Abstract:
The ‘primary objective of this paper is to investigate the climate change effects on agricultural gross domestic product growth in Ethiopia. This study uses time series annual data from 1992/93 to 2019/20 and, 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 affects real agricultural gross domestic product growth negatively in the long run and has a positive impact in the short run. The coefficient of the error term that captures the speed of adjustment towards the long run equilibrium is found with the correct sign and magnitude. The economic impact of climate change mainly depends on the sectorial makeup of the economy, which means that in sector such as agriculture, the economic impact of climate change can be particularly significant. It is true that some industries, such as agriculture are more vulnerable to climate change and its associated variability. 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
