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UGANDA: ECONOMIC IMPACTS OF CLIMATE CHANGE
Four Sector Studies and Five Case Studies
INTRODUCTION
• Study commissioned by the Uganda’s Ministry of Water and
Environment’s Climate Change Department
• Funded by CDKN and DFID
• Started in January 2014, and will be finalised in June 2015
• 4 main components:
•
Downscaling of climate change scenarios over Uganda
•
Economic modelling at national/sectoral and district levels through
case-studies
• Recommendations for policy development and implementation, and
priority investments
•
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Communications & outreach
2
SECTOR AND CASE STUDIES
• Sectors looked at are: water, agriculture, infrastructure
and energy.
• We have drafts of these
• Case studies under way are: urban areas (Kampala),
coffee region (Mt. Elgon), agriculture and livestock region
(Karamoja), water and energy conflict region (Mpanga)
and a case study of regions where health impacts of
climate change could be important.
• Some preliminary results are available for Kampala
The Water Sector
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PAST IMPACTS AND STRUCTURE OF THE ANALYSIS
• Climate change and variability are already affecting the
availability of water in Uganda. Recent extreme events
such as the La Nina drought of 1998-2000 and floods,
including the ENSO 1997-1998 event, have caused
significant losses.
• This study has assessed:
• The impacts of climatic and socio-economic changes on water
supply and demand;
• The size of economic losses due to unmet demand in money
terms;
• The costs of water shortage due to extreme events
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METHODOLOGY
CLIMATE CHANGE IMPACTS
• Changes in Internal Renewable Water Resources for
Uganda (RCP8.5 - SSP5). Source: Water2Invest.
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Sum
Current
771
694
1,139
2,976
1,636
1,285
717
655
601
852
965
835
13,127
2050 Change (%)
613
-20.4
497
-28.4
686
-39.8
1,692
-43.1
1,019
-37.7
653
-49.2
558
-22.1
553
-15.6
675
12.2
964
13.2
1,002
3.8
774
-7.3
9,686
-26.2
EXPECTED DEMAND IN 2030 BY BASIN
Notes: IRWR = Internal renewable water resources, EI =
exploitation index (= demand/IRWR)*100.
EXPECTED DEMAND IN 2050 BY BASIN
2050
Watershed
Lake Victoria
Lake Kyoga
Victoria Nile
Lake Edward
Lake Albert
Aswa
Albert Nile
Kidepo
Misc
Total
Urban
Rural
Domestic Domestic Industrial Livestock
213.8
140.0
28.9
42.3
96.8
231.5
1.3
75.7
41.4
73.9
0.8
23.2
33.6
80.7
0.9
18.1
11.6
43.8
0.4
12.5
30.4
2.7
0.0
14.2
31.1
59.8
0.3
15.6
0.0
5.1
0.0
2.6
5.2
11.4
0.0
8.2
463.9
648.9
32.6
212.4
Irrigation
453.1
1344.9
218.0
133.8
0.0
52.0
428.0
0.0
0.0
2629.8
Total
878.1
1750.2
357.3
267.1
68.3
139.3
534.8
10.3
24.8
4030.2
IWRW
1680.0
2320.0
1440.0
4470.0
2890.0
1770.0
450.0
210.0
360.0
15590
Notes: IRWR = Internal renewable water resources, EI =
exploitation index (= demand/IRWR)*100.
EI
52.1
75.5
24.8
6.0
2.3
7.9
118.6
3.6
6.9
14.3
ALLOCATION RULE FOR WATER
• For the purposes of this study, based on discussions with the
Ministry of Water and Environment, we assume a hierarchy
of allocation, with the following demands being met
sequentially:
1. Consumption demand – urban and rural;
2. Irrigation water demand;
3. Industry water demand; and
4. Livestock consumption demand.
UNMET DEMAND BY USER AND BY BASIN IN 2050
Domestic
Irrigation
Industry
Livestock
Lake Victoria
97,788.1
360,057.3
28,900.0
42,300.0
Lake Kyoga
0.0
127,868.7
433.3
26,477.9
Victoria Nile
0.0
12,286.5
200.0
6,839.4
Lake Edward
0.0
0.0
0.0
1,298.5
Lake Albert
0.0
0.0
0.0
1,078.1
Aswa
1,613.3
28,160.6
0.0
13,848.0
Albert Nile
0.0
179,593.3
300.0
15,600.0
Kidepo
129.3
0.0
0.0
857.2
VALUATION OF UNMET DEMAND
User category
Willingness to pay
(shillings/litre, 2013
prices)
Source
Urban domestic
17.97
Based on Whittington et al (1998),
updated for inflation
Rural domestic
15.08
Based on Wright (2012), updated for
inflation
Industry
17.18
Based on Davis et al (2001), updated for
inflation
Irrigation
15.15
Based on Angella et al (2014), updat ed for
inflation
Livestock
15.15
Based on irrigation
ESTIMATED ECONOMIC LOSSES DUE TO WATER
SHORTAGES IN 2050 UNDER CLIMATE CHANGE
(BILLIONS OF SHILLINGS)
Domestic
Lake Victoria
Irrigation
Industry
Livestock
Total
1,645.6
5,456.0
496.6
641.0
8,239.3
Lake Kyoga
0.0
1,937.6
7.4
401.2
2,346.3
Victoria Nile
0.0
186.2
3.4
103.6
293.3
Lake Edward
0.0
0.0
0.0
19.7
19.7
Lake Albert
0.0
0.0
0.0
16.3
16.3
28.6
426.7
0.0
209.8
665.2
Albert Nile
0.0
2,721.4
5.2
236.4
2,963.0
Kidepo
1.9
0.0
0.0
13.0
14.9
1676.1
10,728.0
512.7
1,641.1
14,558.0
Aswa
Total
•Overall we estimate 14,558 billion shillings ($5.5 billion) due
to water shortages.
COSTS OF DROUGHTS IN UGANDA
Summary of damage and losses caused by the 2010-2011 rainfall deficit
Sector
Damage
Crops
Livestock
Production losses
Higher costs
1034.7
106.2
934.9
Agro Industry
278
Commerce
39.2
Total
1034.7
85.4
1126.5
278
130.7
169.9
106.3
106.3
1.3
1.9
Health
14.9
14.9
Education
48.6
48.6
Food Aid
16.9
16.9
Electricity
Water
0.6
Total (Bn Shs)
106.2
2287.3
404.1
2797.6
Total (million US$)
44.6
959.9
169.6
1174.1
NET BENEFITS OF DIFFERENT ADAPTATION OPTIONS
Programme
Present Value of
Costs @ 10%
Discount Rate
($Mn.)
Impact of Programme
that has been assessed
Minimum %
Reduction in Damage
to give a 10% Return
Efficient water utilisation
among households
$4.7
Reduced unmet demand
in household sector
0.51%
Increased water availability
for agriculture and industry
$32.7
Reduced unmet demand
in agriculture, livestock
and industry
0.4%
Integrated water resource
management to deal with
extreme events
$42.8
Reduced damages from
future droughts
4.5%
SUMMARY
• Climate and socioeconomic change will lead to deficits in water
supply without adaptation. A conservative estimate puts losses
at US$5.5 billion by 2050, and it could be as high as $50.2 billion
if income elasticity is taken into account.
• Extreme weather events give an indication of the potential costs
of climate change – and there have been significant economic
costs associated with such events. For example, the 2010-11
drought cost Uganda $1.1 billion.
• Adaptation of the water sector, taking into account the needs to
adapt to climate change and socioeconomic development, is
likely to yield significant welfare gains.
The Agriculture Sector
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BACKGROUND
• The agricultural sector is a fundamental part of the
Ugandan economy, employing about 66 percent of the
working population in 2009/10 and contributing about 22
percent to total GDP in the year 2012.
The study assessed:
• Potential economic impacts of climate
change on: (i) food crops (ii) livestock
and (iii) export crops.
• Current and future economic impacts
of droughts and floods on agriculture.
• Adaptation priorities
FOOD CROPS
• Study estimated changes to future production and value of food crops
due to climate change impacts on yield and cultivation area.
• Results for production and value changes show great divergence between
different climate models and different regions for 11 crops.
• Most crops show reductions in total production under almost all climate
change scenarios to 2050 (e.g. cassava, maize, millet, groundnuts); but
some show both increases and decreases depending on the model (e.g.
maize).
• For some crops the impacts are quite significant (e.g. cassava, potato and
sweet potato show around 40% reductions). In other cases, reduction is
less than 10% (e.g. millet, sorghum and pigeon peas).
• Largest impacts in the East and North.
• Overall losses for food crops by 2050 are likely to be up to US$1.5 billion.
Under assumed growth this is less than 0.2 percent of GDP in that year.
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
Cassava
Gdnuts
Maize
Pg Peas
Potato
Rice
Sorghum
Soybean
Sugar
cane
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
Millet
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
FOOD CROP PRODUCTION WITH CLIMATE CHANGE AS %
OF PRODUCTION WITHOUT CLIMATE CHANGE IN 2050
120
100
80
60
Pessimistic
40
Baseline
Optimistic
20
0
Sweet
Pot
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
CSIRO A1B
CSIRO B1
MIROC A1B
MIROC B1
FOOD CROPS VALUE CHANGE DUE TO CLIMATE CHANGE COMPARED
WITH NO CLIMATE CHANGE IN 2050 (USD 1000 AT 2000 PRICES)
1500000
1000000
500000
0
-500000
Pessimistic
-1000000
Baseline
Optimistic
-1500000
-2000000
Cassava
Gdnuts
Maize
Millet
Pg Peas
Potato
Rice
Sorghum Soybean
Sugar
cane
Sweet
Pot
ESTIMATED IMPACTS: LIVESTOCK PRODUCTS
• Impacts of climate change scenarios on livestock production
were estimated for Beef, Lamb, Pork, Poultry, Eggs, Poultry
and Milk.
• In all cases impacts were quite small (1 or 2 percent).
• This modeling was only for yield and area whereas the key
impacts on livestock may come from other climate change
factors, in particular droughts, floods and diseases.
ESTIMATED IMPACTS: AGRICULTURAL EXPORTS
• Agricultural exports represented about 50% of the total
export value of Uganda in 2013.
• Coffee production (18% of total exports) is a key area of
concern under climate change.
• Significant negative impacts on Arabica coffee growing areas
due to climate change are forecast. Estimates for Robusta
are less well developed but preliminary studies show impacts
• Illustrative estimate of value of potential losses of Arabica
and Robusta coffee combined: about US$1,235mn. in 2050
(50 percent reduction in production).
PREDICTED SUITABILITY FOR COFFEE PRODUCTION IN ARABICA COFFEE-PRODUCING AREA IN
UGANDA (CURRENT, 2030, AND 2050).
ESTIMATED IMPACTS: AGRICULTURAL EXPORTS
• Estimates of impacts on tea growing areas (over 3% of total
export revenues for Uganda) also indicate significant losses
of value under climate change scenarios.
• Some potential losses of cotton production (also over 3% of
total export revenues for Uganda) are projected.
• These results indicate the potential for Uganda agricultural
export production and value to be strongly affected by
climate change in the absence of adaptation actions.
• Estimated value of losses due to a 50 percent reduction in
production of coffee and tea combined would be about
US$1,400 million in 2050.
ESTIMATED IMPACTS: EXTREME WEATHER EVENTS
• For some agricultural products the threat from droughts and
floods are greater than the threat from decreased yields.
• Extreme weather events have been increasing and becoming
more severe in recent years in Uganda.
• Divergence in estimates of magnitude of current losses.
o Estimated loss of about US$470 million to food crops, cash crops and
livestock from the 2010-11 drought (OPM, 2012).
o This equates to about 16% of total value of these items in GDP for
2011.
o Annual damage figure of US$47million to crops from the 2008
drought (NEMA, 2008) is equal to approximately 3 per cent of the
value of all cash and food crops.
ADAPTATION PRIORITIES
• The immediate priority for adaptation action is the threat
from droughts and floods.
• Agricultural export production of coffee and tea would be
strongly affected by climate change without adaptation.
• Threats also exist to some food crops (e.g. cassava, potato
and sweet potato) due to changes in yield and cultivation
areas.
• Largest impacts on food crop production are estimated in
the East and North of Uganda.
• Increased risks from the above threats are greater in areas
of existing poverty and, without adaptation, will have
serious consequences for local economies and food security.
ADAPTATION PRIORITIES
•
Government of Uganda has identified eight areas of adaptation for the agricultural sector,
with a proposed budget over the next 15 years of about US$297 million:
1.
Promote highly adaptive & productive crop varieties and cultivars in droughtprone, flood-prone and rain-fed farming systems.
2.
Promote highly adaptive and productive livestock breeds.
3.
Promote conservation agriculture and ecologically compatible cropping systems.
4.
Promote sustainable management of rangelands and pastures
5.
Promote irrigated agriculture by encouraging irrigation systems that use water
sustainably.
6.
Promote agricultural diversification and improved post-harvest handling, storage
and value addition.
7.
Support community-based adaptation strategies through expanded extension
services and improved climate information systems.
8.
Develop innovative insurance schemes (low-premium micro-insurance policies)
and low-interest credit facilities.
Infrastructure
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MAIN ISSUES
• Uganda’s infrastructure is currently subject to major
impacts from climate variability: this is not a problem
only for the future but very much something that
urgently needs to be addressed today. We estimate :
• The costs of making the country’s infrastructure more
resilient in the face of increased climate stress such as
increased rainfall and changes in temperature; and
• The cost of damage to infrastructure from extreme
events.
MAKING INFRASTRUCTURE CLIMATE RESILIENT
• Infrastructure comprises residential buildings, nonresidential private buildings, social infrastructure
(including schools, hospitals, ports, airports, government
offices) and roads, railways and bridges.
• Total annual costs for ensuring climate resilient
infrastructure in Uganda are estimated at US$52-66
million for the period 2015-2020; and US$638-1,157
million for the period 2045-2050.
• New construction accounts for around 37% per cent of
total costs; the rest is additional maintenance.
MAKING INFRASTRUCTURE CLIMATE RESILIENT
• Costs depend on which climate scenario we take,
especially later on. Total costs to 2050 could be 50%
higher if the RCP8.5 scenario is realized compared to the
RCP 4.5 scenario.
• The most affected sector is residential buildings, which
accounts for around half of all costs. Next are public
buildings, which account for a quarter and then comes
other private non-residential infrastructure with 16%. In
fact it is buildings that account for most of the costs
(92%). Transport only accounts for 8%.
EXTREME EVENTS
• Damages from flooding are already significant.
• If there is no increase in frequency or intensity to 2050
then the damages, currently between $20-130 million a
year (depending on how you value the loss of life), rise to
$39-234 million by 2025 and to $189-838 million by 2050.
• Some increase in frequency can be expected though we
don’t know how much.
• Assuming a doubling of frequency every 25 years would
result in damages of around $77-467 million by 2025 and
$738-3294 million by 2050.
ADAPTATION PRIORITIES
• Highest priorities in the infrastructure adaptation
programme are for climate proofing public buildings,
developing standards for transport and infrastructure
planning and climate change-resilient standards into
existing infrastructure risk assessment guidelines.
• The projected adaptation program for disaster risk
reduction is only a fraction of the damages estimated
from disasters. Hence if the programmes can reduce
damages by even a small amount (i.e. around 7%) they
will, under the most conservative assumptions, generate
a rate of return of at least 10 percent.
Energy
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MAIN ISSUES
• Energy use in Uganda is dominated by traditional biomass, with
electricity and other fuels playing a very small role. With the
exception of transport, biomass is the main energy resource not only
for household but all the other sectors.
• Electricity access in Uganda is about 15 percent and it constitutes
about 1.4 percent of the total energy.
• The present situation is one where demand and supply for each type
of energy is in a precarious balance. For biomass supply is being met
in an unsustainable way through deforestation. Uganda has a total
of 3.6 million hectares of forest land. The total deforestation rate per
year is 1.8%. Although deforestation has been declining, studies
indicate that with growing biomass demand and constant rates of
deforestation there will be a deficit of around 16 percent by 2016.
PROJECTIONS WITHOUT CLIMATE CHANGE
• If no action is taken there will be a huge deficit of
biomass (1,710 million tonnes) over the period 2010-2050.
• This is not sustainable, so we consider an alternative
where biomass demand is much lower and is replaced by
LPG, greater efficiency in biomass and greater use of
electricity.
• With this alternative scenario the biomass demand can
be met but there is a deficit in electricity based on current
generation plans of 9%.
• One way to reduce this deficit could be to import biomass
or import electricity.
BIOMASS DEMAND FORECASTS
IMPACTS OF CLIMATE CHANGE
• When climate change impacts on the energy sector are
evaluated, two things stand out.
• The first is that such change will almost certainly reduce
biomass availability.
• We estimate that a plausible loss of 5 to 10 percent of
domestic wood between 2020 and 2050 would imply the
need for additional expenditures of $5-11 billion on LPG
to meet demand.
IMPACTS OF CLIMATE CHANGE
• The second main impact of climate change is on
availability of water for hydropower generation.
• There is a possibility that hydropower potential will
decrease due to a reduction in precipitation. A possible
decline of 26 percent by 2050 has been estimated in the
water sector study.
• Under that scenario, the government’s current expansion
programme for the power sector is sufficient to cover the
hydropower deficit, as long as the other components of
the programme are implemented according to the
proposed schedule.
POWER GENERATION EXPANSION PLAN
• A very ambitious programme, which will demand large
financial resources as well as highly skilled manpower.
• The estimated additional capital investment in hydro,
nuclear and other generation from now to 2050 is around
$83 billion.
• In the period 2015-2020 the country will need to invest
around one billion dollars in the electricity system, or
around $200 million per year, which is equal to about one
percent of national GDP. In future years the amounts
increase very sharply.
INSTALLED (HISTORICAL 2010-13) AND
PROJECTED (UP TO 2050) ELECTRICITY CAPACITY
ADAPTATION
• The Government’s Adaptation Strategy focusses heavily
on reducing dependence on biomass, but it also gives
importance to promoting energy conservation and
efficient utilisation of energy to reduce GHG emissions.
• It does not have much on increased use of LPG or
expanding access for electricity.
• The government programmes aiming to increase energy
efficiency are similar to those in many developing
countries. Reviews of such programmes indicate a high
level of cost effectiveness in promoting energy efficiency
and reducing GHG emissions.
ADAPTATION
• The main difficulties arise when the program requires an
up-front expenditure by users with limited resources.
• In Uganda similar considerations will apply: energy
efficiency programmes designed with care, taking
account of lessons learnt from other countries in a similar
situation, should yield high benefits relative to costs.
• Detailed estimates of the benefits and costs of individual
components in the adaptation programme require more
data. Hence they will have to wait for case studies to be
undertaken in the future.
KAMPALA CASE STUDY
PRELIMINARY RESULTS
MAIN ISSUES
• A crucial demographic, social, economic and political pole in East
Africa, the city faces problems from climate variability and climate
change with respect to flooding, water supply, infrastructure
resilience.
• Local climate scenarios developed for the city and used to assess the
effects in these areas.
• The urban poor suffer most the impacts of climate change. Informal
settlements, 60% of Kampala’s population (about 700.000 people),
especially in wetlands, are particularly hit, especially from flooding
• The shallowness and low topographic gradients of Lake Victoria
make it particularly sensitive to changes in water levels, and
temperatures favour vector-borne diseases.
MAIN FINDINGS
• The damages from extreme events leading to flooding could rise
from between $1.3 and $7.3 million in 2013 to between $3.7 and $17.6
million by 2025 and between $33.2 million and $101.7 million by 2050,
if the frequency and intensity of these events does not change
• Damges would be between $5.6 and $26.3 million by 2025 and
between $66.5 and $203.3 million by 2050 if the frequency of these
events doubles and increases linearly between 2013 and 2050.
• Cost of climate proofing buildings and roads are significant: between
$3,259 million (under RCP4.5) and $3,699 million (under RCP8.5) over
the 2015-2050 period, between $560 million (under RCP4.5) and $600
million (under RCP8.5) only over the period 2015-2030
MAIN FINDINGS
• Cost benefit analysis of proposed 4 flood schemes
indicates a high net benefits for two of them even with
no climate change. The other two have a positive net
benefit if frequency of flooding rises, as is possible.
• More work on local projects is needed to value them more
accurately.
THANK YOU
CONTACTS:
ANIL MARKANDYA: [email protected]
STUDY COORDINATOR: : [email protected]