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The impact of Technology progress and Climate Change on Supply Response in YemenPasquale LucioScandizzoCentre for Economic and International Studies (CEIS), Faculty of Economics, University of Rome "Tor Vergata”Daniele Cufari Department of Economics Law and Institutions, Faculty of Economics, University of Rome “Tor Vergata”

yemen

Yemen

Source: WFP

  • Yemen is one of the poorest countries in the World:
  • GDP per capita around 600 USD
  • Small land based: around 1.2 Mln Has of arablel and against 24 Mln of population
  • Oil sector is dominant: around 27% of GDP and 90% of merchandise exports
  • Scarcity of water and infrastructure
yemen agroecological zones
Yemen Agroecological zones

Source: IFPRI

1. Upper Highlands (above 1,900 m): temperate, rainy summer and a cool, moderately dry winter

2. Lower Highlands (below 1,900 m): Precipitation ranges from 0 mm to 400 mm and the temperature in the summer reaches 40°C.

3. Red Sea and Tihama Plain: tropical, hot and humid climate, while

rainfall averages only 130 mm annually and occurs in irregular, torrential storms.

4. Arabian sea cost: average temperature of 25°C in January and 32°C in June, with an average annual rainfall of 127 mm

5. Internal Plateau: characterized by a desert environment

6. Desert

Climate change poses a significant threat to Yemen’s development, with rising temperature projections and increasing in variance of rainfall

Climate-related hazards in Yemen include extreme temperatures, floods, landslides, sea level rise, and droughts.

volatility increase and impact on agricultural productivity
Volatility increase and impact on agricultural productivity

The volatility of the yield is negatively related with the productivity

This negative effect, is enhanced by the increase of the variation of the rain, especially for the planting season

example of impact impact of climate change authors estimates on unbalanced panel data
Example of impact Impact of Climate Change (Authors’ estimates on unbalanced Panel data)

Dependent variable: Logarithm of maize yield

Independent variables: logarithm of average quantity and variance of rainfall in critical seasons

Rainfall variance has a negative effect in the winter and the fall and the variation of rainfall in the spring, a likely manifestation of climate change, has also a negative effect

adapting to climate change mathematical model
Adapting to climate change: Mathematical model

Assuming that each option underlying value evolves as a Brownian Motion with zero drift and constant variance

(1)

where j denote the j-th option and i denote the i-th farmer. The economic value of the ith farm can be represented by the equation:

(2)

where is the value of the jthoption to adapt of the ith farmer and (Dixit and Pindyck, 1994). For adoption To be acceptable for option j:

(3)

here At farmer level, the option value over an infinite time horizon for farmers who have not adopted (yet) is given by:

(4)

where i. e. the coefficient estimated in the regression on an estimate of the increment of value added due to the adoption

conclusions
CONCLUSIONS
  • Climate Change threats provide the incentives to adapt trough a class of projects, which construct capabilities and open real options as a major source of opportunities.
  • The options to adapt to climate change in Yemen, exist not only as a reactive and coping responses of existing farming system, but also as accumulation of capabilities to flexibly create a whole set of new farming systems
  • The adoption of the GM technology appears to be an especially valuable option for the country to adapt to some of the harshes conditions that may be determined by climate change