Economic effects of climate change in developing countries: Economy-wide and regional analysis for Ethiopia

Amsalu Woldie Yalew, Georg Hirte (), Hermann Lotze-Campen and Stefan Tscharaktschiew

No 10/17, CEPIE Working Papers from Technische Universität Dresden, Center of Public and International Economics (CEPIE)

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 agriculture in Ethiopia. The study shows, in worst case scenario, the effects on national GDP may add up to -8% with uneven regional effects ranging from -10% in agrarian regions (e.g. Amhara) to +2.5% in urbanized regions (e.g. Addis Ababa). Cost-free exogenous structural change scenarios in labor markets and transaction costs may offset about 20-30% of the ripple effects of climate change. Therefore, the ongoing structural transformation in the country may underpin the resilience of the economy to climate change. Nevertheless, given the role of agriculture in the current economic structure of the country and the potency of biophysical impacts of climate change, adaptation in the sector is indispensable. Otherwise, climate change may hamper economic progress of the country, and make rural livelihood unpredictable.

Keywords: climate change; agriculture; migration; CGE model; Ethiopia (search for similar items in EconPapers)
JEL-codes: C68 D58 J21 J43 J62 O55 Q54 Q56 R11 R13 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-agr, nep-dev and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tudcep:1017

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