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Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results
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Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results

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Ethiopian Development Research Institute(EDRI) and IFPRI Ethiopia Strategy Support Program 2 (IFPRI-ESSP2) Seminar Series …

Ethiopian Development Research Institute(EDRI) and IFPRI Ethiopia Strategy Support Program 2 (IFPRI-ESSP2) Seminar Series
November 20, 2009

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  • 1. Economywide Impacts of Climate Change and Adaptation in Ethiopia: Preliminary Results Sherman Robinson (IDS) Dirk Willenbockel (IDS) Channing Arndt (Copenhagen) James Thurlow (IFPRI) Kenneth Strzepek (MIT, Colorado)
  • 2. Ethiopia: Climate Change Impact and Adaptation Project • World Bank: UK, Dutch, and Swiss funding • Core modeling team worked closely with: – EDRI: Hashim Ahmed – IFPRI: Emily Schmitz, Paul Dorosh – Water/climate team: Ken Strzepek, Paul Block • One of seven case studies: – Ethiopia, Mozambique, Ghana, Bangladesh, Vietnam, Bolivia, Samoa. 2
  • 3. Future Climate is Uncertain Economic & Model Uncertainty
  • 4. Wide Variation at Local Scale between Models Precipitation 2100 NCAR Precipitation 2100 MIROC
  • 5. Observed & Predicated Trends
  • 6. Consistent Message from GCMs • Change in Daily Precipitation Intensity • Change in inter- storm arrival • Seasonal & Spatial Variation
  • 7. Modeling Framework Infrastructu re •Roads •M&I Water
  • 8. PRECIP CHANGES 2050
  • 9. Five Agro-Ecological Zones SAM Region Temperature and Moisture Regime R1 (Zone 1) Humid lowlands, moisture reliable R2 (Zone 2) Moisture sufficient highlands, cereals based R3 (Zone 3) Moisture sufficient highlands, enset based R4 (Zone 4) Drought-prone (highlands) R5 (Zone 5) Pastoralist (arid lowland plains) 9
  • 10. 5 Agro-Ecological Zones (AEZs) 10
  • 11. Crop Yield
  • 12. ROADS total average cost from climate change $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 2020ncar_ccsm3_0_a1b 2030 2040 gfdl_cm2_1_a1b 2050
  • 13. 120 FLOODS REGION 3 100 80 60 40 20 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 History WET
  • 14. FLOODS • Regional based on 36 Basin • Damage Infrastructure • Increased frequency of extreme events
  • 15. CMI
  • 16. Energy Resources Development Plan Study focus: potential impacts of climate change on Ethiopian energy and costs of adaptation Timeline: 2010-2050 Predominantly hydropower Project cost and year
  • 17. Energy Demand 80000 Target 70000 Energy [GW_hrs] 60000 Design 50000 40000 Moderate 30000 20000 10000 0 2005 2010 2015 2020 2025 2030 2035 2040 2045 Year
  • 18. Potential Climate Change Impacts
  • 19. Climate Change Adaptation Costs Shift projects within the development plan such that energy produced under the Base scenario is matched or minimally exceeded Costs in 2010 USD; 5% discount rate
  • 20. Economywide: Methodology • Computable General Equilibrium (CGE) economywide model • Regionalized – Based on 5 agro-ecological zones – Regional agricultural production – Regional household incomes and consumption • Disaggregated households – Rural farm (by region) – Small urban (rural non-farm) and large urban centers
  • 21. Data Base: EDRI 2004/05 Social Accounting Matrix (SAM) • Constructed as part of a project with IDS (w/support of IFPRI-ESSP2) • 65 production sectors, 5 Regions + urban – 24 agricultural, – 10 agricultural processing, – 20 other industry, – 11 services • 14 Households by region and income 21
  • 22. Data Base: EDRI 2004/05 SAM • Agricultural production – Crops and livestock disaggregated by five regions: agro-ecological zones • Poor household groups defined as poorest 40% of rural and urban households according to HICES 2004/05 per capita expenditure data 22
  • 23. CGE Model: Product and Factor Markets • Model simulates the operation of a market economy – Commodity and factor prices are solved endogenously to “clear” markets • Land: fixed by region, mobile across crops • Labor markets: – Labor supply is exogenous by skill category – Real wages solved endogenously 23
  • 24. CGE Model: Income Distribution • Households disaggregated by region and income • Household incomes depend on distribution of factor income, including region-specific and agriculture-specific factors. – Volatility of income depends on volatility of factor incomes, which is affected by CC shocks 24
  • 25. CGE Model: Macro Specification • Trade balance • Fixed foreign savings (foreign capital inflow), so trade balance (current account) is also fixed. • Real exchange rate adjusts to achieve export supply and import demand that yield the fixed trade balance. • “Balanced” macro closure • Aggregate investment, government demand, and consumption are fixed shares of total absorption. • Any macro adjustment burden is shared equally across macro aggregates • Govt deficit is endogenous. Savings rates adjust to achieved savings-investment balance. • Numeraire: Consumer price index is fixed • The model determines prices relative to this fixed CPI.
  • 26. Dynamics • Model is run from 2006 to 2050 – Dynamic recursive specification. Exogenous variables and parameters updated “between” periods. CC shocks imposed. – Model solved twice in each period: • Solve after updating all exogenous variables to determine “desired” production decisions, • Then fix agricultural factor inputs and solve again with CC shocks on activities and factors 26
  • 27. Climate Change (CC) Shocks • Temperature and water: direct impact on agricultural productivity – Crops (yields) and livestock by region • Water shocks: – Hydroelectric generating capacity – Floods affect transport (roads) and agriculture by regions 27
  • 28. Adaptation Investment • Agricultural investment (e.g. irrigation, chemicals, technology) reduces yield shocks • Dam construction reduces impact on hydro • Road investment reduces impact of flooding on transport sector – Investment to pave and “harden” roads 28
  • 29. Climate Change Scenarios Scenario GCM CMI Description MB Trend base Trends with no climate change Base Historical Climate Historical climate shocks Wet2 Ncar_ccsm3_0-sres (A1b) 23% Very wet CC shocks Wet1 Ncar_ccsm3_0-sres (A2) 10% Wet CC shocks Dry1 Csiro_mk3_0-sres (A2) -5% Dry CC shocks Dry2 Gfdl_cm2_1-sres (A1b) -15% Very dry CC shocks CMI: Crop moisture index change In addition, the CC scenarios have two additional scenarios indicated by a suffix: “A” for adaptation and “AC” for adaptation with investment costs. 29
  • 30. Differences in Present Value of GDP from Base Scenario 30
  • 31. Deviations of GDP from Base Run by Decade 31
  • 32. Agriculture: Mean and Stnd Dev of Annual Growth Rates 32
  • 33. Agriculture: Min and Max Annual Growth Rates 33
  • 34. Crop Output: Differences from Base Scenario by Decade 34
  • 35. Regional Growth Rates: Differences from Base, Wet2 35
  • 36. Regional Growth Rates: Differences from Base, Dry2 36
  • 37. Mean Annual Growth Rates of Household Consumption 37
  • 38. Standard Deviation of Growth Rates of Household Consumption 38
  • 39. Conclusions • Negative impacts of CC shocks are significant – Regional and sectoral variation across scenarios – Especially severe in last decade • Given growth scenario, planned hydroelectric capacity meets demand under CC shocks – CC shocks affect exports, not domestic supply • Extreme “wet” scenarios, with increased incidence of floods, are especially damaging • Poor and rural households are hurt more by CC shocks: mean and variance 39
  • 40. Conclusions • Adaptation investment – Very beneficial, especially in extreme scenarios – Reduces size and variance of CC impacts – Reduces but does not eliminate negative impact of CC shocks – Benefits vary widely across CC scenarios. • Need for analysis of investment under risk – Consistent with Ethiopia’s agricultural development strategy • Infrastructure: roads, electricity, irrigation • Technology, farm management, extension 40

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