Abstract
PurposeClimate change has become one of the most important development challenges worldwide. It affects various sectors, with agriculture the most vulnerable. In Ethiopia, climate change impacts are exacerbated due to the economy’s heavy dependence on agriculture. The Ethiopian Government has started to implement its climate-resilient green economy (CRGE) strategy and reduce CO2emissions. Therefore, the purpose of this study is to examine the impact of CO2emission on agricultural productivity and household welfare.Design/methodology/approachThis study aims to fill these significant research and knowledge gaps using a recursive dynamic computable general equilibrium model to investigate CO2emissions’ impact on agricultural performance and household welfare.FindingsThe results indicate that CO2emissions negatively affect agricultural productivity and household welfare. Compared to the baseline, real agricultural gross domestic product is projected to be 4.5% lower in the 2020s under a no-CRGE scenario. Specifically, CO2emissions lead to a decrease in the production of traded and non-traded crops, but not livestock. Emissions also worsen the welfare of all segments of households, where the most vulnerable groups are the rural-poor households.Originality/valueThe debate in the area is not derived from a rigorous analysis and holistic economy-wide approach. Therefore, the paper fills this gap and is original by value and examines these issues methodically.
Highlights
The burden of climate change is real for poor countries
This is an incentive for the government to highly engage in the implementation of the climate-resilient green economy (CRGE) policy as it reduces the effect of CO2
Ethiopia has started the implementation of a CRGE strategy in 2010, aiming to become a low-carbon, middle-income country by 2025
Summary
The burden of climate change is real for poor countries. Climate-related risks are projected to increase with global warming (IPCC, 2018). Molua, 2002; Muamba and Kraybill, 2010; Di Falco et al, 2011) reported a decline in crop yields due to climate change in agriculture-based economies. This implies devastating effects on developing economies that depend heavily on agriculture (Bezabih et al, 2011; Zhai et al, 2009). Agriculture accounted for the lion’s share in GDP, export, labor force and it remains the most vital sector Though it has a vast area of fertile land and a diverse climate, the sector is highly dependent on rainfall with a scanty share of irrigation while Ethiopia is the “water tower” of Africa. The agricultural land per household is scanty, around 0.33 hector per household (Zerayehu et al, 2016)
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