Ethiopia - A Country Study on the Economic Impacts of Climate
Change

It is now widely recognized that
low-income countries in tropical and sub-tropical regions
will be disproportionally affected by the adverse impacts of
climate change. The combination of already fragile
environments, dominance of climate-sensitive sectors in
economic activity, and low autonomous adaptive capacity in
these regions implies a high vulnerability to the harmful
effects of global warming on agricultural production and
food security, water resources, human health, physical
infrastructure and ecosystems. Recent authoritative
scientific assessments emphasize that, even under the most
optimistic assumptions about the success of future global
mitigation action, an acceleration of adaptation efforts in
developing countries over the next decades is essential to
build resilience and reduce damage costs. The effects of
climate change vary across countries, and adaptation and
coping capabilities are influenced by geographical,
economic, cultural and political factors. Successful
adaptation programs must therefore take into account
country-specific circumstances. This pilot study aims to
develop a methodology that provides an economy-wide
framework for analyzing economic impacts from climate change
and potential adaptation policies that developing countries
might undertake in the near and long term. To accomplish
this objective, the paper modifies and extends a dynamic,
single-country prototype Computable General Equilibrium
(CGE) model to include stochastic elements that are
characteristic of climate change and a representation of the
sectors that are most likely to be affected.