Global Climate Change and its Economic Impact on Sub-saharan Africa: Simulation of a Computable General Equilibrium Model for Ethiopia

Abstract

An Increase in temperature and reduction in precipitation beyond the ideal threshold undermines agricultural productivity which is likely to be worse in the tropics due to vulnerability of the agricultural systems to climate change and low adaptive capacity in the region. In line with this an attempt is made to show the wake up call from the sleepless changing world climatic condition by analyzing its Economic impact in Ethiopia, one of the poorest economy in Sub-Saharan Africa . Using the CGE model the backward and forward linkage between sectors and the specific impacts on producers, consumers and other institutions are analyzed. The results show that climate change through its impact on the major sector agriculture has a significant negating effect on consumption and production in the rest of the economy. The study result also suggests that unless immediate action is taken to combat global warming and hence climate change, sub-Saharan Africa and the entire community of already poor and vulnerable people in the nation may face the worst in the years to come.