Abstract: This paper reviews the empirical literature on the economic impacts of natural disasters to inform both climate adaptation policy and the estimation of potential climate damages. It covers papers that estimate the short- and long-run economic impacts of weather-related extreme events as well as studies regarding the determinants of the magnitude of those damages (including fatalities). The paper also includes a discussion of risk reduction options and the use of such measures as an adaptation strategy for predicted changes in extreme events with climate change.

Abstract: This paper studies the patterns of farmers’ crop choices for a multiple-crop portfolio, where production risk considerations and rainfall uncertainty are likely to be critical factors. Our analysisemploys plot-level panel data from Ethiopia, combined with seasonal and yearly rainfall variability (from 30 years of meteorological data corresponding to the survey villages). Using the single indexapproach, our results indicate that the combined riskiness of crop portfolios at a household level responds negatively to annual rainfall variability, while seasonal rainfall variability has less consistent impact. Farmers are more likely to select less risky crops with less return, even when intercrop interactions are taken into account. Moreover, development policies designed to enhance accumulation and risk taking should take into account the importance of such exogenous factors as weather in ex-ante risk taking.

Abstract: This paper analyses the economic impacts of climate change on Ethiopia’s agriculture using a countrywide computable general equilibrium model. The impacts on agriculture are based on results from a Ricardian model where current (and future) agricultural production is analyzed as a function of temperature and precipitation. We project that the effect of overall climate change will be relatively benign until approximately 2030 and then worsen considerably. Our simulation results indicate that, over a 50-year period, the projected reduction in agricultural productivity may lead to 30 percent less average income, compared with the possible outcome in the absence of climate change. Autonomous adaptations that the farmers make and government policies in response will be crucial for Ethiopia’s future development.

Abstract: This paper analyzes the economic impacts of climate change-induced adjustments on the performance of the Tanzanian economy, using a countrywide CGE (computable general equilibrium) model. The generalequilibrium framework enables comparison of the effects of climate change to the overall growth of the economy because responsiveness to shocks is likely to depend on the macroeconomic structure of the economy. Effect of overall climate change on agricultural productivity is projected to be relatively limited until approximately 2030 and become worse thereafter. Our simulation results indicate that, despite the projected reduction in agricultural productivity, the negative impacts can potentially be quite limited. This is because the time scales involved and the low starting point of the economy leave ample time for factor substitutability (i.e., replacing reduced land productivity with increased use of capital and labor) and increased overall productivity. This indicates that policies that give farmers opportunity to invest in autonomous climate adaptation, as well aspolicies that improve the overall performance of the economy, can be as important for reducing the impacts of climate change in the economy as direct government policies for climate adaptation. The study results can inform policymakers when choosing between direct climate-change adaptation policies or measures aimed at strengthening the fundamentals of the economy, as ways of insulating against external shocks.