IMPACT OF ENVIRONMENTAL DEGRADATION ON IVORIAN ECONOMY 1 By Karine KOUASSI LOU

PLAN 1. Introduction 2. Deforestation, climate change and economic impact in Côte d‘Ivoire 3. Recommendations 4. Conclusion 2

INTRODUCTION  Côte d’Ivoire is far from achieving the MDGs  Climate change is an additional challenge to achieve the MDGs  The objective of this study is to highlight the potential risks of climate change on the Ivorian economy. 3

I VORIAN FOREST DISAPPEARS QUICKLY Ivorian forest disappears quickly 4

ANNUAL RAINFALL HAS DECREASED SIGNIFICANTLY 5

AVERAGE ANNUAL TEMPERATURES HAS RISEN SHARPLY 6

E CONOMIC IMPACT OF CLIMATE CHANGE  Brou (2005) shows that the average weight of fresh cocoa beans during harvest depends on the magnitude of the rainfall, and more generally on the level of agro-climatic drought.  Climate variability have a significant effect on agricultural production. Indeed, deteriorated weather conditions can cause a decline of agricultural production.  What is the impact of a decline of x% of agricultural production throughout the economy? 7

METHODOLOGY  Construction of a Computable General Equilibrium Model  Social Accounting Matrix (SAM) with 2006 as benchmark year is divided into twenty-five (23) accounts as follows: 2 accounts for factors of production: capital and labor; 4 accounts of economic agents: households, businesses, government, rest of world; 7 accounts for taxes and state grants: Grants / production taxes on income and assets, non-deductible VAT, taxes on imports excluding VAT, excise duties and export taxes, other indirect taxes products, other taxes / Producer 3 branch accounts : agriculture, industry, services; 3 accounts of composite products: agricultural product, industrial product, services product; 3 accounts of product external trade: agricultural product, industrial product, merchant services 1 accumulation account. 8

 The choice of functional forms and formulation of equations is essentially based on the model EXTER 2 of Decaluwé, Martens and Savard (2001)  Main hypothesis of the model: Factors of production are substitutable according to a Cobb- Douglas relationship, There is a perfect complement to Leontief, Consumers have a utility function Cobb-Douglas The labor is perfectly mobile between the industries of production and capital is specific to each industry of service production Factors of production are internationally immobile Domestic producers face export demand to price elasticity over 9

MAIN RESULTS VariableInitialSimulatedGap GDP (billion, CFA) % Agriculture labor demand 193,31185,62-4% 10 Impact of a decrease of 10% of agricultural production with Computable General Equilibrium Model

RECOMMENDATIONS  Effective implementation of the National Reforestation Programme: the results achieved since 1926 (nearly 300,000 ha of plantations carried out) are still largely insufficient to cover the deficit of 6% (2 million ha) of forest cover  Adoption of incentives for the development of community reforestation  Creation of a Forest Department in the National Centre for Agronomic Research (NCAR) to revive the activities of the Forest Research 11

CONCLUSION  Côte d'Ivoire is an agricultural country (agricultural sector represent around 30% of GDP)  Significant degradation of its forest resources are significantly degradated, and contribute to increase climate variability and change.  A negative impact on agricultural production due mainly to bad weather has a significant influence on the country's wealth and reducing poverty.  Bring the Ivorian forest coverage rate to a level higher than 20%, essential to the ecological balance and economic development of the country. 12

THANK YOU 13