Rainfall variation due to climate change : an intertemporal investigation into its impact on susbsistence crop net revenue

Abstract

The study uses a multivariate regression model to investigate how climate change will affect crop revenue in Ethiopia. A total of 425 subsistence farmers from 17 sub-districts in Tigray region were interviewed in six survey rounds from 1997 to 2010 to form a panel. Analysis involved regressing net revenue per unit area on climate (rainfall), soil and household characteristics to assess the significance of their impact on net revenue per unit area. Our results indicated that marginally increasing precipitation in the pre-growth season increased revenue by US$ 0.04/ha while marginally increasing main season precipitation increased revenue by US$0.02/ha. Variation of monthly precipitation from the mean in the production year had no effect on net revenue and the drought in 2002 reduced net crop revenue by 52%. The study went ahead to examine the economic implication of climate change by assessing how net revenue changes with five uniform climate change scenarios. The climate scenarios used include reducing precipitation by 5%, 10%, 15%, 20% and 25%. The last two scenarios represent drought conditions. A 5% and 10% reduction in average precipitation was inferred to reduce average net revenue by 3% and 6% respectively. The 15% decline in rainfall is predicted to reduce net revenue by 10% while the two drought conditions cause a 13% and 16% fall in net revenue. In general, the results indicate that decreasing precipitation is damaging to crop productivity in Tigray region. In spite of the impacts being relatively modest, we cannot disregard the damage that can result from droughts since their frequency is expected to increase in semi-arid areas because of climate change.