CO2emissions, agricultural productivity and welfare in Ethiopia

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.