The Economic Wide Impacts of Land Use Change for Sugarcane Plantation in Ethiopia: A Recursive Dynamic CGE Approach
Journal Title: International Journal of Management, IT and Engineering - Year 2017, Vol 7, Issue 8
Abstract
In recent years Ethiopia has been implementing multifaceted investment on sugarcane. This massive investment with the aims of producing sugar, ethanol and cogeneration has been undertaking in different regions of the country covering the period of 2009-2019. The most recent and more complicated model that helps us see inter-sectoral impacts of land use change for sugarcane plantation is computable general equilibrium (CGE). This study extends the previous SAM and CGE modeling work in Ethiopia in one step ahead; it incorporates ethanol and cogeneration in an updated version of 2005/06 SAM. And this study made the first attempt to modeled sugarcane collectively with sugar, ethanol and cogeneration into the CGE model. The findings of the study revealed that all macroeconomic variables have shown positive changes except for private consumption. A real GDP at factor cost has grown by 0.35% and real investment increased by 1.68%. With regard to the three dominant sectors of the economy, the largest output expansion is registered by the service sector. It has increased by 1.11%. The agricultural sector is the second with percentage change of 0.16%. The least growth rate has been registered by industrial sector. It declines by 0.69%. With regard to subsectors of the economy, sugarcane, sugar refining, ethanol processing and cogeneration have increased by 34.07%, 19.43%, 1.31% and 0.59%, respectively. Regarding the deleterious impact of land use change for sugarcane plantation, the production of main food stables, pulses, cash crops and livestock have shown reduction in output. It is envisaged that the policy of using degraded and barren lands for sugarcane production will appear as a way out to reverse the adverse effect of land use change on production of cereals, pulses, livestock and agro-processing industries.
Authors and Affiliations
Timkete Aleme Abebe
Keywords
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