Climate induced hazards such as droughts, floods and rising temperatures pose a major threat to the livelihoods of the poor in Ethiopia. The country has experienced 15 drought episodes between 1965 and 2015, some of which resulted in substantial humanitarian crises. For example, the 1984-85 drought, which resulted in the worst famine in the country’s history, took some 300,000 lives. During the period 1991-2008, Ethiopia lost a cumulative amount in the range of 13-40 percent of its current level of agricultural output due to climate change (Aragie, 2013). Furthermore, in 2015-2016 the country experienced one of worst El Niño-induced droughts in decades, with below-average rainfall leading to 50–90% harvest failure affecting more than 10.2 million people (on top of the 7.9 million people already covered under PSNP).1 Ethiopia’s drought history further indicates that vulnerability to drought is highest in the pastoral areas in the lowlands and in the densely populated, food-insecure areas in the highlands. Within the arid and semi-arid areas of the country, the regions of Afar, Somali, Tigray and low lands of Oromia, are among the most vulnerable to climate shocks, given low levels of service provision and infrastructure development, and the frequency of droughts and floods (Deressa et al., 2008).
Most of the global climate models project an increase in precipitation in both the dry and wet seasons in Ethiopia. On the other hand, studies with more detailed regional climate models indicate that the direction of the expected precipitation change is uncertain. The temperature is likely to continue to increase for the next few decades with the rate of change as observed. The impacts of the ongoing and projected climate change and variability are widespread in both socio-economic and natural systems. It is predicted that changes in climate will lead to recurrent droughts and heavy rainfall in different parts of Ethiopia, reducing the amount of land that can be used for agriculture and decreasing crop productivity. The economic impact of climate change depends on the extent of annual weather variability and extremes, but recent major droughts have reduced GDP by 1% - 4%. Future climate change could reduce Ethiopia’s GDP by 8-10% in 2050 (Irish Aid, 2018) The government’s Climate Resilience Strategy for Agriculture and Forestry indicates that under some extreme scenarios the impact of climate change on all sectors could reduce GDP by 10% or more by 2050 (FDRE, 2015). The potential decrease in GDP due to climate change could impact Ethiopia’s ambition to reach middle-income status by 2025 and is likely to slow down poverty reduction. Mideksa (2009) also found that climate change will make the prospect of economic development in Ethiopia harder by reducing agricultural production and output in the sectors linked to agriculte, which is likely to reduce Ethiopia’s GDP by about 10% from its benchmark level; and by raising the degree of income inequality in which the Gini-coefficient increases by 20%, which is likely to further decrease economic growth and fuel poverty.