A dynamic linkage between greenhouse gas (GHG) emissions and agricultural productivity: evidence from Ethiopia

The consequences of greenhouse gas emissions are a global problem and are felt most clearly in poor countries. Every sector in Ethiopia is affected by greenhouse gas emissions, but the productivity of the agricultural sector is particularly at risk. Although climate change is a long-term phenomenon, no in-depth macro-level studies have been conducted to guide discussion in this area. Therefore, the study fills this gap and carefully examines these impacts over time from 2019 to 2022 using the Vector Auto Regressive Model. Our results show that a 1% increase in fertilizer consumption, agricultural land, nitrous oxide (N₂O) emissions, rural population, and area devoted to grain production results in a 0.28, 2.09, 15.92, 5.33, and 1.31 percent increase in agricultural yield in the long-run, respectively. A negative relationship was found between agricultural employment, agricultural methane emissions (CH₄), carbon dioxide emissions (CO₂), and agricultural productivity with a significance level of 5%. This means that under a black box condition, a one percent increase in agricultural employment, CH₄, and CO₂ emissions in the country in the long run will lead to a decrease in agricultural productivity by 5.82, 17.11, and 2.75 percent respectively, as we also found that all regressors except technology adoption had an elastic relationship with agricultural productivity. The short-term error correction estimates show that the coefficient of the "speed of adjustment" term for the expected productivity equation is both statistically significant and negative. The value of the coefficient term of -0.744 shows that an adjustment of 74.4% is made each year to converge the long-run equilibrium level. Therefore, Ethiopia needs to take measures that keep the economy away from sectors that produce a lot of carbon. These must be coordinated at a global level to achieve social change towards a fair and environmentally sustainable future and to increase agricultural productivity.