Working Paper No. 27 of 2017 on Impact of Climate Change and Agricultural Policy on Household Welfare and Trade in East Africa Community

Abstract

The East Africa Community (EAC) was established to widen and deepen cooperation among the EAC Partner States in, among others, political, economic and social fields for their mutual benefit. One of the ways of reaping the economic and social benefits is intra-regional trade between Partner States which is expected to yield economic benefits by availing commodities at reduced prices and boost social welfare by reducing poverty through increased incomes. Using a spatial equilibrium multi-market model, we modelled the impact of agricultural policy, trade policy, and climate change on the welfare of people in individual EAC Partner States and the region as a whole. We estimated the base model and three different scenarios to determine how changes in different variables influence welfare and trade fowl in the EAC. The base scenario represents the prevailing conditions projected into the future (year 2045) with the assumptions that the current growth rates of demand side and supply side shifters remain as they are. In this scenario, we also assumed the prevailing common external tariffs (CETs).