The paper specifically explores the corollary benefits for economic development and environmental sustainability of a low-carbon, climate-resilient, green pathway for Ethiopia—a pathway that is consistent with attaining the country’s medium- and long-term development goals. The analysis compares a net zero emissions (NZE) pathway with a business-as-usual (BAU) scenario. The BAU scenario embeds optimistic (high) economic growth assumptions from Ethiopia’s 10-Year Development Plan, and it incorporates the gradual and early incremental adoption of several climate initiatives proposed in the Climate Resilience and Green Economy Strategy. The NZE scenario builds on the implementation of Ethiopia’s nationally determined contribution (NDC) by 2030. The NZE scenario also incorporates additional climate policy options (adaptation and mitigation), resulting in net zero emissions by 2050.

The paper highlights how investments in climate mitigation and adaptation can create synergy for national development along an NZE pathway, helping deliver net zero GHG emissions in Ethiopia by 2050. It demonstrates the tangible economic, social, and environmental benefits, or “co-benefits,” of this pathway. Given the optimistic growth assumptions in the BAU scenario, the benefits of NZE compared to BAU estimated in this paper may be considered conservative estimates. Overall, higher levels of investment in the NZE scenario, compared to the BAU scenario, lead to higher levels of growth and better-quality growth (i.e., growth that is more environmentally sustainable and inclusive); the co-benefits of NZE would be even higher if estimated from a comparison with a lower-growth BAU scenario.

Key Findings:

  • Results from Ethiopia’s Green Economy Model showed the net zero emissions (NZE) pathway increasing average real annual gross domestic product (GDP) growth rate by 1.4 percent from 2020 to 2050, relative to a business-as-usual (BAU) scenario.
  • Implementation of NZE is estimated to raise cumulative investment costs by US$66.98 billion (net present value) compared to BAU by 2050; however, this investment creates cumulative co-benefits for development of $111 billion from 2020 to 2050 in the form of increased real GDP compared to BAU and avoids costs of $89 billion (largely avoided energy costs).
  • Other co-benefits include, on average, 672,000 additional green jobs relative to BAU; a faster reduction of extreme and moderate poverty and higher disposable incomes, with the latter rising 10.5 percent by 2030 and 53.1 percent by 2050, compared to BAU; also better air quality and related health benefits and potential benefits from nature-based solutions and ecosystem services.
  • Overall, the cumulative monetized results suggest a benefit-cost ratio (BCR) of 1.04, such that by 2030, each dollar invested in mitigation and adaptation generates $1.04 in economy-wide benefits; the cumulative BCR rises to 2.17 by 2040 and 2.99 by 2050.

Executive Summary:

This paper considers the co-benefits for economic development of achieving Ethiopia’s net zero emissions and climate resilience ambition by 2050. Early introduction of NZE policies in land use, forestry, and energy sectors can deliver significant near- and long-term economic, ecosystem, and social co-benefits, resulting in improved development outcomes. Delaying interventions in these sectors will create new risks for growth, slowing progress in Ethiopia’s implementation of ambitious plans to modernize and green its economy.


Preview image by Aaron Minnick/WRI