. "Counting the Cost of Drought Induced Productivity Losses in an Agro-Based Economy: The Case of Uganda," Working Papers 201649, University of Pretoria, Department of Economics.
    9. Channing Arndt & Adam Schlosser & Kenneth Strzepek & James Thurlow, 2014. "Climate Change and Economic Growth Prospects for Malawi: An Uncertainty Approach," WIDER Working Paper Series wp-2014-013, World Institute for Development Economic Research (UNU-WIDER).
    10. Klaus J. Droppelmann & Sieglinde S. Snapp & Stephen R. Waddington, 2017. "Sustainable intensification options for smallholder maize-based farming systems in sub-Saharan Africa," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(1), pages 133-150, February.
    11. Jaume Freire-González & Christopher A. Decker & Jim W. Hall, 2017. "A Scenario-Based Framework for Assessing the Economic Impacts of Potential Droughts," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-27, October.
    12. Samson P. Katengeza & Stein T. Holden & Rodney W. Lunduka, 2019. "Adoption of Drought Tolerant Maize Varieties under Rainfall Stress in Malawi," Journal of Agricultural Economics, Wiley Blackwell, vol. 70(1), pages 198-214, February.
    13. Montaud, Jean-Marc & Pecastaing, Nicolas & Tankari, Mahamadou, 2017. "Potential socio-economic implications of future climate change and variability for Nigerien agriculture: A countrywide dynamic CGE-Microsimulation analysis," Economic Modelling, Elsevier, vol. 63(C), pages 128-142.
    14. Fabio, Farinosi & Carrera, Lorenzo & Maziotis, Alexandros & Mysiak, Jaroslav & Eboli, Fabio & Standardi, Gabriele, 2012. "Policy-relevant Assessment Method of Socio-economic Impacts of Floods: An Italian Case Study," Climate Change and Sustainable Development 143117, Fondazione Eni Enrico Mattei (FEEM).
    15. Franziska Schuenemann & James Thurlow & Stefan Meyer & Richard Robertson & Joao Rodrigues, 2018. "Evaluating irrigation investments in Malawi: economy†wide impacts under uncertainty and labor constraints," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 237-250, March.
    16. Lorenzo Carrera & Gabriele Standardi & Francesco Bosello & Jaroslav Mysiak, 2014. "Assessing Direct and Indirect Economic Impacts of a Flood Event Through the Integration of Spatial and Computable General Equilibrium Modelling," Working Papers 2014.82, Fondazione Eni Enrico Mattei.
    17. Channing Arndt & Karl Pauw & James Thurlow, 2016. "The Economy-wide Impacts and Risks of Malawi's Farm Input Subsidy Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 962-980.
    18. Borgomeo, Edoardo & Vadheim, Bryan & Woldeyes, Firew B. & Alamirew, Tena & Tamru, Seneshaw & Charles, Katrina J. & Kebede, Seifu & Walker, Oliver, 2018. "The Distributional and Multi-Sectoral Impacts of Rainfall Shocks: Evidence From Computable General Equilibrium Modelling for the Awash Basin, Ethiopia," Ecological Economics, Elsevier, vol. 146(C), pages 621-632.
    19. Fontes, Francisco & Gorst, Ashley & Palmer, Charles, 2020. "Does choice of drought index influence estimates of drought-induced rice losses in India?," LSE Research Online Documents on Economics 103378, London School of Economics and Political Science, LSE Library.
    20. Kang, Hyunwoo & Sridhar, Venkataramana & Mills, Bradford F. & Hession, W. Cully & Ogejo, Jactone A., 2019. "Economy-wide climate change impacts on green water droughts based on the hydrologic simulations," Agricultural Systems, Elsevier, vol. 171(C), pages 76-88.
    21. Henry Kankwamba & Mariam Kadzamira & Karl Pauw, 2018. "How diversified is cropping in Malawi? Patterns, determinants and policy implications," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(2), pages 323-338, April.
    22. Channing Arndt & Adam Schlosser & Kenneth Strzepek & James Thurlow, 2014. "Climate Change and Economic Growth Prospects for Malawi: An Uncertainty Approach," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 23(suppl_2), pages 83-107.
    23. Freire-González, Jaume & Decker, Christopher & Hall, Jim W., 2017. "The Economic Impacts of Droughts: A Framework for Analysis," Ecological Economics, Elsevier, vol. 132(C), pages 196-204.

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