The impact of climate change on the distribution of rural income in Ethiopia

Abstract

Recent evidence suggests that global climate change is likely to increase the incidence of environmental disasters, as well as the frequency of extreme weather events. As a result, it is generally recognized that climate and weather variability has negative impacts on households’ welfare relying mainly on agriculture. In Ethiopia, 95% of the population depends on rain-fed agriculture and consequently the economic impact of climate change is crucial for small-scale farmers’ food security and welfare. The objective of this study is to provide a comprehensive analysis of the impact of climate change on rural households’ welfare in Ethiopia by using a Quantile Regression (QR) analysis. The main econometric results show that the elasticity of crop income with respect to rainfall varies across quantiles. It is confirmed that there is a non-linear relationship between climatic variables and income.