Climate Change and its Impact on Agricultural GDP Growth in Ethiopia: A Time Series Analysis

Abstract

Climate change is now a global phenomenon with growth, poverty, food security, and stability implications, and is one of the greatest challenges the world is facing today. The economic impact of climate change mainly depends on the sectoral composition of the economy. That is certain sectors like agriculture are more sensitive to climate change and the associated variability. The main objective of this paper is to investigate the impact of climate change on agricultural gross domestic product growth in Ethiopia. This study uses time-series annual data from  1992/93to 2017/18 and, an effort is made to identify the long run and short-run impact of climate change in Ethiopia using an autoregressive distributed lag (ARDL)  and error correction methods. The results of the study provide evidence that climate change and variability affect real agricultural gross domestic product growth negatively in the long run. The coefficient of the error term that captures the speed of adjustment toward the long-run equilibrium is found with the correct sign and magnitude. The overall findings of the study underlined the importance of building resilience to climate change and minimizing the adverse impacts of climate change to promote agricultural output and hence economic growth in Ethiopia.