Human Resource Economics

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Economic Implications of Climate Change in Ethiopia: A Computable General Equilibrium Analysis
(Addis Ababa University, 2011-06) Belayneh, Ashenafi; Ferede, Tadele (PhD)
Climate change has become one of the pressing problems worldwide as it affects socio-economic activities - agriculture being one of the most vulnerable sectors. Specifically, this study has attempted to evaluate the short-run economic impacts of climate change (change in the levels of temperature and precipitation) with a focus on the Ethiopian economy. In so doing, it uses a computable general equilibrium model based on the 2005/06 Ethiopian Social Accounting Matrix. The results show that climate change has a dampening effect on economic growth and many key macroeconomic indicators. Investment is the only macroeconomic variable that increases despite the changes in climate. It has also a negative impact on sectoral growth and trade, and the effect varies across agro-ecological zones. The findings further revealed that household livelihoods (measured in terms of income and welfare) have declined, and the effect is unevenly distributed across different household groups. The highest losses are likely to be incurred by the poor households that are residing in smaller urban centers. Thus, the results of the study calls for improved climate adaptation actions to reduce both economic decline and welfare deteriorations