ORANI-G-SL – A Computable General Equilibrium Model to Assess the Climate Change Impacts on Agriculture in Sri Lanka

Author(s): Walimuni Chamindri Sewanka Mendis Abeysekara, Mahinda Siriwardana, Samuel Meng

This paper presents a detailed technical description of features added to the standard ORANI model to construct a CGE for Sri Lanka, referred to as the ORANI-G-SL. The adapted model introduces water as a production factor, distinguishes between rainfed and irrigated agricultural lands, and allows for substitution between these two major inputs. The paper also describes the model database and outlines the pre-simulation process of data transformation from the latest available national input-output table to the model database. The ORANI-G-SL is equipped to model the economywide impacts of climate change in Sri Lanka, the economic implications of increasing irrigation capacity for the continuing sustainability of national resources, and the potential efficiency of other climate change adaptation strategies. The model can be easily modified for use in other countries. Two simulation exercises were conducted to assess the validity of the model and demonstrate specific features. The first simulation analysed the economy-wide effects of losses of productivity in the agricultural sector due to climate change. The model results point to the likelihood of an overall reduction in agricultural output, resulting in escalating food prices, and a consequential decline in real GDP and future levels of employment. The second simulation analysed the economic impacts of agricultural land expansion as an adaptation strategy. The outcome projected overall economic gains, supporting growth in the economy of Sri Lanka.