No. 03-The Economic Impacts of Climate Change in Ethiopia: A CGE Analysis

A multi-country, multi-sector computable general equilibrium (CGE) model is used for the first time to evaluate the impacts of climate change on Ethiopian agriculture and the overall economy. This analysis uses the GTAP1 9 Database and the GTAP-W model that distinguishes between rainfed and irrigated agriculture, and implements water as a directly substitutable factor of production in the production process of irrigated agriculture. Two global emissions scenarios (A1 and B1) from two global circulation models (GCM) (CSIRO2 and MIROC3) in 2050 are used to evaluate the economy-wide impacts of climate change on Ethiopian agriculture. The study reveals that climate change depresses agricultural production resulting in a significant rise in crop market prices. Further, climate change depresses economic growth and welfare, and tends to deepen poverty and food insecurity in the country.