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Abstract
This article investigates the effects of climate-induced agricultural shocks on household welfare in Burkina Faso using a combination of the International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT), and the Global Trade Analysis Project (GTAP) standard model. The climate shocks such as temperature variation and precipitation are converted to agricultural shocks using the IMPACT model which is a partial equilibrium model. Later on, these climate-induced agricultural shocks are introduced into the (GTAP) standard model to evaluate households' welfare effects. The simulations show that climate-induced agricultural shocks (agriculture yield decrease and the cropland variation) will reduce households' global wellbeing in Burkina Faso. For instance, the results show that climate change will cause a minimum GDP loss estimated at 9.33% and a maximum loss estimated at 17.39% in Burkina Faso. Besides, simulations demonstrate that climate shocks will lead to an average household welfare loss estimated to 14% in Burkina Faso. These results are in line with theoretical intuition showing a deterioration in households' welfare.