Impact of climate change on the agriculture sector and household welfare in Mozambique: an analysis based on a dynamic computable general equilibrium model

Mozambique has historically been prone to natural disasters due to its geographical location, but over the past 20 years the intensity and frequency of droughts, floods and cyclones has increased, negatively affecting the entire economy, particularly agriculture. These impacts are expected to worsen, as climatic conditions become hotter and drier. This study estimates the impacts of climate change on the agriculture sector and household welfare in Mozambique using a dynamic computable general equilibrium model. Specifically, the study investigates the impact of climate change on agricultural production, looking at implications for various crops and regions in the country. It also reports climate change impacts on both urban and rural household welfare. A probabilistic approach considering a distribution of climate shocks under two global mitigation futures (i.e. unconstrained emissions and level 1 stabilization) is used to evaluate the impacts of climate change on the economy, providing a range for the potential impact of climate change and the uncertainties related to it. Climate impacts are considered through five key channels: agriculture, roads, hydropower, sea-level rise and cyclones. The analysis shows that acute negative impacts are experienced in the agricultural sector, particularly for maize and cassava as crop yields decrease. Successful global mitigation efforts of reducing CO2 concentration to 560 ppm by 2100 (L1S) decreases the degree of uncertainty of the impact of climate change on the Mozambican economy, as the GDP is expected to increase up to USD 6.0 billion.