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NewsNo escape from climate-induced poverty without structural reforms: World Bank

No escape from climate-induced poverty without structural reforms: World Bank

  • Report warns failure to address climate concerns will be catastrophic.

The long-ignored climate change issue is poised to deepen poverty in Ethiopia’s struggling economy unless the country can manage to introduce encompassing structural reforms before it is too late, warns the World Bank.

The Bank unveiled its Ethiopia Country Climate and Development Report (CCDR) last Tuesday at the Hyatt Regency. Present were Ahmed Shide, minister of Finance, and Fistum Assefa (PhD), minister of Planning and Development, as experts under their offices collaborated with the World Bank (WB) and other institutions to prepare the ominous report.

It warns of skyrocketing poverty due to severe climate change impacts in the absence of macroeconomic and structural reforms. The WB analysis cautions that a lack of structural reforms could see an additional 3.7 million Ethiopians dragged into poverty over the next 25 years.

It would be a 1.7 percent rise in poverty levels, which could be contained to under one percent with reforms, according to the analysis.

“Climate change is no longer some curious topic we talk about at summits and on platforms. It is a matter of life and death,” said Fitsum at the Hyatt. “Developing countries like Ethiopia are forced to struggle with climate induced poverty, which is affecting their development aspirations and depleting resource allocation.”

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The report highlights that Ethiopia’s economic growth has fallen to an estimated six percent annually.

“This [six percent GDP growth] will not be sufficient for Ethiopia to achieve its appropriately ambitious development goals, including reducing extreme poverty, which still stands at almost a quarter of the population,” reads the WB report.

It indicates the country is losing the equivalent of between 10 and 14 percent of its GDP (from 2022) each year due to the impacts of climate change. It translates to over USD 15 billion on average, and the losses are only slated to double beginning 2030.

“Merging structural reforms with adaptation strategies is pivotal because it can substantially reduce expenses arising from climatic disasters such as droughts and floods, and can help Ethiopia harness opportunities, especially in agriculture” said Ousmane Dione, WB country director for Ethiopia, Eritrea, South Sudan and Sudan, during the report launch.  “Although formulating policies that account for the various levels of geographic vulnerability to climate change is key, it is equally important to encourage collaboration with regional governments in order to develop tailored solutions that effectively address their specific challenges.”

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Ethiopia’s lowlands are particularly vulnerable to erosion due to increased rainfall as a result of climate change. By 2050, the resulting land degradation could reduce crop yields by up to five percent as nutrients are washed away, according to the report.

Losses in livestock production are also likely to be higher in the lowlands. For instance, Afar, home to the northeastern lowlands, could see cattle milk production fall by up to a quarter in the 2040s in a scenario without reforms compared to an average national decrease of between six and 11 percent.

Similarly, cattle meat production will be affected more in the lowlands, with decreases of between four and 14 percent in the Afar region, more than double what is expected nationally. For goat meat, of which the Afar region is the largest producer in the country, declines of between six and 21 percent are likely, compared to declines nationally of between five and 13 percent.

“Without reforms in agricultural policies, Ethiopia will continue to carry out significant imports of agricultural commodities to meet domestic demand,” reads the report.

Natural hazards are further increasing vulnerability and adding to development challenges.

A total of 16 drought events and 32 riverine floods have been reported in the country since 1900. It is estimated that five million people are exposed to an average drought and 0.25 million people to an average flood event every year.

In addition to the widespread human suffering, such events also impact the economy by increasing the need for humanitarian assistance, damaging infrastructure, and causing disruptions in economic activity.

A drought event with a 1-in-5 year return period is estimated to cause economic losses of over USD 1 billion, rising to over USD 3 billion for a 1-in-100 year drought event. The cumulative effects of the ongoing drought, the most severe in the last 40 years, have been devastating for people in the already arid pastoral areas of Ethiopia, which cover two-thirds of the land mass of the country.

After a sixth consecutive poor or failed rainy season, more than 22 million people are estimated to be food insecure, while 11.8 million are said to have experienced significant livelihood losses in the drought-affected areas of Afar, Somali, Oromia and former SNNP regions and Dire Dawa City Administration.

Estimates from a recent survey of pastoral communities suggest that a contemporaneous drought shock reduces consumption by 15 percent. As a result of the prolonged drought, 13 million people are estimated to be living with insecure access to water, 1.4 million children are at risk of dropping out of school, and four million heads of livestock have died.

Meanwhile, flooding has tested the resilience of people and infrastructure in other parts of the country. Heavy rains between August and October of 2022 in the moisture-reliant lowlands in the west of the country caused flooding in Gambella, displacing over 185,000 people and affecting an additional 80,000 through loss of crop land; death of livestock; destruction of property, schools, and health facilities; and contamination of water supply.

Government officials, humanitarian organizations, and development partners have conducted meetings on how to address the climate-induced humanitarian crisis at hand following the report launch.

Amb. Shiferaw Teklemariam (PhD), head of the Ethiopian Disaster Risk Management Commission, offered a short presentation on prevailing humanitarian needs and the departures of the new Disaster Risk Management policy during a meeting organized by the Ministry of Finance.

“Though there are efforts from development partners to address humanitarian responses, there is a significant resource gap and a shocking declining trend in humanitarian assistance,” he stated.

The meeting was focused on methods of addressing food shortages, particularly in northern Ethiopia, the continued assistance for drought-affected areas in the country’s south and southeast, as well as flood affected areas in the country.

Development partners emphasized that concerted efforts are required to address the current humanitarian crisis, in tandem with efforts to build and strengthen resilience.

Temperature increases are likely to exacerbate extreme heat events in the hotter climatic zones of the country, warns the WB report.

In a high-warming future climate scenario, monthly temperatures could increase by up to 3°C by 2050, pushing mean temperatures to over 26°C in warmer months. Maximum temperatures are also projected to rise, as are the number of days with extreme heat.

These extremes will mostly affect the hotter northern and eastern parts of the country, with around 40 additional days of extreme heat expected in the Afar region.

In a scenario without structural reform measures, additional repair and maintenance costs of USD 755 million for roads and bridges would be incurred between 2041 and 2050 to offset the impacts of climate change. The report foresees these costs would fall by over a sixth in light of structural reforms.

Higher temperatures and greater precipitation is also likely to increase malaria and dengue transmissibility by 2050. Mortality and morbidity due to dengue, in particular, would rise by as much as 50 percent without any complementary reforms in health policies. However, health sector reforms could contain morbidity to 14 percent growth by 2050.

“Ethiopia is working on its domestic climate action initiatives and resource mobilization, but we also appreciate the support of our development partners,” said Fitsum. “Coupling the government’s green legacy initiatives with private sector and development partner collaboration is a crucial ingredient for our proposed net climate actions.”

Ethiopia has a small greenhouse gas (GHG) footprint, but emissions are projected to grow. In per-capita terms, GHG emissions have remained relatively constant over time at 1.64 tons (metric tons) of carbon dioxide equivalent (tCO2e) per person, much lower than the world average of 6.48 despite a 2.3 percent average annual growth since 1990.

The vast majority of these emissions (more than 90 percent) are related to agriculture and land use change and forestry, with 147 million tons of carbon dioxide equivalent (MtCO2e) of agriculture-related emissions coming from the livestock sector.

The energy sector’s contribution to emissions is minimal, as Ethiopia boasts one of the greenest power grids in the world with approximately 90 percent of installed generation capacity coming from hydropower. The remainder consists of wind and geothermal sources.

However, a lack of policy interventions could see emissions grow significantly by 2030. The greatest rise in absolute emissions would come from agriculture (by over 50 MtCO2e) and relative emissions from industry (by over 340 percent).

Ethiopia’s cumulative emissions in 2020 stood at 303Mt. It is forecasted to increase by 15 percent in 2025, and by a further 16 percent to 404Mt in 2030.

Fitsum pointed out the efforts the government is making to bridge financing gaps in both development and climate financing, and the need to integrate the two.

“We must make sure that climate change won’t affect our growth. We appreciate World Bank support to our structural adjustment efforts,” she said.

Ethiopia plans to reduce GHG emission by 69 percent in the coming years if conditionalities are met. The plans include carbon sequestration in grasslands; the Lowlands Livelihood Resilience Project; and alternative fuels and biomass efficiency.

Reforestation, landscape restoration, enhancement of livestock productivity, agricultural mechanization, an increase in poultry consumption, and the use of organic fertilizers and crop residues is hoped to cut emissions from agriculture.

Energy efficiency, transport electrification, public transport expansion, industry fuel switch, clinker substitution in cement, reduction of waste per capita, waste separation and composting, and wastewater management are also on the agenda.

However, the report highlights the significant climate financing gap facing Ethiopia. It indicates the country requires close to USD 28 billion in additional climate finance over the coming 25 years. The figure is less daunting when considering Ethiopia’s current climate financing of USD 1.9 billion annually, according to the report.

The report reveals crop agriculture requires USD 2 billion in climate financing investments before 2030, while USD 6 billion needs to go to hydropower.

“We will continue to deepen Ethiopia’s structural adjustment through the second Homegrown Economic Reform,” said Fitsum. “We also need to make sure that our efforts for structural transformations in the economy are heading in the right direction.”

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