June 13, 2013
Alli Gold
MIT Joint Program on the Science and Policy of Global Change
If you know how much something costs, you can budget and plan ahead. With this in mind, a team of researchers from MIT, the World Bank and the International Food Policy Research Institute recently developed a country-level method of estimating the impacts of climate change and the costs of adaptation. This new method models sector-wide and economy-wide estimates to help policymakers prepare and plan for the future.
"Previous country-level research assessing climate change impacts and adaptation either focused on economy-wide estimates or sector-by-sector analysis, without looking at the bigger picture," says Kenneth Strzepek, one of the lead authors of the study and a research scientist at MIT's Joint Program on the Science and Policy of Global Change. "By looking at the interplay between different sectors and within the economy, we are able to evaluate the indirect effects and interactions that can occur that are often not captured."
As a case study, the researchers apply their technique to Ethiopia — the second most populated country in Sub-Saharan Africa. They look at three key sectors: agriculture, road infrastructure and hydropower.
"These sectors were selected because of their strategic role in the country's current economic structure and its future development plans," Strzepek says.
Agriculture accounts for about 46 percent of the GDP in Ethiopia and is almost entirely rain-fed. Variability in temperature and rainfall will have major impacts on this crucial industry. The researchers found that with a temperature increase of two degrees Celsius, more intense drought and floods will cause a drop in crop production — triggering reductions in income, employment and investments.
Frequent and intense flooding will also damage Ethiopia's road infrastructure — the backbone of the country's transportation system and a needed link in the agricultural supply chain. The researchers found that flooding brought on by climate change will increase maintenance costs by as much as $14 million per year for the existing road network, which is expected to grow dramatically in the next 40 years.
The intense variability of precipitation will also greatly impact the country's hydropower and associated reservoir storage, which could provide energy, irrigation and flood mitigation. Because there is currently little installed hydro capacity in Ethiopia, the model showed few climate change impacts. But in the coming years, the government plans to invest heavily in this sector, meaning there could potentially be significant impacts to this sector as well.
Additionally, the researchers found that there would be an increased demand for water across sectors and create challenges for policymakers to effectively distribute this important resource. For example, Ethiopia plans to expand irrigated agriculture by 30 percent by 2050. The researchers found that some of the irrigation demands will be unmet, placing demands on other sectors requiring water resources.
"This research makes clear the impact droughts, floods, and other effects brought on by climate change can have on major financial sectors and infrastructure," Strzepek says. "For Ethiopia, we find that one of the best defenses against climate change is investment in infrastructure for transportation, energy and agriculture. By building up these sectors, the government will be able to enhance the country's resiliency."
He continued, "In predicting the outcomes of future water, infrastructure and agriculture projects, we were able to test the effectiveness of policies. This gives decision-makers in these countries, as well as international organizations, the information they need to continue to grow, develop and plan for the future with climate change in mind."
Planning for climate change is essential, Raffaello Cervigni, a co-author of the study and lead environmental economist at the World Bank, writes in a recent blog post.
"Addressing climate change is first and foremost a development priority for Africa … If no action is taken to adapt to climate change, it threatens to dissipate the gains made by many African countries in terms of economic growth and poverty reduction over the past ten years," he writes.
But, he continues, "a harsher climate need not be an impediment for Africa's development," if we can come together to address these challenges.
The integrated approach used by the authors is now being applied to studies on the costs of adapting to climate change in Ghana and Mozambique, as well as Vietnam. Others have replicated the approach to help other countries calculate the costs of adaptation.
Reprint 2013-7
Maputo — Researchers from the Massachusetts Institute of Technology (MIT) and the United Nations have warned that Mozambique's infrastructure is vulnerable to extreme weather events that are becoming more frequent due to climate change.
According to MIT's Ken Strzepek, "in developing countries - and particularly in Africa - they are building their infrastructure at a very fast rate. They are also the most vulnerable to climate change impacts like flooding".
The researchers closely studied the projected change to Mozambique's climate and found that "it was clear that flooding and sea level rise would be two critical threats to the economy, and in particular to roads needed to transport food from rural farms to city populations".
Strzepek argues that "it would make sense for the government to spend the money now to build the roads in a way that makes them less vulnerable in the future".
Published in the "Review of Development Economics", the research on Mozambique finds that "climate change through 2050 is likely to place a drag on economic growth and development prospects. The economic implications of climate change appear to become more pronounced from about 2030. Nevertheless, the implications are not so strong as to drastically diminish development prospects".
The paper points out that "economic growth is widely held to depend on the quantity, quality, and orientation of a country's backbone infrastructure", and argues that the vulnerability of future infrastructure is "to a considerable degree, a matter of choice".
The researchers found that improved economic conditions in Mozambique have been felt by most segments of the population and that "the national poverty headcount fell from 69 to 55 per cent during 1997-2009, and infant mortality rates fell from 149 to less than 100 per 1000 births during 1996-2008. Education levels have also improved dramatically".
The authors of the report point out that "with agriculture accounting for about a quarter of Gross Domestic Product and three quarters of employment, improved rural infrastructure is often viewed as critical to future economic growth and poverty reduction".
They argue that "poor infrastructure, large distances, and associated weak market development generate large differences between farm gate and urban prices for agricultural products" and point out that "reducing these marketing margins results in strong poverty reductions, particularly if agricultural productivity rises simultaneously".
The researchers looked at four different climate change scenarios. Even in the scenario where Mozambique has a reduction in rainfall, there is a small increase in flooding although there is no increase in the probability of extreme flooding. In all the other cases, including the "global dry" scenario, the probability of extreme flooding events rises dramatically.
The paper concludes that "while the analysis conducted here does not favour a prophylactic policy of upgrading the road network, it should, in many instances, be reasonably obvious which portions of road are more likely to be subjected to flooding events. The concept extends well beyond roads. Indeed, the vulnerability profile of the large majority of the capital stock in 2050 is endogenous. By gradually channelling economic activity to areas less vulnerable to climate change (e.g. flooding events and sea level rise), the vulnerability of the economy can be greatly reduced, likely at very low cost. Simply accounting for the potential implications of climate change in decisions with respect to zoning and major public investments may be sufficient to substantially reduce the vulnerability profile in 2050 and beyond, when the implications of climate change are projected to manifest themselves with much greater force".
A conflict over water management has intensified along the Mississippi and Missouri rivers. Downstream states argue water should be released from the Missouri’s upstream reservoirs into the Mississippi to allow shipping to continue in the record low-level waters. Upstream states are fighting to keep the water to irrigate their crops and prevent the drought from getting even worse next year. To add to the tension, still others want to move a portion of the Missouri River Basin’s water to the Colorado Basin—which will see demand outstrip supply in the coming decades, according to a federal study released last week.

