Emerta Aragie

The impact of large-scale agricultural investments in low-income economies

Recent years have witnessed an increasing interest in large-scale agricultural land acquisitions in developing countries. The accompanying socio-economic implications have been areas of debate among politicians, policymakers and development agents. This paper argues that the traditional way of simulating the impacts of these investments in developing countries is misleading as the approach implies that the new investments are identical to the semi-subsistence way of farming that dominates agricultural practices in the host countries. In this study, we incorporate the peculiarity of large-scale agro-investments into an existing database for economy-wide models, i.e., social accounting matrix (SAM), and capture welfare and distributional outcomes properly. SAM-based multiplier models applied to Ethiopian data justify the need to account for the peculiarity of the investments in terms of production technology and their geographic distribution.

The effect of price support policies under productivity shocks: Evidence from an economywide model

Modeling the economywide effects of water and energy interventions in the face of climate change

The Ethiopian economy relies predominantly on rainfed agriculture for income generation, export earnings, and rural livelihoods. However, the frequency and intensity of extreme ago-climatic events projected by climate scenarios suggest considerable and growing risks from climate change to the country’s agri-food systems and the overall economy. This study assesses the economic impacts of recurrent climate shocks on the Ethiopian economy to 2040. The results indicate that recurrent climate shocks will lead to a reduction in Ethiopia’s cumulative GDP from 2020 to 2040 compared to a “no climate change” baseline. Specifically, extreme weather events could cumulatively cost Ethiopia up to 17 percent (or US$ 534.3 billion) in GDP between 2020 and 2040 compared to a no-climate change baseline. The weight of the economic loss is concentrated in the agricultural production sector, with rural households and poorer households in urban areas being worst affected. Strategic investments in irrigation infrastructure and in hydroelectricity generation are found to be effective in mitigating some of the damage caused by recurrent climate variability.