Perrihan Al-Riffai

Who Bears the Costs of Climate Change? Evidence from Tunisia

In order to estimate the economic costs of climate change for Tunisia, this paper uses a combination of biophysical and economic models. In addition, the paper draws on the literature to complement the quantitative analysis with policy recommendations on how to adapt to the changing climate. The results bear out the expectation that climate change has a negative but weak overall effect on the Tunisian economy. Decomposing the global and local effects shows that global climate change may benefit the agricultural sector since higher world market prices for agricultural commodities are likely to stimulate export expansion and import substitution. Locally felt climate change, however, is likely to hurt the agricultural sector as lower yields reduce factor productivities and lead to lower incomes and higher food prices. The combined local and global effects are projected to be mostly negative and the costs will have to be carried mainly by urban and richer households. From a policy perspective, the results suggest that Tunisia should try to maximize the benefits from rising global agricultural prices and to minimize (or reverse) declining crop yields at home.

Economic Impacts of Climate Change in the Arab World: A Summary of Case Studies from Syria, Tunisia and Yemen

This paper synthesizes pioneering work based on a comprehensive modeling suite that combines biophysical, sub-national and global economic models to assess the global and local effects of a changing climate on growth and household incomes in three countries in the Middle East and North Africa: Syria, Tunisia and Yemen. This cross country comparison is important given these countries’ location in a region that is consistently projected to be amongst the hardest hit by climate change. Results show that even under perfect climate change mitigation, the world market prices for food are projected to increase affecting the three economies differently. Higher global prices for food negatively affect most sectors of the economy in Syria, except for agriculture, which benefits from the higher prices. However, Syrian real household incomes decline, particularly those of poor rural nonfarm households. In Tunisia, higher food prices pose challenges to its poor and in Yemen, results from the DCGE model suggest that higher global prices for food will lower Yemen’s overall GDP growth, raise agricultural GDP, and decrease real household incomes. Effects on agricultural GDP vary by agroecological zone depending on the production structure in place. Local climate change impacts alone will lead to lower crop yields for all of the countries. In Syria, the agricultural sector suffers as a result of long-term declines in yields, and different agroecological zones will be affected differently. In Tunisia, local climate change shocks operate on the sector and on households through reduced crop yields. Results from the Tunisian DCGE model shows that local climate change is welfare reducing for all household groups under both GCM scenarios, however, farm households are most adversely affected by these yield reductions. Finally for Yemen, the local impacts of climate change are different under the two climate scenarios considered where under the MIROC scenario, agricultural GDP is somewhat higher compared to the baseline. Rural incomes are expected to rise due to the higher yields and the lower prices for sorghum and millet, whereas the urban households are largely unaffected because they hardly consume those commodities. Under the CSIRO scenario, positive and negative yield changes cancel each other out so agricultural GDP and incomes for all three household groups hardly change over the period of analysis compared to the baseline. Over the long-term, the adverse effects of both global and local climate change impacts are felt throughout the three countries. In Syria, combining local and global climate change effects slows GDP growth in all sectors. Rural households (both farm and nonfarm households) suffer the most from climate change, but urban households are also worse off when compared with the perfect mitigation scenario. Across Tunisia, the combined climate change effects lead to negative effects on the overall economy, the agricultural sector, and a total reduction of household incomes and in Yemen, the long-term implications of climate change (local and global) lead to a reduction in household welfare under both the MIROC and the CSIRO scenarios. Those reductions in welfare accumulate over time and rural households suffer more from climate change than urban households. However, under the MIROC scenario, farm households benefit from the increasing yields but rural nonfarm households do not and suffer both in relative and absolute terms under the MIROC and CSIRO scenarios. Given the strong global and local impacts of climate change, a diverse set of policy actions at different levels will be required to mitigate the negative socioeconomic effects. Moreover, global price increases, declining crop yields, and droughts affect different sectors and households differently, which underscores the necessity to consider a variety of mitigation and adaptation tools including global and national action plans, investments in agriculture, social protection, and disaster risk management.