Adaptation to climate change impacts on the agricultural sector of Sri Lanka: a computable general equilibrium analysis

Abstract

To date, Sri Lanka, like many other South Asian countries, has experienced an above-average level of the negative impacts of climate change. The study uses the ORANI-G-SL, a single-country, static computable general equilibrium model, to analyse the economic impacts of climate change-induced agricultural productivity changes and two possible alternative adaptation strategies. The first adaptation strategy is based on expanding agricultural land area, and the second is on increasing crop productivity by increasing investment in agricultural research and development. According to the findings, Sri Lankans will experience an increase in the consumer price index, associated with reductions in the output of most crops, leading to a decline in overall household consumption in the future, threatening national food security. Further, climate-induced agricultural productivity changes will negatively impact the overall GDP and most Sri Lankan macroeconomic variables. Both explored adaptation strategies will provide economic expansion under the impacts of climate change. However, increasing productivity will lead to greater economic gains compared with the baseline scenario, agricultural land expansion scenario, and no adaptation scenario. Thus, the findings suggest that increasing agricultural productivity by increasing investment in R&D is the most effective adaptation strategy for Sri Lanka to offset the adverse effects of climate change on the agricultural sector and food security.