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Climate Change, Agriculture, and Economic Development in Ethiopia

Author

Listed:
  • Amsalu Woldie Yalew

    (Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association, P.O. Box 601203, 14412 Potsdam, Germany)

  • Georg Hirte

    (Institute of Transport and Economics, Technische Universität Dresden, 01062 Dresden, Germany)

  • Hermann Lotze-Campen

    (Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association, P.O. Box 601203, 14412 Potsdam, Germany
    Humboldt-Universität zu Berlin, Department of Agricultural Economics, Unter den Linden 6, 10099 Berlin, Germany)

  • Stefan Tscharaktschiew

    (Institute of Transport and Economics, Technische Universität Dresden, 01062 Dresden, Germany)

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.

Suggested Citation

  • Amsalu Woldie Yalew & Georg Hirte & Hermann Lotze-Campen & Stefan Tscharaktschiew, 2018. "Climate Change, Agriculture, and Economic Development in Ethiopia," Sustainability, MDPI, vol. 10(10), pages 1-23, September.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:10:p:3464-:d:172567
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    References listed on IDEAS

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    4. Alisa Ableeva & Guzel Salimova & Rasul Gusmanov & Tatyana Lubova & Oleg Efimov & Almira Farrahetdinova, 2019. "The Role of Agriculture in the Formation of Macroeconomic Indicators of National Economy," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 15(4), pages 183-193.
    5. Amsalu Woldie Yalew & Georg Hirte & Hermann Lotze-Campen & Stefan Tscharaktschiew, 2019. "The Synergies and Trade-Offs of Planned Adaptation in Agriculture: a General Equilibrium Analysis for Ethiopia," Economics of Disasters and Climate Change, Springer, vol. 3(3), pages 213-233, October.

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