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Impacts of considering climate variability on investment decisions in Ethiopia:

Author

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  • Block, Paul J.
  • Strzepek, Kenneth
  • Rosegrant, Mark W.
  • Diao, Xinshen
Abstract
"Extreme interannual variability of precipitation within Ethiopia is not uncommon, inducing droughts or floods and often creating serious repercussions on agricultural and non-agricultural commodities. An agro-economic model, including mean climate variables, was developed to assess irrigation and road construction investment strategies in comparison to a baseline scenario over a 12-year time horizon. The motivation for this work is to evaluate whether the inclusion of climate variability in the model has a significant effect on prospective investment strategies and the resulting country-wide economy. The mean climate model is transformed into a variable climate model by dynamically adding yearly climate-yield factors, which influence agricultural production levels and linkages to non-agricultural goods. Nine sets of variable climate data are processed by the new model to produce an ensemble of potential economic prediction indicators. Analysis of gross domestic product and poverty rate reveal a significant overestimation of the country's future welfare by the mean climate model method, in comparison to probability density functions created from the variable climate ensemble. The ensemble is further utilized to demonstrate risk assessment capabilities. The addition of climate variability to the agro-economic model provides a framework, including realistic ranges of economic values, from which Ethiopian planners may make strategic decisions." Authors' abstract

Suggested Citation

  • Block, Paul J. & Strzepek, Kenneth & Rosegrant, Mark W. & Diao, Xinshen, 2006. "Impacts of considering climate variability on investment decisions in Ethiopia:," EPTD discussion papers 150, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:eptddp:150
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    3. Berger, Thomas, 2015. "Adaptation of farm-households to increasing climate variability in Ethiopia: Bioeconomic modeling of innovation diffusion and policy interventions," 2015 Conference, August 9-14, 2015, Milan, Italy 229062, International Association of Agricultural Economists.
    4. Bazzana, Davide & Foltz, Jeremy & Zhang, Ying, 2022. "Impact of climate smart agriculture on food security: An agent-based analysis," Food Policy, Elsevier, vol. 111(C).
    5. Karen Fisher-Vanden & Ian Sue Wing & Elisa Lanzi & David Popp, 2013. "Modeling climate change feedbacks and adaptation responses: recent approaches and shortcomings," Climatic Change, Springer, vol. 117(3), pages 481-495, April.
    6. Julia Reis & Julie Shortridge, 2020. "Impact of Uncertainty Parameter Distribution on Robust Decision Making Outcomes for Climate Change Adaptation under Deep Uncertainty," Risk Analysis, John Wiley & Sons, vol. 40(3), pages 494-511, March.
    7. You, Gene Jiing-Yun & Ringler, Claudia, 2010. "Hydro-economic modeling of climate change impacts in Ethiopia," IFPRI discussion papers 960, International Food Policy Research Institute (IFPRI).
    8. Yang, Meijian & Wang, Guiling & Lazin, Rehenuma & Shen, Xinyi & Anagnostou, Emmanouil, 2021. "Impact of planting time soil moisture on cereal crop yield in the Upper Blue Nile Basin: A novel insight towards agricultural water management," Agricultural Water Management, Elsevier, vol. 243(C).
    9. James Thurlow & Paul Dorosh & Winston Yu, 2012. "A Stochastic Simulation Approach to Estimating the Economic Impacts of Climate Change in Bangladesh," Review of Development Economics, Wiley Blackwell, vol. 16(3), pages 412-428, August.
    10. Kostandini, Genti & La Rovere, Roberto & Abdoulaye, Tahirou, 2013. "Potential impacts of increasing average yields and reducing maize yield variability in Africa," Food Policy, Elsevier, vol. 43(C), pages 213-226.
    11. James Thurlow & Paul Dorosh & Winston Yu, 2012. "A Stochastic Simulation Approach to Estimating the Economic Impacts of Climate Change in Bangladesh," Review of Development Economics, Wiley Blackwell, vol. 16(3), pages 412-428, August.
    12. Nicole D. Peterson, 2012. "Developing Climate Adaptation: The Intersection of Climate Research and Development Programmes in Index Insurance," Development and Change, International Institute of Social Studies, vol. 43(2), pages 557-584, March.
    13. World Bank, 2008. "Ethiopia - A Country Study on the Economic Impacts of Climate Change," World Bank Publications - Reports 8030, The World Bank Group.
    14. Block, P. J., 2008. "Mitigating the effects of hydrologic variability in Ethiopia: an assessment of investments in agricultural and transportation infrastructure, energy and hydroclimatic forecasting," IWMI Working Papers H042798, International Water Management Institute.
    15. Blankespoor,Brian & Ru,Yating & Wood-Sichra,Ulrike & Chambers,Thomas Timothy & You,Liangzhi & Kalvelagen,Erwin, 2022. "Estimating Local Agricultural GDP across the World," Policy Research Working Paper Series 10109, The World Bank.
    16. Williams, T.G. & Guikema, S.D. & Brown, D.G. & Agrawal, A., 2020. "Resilience and equity: Quantifying the distributional effects of resilience-enhancing strategies in a smallholder agricultural system," Agricultural Systems, Elsevier, vol. 182(C).
    17. Bazzana, Davide & Gilioli, Gianni & Simane, Belay & Zaitchik, Benjamin, 2021. "Analyzing constraints in the water-energy-food nexus: The case of eucalyptus plantation in Ethiopia," Ecological Economics, Elsevier, vol. 180(C).

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    Keywords

    Climate variability; Water; Droughts; Flooding; Irrigation Economic aspects; Road construction Economic aspects; Investments; Economic situation; Agro-economic model;
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