Blog Post

Mitigating Climate Change in Ethiopia: Policies and Priorities

Ethiopia is in the midst of the worst drought in the past 40 years, with six consecutive failed or below-average rainy seasons in the country’s pastoral areas. At the same time, flooding in other regions has disrupted livelihoods and caused widespread damage to lands and infrastructure. Climate shocks like these have been a major contributing factor to Ethiopia’s recent economic reversals, says a new report from the World Bank Group, and strong government action is needed to prepare for and adapt to an uncertain climate future.

From 2004 to 2019, Ethiopia experienced impressive economic growth and poverty reduction. That progress has slowed in recent years, however. Compounding shocks, such as the COVID-19 pandemic, ongoing global and regional conflicts, rising global food and energy prices, climate change, and an increasingly fragile domestic macroeconomic situation, have reduced the country’s GDP growth to around 6 percent per year.

The report finds that the costs imposed by climate change will only continue to grow, and grow rapidly, to 2030 and beyond. Under the country’s current economic policies, which rely heavily on state-led investments and little to no structural reform, average annual losses to GDP and household consumption due to the impacts of climate change could be as high as 1.5 percent annually by 2030 and upwards of 5 percent annually beyond 2030. Cumulative economic losses, based on 2022 GDP, would range from 10-14 percent by 2030 and 20-30 percent in the 2040s.

Poverty will also continue to increase in the coming decades under the current policies—increasing by as much as 1.7 percentage point by 2050. This could mean an additional 3.7 million people living in poverty as a result of the impacts of climate change.

Those impacts will vary across regions and sectors, the report highlights. Land degradation and impacts to agriculture and livestock will be more severe in the country’s lowlands. Sectorally, the livestock sector will see much larger adverse impacts than the crop sector.

Structural reforms to agricultural policies could mitigate these impacts. In a scenario of structural reform, average annual losses in GDP and household consumption would be close to 1 percent by 2030. Such reforms could increase agricultural output even with climate change, reducing the country’s reliance on food imports by 2030 and even creating exportable surpluses of certain crops into the future. Structural reform would also reduce the cost of maintaining and repairing key infrastructure like roads and bridges by over one-sixth of the estimated US$755 million estimated between 2041-2050 under the current policy scenario.

Structural reform alone will not be enough, however, the report goes on to say. Investment in climate change adaptation strategies, decentralized and tailored to local contexts, will be needed to effectively increase Ethiopia’s resilience to climate change. Investing in sustainable water management, for example, could improve the country’s existing water storage systems and help populations better weather changes in precipitation patterns. Similarly, investments in agricultural research and development to focus on crop and livestock varieties that are more resilient to climate change could help protect those sectors for significant adverse impacts.

The report emphasizes the need for private sector actors—private businesses, farmers, and consumers—to be more empowered and educated to adopt effective climate change adaptation and mitigation strategies. Structural reform will be key in enabling the country’s private sector.

In addition, policies and programs need to be decentralized to allow local governments the flexibility to tailor and implement responses that meet their location’s unique climate needs.

Finally, Ethiopia will need to continue to strengthen its social safety net programs to help poor rural and urban households become more resilient to climate change.

Sara Gustafson is a freelance communications consultant.