Economic implications of climate change in Mozambique

Mozambique has been historically 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 agriculture sector. These impacts are expected to worsen, as climatic  conditions become hotter and drier. This study estimates the impacts of climate change on the economy of Mozambique using a dynamic computable general equilibrium model which forms part of a larger modelling framework called the Systematic Analysis of Climate Resilient Development. Specifically, the study investigates the impact of climate change on agricultural production, looking at implications for various crops and regions in the country. A probabilistic approach, considering a distribution of climate shocks, is used to evaluate the impacts of climate change, thus providing a range of potential impacts on the economy. Two global mitigation scenarios (unconstrained emission and level one stabilization (L1S)) and five key climate channels (i.e. crop yields, road infrastructure, hydropower generation, sea-level rise, and cyclones) are considered. The analysis shows that acute negative impacts are experienced in the agriculture sector, particularly for maize and cassava. For instance, under the L1S scenario the distribution mode of potential maize yield outcomes are estimated as -1.1%, 2.5% and 0 for the northern, central and southern regions. Successful global mitigation to the L1S level of reducing CO2 concentration to 480 ppm by 2100 reduces the impact of climate change on the Mozambican economy as the GDP is expected to increase up to USD 6.0 billion. In fact, the L1S policy generates positive impact compared to the unconstrained emission, for roads, energy, sea-level and cyclone scenarios.