Eacc ethiopia

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Eacc ethiopia

  1. 1. E T H I O P I A CO U N T RY ST U DY i Economics of Adaptation to Climate Change ETHIOPIA
  2. 2. ii E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EEACC Publications and Reports1. Economics of Adaptation to Climate Change: Synthesis Report2. Economics of Adaptation to Climate Change: Social Synthesis Report3. The Cost to Developing Countries of Adapting to Climate Change: New Methods and EstimatesCountry Case Studies:1. Bangladesh: Economics of Adaptation to Climate Change2. Bolivia: Adaptation to Climate Change: Vulnerability Assessment and Economic Aspects3. Ethiopia : Economics of Adaptation to Climate Change4. Ghana: Economics of Adaptation to Climate Change5. Mozambique: Economics of Adaptation to Climate Change6. Samoa: Economics of Adaptation to Climate Change7. Vietnam: Economics of Adaptation to Climate ChangeDiscussion Papers:1. Economics of Adaptation to Extreme Weather Events in Developing Countries2. The Costs of Adapting to Climate Change for Infrastructure3. Adaptation of Forests to Climate Change4. Costs of Agriculture Adaptation to Climate Change5. Cost of Adapting Fisheries to Climate Change6. Costs of Adaptation Related to Industrial and Municipal Water Supply and Riverine Flood Protection7. Economics of Adaptation to Climate Change-Ecosystem Services8. Modeling the Impact of Climate Change on Global Hydrology and Water Availability9. Climate Change Scenarios and Climate Data10. Economics of Coastal Zone Adaptation to Climate Change11. Costs of Adapting to Climate Change for Human Health in Developing Countries12. Social Dimensions of Adaptation to Climate Change in Bangladesh13. Social Dimensions of Adaptation to Climate Change in Bolivia14. Social Dimensions of Adaptation to Climate Change in Ethiopia15. Social Dimensions of Adaptation to Climate Change in Ghana16. Social Dimensions of Adaptation to Climate Change in Mozambique17. Social Dimensions of Adaptation to Climate Change in Vietnam18. Participatory Scenario Development Approaches for Identifying Pro-Poor Adaptation Options19. Participatory Scenario Development Approaches for Pro-Poor Adaptation: Capacity Development Manual
  3. 3. E T H I O P I A CO U N T RY ST U DY iii Economics of Adaptation to Climate ChangeETH IOPIA Ministry of Foreign Affairs Government of the Netherlands
  4. 4. iv E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E© 2010 The World Bank Group1818 H Street, NWWashington, DC 20433Telephone: 202-473-1000Internet: www.worldbank.orgE-mail: feedback@worldbank.orgAll rights reserved.This volume is a product of the World Bank Group. The World Bank Group does not guarantee the accuracy of the dataincluded in this work. The boundaries, colors, denominations, and other information shown on any map in this work do notimply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement oracceptance of such boundaries.RIGHTS AND PERMISSIONSThe material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permissionmay be a violation of applicable law. The World Bank Group encourages dissemination of its work and will normally grantpermission to reproduce portions of the work promptly.For permission to photocopy or reprint any part of this work, please send a request with complete information to the CopyrightClearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470;Internet: www.copyright.com.All images © The World Bank Photo Library, exceptPages xii, 3, 30, 62 and 92 © ShutterstockPages 77 and 86 © iStockphoto
  5. 5. E T H I O P I A CO U N T RY ST U DY vContentsAbbreviations and Acronyms xAcknowledgments xiiiExecutive Summary xvKey Concepts xvEthiopia’s Vulnerability to Climate Variability and Change xviImpacts xviAdaptation xixRecommendations xxii1 Introduction 1Background 1Scope and Limitations 12 Country Background 5Basic Features 5Current Growth and Poverty Reduction Policies 5Climate and Vulnerability to Climate Change 6Modeling Approach 6Approach to Climate Model Uncertainty 8Crop Model Description 10Livestock Model Description 11Drought Model Description 15Road Transport Model Description 15Flood Cost Model for Road Infrastructure 18IMPEND Model Description 20WEAP Model Description 21CGE Model Description 24Dynamic CGE models 25Social Analysis Approach 27Key Assumptions and Limitations 27
  6. 6. vi E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E3 Impacts 31Agriculture 31Drought Expenditures 39Road Transport 40Hydropower 46Vulnerability: A Participatory Analysis 52Economywide Impacts 544 Adaptation Options 63Agriculture 63Road Transport 65Hydropower 69Summary of Sector-Level Adaptation Costs 70Adaptation: Economywide Analysis 72Adaptation: Priorities at the Community Level 845 Recommendations 89Shorter Term (up to 2015) 89Medium to Long Term 91Bibliographic references 95Annexes (available on line at www.worldbank.org/eacc)Annex 1: CLIRUN-II Rainfall Runoff model DescriptionAnnex 2: CliCrop modelAnnex 3. Hydropower: IMPEND ModelAnnex 4: WEAP21 Model DescriptionAnnex 5: CGE Model: additional data and informationAnnex 6: WEAP Intersectoral Analysis Data and MethodsAnnex 7: Livestock Model Transfer Approach and AssumptionsAnnex 8: Drought Model DetailsTablesTable 1 Adaptation Costs (annual average, 2010–50, US$ billions) xixTable 2 Adaptation Costs and Residual Damage (annual average, 2010-2050), US$ billions xxiTable 3 GCM Scenarios for Ethiopia Country Track Study 9Table 4 Predicted Change in the Probability of Selecting Each Animal as the Primary Animal Type for the Farm 13Table 5 Predicted Change in Net Income per Animal 13
  7. 7. E T H I O P I A CO U N T RY ST U DY viiTable 6 Predicted Change in Number of Animals per Farm 13Table 7 Predicted Change in Expected Income 14Table 8 Dose-response Descriptions for Maintenance Costs 16Table 9 Five Agroecological Zones 27Table 10 Base Classified and Urban Road Networks, 2006 (km) 41Table 11 Unit Maintenance Cost Rates (US$) 41Table 12 Cumulative Climate Change Impact on Paved and Unpaved Roads Based on Increased Maintenance Costs for the Four Climate GCMs (US$ Million) 43Table 13 Time-Series inputs to CGE model for transport costs 43Table 14 Summary of Impacts Costs on Roads (US$ Million, annual average) 46Table 15 Planned Power Generation Projects Included in the Analysis 46Table 16 Total Hydropower Production under Different Demand and Climate Scenarios (Million MWH, 2010–40) 50Table 17 Unmet Demand for Irrigation (Million m3, annual average by decade) 51Table 18 Scenarios 55Table 19 Statistics on Year-to-Year Growth Rates of Household Consumption 61Table 20 Existing Irrigation Schemes (2005/06) and Irrigation Potential 64Table 21 Summary of Adaptation Costs in Agriculture (annual average 2010–50, US$ million) 65Table 22 Summary of Adaptation Costs for Roads (annual average 2010–50, US$ million) 67Table 23 Summary of Adaptation Costs in the Road Sector (annual average over the 2010–40 period, US$ million) 69Table 24 Summary of Adaptation Costs, all sectors analyzed (annual average 2010–50, US$ million) 71Table 25 Total Direct and Indirect Adaptation Costs ($ billions) 74Table 26 Foreign Savings ($ billions) 75Table 27 Net Benefits and Adaptation Project Costs, US$ billions 79Table 28 Adaptation Costs and Residual Damage (annual average, 2010-2050), US$ billions 80FiguresFigure 1 Deviations of GDP from Base Scenario xviiFigure 2 Agricultural Year-to-Year Growth Rates: Standard Deviations xviiiFigure 3 Regional GDP, Deviation from Base, Wet2 xviiiFigure 4 Net Present Value (NPV) of Absorption Differences xxFigure 5 Standard Deviation of Year-to-Year Agriculture GDP Growth Rates, without and with adaptation xxiFigure 6 Benefit/ cost ratio of Upgrading Road Standards xxivFigure 7 Economic Growth and Climate xxviFigure 8 Flow Chart of Model Sequencing 7Figure 9 CGM Projection on Daily Precipitation Intensity 10Figure 10 Precipitation Changes for IPCC A1B Scenario 10Figure 11 Flood Damage Relationship 19Figure 12 Ethiopia River Basins Modeled with WEAP 22
  8. 8. viii E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EFigure 13 Example of Basin Schematic with Supply and Demand in WEAP 23Figure 14 Overview of Ethiopia WEAP Model 23Figure 15 Agroecological Zones in Ethiopia 31Figure 16 Range of Percent Yield Deviations from no-CC Base (2006-2050) for Selected Crops 33Figure 17 Biophysical Component: Ratio of Future Livestock Expected Incomes to Expected Incomes under Mean Baseline Conditions, Ethiopia Base Scenario, 2001–50 34Figure 18 Biophysical Component: Ratio of Future Livestock Net Revenues to Net Revenues under Mean Baseline Conditions, Ethiopia Dry (on left) and Wet (on right) Scenarios, 2001–50 35Figure 19 Biophysical Component: Ratio of Future Livestock Net Revenues to Net Revenues under Mean Baseline Conditions, Global Dry (on left) and Wet (on right) Scenarios, 2001–50 35Figure 20 Feed Component: Ratio of Millet Yields to Mean Baseline Yields, Ethiopia Base Scenario, 2001–50 36Figure 21 Feed Component: Ratio of Millet Yields to Mean Baseline Yields, Ethiopia Dry (on left) and Wet (on right) Scenarios, 2001–50 37Figure 22 Feed Component: Ratio of Millet Yields to Mean Baseline Yields, Global Dry (on left) and Wet (on right) Scenarios, 2001–50 37Figure 23 Combined Components: Mean of Biophysical and Feed Vectors, Ethiopia Base Scenario, 2001–50 38Figure 24 Combined Components: Mean of Biophysical and Feed Vectors, Ethiopia Dry (on left) and Wet (on right) Scenarios, 2001–50 39Figure 25 Combined Components: Mean of Biophysical and Feed Vectors, Global Dry (on left) and Wet (on right) Scenarios, 2001–50 39Figure 26 Mean Annual Projected Ethiopian Government Expenditures in the 2000s through 2040s (Millions of 2010 $) 40Figure 27 Average Decade Costs for each of the Four GCMs for Maintaining Gravel and Earth Roads due to Climate Change Increase in Precipitation 42Figure 28 Average Decade Costs for each of the four GCMs for Maintaining Paved Roads due to Climate Change Increase in Precipitation and Temperature 42Figure 29 Base Maintenance Costs to Repair Flood Damage Based on Projected Floods From Historic Climate Patterns 44Figure 30 Total Road Capital % Loss Based on Historic Projected Flood Events 44Figure 31 Annual Average Maintenance Cost for Existing Paved and Unpaved Roads per Decade With No Adaptation 45Figure 32 Hydropower Generation under two Change Scenarios, 2008–50 47Figure 33 Total Hydropower Production in the 21 Ethiopia River Basins, Assuming Growing M&I Demands and Irrigation to 3.7 Million ha, 2001–50 48Figure 34 Mean Decadal Changes in Hydropower Production Given Increasing M&I and Irrigation Demands, Relative to a No-Demand Scenario 49Figure 35 Mean Decadal Changes in Crop Yields Given Increasing M&I and Irrigation Demands 51Figure 36 Welfare Loss from CC Scenarios 57Figure 37 Deviation of GDP from Base Scenario 58Figure 38 Standard Deviation of Agricultural Year-to-Year Growth Rates 58
  9. 9. E T H I O P I A CO U N T RY ST U DY ixFigure 39 Agricultural GDP, Deviation from Base 59Figure 40 Regional GDP, Deviation from Base, Wet2 60Figure 41 Regional GDP, Deviation from Base, Dry2 60Figure 42 Export Share of Electricity Production 61Figure 43 Total Adaptation Cost for New Roads (average annual cost per decade) 69Figure 44 Benefit/Cost Ratio of Upgrading Road Standards 70Figure 45 Cumulative Discounted Cost of Hydropower for Two Climate Change Scenarios 71Figure 46 Net Present Value (NPV) of Absorption Differences 73Figure 47 Average Deviation of GDP from Base Run (%) 74Figure 48 Standard Deviation of Year-to-Year Agriculture GDP Growth Rates 75Figure 49 Direct and Indirect Adaptation Costs ($ billions) 76Figure 50 Foreign Saving, Differences from Base Run Values ($ billions) 76Figure 51 GFCF, Ratio to Base Run, Wet Scenarios 78Figure 52 GFCF, Ratio to Base Run, Dry Scenarios 78Figure 53 Residual Damage Costs ($ billions) 80Figure 54 Discounted Differences in Absorption from Baseline (2010-2050, Wet2 scenario) 81Figure 55 Household Consumption: Difference from Base, CC Shocks 82Figure 56 Household Consumption, Difference from Base, Wet2 CC Shocks and Adaptation 82Figure 57 Household Consumption, Difference from Base, Dry2 CC Shocks and Adaptation 83Figure 58 Coefficient of Variation of Year-to-Year Growth Rates, Household Consumption 83Figure 59 Economic Growth and Climate 92BoxesBox 1 Climate Scenarios in the Global and Ethiopia Track of the EACC 9Box 2 Modeling Impacts on Paved and Unpaved Roads 17 Box 3 Computable General Equilibrium Models (CGEs) 25Box 4 Government Activities in the Agriculture Sector 64Box 5 Design Strategy Adaptation for paved and unpaved roads 66
  10. 10. x E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EAcronymsAR4 IPCC Fourth Assessment Report ITCZ Inter-Tropical Conversion ZoneBAU Business-as-usual MDGs Millennium Development GoalsCAADP Comprehensive Africa Agriculture NCAR National Center for Atmospheric Development Program ResearchCGE Computable general equilibrium NAPA National Adaptation Plans of ActionCO2 Carbon dioxide NCCAS National Climate Change AdaptationCMI Climate moisture index StrategyCRU Climate Research Unit NGO Nongovernmental organizationCSIRO Commonwealth Scientific and Indus- ODA Official development assistance trial Organisation PaMs Policies and measuresEACC Economics of Adaptation to Climate PET Potential evapotranspiration Change Ppm Parts per millionENSO El Niño-Southern Oscillation R&D Research and developmentGCM General circulation model SRES Special Report on EmissionsGDP Gross domestic product ScenariosGHG Greenhouse gases SSA Sub-Saharan AfricaGIS Geographical information system SST Sea surface temperatureHDI Human Development Index TAR Third Assessment ReportIFPRI International Food Policy Index UNDP United Nations DevelopmentIMPACT International Model for Policy Analy- Programme sis of Agricultural Commodities and UNFCCC United Nations Framework Conven- Trade tion on Climate ChangeIPCC Intergovernmental Panel on Climate VFS Vulnerability and food security Change
  11. 11. E T H I O P I A CO U N T RY ST U DY xiCURRENCY EQUIVALENTS(Exchange Rate Effective)Currency Units = BirrUS$1.00 = 11.7 Birr in 2009 (annual average)Note: Unless otherwise noted, all dollars are U.S. dollars.FISCAL YEAR (FY)July 8 – July 7WEIGHT AND MEASURESMetric System
  12. 12. xii E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E
  13. 13. E T H I O P I A CO U N T RY ST U DY xiiiAcknowledgmentsThe report was prepared by a team coordinated on The team is grateful for the comments receivedthe World Bank side by Raffaello Cervigni. Prin- from participants to the initial consultationcipal authors were Kenneth Strzepek, Sherman workshop held in Addis Ababa in NovemberRobinson, Len Wright and Raffaello Cervigni; 2009, as well as the final workshop in Addisadditional experts on the team were Paul Block, Ababa in October 2010. These included: AssefaBrent Boehlert, Paul Chinowsky, Chas Fant, Wil- Tofu, Kumelachew Yeshitela, Sisay Nune,liam Farmer, Alyssa McCluskey, Michelle Mini- Abdissa Megersa, Abera Tola, Ahmed Kha-hane, Niko Strzepek, and Gete Zeleke. lid Eldaw, Alessandra Tisot, Amare Kebede, Amare Worku, Amelie Blume, Angus Friday,The World Bank team comprised, in alphabetical Belay Simane, Berhanu Adenew, Berhanuorder, Aziz Bouzaher (former team leader), Marie Ayalew, Berhanu Kassa, Daniel Danano, DanielBernadette Darang, Susmita Dasgupta, Edward Tewodros, Dessalegen Mesfin, Dubale Admasu,Dwumfour, Achim Fock, Francesca Fusaro, Anne Gelila Woodeneh, Getu Zegye, Girma Balcha,Kuriakose, Stephen Ling, Sergio Margulis (team Hailu Tefera, Hiwot Michael, Ian Campbell,leader of the overall EACC study), Stephen Jeremy Webb, Mahary Maasho, Mahlet Eyassu,Mink, Kiran Pandey (Coordinator EACC coun- Mersha Argaw, Mesfin Mengistu, Michael Cat,try studies) , Dawit Tadesse, and Fang Xu. Robert Moges Worku, Negusu Aklilu, Peter Mwa-Livernash provided editorial services, Jim Cant- nakatwe, Praveen Wignarajah, Seleshi Geta-rell contributed editorial input and coordinated hun, Shewaye Deribe, Tamiru Sebsibe, Tesfayeproduction, and Hugo Mansilla provided edito- Alemu, Tewolde Egziabher, Tibebu Tadesse,rial and production support. The peer reviewers Valdemar Holmegen,Wondosen Sentayehu,were John Nash, Vahid Alavian, Michael Jacob- Wondwossen Mekuria, Wolt Soer, Yacobsen, and Roger Gorham. Mulugeta, Zenebe Gegziabher and Zerihun Ambaye.From the government of Ethiopia, policy guidancewas provided by Dr. Tewolde Birhan Gebre Egziab- Financial support from DFID, the governmentsher Yohannes (Director General of the Environmen- of the Netherlands and Switzerland, and thetal Protection Authority), Ato Dessalegen Mesfin Trust Fund for Environmentally and Socially(Deputy Director General, EPA); and Dr. Abera Sustainable Development (TFESSD) is gratefullyDeresa (State Minister, Ministry of Agriculture). acknowledged.
  14. 14. xiv E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E
  15. 15. E T H I O P I A CO U N T RY ST U DY xvExecutive SummaryThis report is part of a broader study, the Eco- change of the economy in the absence of climatenomics of Adaptation to Climate Change change that can be used as a basis for comparison(EACC), which has two objectives: (a) to develop a with various climate change scenarios.global estimate of adaptation costs for informinginternational climate negotiations; and (b) to help For Ethiopia, a baseline, no-climate-change sce-decision makers in developing countries assess the nario reflecting current government plans andrisks posed by climate change and design nationa priorities and spanning the 2010–2050 time hori-strategies for adapting to it. zon, was established in consultation with govern- ment officials at a workshop in November 2009.In addition to a “global track” (World Bank The baseline includes an ambitious investment2010), where multicountry databases were used to program in dams, hydropower development, irri-generate aggregate estimates at a global scale, the gation, water management, and road building.EACC project includes a series of country-levelstudies, where national data were disaggregated Impacts are evaluated as the deviation of theto more local and sector levels, helping to under- variables of interest—economic welfare, sec-stand adaptation from a bottom-up perspective. tor development objectives, and so on—from the baseline trajectory. Adaptation is defined as a set of actions intended to reduce or eliminateKey Concepts the deviation from the baseline development path caused by climate change.In accordance with the broader EACC method-ology, climate change impacts and adaptation The impacts of climate change, and the meritsstrategies were defined in relation to a baseline of adaptation strategies, depend on future cli-(no-climate change) development trajectory, mate outcomes. These are typically derived fromdesigned as a plausible representation of how global circulation models (GCMs) and are uncer-Ethiopia’s economy might evolve in the period tain, both because the processes are inherently2010–50 on the basis of historical trends and stochastic and because the GCM models differcurrent government plans. The baseline is not a in how they represent those processes. To cap-forecast, but instead provides a counterfactual—a ture these uncertainties, this study utilizes the tworeasonable trajectory for growth and structural “extreme” GCMs used in the global track of the
  16. 16. xvi E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EEACC (labeled Wet1 and Dry1), as well as two rainfall intensity, there would be an increasedadditional models that are better suited to repre- chance of severe episodic flooding caused bysent climate model uncertainty in the specific case storm runoff in highland areas.of Ethiopia (labeled here Wet2 and Dry2). TheWet1 and Dry1 are used to ensure consistencywith the EACC global track; but the Ethiopia Dry Impacts(Dry2) and the Ethiopia Wet (Wet2) capture moreadequately the range of variation of climate out- The analysis focuses on three main channels ofcomes specific to Ethiopia. climatic vulnerability that already affect the Ethi- opian economy and are likely to be of major sig- nificance under the climate of the future. TheseEthiopia’s Vulnerability channels include (1) agriculture, which accountedto Climate Variability and for 47 percent of Ethiopian GDP in 2006 and is highly sensitive to seasonal variations in tem-Change perature and moisture; (2) roads, the backbone of the country’s transport system, which are oftenEthiopia is heavily dependent on rainfed agricul- hit by large floods, causing serious infrastructureture. Its geographical location and topography—in damage and disruptions to supply chains; and (3)combination with low adaptive capacity—entail dams, which provide hydropower and irrigationa high vulnerability to the impacts of climate and are affected by large precipitation swings.change. Historically the country has been proneto extreme weather variability. Rainfall is highly Changes in precipitation and temperature fromerratic, most rain falls with high intensity, and the four GCMs were used to estimate (a) changesthere is a high degree of variability in both time in yields for major crops and impacts on livestock,and space. Since the early 1980s, the country has (b) flow into hydropower generation facilities andsuffered seven major droughts—five of which the consequent changes in power generation, (c)have led to famines—in addition to dozens of the impact of flooding on roads; (d) the effects oflocal droughts. Major floods also occurred in dif- more frequent droughts on government expendi-ferent parts of the country in 1988, 1993, 1994, ture on vulnerability and food security (VFS); and1995, 1996, and 2006. (e) the loss of irrigation and hydropower due to conflicts among competing demands. The analy-Climate projections obtained from the GCMs sis assesses deviations in GDP and other variablesreferred to above suggest an increase in rainfall from the no-climate-change baseline growth pathvariability with a rising frequency of both severe for the four climate change scenarios mentionedflooding and droughts due to global warming. above, which are intended to capture the rangeThe Dry2 scenario shows reductions in average of possible variability in Ethiopia: Dry1, Dry2;annual rainfall over 2045–55 of (a) 10–25 per- Wet1, and Wet2.cent in the central highlands, (b) 0–10 percent inthe south, and (c) more than 25 percent in the For the baseline (no-climate-change scenario),north of the country. The Wet2 scenario shows the analysis uses historical monthly climate dataincreases in average annual rainfall of (a) 10–25 and projects the historical pattern into the future.percent in the south and central highlands, and For the climate change scenarios, stochastic rep-(b) more than 25 percent in most of the rest of resentations of weather variability in each globalthe country. If the Wet2 scenario is accompanied circulation model are superimposed on the base-by an increase in the variability of short-duration line to capture the variability of the future. The
  17. 17. E T H I O P I A CO U N T RY ST U DY xviiscenarios include projections of extreme weather nearly 8 percent lower than in the baseline. Whileevents such as droughts and floods. these are not forecasts of future climate impacts, they highlight the high degree of vulnerability ofEconomy-wide impacts of climate change were Ethiopian agriculture and infrastructure to theassessed using a computable general equilib- climate shocks of the future.rium (CGE) model. The results of the model-ing suggest that the GDP losses are significant, Climate change brings about increased weatherbut diverse across scenarios. Under the Dry2 variability, which translates into large swings inscenario, losses are large (6 to 10 percent) and the growth rate of agricultural GDP, illustratedregularly distributed during the time horizon con- in Figure 2 by the increase in standard devia-sidered. In contrast, in the case of the Wet 2 sce- tion compared to the baseline. While the simplenario, the loss of GDP is quite substantial in the means of annual growth rates are similar across2040–49 decade because of the costs of coping the scenarios, high variability leads to significantwith damage caused by extreme weather events, welfare losses. A priority for adaptation invest-especially floods, from the 2030 decade onward. ment is therefore to reduce income variation andThe 10-year average GDP for the final decade is the related welfare losses. Figure 1 Deviations of GDP from Base Scenario 2015 2025 2035 2045 0.00 -2.00 WET 2 PERCENT DEVIATION FROM BASE -4.00 WET 1 -6.00 DRY 1 DRY 2 -8.00 -10.00 -12.00
  18. 18. xviii E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E Figure 2 Agricultural Year-to-Year Growth Rates: Standard Deviations 7.00 6.00 5.00 PERCENTAGE POINTS 4.00 3.00 2.00 1.00 0.00 BASE DRY2 WET2 Figure 3 Regional GDP, Deviation from Base, Wet2 40.00 30.00 rrR1 PERCENT DEVIATION FROM BASE 20.00 rrR2 rrR3 10.00 rrR4 0.00 rrR5 2015 2025 2035 2045 rrURB -10.00 -20.00Notes: Regions R1 to R5 and Urban.
  19. 19. E T H I O P I A CO U N T RY ST U DY xixVariability in agricultural income tends to affectthe poor more, with values of the standard devia- Adaptationtion on average some 10 percent higher than forthe non-poor, under both wet and dry scenarios. The investment program included in the no-cli- mate-change baseline established in consultationFinally, as shown in Figure 3 for the Wet2 sce- with the government is likely to enhance Ethio-nario, climate change impacts are likely to vary pia’s resilience to climate change. However, addi-significantly across regions. tional efforts are required to attenuate climate change impacts. Adaptation strategies were there-The arid lowland zone 5 (R5) derives substantial fore identified as additions to—or modificationsbenefits from the increase in total rainfall, which of—current government programs.supports livestock, while relative losses are concen-trated in the cereals-based highlands zone 2 (R2) More specifically, adaptation in agricultureand in urban areas. The latter reflects the down- included increasing irrigated cropland and invest-stream consequences of flooding and weather vari- ing in agricultural research and development. Inability. The dry scenarios have reverse impacts, with the transport sector, adaptation options includedthe arid lowlands and livestock suffering greatly. increasing the share of paved and hardened roads, as well as “soft” measures such as changesIn addition to analysis of the three priority sectors in transportation operation and maintenance,(agriculture, roads, and hydropower), the study development of new design standards that con-also analyzed potential conflicts under climate sider projected climate changes, transfer of rel-change in the use of water across sectors. A water evant transportation technology to stakeholders,planning model was used to evaluate the potential and the enhancement of transportation safetyinteractions among growing municipal and indus- measures. In the hydropower sector, adaptationtrial (M&I), irrigation, and hydropower demands policies included altering the scale and timingunder climate change. The model evaluates these of planned projects, as well as constraining totalintersectoral effects between 2001 and 2050 and downstream flow and irrigation flow.generates time series of impacts to irrigated agri-cultural yields and hydropower generation under These strategies were first assessed on a sector-byeach of the climate scenarios. sector basis. When the full set of economywide linkages is taken into account, direct plus indirectThe result of the intersectoral analysis indicates adaptation costs increase significantly, as indi-that hydropower production is impacted by irriga- cated in Table 1.tion and M&I withdrawals. Under the Dry2 sce-nario, if priority is given to agricultural demands, Table 1 Adaptation Costs (annual average, 2010–50,there is a loss of hydropower capacity equivalent US$ billions)to 100 percent of the 2000 installed capacity and Scenario Direct, Indirect Total direct10 percent of the hydropower capacity planed by sector costs and level costs indirectthe government for the period 2011–15. costs Wet 1 0.19 0.60 0.79If, on the other hand, priority is given to hydro- Dry 1 0.17 0.77 0.94power, up to a billion cubic meters of water Wet 2 0.16 2.30 2.46might be taken away from irrigated agriculture. Dry 2 0.26 2.55 2.81That would cause a 30–40 percent yield drop inan area of some 250,000 hectares that would beforced to revert to rainfed conditions.
  20. 20. xx E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G ETo evaluate its welfare implications, the adapta- at relatively low cost; and (c) that adaptation low-tion strategy was analyzed in a CGE framework ers income variability.by comparing a no-climate change baseline—reflecting existing development plans—with As shown in Figure 4, adaptation greatly reducesclimate change scenarios reflecting adaptation the welfare loss due to climate change (measuredinvestments. The main findings are that adapta- here by the difference from the baseline of totaltion (a) reduces, but does not eliminate, welfare absorption –GDP plus imports minus exports, dis-losses; (b) that such welfare gains can be achieved counted over the 40-year time horizon). Figure 4 Net Present Value (NPV) of Absorption Differences 0.0 WET 2 DRY 2 WET 1 DRY 1 -1.0 -2.0 RATIO �%� TO NVP OF BASE GDP -3.0 -4.0 -5.0 -6.0 -7.0 -8.0 -9.0 -10.0 NO ADAPTATION ADAPTATIONNote: NPV of Absorption, Difference from Base (% of NPV of GDP). Absorption is defined as GDP, plus imports minus exports
  21. 21. E T H I O P I A CO U N T RY ST U DY xxi Figure 5 Standard Deviation of Year-to-Year Agriculture GDP Growth Rates, without and with adaptation 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 NO WITH NO WITH ADAPTATION ADAPTATION ADAPTATION ADAPTATION BASELINE WET 2 DRY 2The (undiscounted) welfare benefits of the adap- Table 2 Adaptation Costs and Residual Damage (annual average,tation strategy are significantly larger than the 2010-2050), US$ billionsproject-level costs of implementing it, resulting Scenario Adaptation Residual Totalin benefit/cost ratios ranging from 5 to over 13. costs damageFinally, adaptation restores the variability of agri- Wet2 2.45 1.52 3.97culture GDP growth close to the baseline scenario Wet1 0.79 0.43 1.22(Figure 5). Dry1 0.94 0.81 1.75 Dry2 2.81 3.03 5.84While the benefits of adaptation investmentsare significant, they do not fully offset the nega-tive impact of the climate change scenarios. Two The second approach is to include an additionaloptions were explored to close the “welfare gap” labor-upgrading program in the adaptation strat-caused by climate change. egy. In this scenario, 0.1 percent of rural unskilled labor is assumed to be transferred to the urbanThe first is to estimate the “residual damage region, with additional upgrading so that all thecosts” as the transfer (in $) that would be required urban labor categories, skilled and unskilled,to completely offset the loss of absorption from grow uniformly faster than in the base run. Whenclimate change shock, after implementing adap- tested under the Wet2 scenario, an adaptationtation investments. Closing the “welfare gap” strategy—including such a labor-upgrading pro-through residual compensation would entail gram—appears to be able to more than offset themobilizing significant resources compared to negative impacts of climate change.direct project-level adaptation costs.
  22. 22. xxii E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EWhile no information was available within the level, similar options were identified, along withanalysis’ time frame to properly estimate the cost a focus on early warning systems and flood con-of the skill upgrading program, this finding points trol measures, agricultural technology, financeto the significant potential benefits of accelerat- and market development, renewable energy, anding the diversification of the economy away from urban planning. The adaptation options iden-highly climate sensitive sectors, such as agricul- tified at the local and national levels generallyture. In the Wet2 scenario, for any value of the aligned with the natural resource and agricultureprogram cost below $1.5 billion/ year, a devel- focus in the NAPA, which also identifies neededopment strategy including a skill upgrading pro- investments in crop insurance, wetlands protec-gram like the one considered here would appear tion, carbon livelihoods, agroforestry and anti-to be preferable to the residual compensation malaria initiatives.approach.Adaptation priorities: local-level Recommendationsperspectives The findings of this analysis suggest that impactsLand and water management are central con- of climate change will be quite significant, par-cerns in Ethiopia, which is subject to extremes ticularly as Ethiopia approaches the middle ofof drought and floods. Vulnerable groups iden- the century. While the magnitude of the impactstified through community discussions included remains considerable—irrespective of whetherasset-poor households with very limited means the climate of the future will be wetter or drier—of coping with climate hazards, the expanding several important adaptation decisions are sensi-group of rural landless who lack income opportu- tive to what climate is expected.nities, the urban poor living in flood-prone areasof cities, and the elderly and the sick due to their Given the large uncertainty on future climatelimited adaptive capacity. Women and children outcomes, the approach to enhance Ethiopia’sleft behind as male adults migrate for employ- climate resilience should be couched in termsment during drought-related production failures of a gradual, adaptive, and learning paradigm.were also identified as vulnerable during and after Such an approach could be articulated for bothextreme events. Other vulnerable groups identi- the shorter term—including the implementationfied included communities living on already-de- of the Growth and Transformation Plan (GTP)graded lands, and pastoral communities who face recently issued by the government—and for thesevere conflicts over natural resources (especially longer term.access to land for herd mobility) with agricultural-ists and the state. Shorter term (up to 2015)Local participatory scenario development (PSD) By and large, the Growth and Transformationworkshops identified soil and forest rehabilitation, Plan supports a number of actions that, by boost-irrigation and water harvesting, improved agri- ing growth, will contribute to the enhancementcultural techniques and drought-resistant variet- of Ethiopia’s resilience to climatic shocks. Robusties, education, and land use rights for pastoralists growth based on infrastructure investment isas adaptation preferences. Regional development likely to be the first line of defense against climateand the need for structural shifts toward service change impacts. Relatively small deviations fromand industry sectors to improve employment out- the ambitious investment targets set forth by thecomes were also raised as issues. At the national government for roads, dams, hydropower, water
  23. 23. E T H I O P I A CO U N T RY ST U DY xxiiimanagement, and irrigation would significantly Road infrastructureincrease longer-term vulnerability to climatechange and thus make adaptation costlier. The GTP aims to expand the coverage and enhance the quality of infrastructure: “Focus willHowever, there are a number of additional be given to the development of roads, railways,issues the government could consider to further energy, telecommunication, irrigation, drinkingenhance the contribution of GTP to Ethiopia’s water and sanitation, and basic infrastructureclimate resilience—and thus, ultimately, to the developments … With regard to roads, ruralability of the country to support sustained, longer roads will be constructed on all regions and allterm growth. rural kebeles will be connected (through) stan- dardized all-weather roads with main highways.”Agriculture Modeling results show that existing infrastruc- ture design standards (level of prevention againstThe GTP purports to “continue the ongoing extreme events, e.g. local and regional flooding)effort of improving agriculture productivity in a are inadequate to address current climate variabil-sustainable manner so as to ensure its place of ity and will impact economic growth rates in thethe engine of growth.” The analysis of this report near- and mid-term. Results from climate changeindicates that under future climates many regions analyses show that this issue is likely to becomeof Ethiopia will face decreases in agricultural worse in the mid to long term. The governmentproduction. This suggests that agricultural pro- should consider enhancing infrastructure designduction as an engine of growth is vulnerable to standards as soon as possible.climate change and climate variability. While themore pronounced effects on crops and livestock Even under current climate, the direct bene-are likely to materialize in later decades, efforts to fits—in terms of increased lifetime—of roadsenhance the resilience to climate shocks of crop designed following higher standards outweigh theyields and livestock production should be stepped corresponding costs in a discounted benefit/costup as soon as possible, particularly on account of analysis. The case for improved design standardsthe lead time needed to strengthen research sys- is even stronger under climate change, irrespec-tems and to transfer and adapt findings from the tive of climate outcomes: the benefit/cost ratiolab to the field. of adopting higher design standards is 17 percent to 75 percent higher than in the baseline underInvestments in improved agricultural productiv- the Wet2 scenario, and 16 to 55 percent higherity—such as watershed management, on-farm in the Dry2 scenario (Figure 6). And in additiontechnology, access to extension services, trans- there are important indirect economywide ben-port, fertilizers and improved seed varieties, and efits: a more climate-resilient road network canclimate and weather forecasting—will enhance avoid costly disruptions of communications linksthe resilience of agriculture both to droughts and and supply chains that increased flood frequencyto waterlogging caused by floods. National and might bring about.local actions will need to be supported by inter-national efforts (e.g. through the CGIAR system) The GTP includes ambitious targets for upgrad-to develop climate resilient agricultural technolo- ing the road network, including 70,000 km ofgies, given the global public good nature of these all-weather, Woreda (locally administrative unit)innovations. managed roads. Unpaved roads only have a 5-year design span until resurfacing and they are very susceptible to flooding damage, which has
  24. 24. xxiv E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E Figure 6 Benefit/ cost ratio of Upgrading Road Standards WET 2 SCENARIO DRY 2 SCENARIO 5.00 4.00 3.50 4.00 3.00 3.00 2.50 2.00 2.00 1.50 1.00 1.00 0.50 0.00 0.00 2020 2030 2040 2050 2020 2030 2040 2050 NO CLIMATE CHANGE NO CLIMATE CHANGE WITH CLIMATE CHANGE WITH CLIMATE CHANGEvery large indirect, economywide costs on supply wide planning purposes, although not for plant-chains, health and education services, etc. The level design and operation), provides support,government may want to consider a more detailed from a climate change perspective, to the GTPeconomic analysis of the road expansion targets targets. The projects likely to go online in the nextto determine if building fewer but more climate 5 years have very low risk of being impacted byresilient roads is preferable to building a larger climate change.number of roads, which are likely to be more vul-nerable to climate shocks. The case for the for- While in the longer term (see below) hydropowermer option seems compelling under the current development will become increasingly more cli-climate, and will become even sounder under the mate sensitive, projects in the current pipelineclimate of the future. In addition, should interna- are likely to be less vulnerable to shocks, as thetional climate finance resources become available overlap between their life span and the time whenin the future for Ethiopia (from the Copenhagen stronger climate change effects will materialize isGreen Fund or other mechanisms), the govern- relatively limited. Some climate change scenariosment might consider utilizing these resources for actually project an increase in Ethiopian runoff,enhancing the climate resilience of the road net- resulting in larger volumes of hydropower gen-work expansion plans. eration, and thus making the case for investment in hydropower stronger.Energy In the nearer term, the economics of hydropowerCurrent water resources and Ethiopian topog- investments will be influenced less by climate, andraphy indicate an overall potential of more than more, on the demand side, by the evolution of30,000 megawatts in economically viable hydro- domestic and external markets (Regional Africanpower generation capacity. The GTP approach is power grids). A sustained expansion of nationalto focus on “the development of water and wind and foreign demand for power will be key to sup-energy options to fulfill the energy demand of the port the expansion of Ethiopia’s hydropowercountry,” with targets for hydropower of 6,000 to sector, which in turn will be vital to support the8,000 MW in additional generation capacity. The country’s accelerated economic growth.hydropower analyses of this report (conducted atthe monthly scale, which is adequate for sector-
  25. 25. E T H I O P I A CO U N T RY ST U DY xxvIn the short run, expansion of hydropower gen- Medium to long termeration should be accelerated as a way to supportgrowth and to facilitate the transition of the econ- As Ethiopia looks into the next stages of devel-omy from being highly agriculture-dependent to opment—starting with preparation of the nexthaving a broader productive base in industry and growth plan, which will follow the GTP 2011–services. Given the vulnerability of the agricul- 15)—it might want to evaluate more closely thetural sector to current climate shocks (let alone implications of climate change for its overallthose to be expected in the future), strengthen- policies and infrastructure development pro-ing of the electricity sector, and in particular the grams. Early planning for the more severe cli-promotion of regional and Africa-wide power mate impacts of mid-century is desirable, so as togrids to receive Ethiopia’s excess power, should avoid locking the country into a climate-vulner-be a priority in the investment strategy. Strength- able development trajectory, particularly when itened hydropower development can both increase comes to economic processes with a high degreenear-term economic growth and make the energy of inertia, or investment decisions concerningsystem more climate resilient, since more reser- infrastructures with a long life span.voir storage distributed over the country providesmore reliability and protection from regional Due to the uncertainty of future climate, a risk-droughts. based investment planning approach should be adopted. Robust decision-making principles are needed to minimize the “regrets” of climate- sensitive decisions. As climate shocks become more frequent and severe, the opportunity costs
  26. 26. xxvi E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G Eof capital invested in projects and programs that employment, fiscal revenues, capital formation,are viable only under a limited set of climate out- the drain on government expenditure, aid flowscomes becomes too large. In developing a climate to support disaster relief, and so on.risk management approach to support long-termdevelopment, some key considerations include Under climate change, renewed efforts will bethe following. necessary to buffer the economy from more frequent and/or severe climate shocks. TheseMacroeconomic management include strengthening social safety nets, access to relief funds, drought early warning systems, cropHistorically the Ethiopian economy has been insurance programs, grain banks, and strengthen-vulnerable to climate fluctuations (Figure 7). The ing infrastructure design.analysis of this report shows that climate variabil-ity will increase under all scenarios. Since agricul- Promote diversification acrossture (the economy’s most climate sensitive sector) sectors of income and employmentis likely to remain for some time one of Ethiopia’smain engines of growth, climate-induced shocks In the longer term, however, accelerated diversi-will continue to be a threat to macroeconomic fication of income and employment sources awaystability, because of the impacts on income, from climate-sensitive sectors such as agriculture Figure 7 Economic Growth and Climate 80 25 20 60 15 40 10 20 5 -0 % 0 -5 2000 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 -20 -10 RAINFALL VARIABILITY -15 -40 GDP GROWTH -20 -60 AG GDP GROWTH -25 -80 -30Source: De Jong, The World Bank (2005)
  27. 27. E T H I O P I A CO U N T RY ST U DY xxviiis likely to become increasingly important under are crucial to help identify which climate changea more erratic climate. It be should explored in path Ethiopia is actually on, and to provide inputscloser detail, particularly because it holds prom- to the adaptive management process for resourceise to be a cost-effective way to eliminate residual management. Better data on hydrometeorologi-welfare damage caused by climate change. cal processes, and stronger capacity to analyze and model them, is key to making more informedThe government may want to look into ways to decisions on issues such as the number of hydro-accelerate the absorption of the rural labor force power plants, the design of individual plants, andinto non-agricultural activities, including skills- the operation of the grid.upgrading programs and encouragement ofgrowth poles around medium-size municipalities. Proactively address conflicts in water usesEvaluate the climate resilience oflarge infrastructure projects Under “dry” future climate scenarios, compe- tition among users of water—municipal andAs we move toward mid-century, the range of industrial consumption, hydropower generation,possible climate futures broadens to encompass and irrigation—might become more acute, par-markedly different “wet” and “dry” scenarios. ticularly in certain river basins. The availabilityThis has implications for the optimal timing of of water to downstream riparian countries mightdams and other investments in water infrastruc- also be affected.ture, which is likely to be quite sensitive to climateoutcomes. Large projects of this type should be Given the significant pay-off in addressing inter-subject—on account of the large capital outlays nal and transboundary conflicts on water useinvolved—to careful climate-robustness tests. before they arise, the government might want to consider investments in river basin planningTo adequately inform the design of subsequent systems and institutional arrangements that cangenerations of water infrastructure projects, facilitate information sharing, dialogue, and dis-investments in enhancing national hydrometeo- pute resolution.rological services, data collection, and analysis
  28. 28. xxviii O NE E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E
  29. 29. E T H I O P I A CO U N T RY ST U DY 1IntroductionBackground Under the country track, impacts of climate change and adaptation costs are being assessedThe Economics of Adaptation to Climate by sector, but only for the major economic sectorsChange (EACC) has two specific analytical objec- in each case study country. Differently from thetives. The first is to develop a “global” estimate global analysis, though, vulnerability assessmentsof adaptation costs to inform the international and participatory scenario workshops are beingcommunity’s efforts to help those developing used to highlight the impact of climate changecountries most vulnerable to climate change to on vulnerable groups and to identify adaptationmeet adaptation costs. The second objective is strategies that can benefit these groups. Further-to help decision makers in developing countries more, macroeconomic analyses using CGE mod-to better understand and assess the risks posed eling are being used to integrate the sector levelby climate change and to better design strategies analyses and to identify cross-sectoral effects, suchto adapt to it. as relative price changes.The EACC study comprises a global track to meetthe first study objective and a case study track to Scope and Limitationsmeet the second one. The country track comprisesseven countries: Ethiopia, Mozambique, Ghana, The purpose of this study is to assist the govern-Bangladesh, Vietnam, Bolivia, and Samoa. ment of Ethiopia in its efforts to understand theUnder the global track, adaptation costs for all potential economic impacts of climate changedeveloping countries are estimated by major and to develop sound policies and investmentseconomic sectors using country-level data sets in response to such impacts. Adaptation optionsthat have global coverage. Sectors covered are and their costs are estimated and compared withagriculture, forestry, fisheries, infrastructure, the costs of inaction. The analysis of impacts andwater resources, coastal zones, health, and eco- adaptation focuses on three sectors considered:system services. Cost implications of changes in agriculture, road infrastructure, and hydropower.the frequency of extreme weather events are also In addition, an evaluation of the economywideconsidered, including the implications for social repercussions of the sector-wise impacts is alsoprotection programs. included.
  30. 30. 2 E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EThe study methodology and a first set of results conducted at the subnational level (the five agro-were discussed at a workshop with government ecological regions discussed in chapter 3), but fur-officials and other stakeholders in Addis Ababa ther spatial disaggregation would be desirable forin November 2009. This report presents a set of future finer-level analysis on specific sectors suchfindings that take into account comments and sug- as agriculture.gestions made at the meeting, particularly on thedefinition of a development baseline consistent In addition, the report’s scope is limited in termswith the government’s priorities and plans. This of the adaptation options considered. The analy-report also incorporates new work on livestock, sis focused on a relatively limited numbers ofirrigation, road infrastructure, and tradeoffs in options in each of the three sectors considered.water use between hydropower and irrigation. The choice was guided by availability of data, and by the possibility of utilizing straightforwardThe study does not have the ambition to cover and broadly accepted methodologies. More workthe full range of impacts that climate change would be required to evaluate a fuller range ofmight have on Ethiopia’s economic and social adaptation options. This would best be donedevelopment. Given resources and time con- through follow-up studies undertaken at the levelstraints, it focused on three sectors (agriculture, of individual sectors, rather than at the multisec-roads, and hydropower) that play a strategic role toral, economywide level of the present study.in the country’s current economic structure andin its future development prospects. However, it is The report is structured as follows. Backgroundimportant to recognize that climate change might information related to climate vulnerability spe-have important impacts in other areas not cov- cific to Ethiopia is provided in chapter 2. Meth-ered by this report; for example, the provision of ods used to assess the economics of adaptationecosystem services (e.g. by forests or wetlands), or are described in chapter 3. Estimated impacts ofthe effects of climate change on human health. climate change are presented in chapter 4. Adap-As a result, the estimates of impacts are likely tation options, including economywide costs, areto be a conservative, lower-bound approxima- outlined in chapter 5, and conclusions are pro-tion of the fuller spectrum of effects that climate vided in chapter 6.change might bring about. The analysis has been
  31. 31. E T H I O P I A CO U N T RY ST U DY 3
  32. 32. 4 T WO E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G E
  33. 33. E T H I O P I A CO U N T RY ST U DY 5Country BackgroundBasic Features strategic framework known as Plan for Acceler- ated and Sustained Development to End PovertyWith around 75 million inhabitants, Ethiopia is (PASDEP). The third strategy plan, recently pub-the second most populous country in Sub-Saha- lished, is the “Growth and Transformation Plan-ran Africa (SSA). Despite rapid economic growth ning (GTP) 2011–2015.”over the past five years, per capita income—$255in 2006/07 at current prices—remains well Policies related to human development, ruralbelow the region’s average. The 2006/07 share development, food security, and capacity build-of agriculture in GDP is 46 percent, while indus- ing that were a priority in the SDPRP were aug-try accounts for 13 percent and services for 41 mented under the PASDEP. In addition to these,percent (CSA 2008). The main export commod- new strategic directions with emphasis on com-ity is coffee with a share of 35.7 percent in total mercialization of agriculture and an emergingmerchandise exports in 2006/07, followed by oil urban agenda are also pursued as a means toseeds (15.8 percent), gold (8.2 percent), chat (7.8 mitigate the challenges faced by the agriculturepercent), leather and leather goods (7.5 percent), sector and the overall economy.and pulses (5.9 percent) (IMF 2008). Ethiopia is anet importer of wheat; petrol, coal, and gas are The government strategy in agriculture empha-only imported. sizes a major effort to support the intensification of marketable farm products by both small and large farmers. To help jump-start this process, aCurrent Growth and Poverty range of public investments have been identifiedReduction Policies and are being implemented. The major invest- ments include the construction of farm-to-market roads and area irrigation through multipurposeThe Ethiopian government prepared and adopted dams. Other related services include measures tothree successive poverty reduction strategy pro- improve land tenure security, reforms to improvegrams. The first was the Sustainable Development the availability of fertilizer and improved seeds,and Poverty Reduction Program (SDPRP). that and specialized extension services for differenti-covered three years from 2000/01 to 2003/04. ated agricultural zones and types of commercialThe second is a five-year (2005–10) guiding agriculture (Ahmed et al. 2009).
  34. 34. 6 E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EGrowth and Transformation Planning (2011–2015), between climate change variations and overallrecently issued by the Ministry of Finance and economic performance.Economic Development, outlines growth strat-egies planned for the next 5 years. The agricul- Ethiopia is historically prone to extreme weathertural sector is identified as a key driver of growth. events. Rainfall in Ethiopia is highly erratic,As this sector is particularly sensitive to climate, and most rain falls intensively, often as convec-there is an opportunity to consider the implica- tive storms, with very high rainfall intensity andtions of the EACC findings with respect to the extreme spatial and temporal variability. Since theGTP (Chapter 5). early 1980s, the country has suffered seven major droughts, five of which led to famines in addition to dozens of local droughts (Diao and Pratt 2007).Climate and Vulnerability to Survey data show that between 1999 and 2004Climate Change more than half of all households in the country experienced at least one major drought shock (UNDP 2007). Major floods occurred in differentAround 45 percent of Ethiopia consists of a high parts of the country in 1988, 1993, 1994, 1995,plateau with mountain ranges divided by the East 1996, and 2006 (ICPAC 2007).African Rift Valley. Almost 90 percent of thepopulation resides in these highland regions with It is important to highlight that climate change iselevations greater than 1,500m above sea level. projected to take place over the course of the nextThe surrounding lowlands (<1,500m) are mostly century. In accordance with the approach fol-populated by pastoralists. Ethiopia’s varied topog- lowed by the broader EACC study, this report willraphy has traditionally been associated with three only consider the implications of climate changemain climatic zones: (a) the warm, semiarid Kolla, to 2050 (by decadal increment), even though cli-<1,500m above sea level; (b) the Woinadega, a cool, mate change is expected to be most severe towardsubhumid temperate zone, 1,500–2,400m above the end of the century. The long time frame con-sea level; and (c) the cool and humid Dega, mostly sidered—40 years into the future—means that>2,400m above sea level. As the population dynamic processes are important. Two distinctincreased and agricultural activities expanded, approaches to the analysis were used: quantitativetwo more were added at the extreme ends of the modeling for biophysical and economic assess-nation’s climatic conditions: the hot, arid Bereha, ments, and participatory social analysis.and the cold and moist Wurch.Ethiopia is heavily dependent on rainfed agricul- Modeling Approachture. Its geographical location and topography incombination with low adaptive capacity entail a The economywide modeling component of thehigh vulnerability to adverse impacts of climate EACC Ethiopia case study involves linking achange. Regional projections of climate models dynamic multisectoral and multiregional com-not only predict a substantial rise in mean tem- putable general equilibrium model (CGE) withperatures over the 21st century, but also suggest a range of sectoral climate change impact mod-an increase in rainfall variability with a rising fre- els that generate quantitative estimates of effectsquency of both  extreme flooding and droughts on water systems, agriculture, hydro-energy, anddue to global warming. The agricultural sector road transport infrastructure (Figure 8).also affects performance in other sectors of theeconomy. Hence, there is a strong observable link
  35. 35. E T H I O P I A CO U N T RY ST U DY 7 Figure 8 Flow Chart of Model Sequencing Location GCM GENERAL CIRCULATION MODEL TEMPERATURE PRECIPITATION Surface Slope CliRun CLIMATE RUNOFF TEMPERATURE PRECIPITATION TEMPERATURE RAINFALL RUNOFF Soil CompositionReserve Specifications Crop Type Discount Rate IMPEND INVESTMENT MODEL FOR CliCrop PLANNING ETHIOPIAN CLIMATE CROP AND NILE DEVELOPMENT WATER RESOURCE ALLOCATIONS IRRIGATION DEMAND CROP YIELD Reservoir Specifications River Basin Management Municipal and Industrial Demand WEAP WATER EVALUATION AND PLANNING RESOURCE ACCOUNTING Discount Rate CGE COMPUTABLE GENERAL EQUILIBRIUM
  36. 36. 8 E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EGlobal circulation models (GCMs) lie at the in the next phase of work. Reservoir flow calcu-beginning of the modeling chain. These mod- lated in WEAP may change previous inputs intoels take as inputs quantities of greenhouse gases IMPEND, thus requiring the net benefits to beemitted and produce climate outcomes through recalculated and their implications re-modeledtime and across space as a function of these emis- in WEAP. The following subsections describesions and initial conditions. A series of hydrologi- the sector models CliCrop, a road algorithm,cal and crop models are the next elements in the IMPEND, and CGE.chain. These models take climate outcomes andconvert them to natural outcomes on the ground.Outcomes of particular interest are crop yields, Approach to Climate Modelwhich temperature and rainfall can influence Uncertaintysubstantially, and hydrological flow within riverbasins, including the incidence of floods. Historic and future climate inputs specific to Ethi-The flow of information through the integrated opia and its river basins—such as monthly tem-river basin and water resource model is generally perature and precipitation—are used to drive thelinear, as shown above in Figure 8. Climate data river basin and water resource model and cropis entered into CliRun and CliCrop in order to models outlined below. Historic inputs have beenproduce streamflow runoff estimates and crop gathered using data from the Climate Researchirrigation demand estimates. Unit (CRU) on global monthly precipitation and temperature. Information on future climate hasCliRun is a two-layer, one-dimensional infiltration been taken from four general circulation modelsand runoff estimation tool that uses historic run- (GCMs), forced with different CO2 emission sce-off as a means to estimate soil characteristics. A narios to represent the total possible variability in0.5° by 0.5° historic global runoff database gener- precipitation.ated by the Global Runoff Data Center (GRDC)and measured historic runoff is used to calibrate There were four climate change scenarios usedCliRun. CliCrop is a generic crop model described for this analysis. The scenarios were selected toin chapter 2. Inflows calculated using CliRun are span the range of possible climatic change aspassed to IMPEND, where storage capacity and measured by the Climate Moisture Index (CMI).irrigation flows are optimized to maximize net The CMI is an aggregate measure of annualbenefits. The outputs from IMPEND, along with water availability. It provides for an integratedthe irrigation demands estimated from CliCrop, measure of the impact of climate change onare then passed to the Water Evaluation and soil moisture and runoff from changes in bothPlanning System (WEAP), where water storage temperature and precipitation. Since CMI is anand hydropower potential are modeled based on annual measure, it does not account for seasonaltheir interaction with the climate and socioeco- changes and the potential for increased flood-nomics of the river basins being modeled. ing due to changes in daily and monthly scale precipitation processes in the midst of annuallyFinally, this information is passed to the CGE, drier climate. Two scenarios, the Dry1 and Wet1,where the economic implications of the modeled come from the EACC global track (Box 1). Theydata are assessed. Within the river basin model are the wettest and driest scenarios measuringthere is, however, one interaction with the poten- the changes in CMI over all the land area of thetial for nonlinearity. The interaction between globe. These scenarios were examined to provideIMPEND and WEAP is an iterative process for linkage and comparison of the EACC globaldepending on the scenario and will be completed and country-study tracks.
  37. 37. E T H I O P I A CO U N T RY ST U DY 9Box 1 Climate Scenarios in the Global For Ethiopia both of the test scenarios show mod- and Ethiopia Track of the EACC est temperature increase and very small changes in annual precipitation. Dry2 and Wet2 are the In the EACC global track study, two mod- els—the National Center for Atmospheric extremes scenarios of CMI change evaluated Research (NCAR) CCSM3 and Common- only over the area of Ethiopia (Table 3). Over wealth Scientific and Industrial Research Ethiopia, the Dry2 scenario shows reductions in Organization (CSIRO) Mk3.0 models—with average annual rainfall over 2045–55 greater than SRES A2 emission forcings were used to 15 percent. The Wet2 scenario show increases in model climate change for the analysis of average annual rainfall close to 25 percent over most sectors. These models capture a full most of the rest of the country. spread of model predictions to represent Table 3 GCM Scenarios for Ethiopia inherent uncertainty, and they report specific climate variables—minimum and maximum Country Track Study CMI Devia- temperature changes—needed for sector Scenario GCM SRES tion* (%) analyses. Though the model predictions do ncar_ not diverge much for projected tempera- Wet 1: Global Wet ccsm3_0 A2 10 ture increases by 2050—both projecting csiro_ Dry 1: Global Dry mk3_0 A2 -5 increases of approximately 2°C above pre- ncar_ industrial levels—they vary substantially for Wet 2: Ethiopia Wet pcm1 A1b +23 precipitation changes. Among the models Dry 2: Ethiopia Dry ipsl_cm4 B1 -15 reporting minimum and maximum tempera- ture changes, NCAR was the wettest sce- Note: *The Climate Moisture Index (CMI) depends on average annual precipitation and average annual potential evapotranspira- nario and CSIRO the driest scenario globally tion (PET). If PET is greater than precipitation, the climate is con- sidered to be dry, whereas if precipitation is greater than PET, the based on the climate moisture index (CMI). climate is moist. Calculated as CMI = (P/PET)-1 {when PET>P} and CMI = 1-(PET/P) {when P>PET}, a CMI of –1 is very arid and a CMI of +1 is very humid. As a ratio of two depth measurements, CMI In line with the global track, the climate is dimensionless. Average annual PET is a parameter that reflects the amount of water lost via evaporation or transpiration (water projections from these two GCMs are used consumed by vegetation) during a typical year for a given area if to generate the “global wet” and “global sufficient water were available at all times. Average annual evapo- transpiration (ET) is a measure of the amount of water lost to the dry” scenarios for the Ethiopia country- atmosphere from the surface of soils and plants through the com- track study, referred to as Wet1 and Dry1. bined processes of evaporation and transpiration during the year (measured in mm/yr). Evapotranspiration, which is both connected In addition, the climate projections from the to and limited by the physical environment, is a measure that quan- tifies the available water in a region. Potential evapotranspiration two GCM/SRES combinations with the low- is a calculated parameter that represents the maximum rate of ET est and highest climate moisture index for possible for an area completely covered by vegetation with ade- quate moisture available at all times. PET is dependent on several Ethiopia were used to generate “Ethiopia variables, including temperature, humidity, solar radiation, and wind velocity. If ample water is available, ET should be equal to PET. dry” and “Ethiopia wet” scenarios. Precipi- tation and temperature data acquired from these simulations are used to estimate the Interpreting climate scenarios availability of water at a sub-basin scale. Historical climate data for each basin have IPCC reports that while in terms of annual been gathered using available precipitation precipitation in Ethiopia, some climate models and temperature data when available, along indicate increases and some decreases, all mod- with the Climate Research Unit’s 0.5° by 0.5° els suggest increases in precipitation intensity at global historical precipitation and tempera- the daily and weekly scale (Figure 9). This implies ture database. more flooding even in scenarios that suggest more drought. Both increased flooding and increased drought are projected by the same scenarios.
  38. 38. 10 E C O N O M I C S O F A D A P TAT I O N T O C L I M AT E C H A N G EAnother important aspect of the IPCC climatechange scenarios is that they are generated by Crop Model Descriptiondynamic models that are transient over the cen-tury. While temperature mostly increases mono- CliCrop is a generic crop model used to calculatetonically, precipitation does not. Figure 10 shows the effect of variations in CO2 daily precipitationa set of climate change precipitation projections patterns caused by climate change on crop yieldsaveraged over East Africa. These show that there and irrigation water demand. The model wasis a great deal of variability from year to year. developed in response to the available crop mod-Some scenarios even switch from increasing to els that use monthly average rainfall and tem-decreasing precipitation, or from decreasing to perature to produce crop outputs. These monthlyincreasing, over different periods of the 21st Cen- models do not capture the effects of changes intury. These changes can lead to climate change precipitation patterns, which greatly impact cropimpacts that vary by decade within a less transient production. For example, most of the IPCCmulti-decadal trend of reduction or increase in GCMs predict that total annual precipitation willprecipitation. decrease in Africa, but rain will be more intense Figure 9 CGM Projection on Daily Precipitation Intensity Figure 10 Precipitation Changes for IPCC A1B Scenario

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