Climate-Resilient Development

Climate change induced shocks in agriculture impinge on the Ethiopian economy (Chapter 5). The public adaptation costs to fully neutralize the first-order shocks in agriculture is detrimental to government saving and output of some sectors and regions (Chapter 6). Even though alternative adaptation finance schemes may help to reduce the pressure on government saving, the resource-pull effects persist and influence manufacturing and private services output, and hence urban GDP (Chapter 7). In the Ethiopian context, the opportunity costs of declining government saving are enormous as the government plays critical role in urban, transport, and energy infrastructure development.