Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Bio-based and Applied Economics BAE © 2024 Author(s). Open access article published, except where otherwise noted, by Firenze University Press under CC-BY-4.0 License for content and CC0 1.0 Universal for metadata. Firenze University Press | www.fupress.com/bae Citation: Yalew, A.W., Nechifor, V., & Ferrari, E. (2024). The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethio- pia. Bio-based and Applied Economics 13(3): 225-243. doi: 10.36253/bae-15364 Received: November 19, 2023 Accepted: March 11, 2024 Published: October 16, 2024 Data Availability Statement: All rel- evant data are within the paper and its Supporting Information files. Competing Interests: The Author(s) declare(s) no conflict of interest. Editor: Francesco Pagliacci, Valentina Raimondi, Luca Salvatici ORCID AWY: 0000-0002-1778-8477 VN: 0000-0001-8034-4070 EF: 0000-0003-0031-7190 The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Amsalu Woldie Yalew1,2,*, Victor Nechifor3, Emanuele Ferrari3 1 Ca’ Foscari University of Venice, Via Torino 155, 30172 Venice, Italy 2 Euro-Mediterranean Center on Climate Change (CMCC), Via della Liberta 12, 30175 Venice, Italy 3 European Commission, Joint Research Centre (JRC), Seville, Spain *Corresponding author. E-mail: amsaluwoldie.yalew@unive.it Abstract. The Russian invasion of Ukraine contributed to soaring world market prices of many commodities with severe repercussions for many African countries. This study examines the implications of the 2022 world market price increases for wheat, fuels, and fertilizers for Ethiopia. Using a computable general equilibrium (CGE) model, the study shows negative impacts on GDP, wage rates, and households’ consumption in the country. The effects of fertilizer and petroleum price changes are notable and unequal across production sectors. With increasing import prices of inorganic fertilizers, crop growing activities substitute inorganic fertilizers with animal manure reducing the use of manure as cooking fuel. The effects on urban households are more severe than the effects on rural households. Policies supporting biofuels and biogas digesters may dampen the adverse effects stemming from petroleum price surges. Keywords: Commodity markets, Trade, CGE, Russia-Ukraine war, Ethiopia JEL Codes: C68, F10, L66. 1. INTRODUCTION The Russian invasion of Ukraine and the subsequent war have caused a wide-range of crises with short- and long-term implications to the global economy. The repercussions of the war range from disruption of global com- modity markets to long-term effects on the prospects of globalization and geopolitical order (Garicano et al., 2022; Ruta, 2022). The disruptions in the global supply chains increased the synchronization of grain, energy, and fer- tilizer prices at the global level (Ihle et al., 2022). This resulted in contagion across food and non-food markets which would restrict the ability of consum- ers to mitigate the adverse effects of food and energy price spikes by resorting to inexpensive alternatives (Ihle et al., 2022). The disruptions in global food, fertilizer and energy markets threaten to further increase the number of poor and malnourished people, especially in developing countries (Guan et al., 2023; Osendarp et al., 2022). https://doi.org/10.36253/bae-15364 https://creativecommons.org/licenses/by/4.0/legalcode https://creativecommons.org/publicdomain/zero/1.0/legalcode http://www.fupress.com/bae https://doi.org/10.36253/bae-15364 https://orcid.org/0000-0002-1778-8477 https://orcid.org/0000-0001-8034-4070 https://orcid.org/0000-0003-0031-7190 mailto:amsaluwoldie.yalew@unive.it 226 Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Amsalu Woldie Yalew, Victor Nechifor, Emanuele Ferrari The type and size of the effects will differ across countries as these are determined by the trade, pro- duction and consumption structures, and government responses in different countries (Garicano et al., 2022). It is therefore necessary to understand how the war in Ukraine affects individual economies (Ruta, 2022) to underpin country-specific policy measures increasing the resilience of each economy. The short- and long- term implications of the war in Ukraine for African countries are worrisome (Badiane et al., 2022; UNCTAD, 2022). From the 107 economies highly exposed to the shocks due the war in Ukraine, 41 are in Africa (UN, 2022a). Since many African countries are net importers of cereals, vegetable oils and fertilizers, the implications of the war to food security are substan- tial (Badiane et al., 2022). Higher import prices represent negative terms-of-trade for African economies in which poor households face the hardest hit (Arndt et al., 2008). Besides, many African countries have limited fiscal and borrowing capacities to respond to global energy and food market crises, particularly after various spending measures and tightening of monetary policies to cope with and recover from the COVID-19 pandemic crisis. The effects on Ethiopia are of particular inter- est (Diao et al., 2022) as it depends almost entirely on imported petroleum and inorganic fertilizers (Mengistu et al., 2019); the two commodities that felt the highest and immediate effects of the war on Ukraine in 2022 (Ruta, 2022; World Bank, 2023). Ethiopia has also been subject to multiple shocks in recent years (e.g., COV- ID-19 pandemic, droughts, and armed conflicts) leaving the country with little fiscal space to cushion the adverse spillover effects from the Russian invasion of Ukraine. This study examines the economy-wide implications of changes in world prices for three commodities– wheat, fertilizers, and petroleum oil– highly significant for the Ethiopian food and energy systems. It applies a comput- able general equilibrium (CGE) model, which tracks the direct and induced economy-wide effects of the changes in world prices for the three major Ethiopian imports. Quantifying such effects and understanding their trans- mission mechanisms would provide lessons for possible policy responses in the advent of similar incidents with implications for global markets in the future. The study explicitly represents the sectors and com- modities linked to agrifood and energy systems and applied case-specific nesting of production and con- sumption functions to investigate the implications of world market prices changes to the food-energy nexus in Ethiopia and other low-income countries. The model combined production nesting features which are com- mon in equilibrium model applications with detailed representation for energy (e.g., Feng & Zhang, 2018; Hutagalung et al., 2019) and agriculture (e.g., Hertel et al., 1996; Brunelle et al., 2015) sectors. The production nests allow for the imperfect substitution between differ- ent fuels (petroleum fuels, electricity, and biomass fuels) and, for growing crops, limited substitution between organic (animal manure) and inorganic (chemical) fer- tilizers, and then between composite fertilizer and land. The study contributes to the literature on the trans- mission of shocks from global-to-domestic markets and their economy-wide impacts (e.g., Arndt et al., 2008; Dillon & Barrett, 2016; von Arnim et al., 2018), and the food-energy nexus (e.g., Mekonnen et al., 2017) in Afri- can countries. The remainder of the paper is organized as follows. Section 2 presents the materials and methods of the study. Section 3 presents the results followed by Section 4 for the discussions. Section 5 concludes the paper. 2. MATERIALS AND METHODS Given their detailed coverage of commodity and factor markets, and that of the circular flow of income, CGE models are widely applied for many trade, devel- opment, and fiscal policy issues of developing coun- tries (Devarajan & Robinson, 2013). Single-country CGE modelling approach particularly helps to assess the direct and indirect effects of exogenous changes on different parts of the economy by comprehensive- ly accounting for the country-specific interlinkages between production and consumption, and agrifood and energy sectors. 2.1. Model description The Dynamic Equilibrium Model for Economic Development, Resources and Agriculture (DEMET- RA) model is an extension of the STAGE_DEV model (McDonald et al., 2016). DEMETRA is a single-country recursive-dynamic small open-economy CGE model. The model allows for an advanced characterization of impacts of shocks at different levels: sectoral (output and production costs), household (income and consumption demand), factors (demand and income), and national (GDP, employment, and trade). DEMETRA incorporates behavioral equations that represent the economic rela- tionships in developing countries: nested production and consumption functions and factor market segmentations (JRC, 2021; McDonald et al., 2016). The model and the underlying database have been applied in studies focus- ing on food security and agricultural policies in devel- 227The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 oping countries (Nechifor et al., 2021; Boulanger et al., 2022; Ntah et al., 2024). Further information and docu- mentation about the model are available in JRC (2021). 2.2. Model calibration The model assumes perfect competition in factor and commodity markets. Therefore, both the sellers and buyers in the factor and commodity markets take the prices determined by market supply and demand forces as given. Ethiopia is a small open-economy and thus its domestic price changes do not affect world market prices whereas world market price changes (of the country’s exports and imports) are exogenous. In line with the Armington assumption (Armington, 1969), the import- ed and domestically produced varieties of commodities are imperfect substitutes. The elasticities used in produc- tion, commodity, and households’ consumption nests are ad hoc values (summarized in Table A2 in the appendix) within the range found in the existing literature relevant for low-income countries and increase from agriculture to service sectors (e.g., Lofgren, 1994; Diao et al., 2012; Hertel & van der Mensbrugghe, 2019). The production activities are disaggregated into sub processes captured by nested constant elasticity of substitution (CES) and Leontief production functions, which combine primary factors and intermediate inputs at different stages. The substitutions are driven by rela- tive price changes. The decisions of production activities at different stages are driven by cost minimization goals constrained by market prices (of inputs and outputs) and production technology. The production technol- ogy nest of activities (Figure A1) is flexible and allows substitution possibilities among different factors and intermediate inputs at different levels. The top level is specified as Leontief aggregation of a composite inter- mediate input, and a composite valued-added-energy input, assuming a perfect complementarity between the two aggregates. The composite (aggregate) intermedi- ate input is a Leontief aggregation of non-energy and non-fertilizer intermediate inputs. The composite val- ue-added is a CES aggregation of a composite labor (of unskilled, semi-skilled, and skilled), a composite capital (of livestock, agricultural capital, non-agricultural capi- tal), and a composite land (of irrigated or non-irrigated, and composite fertilizer) inputs. The composite energy input is a CES aggregate of energy commodities (elec- tricity, fossil fuels, and bioenergy – fuelwood in hotels or biofuels in transport). Such nesting between energy and factor inputs resembles recent CGE applications (e.g., Feng & Zhang, 2018; Hutagalung et al., 2019). The value- added nest for crop-growing activities comprises a ferti- lizer nest which is a CES aggregation of animal manure (domestic) and inorganic (imported) fertilizers. This nest better represents the contexts in the country (Metaferia et al., 2011; AgSS, 2020) and allows for substitutability between them due to relative price changes which would not be allowed within the Leontief structure. In the recent five harvest seasons, about 45-50% and 11-13% of crop area cultivated by smallholder farmers in Ethiopia applies synthetic (inorganic) and natural (organic) ferti- lizers (AgSS, 2020). The composite fertilizer (of organic and inorganic types) is then treated as an imperfect substitute for cropland. The nesting structure for crop activities is also related to previous research on factor substitution in agriculture (e.g., Binswanger, 1974; Her- tel, 1989; Ali & Parikh, 1992; Hertel et al., 1996; Dalton et al., 1997), and in agricultural land-use (e.g., Brunelle et al., 2015; Lungarska et al., 2023). Households maximize their consumption utility subject to a nested Stone-Geary (or Linear Expenditure System – LES – demand) and CES functions (Figure A2), and to income constraints. In the Stone-Geary/LES utility function, at the top of the utility nest, household consumption demand consists of ‘subsistence’ demand and ‘discretionary’ demand. The commodities in the LES demand function are defined as ‘broad’ commod- ity groups, which are either aggregates of ‘natural’ com- modities or individual ‘natural’ commodities that are deemed sufficiently distinctive as to justify the assump- tion that they are characterized by having a distinct level of ‘subsistence’ demand (JRC, 2021). The second level of the utility functions nest is defined with CES prefer- ences. It consists of six commodity categories represent- ing cereals (6 commodities), livestock (7 commodities including fish), energy (8 commodities in which the 2 are electricity from off-grid and grid sources), processed food and beverages (4 commodities), sweets (sugar and honey), and transport services (equines and modern transport services). Two of the energy commodities (crop residues and biogas), and one of the transport ser- vices (from equines) are consumed only by rural house- holds. Additionally, animal manure, crop residues, and biofuel are by-products from livestock, crops, and sugar manufacturing. Households’ consumption expenditure is a residual of household income after deducting direct (income) taxes, savings, and their net transfers to other institu- tions (i.e., to the other household group, to enterprises, to the government, and to the rest of the world). House- holds’ income sources include factors of production they own and supply, and net transfers from the rest of insti- tutions. Households’ consumption demand is therefore expected to be affected by changes in both households’ 228 Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Amsalu Woldie Yalew, Victor Nechifor, Emanuele Ferrari income and commodity prices. Factors can be mobile across activities (labor and land factors1) or activity-specific (capital and livestock factors). For the mobile factors, flexible average econ- omy-wide wage rates equate their demand and supplies whereas flexible activity-specific wage distortion factors (proportions) equilibrate the markets for activity-specific factors. The supplies of primary factors of production are fixed at their base levels. Government and foreign sav- ings are fixed at their base levels. The external (foreign sector) balance is maintained by a flexible exchange rate. All tax rates are fixed at the benchmark level. 2.3. Model database The CGE model is calibrated to a modified version of the 2015/2016 social accounting matrix (SAM) for Ethio- pia (Mengistu et al., 2019).2 The adjusted SAM consists of 71 production activities (Table A1). The agriculture activities comprise 30 crop-growing activities, 7 livestock raising activities, and 4 other allied activities to agricul- ture. There are 8 industrial and 6 service activities. The remaining 16 activities are related to energy sectors. The modified SAM comprises 51 commodities of which 28 are exportable. Synthetic (inorganic) fertilizers and petroleum oils are virtually all imported. There are 17 primary factor accounts representing different labor (3 by level of skill), land (rainfed and irrigated), capital (5 by primary use of the capital), and livestock (7 by species). There are four tax accounts representing domestic sales taxes, import tariffs and duties, direct (income) taxes, 1 Sensitivity analysis was performed with partially and entirely activity- specific croplands. 2 Additional notes regarding adjustment of the SAM are given in the Appendix. and subsidies to selected electricity producing activities (recorded in the SAM as negative taxes in Table 1). The SAM comprises five accounts representing two house- holds (rural and urban), enterprises, government, and the rest of the world. The remainder of the SAM accounts represent trade and transport margin (or transaction costs), and disaggregated investment accounts. Primary factors account for 66% of the production costs. Approximately 90% of the factor incomes goes to households. Imports account for about 14% of the supply of commodities. Consumption (77%) and savings (20%) are the main households’ expenditure items whereas pub- lic services (61%) and savings (30%) are the main gov- ernment expenditures. The inflows from the rest of the world include foreign saving (which is current account deficit for Ethiopia) (35%), remittances (29%) and export earnings (28%). Households’ consumption (35%), inter- mediate inputs (23.5%), and investment demand (18.7%) are the main sources of demand for domestically sup- plied goods and services while export demand accounts for approximately 4%. Factor incomes (88.5%) followed by remittances (8.9%) are the main sources of house- holds’ income. Taxes are the main source of government revenue as they account for 74% of the total government income. About 65% of tax revenues are collected from commodities (on imports and on domestic sales) fol- lowed by income taxes from households and enterprises (30%). Production subsidies (applicable only to the power sector) account for - 4% of the total tax revenue. Ethio- pian households and foreign sources contribute to 47% and 26% of the total national saving, with the remain- ing saving coming from enterprises and the government. Imports constitute about 97% of the total outflows from Ethiopia to the rest of the world. The 2015/2016 SAM was updated using the recursive features of DEMETRA to the year 2022 using actual and Table 1. Macro SAM of Ethiopia (2015/2016, billion birr). Activities Commodities Factors Households Enterprises Government Taxes Investment RestOfWorld Total Activities 2159.70 2159.70 Commodities 742.26 456.68 1096.46 148.84 591.58 123.21 3159.04 Factors 1425.11 7.83 1432.93 Households 1268.15 11.15 11.32 126.23 1416.84 Enterprises 158.60 5.52 0.28 164.40 Government 8.19 26.72 181.22 28.35 244.49 Taxes -7.67 118.59 29.21 41.09 181.22 Investment 280.33 84.83 73.06 153.36 591.58 RestOfWorld 424.07 6.19 2.64 0.61 5.75 439.26 Total 2159.70 3159.04 1432.93 1416.84 164.40 244.49 181.22 591.58 439.26 Source: Authors’ elaboration. 229The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 forecasted growth rates of GDP (IMF, 2022) and popula- tion (UN, 2022b). The forecasted real GDP growth rate for 2022 was 3.8% (IMF, 2022). We assume this GDP growth rate, which is lower than the country’s five-year average of 8% growth rate (IMF, 2022; NBE, 2023), accounted main- ly for the impacts of recent crises on Ethiopia but little for anticipated cascading effects from the Russia’s invasion of Ukraine war impacts on world markets. The calibration process and the adjusted SAM rep- resent the contexts of the country and make the model suitable to address the study’s research question. The production nest for crops along with the households’ utility nest for energy commodities allow capturing the competition between agriculture and energy for animal manure (Mekonnen et al., 2017). The possibility of sub- stitution between different fuel types (agricultural resi- dues, fuelwood, petroleum products and electricity ser- vices) captures the “fuel stacking” behavior of Ethiopian households (Yalew, 2022). 2.4. World price change impact scenarios The effects of global commodity supply, transport and logistics disruptions, the sanctions against Russia, the export bans adopted by some countries, and specu- lative market behaviors that ensued Russia’s invasion of Ukraine have tremendously affected the prices for dif- ferent world commodities in 2022 (World Bank, 2022). Although prices for some commodities showed a down- ward trend by the end of 2022 their level remained high- er than in 2021 (World Bank, 2023). Prices of many agrifood and energy commodities in Ethiopia increased in the past decade (ESS, 2023). Yet, the impacts of the recent domestic crises (e.g., armed conflicts, droughts) and international crises (e.g., COVID-19 pandemic and Russia’s invasion of Ukraine) are conspicuous (NBE, 2023; EGTE, 2023). The annu- al average price indices for petroleum oil and wheat in the global and Ethiopian markets exhibit similar trends (Figure 1) substantiating the high inflation trends in Ethiopia in the past decade (ESS, 2023) as the local price changes grew faster compared to the world market pric- es. Likewise, domestic fertilizer prices increase might be larger than increases in world market fertilizer prices (Abay et al., 2024). Global price changes would contribute to (or exac- erbate) the domestic price changes which is why it is imperative to examine the implications of global com- modity market shocks, such as those followed the war on Ukraine, for Ethiopia. This study considers the impacts of world import price changes for three commodities (wheat, fertilizer, and petroleum products) which play substantial roles in the food and energy markets in Ethiopia and experi- enced more than 30% annual average real price changes in 2022 compared to 2021 (Table 2). The simulation sce- narios are designed in a way to: (i) assess the potential losers from each commodity price change, (ii) identify the dominant impact channel, and (iii) assess the com- Figure 1. Comparison of local and world price indices for wheat and petroleum oil. Source: Authors’ illustration based on data compiled from various reports by the National Bank of Ethiopia (retail gasoline price in Addis Ababa, Ethiopia), the Ethiopian Grain Trade Enterprise (wholesale wheat price in Ethiopia), and World Bank (2023) (crude oil and wheat prices in world markets). Trends for fertilizer prices were not presented here due to lack of publicly available local price data. 230 Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Amsalu Woldie Yalew, Victor Nechifor, Emanuele Ferrari bined effects of the increase in the import prices of the three commodities. Equations 1 to 4 capture the mechanisms to trans- mit the impacts of world import price changes to the Ethiopia’s economy in DEMETRA: (1) , (2a) ∀c ∈(cm ≠ 0 ∩ cd ≠ 0) (2b) (3) ∀c ∈(cm ≠ 0 ∩ cd ≠ 0) The domestic price of competitive imports for commodity c (PMc) is a product of the world price of imports (PWMc, denominated in foreign currency, assumed to be exogenously determined and fixed by the world markets), the exchange rate (ER, domestic per foreign currency), and the import tariff rate (TMc) (Equation 1). The equation applies for wheat, fertiliz- er, and petroleum fuels. Imported (QMc) and domes- tic (QDc) varieties are imperfect substitutes whose CES (or Armington) aggregation (QQc, the aggregate domestic supply of commodity c) is influenced by the share (δ), the elasticity of substitution (ρ), and the shift (α) parameters, for all commodities, such as wheat, which have both domestically produced (cd) and import (cm) varieties (Equation 2a). However, for some commodities such as fertilizers and petroleum oil their domestic supplies supply is composed of imports only (Equation 2b). The cost minimization behavior of domestic agents (i.e., deriving the first order condi- tions of Equation 2a), determines the optimal mix of supplies from domestic and foreign (import) producers depending on the relative price of domestic (PDc) and import (PMc) varieties of the same commodity (Equa- tion 3). For each cropping activity a, we endogenize land productivity to consider the yield improving role of chemical fertilizer application. Crop yields (Yl,a) endog- enously respond to the relative changes to the chemical fertilizer application, i.e., the application in the new sce- nario ( ) relative to the application in the base sce- nario ( ). The response factor (µf) consider the crop phenological responses to chemical fertilizer application, and thus translating into a change in crop yield per unit of cultivated land (Equation 4). (4) The value of response factors (was obtained from a relevant study (Sheahan et al., 2016) and can be inter- preted as a 1% increase (decrease) in fertilizer applica- tion leads to a 0.21% increase (decrease) in crop yield. Although the yield responses to fertilizer use could vary by crop type (Hertel et al., 1996; Rashid et al., 2013), due to lack of information, we applied a uniform response rate for all crops, which we acknowledge as a limitation. The three commodities considered are essential items in both production and final consumption sec- tors. They account for one-fifth of the total spending for merchandise imports in Ethiopia (NBE, 2023). Ethiopia is a net importer of wheat with imports accounting for a quarter of the wheat supply. According to the SAM, wheat accounts for 3.3% of total imports of goods and services and it is consumed as an intermediate input (26%) and as food by households (74%). The LES-CES utility functions nest employed in the model allows the possibility that households substitute wheat by other cereals such as teff, barley, maize, and sorghum depend- ing on their relative price changes. Ethiopia depends on imported chemical fertilizers and petroleum products. Fertilizer imports comprise approximately 2% of the total good and services imports in the SAM. Fertilizers are used as inputs in crop-grow- ing activities and more than 50% of the supply is used in growing major cereal crops e.g. wheat, maize, teff, barley, and sorghum. In wheat and maize, chemical fer- tilizers account for up to 6.5% of the total production costs. Increasing chemical fertilizer prices are expected to reduce the use of chemical fertilizers by crop growing activities, and partly cropland productivity (Equation 4). Petroleum fuels account for about 10% of imports of goods and services in the SAM. They are consumed as inputs in agriculture (0.4%), industry (28.1%), elec- Table 2. Summary of the simulation scenarios. Scenario Description Import price shocks Wheat World wheat import price changes + 34% Fertilizer World fertilizer import price changes + 54% Petroleum World petroleum oils import price changes + 50% Combined Combination of the above impact scenarios Source: Authors’ calculations from World Bank (2023). Note: The annual average real price changes, between 2022 and 2021, were calculated as of February 2023. 231The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 tricity (2.7%), transport (51.3%), and the rest of ser- vices (10.7%). Households’ demand represents 6.8% of the demand for petroleum fuels while petroleum fuels account for only 0.4% and 0.5% of rural and urban households’ consumption expenditure. The bigger pro- portion of petroleum fuel price change impact on house- holds’ welfare is expected through indirect effects (i.e., higher commodity prices due to increased production costs in most of the sectors as consequence of higher petroleum prices). 3. RESULTS The subsections below present the impacts of world commodity price increases on different components of Ethiopian economy. All results are presented as percent- age changes relative to the base scenario, which repre- sents the counterfactual Ethiopian economy in 2022 without economic repercussions from Russia’s invasion of Ukraine. One could consider the impact scenarios as “what if” scenarios in which the information on world import price changes (Table 2) were projected and com- municated in advance as soon as the war on Ukraine began (say as early warnings). This would have helped Ethiopian producers and consumers plan and undertake anticipatory measures (e.g., factor allocations and adjust- ments in consumption demand) in response to the antic- ipated repercussions from the global market shocks but no significant investment and policy changes. 3.1. Impacts on the macroeconomy The combined world price changes could reduce Ethiopia’s real GDP (by 0.65%), imports (by 5.5%), pri- vate consumption (by 2.7%), and investment demand (by 1.3%) (Table 3). Likewise, the absorption, which meas- ures the domestic expenditure on goods and services, falls by 2%. The effects are driven by the fertilizer and fuel price changes although wheat prices have a marked impact on the trade balance. Increasing wheat import price decreases wheat imports (and hence total imports) but increases domestic wheat production as well as its substitute cereals (to meet the supply gap) which would pull factors from other sectors including those contrib- uting to exports such as coffee, oilseeds, and manufac- tured foods and beverages. As production in some activities contract (and hence factor employment and income) direct tax and total gov- ernment revenue decline by 4.1% and 0.54% in the com- bined impacts scenario. 3.2. Impacts on production activities The domestic production in different sectors respond differently to the aggregate and individual commod- ity price changes (Table 4). The sectors with the highest contraction of output in the combined impacts scenario are services, construction and utilities largely driven by the fuel price changes. Production in the rest of manu- facturing, natural resources-based primary sectors, and public services slightly expand (under fertilizer price changes) and in crops and food and beverages (under fuel price changes). Petroleum price change results in a wider range of output impacts (Figure 2). Disaggregated results show that the impacts are highly scattered across sectors (Figure 2). Rising wheat prices expand domestic wheat production by 2.5%. Table 3. The impacts on the macroeconomy (% changes). Variable Import price change scenarios Wheat Fertilizer Petroleum Combined GDP -0.04 -0.32 -0.27 -0.65 Private consumption -0.32 -0.74 -1.64 -2.70 Investment demand 0.13 -0.10 -1.34 -1.34 Absorption -0.16 -0.46 -1.39 -2.01 Government consumption -0.12 0.22 0.25 0.39 Imports -0.87 -0.83 -3.81 -5.53 Exports -1.21 -0.25 2.12 0.55 Source: DEMETRA simulations. Table 4. The impacts on domestic production by activity groups (% changes). Activities Import price change scenarios Wheat Fertilizer Petroleum Combined Crops 0.35 -1.48 1.7 0.52 Livestock -0.17 -0.07 -0.14 -0.35 Primary sectors – grazing, fishing, forestry, mining -0.19 0.27 -0.41 -0.35 Food and Beverages -0.87 -0.13 0.42 -0.57 Textiles, clothes, leather, and wood processing -0.07 0.31 -0.32 -0.04 Rest of manufacturing -0.08 0.59 0.09 0.68 Utilities - electricity and water -0.08 -0.06 -2.72 -2.87 Construction 0.08 -0.04 -1.06 -1.03 Services - Private -0.15 0.08 -2.59 -2.69 Services - Public -0.11 0.16 0.07 0.14 Source: DEMETRA simulations. 232 Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Amsalu Woldie Yalew, Victor Nechifor, Emanuele Ferrari Under petroleum price changes, domestic production expands in activities with substantial contribution to exports (oilseeds, coffee, vegetables, cotton, and tea) and electricity-powered transport services. The expansion of production in export-oriented agricultural activities derived from the depreciating exchange rates (due to higher import bills) making Ethiopian exports cheaper in the world markets and thus to balancing the increas- ing import costs. In contrast, rising fuel prices reduce the outputs from fuel-powered transport services, die- sel-powered electricity (from grid and off-grid systems), and other private (commercial) services which includes hotels, financial intermediaries, and other business ser- vices. Consequently, exports from fuel-powered trans- port services and, slightly, electricity utilities decline. Production in most cropping activities contracts fol- lowing the rise in world chemical fertilizer prices (Table 4) with negligible size except for oilseeds, wheat, and maize which declined by 5.4%, 3.8%, and 3.2%. The marginal effects on the other crop growing activities are explained by the small shares of inorganic fertilizer inputs in the base scenario and from the substitution by manure (organ- ic) for inorganic fertilizers (Figure 3). This, however, reduc- es manure available for household energy (Table 6). 3.3. Impacts on households’ consumption Rising import prices affect households’ consumption demand directly (due to increased prices) and indirectly (declining household incomes as factor incomes fall due to contraction of production). In the combined impacts scenario, factor income decreases in thirteen of the seven- teen factors. For instance, labor factor incomes decline by approximately 2% for unskilled to approximately 4% for semi-skilled and skilled labor categories whereas house- holds’ income from enterprises decline by about 10% (of which 7% is due to the petroleum price increases). The decline in households’ income and the result- ing decrease in demands for commodities (due to higher prices) result in declining households’ consumption by 2% for rural and 3.5% for urban households (Figure 4). The effects on the household groups vary across import price change scenarios. Urban households are worse off when it comes to wheat and fuel price changes whereas rural households are worse off under fertilizer price changes. The adverse effects on both household groups are mostly driven by petroleum price increases because petroleum products are inputs in almost all activities (and thus the rise in fuel prices increases in the costs of production and reduces factor demands and incomes) and as final demand product by households (and thus increasing price reduces quantity demanded). 3.4. Implications for food security Of the four dimensions of food security, i.e., avail- ability, accessibility, utilization, and stability (Peng and Figure 2. The impacts on domestic production activities (% chang- es). Source: DEMETRA simulations. Figure 3. Fertilizer demand under inorganic fertilizer price increase scenario (% changes). Source: DEMETRA simulations. Figure 4. The impacts on households’ consumption expenditure (% changes). Source: DEMETRA simulations. 233The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Berry, 2019); the rise in world import prices are expected to directly affect food availability (i.e., reduced wheat imports and reduced agricultural output due to expen- sive fertilizers and to some extent fuel prices), acces- sibility (i.e., increased transport costs and/or reduced transport services), and stability (i.e., the ability of the country’s food system to withstand other natural and man-made shocks in the future due to reduced econom- ic growth and government revenue). Except for rural households under the wheat price change scenario, rural and urban households’ food con- sumption decline (Table 5). Mirroring the impacts on crop production (Table 4), the index of food production, which includes crops, sugar, processed foods, and fish, declines (by 1.2%) only under the fertilizer price sce- nario (Table 5). The increase in food production index under petroleum price change is explained by increased agricultural exports, as discussed earlier. The impacts on food production (Table 5) are negli- gible in most cases except under higher world prices for inorganic fertilizers due to Ethiopia’s low dependence on food imports while many food staples (including teff and sorghum) are not traded internationally in large volumes (Diao et al., 2022). Yet, the index of food pro- duction increase includes overall crop production, most of which go to exports rather than to households in this scenario. That is why food consumption in both rural and urban households decreased despite the increased food production index (Table 5). The possibility of sub- stitutions (e.g., wheat by other cereals, inorganic ferti- lizer by animal manure) allowed by the model contrib- uted to relieve some of the price increase burdens on households’ consumption. 3.5. Implications for household energy The repercussions on households’ energy consump- tion have implications for the food-energy nexus in Ethiopia (Mekonnen et al., 2017; Yalew, 2022). Agricul- tural wastes (e.g., crop residues, and animal dung) and products (e.g., biogas, ethanol) are important sources of household energy but using agricultural waste as fuel reduces organic fertilizer available for cropping activities. The changes in demand for energy fuels are higher in rural households (Table 6) because they have a wid- er option of fuels, and hence their demand for a specif- ic fuel is set to be relatively elastic compared to that in urban households. Petroleum prices affect households’ energy prices directly (e.g., gas and kerosene) and indi- rectly (e.g., electricity from diesel generators). Indeed, as discussed in Section 2, the demand for petroleum in production activities is also significant. The decrease in petroleum fuel demand entails an increase in ethanol consumption in both household groups. Since etha- nol is mostly produced from sugar molasses, in the long-term, this is an additional motive to expand sugar manufacturing capacities in the country. The combina- tion of these mechanisms results in a differentiated price increase of the aggregate energy for households (by 1.5% for rural and by 3.5% for urban households). The com- bined share of electricity and ethanol in the total house- holds’ energy consumption is 5% while grid electricity accounts for about 18% of the urban households’ energy consumption expenditure. As such, part of the decline in electricity demand is also associated with decreas- ing households’ income in addition to its price change relative to other fuels. Rising inorganic fertilizer price increases the demand for animal manure as organic fertilizer (Figure 3) and hence reduces the amount of manure consumed as fuel by households. Demand for animal manure used as household energy declines by 5.4% and 3.2% in rural and urban households (Table 6). Increasing petroleum prices induces a slight increase in the use of biogas by rural households. This has positive implication for the domestic (household) biogas sector which converts cattle dung to fuel (biogas) and fertilizer (bio-slurry). As such, although the biogas sector in Ethi- Table 5. Implications for food security (% changes). Scenario Food Production Index Food Price Index Food Consumption Rural Urban Rural Urban Wheat 0.10 0.80 0.34 0.14 -0.19 Fertilizer -1.19 0.80 0.41 -0.41 -0.21 Petroleum 1.49 0.00 -0.08 -1.17 -2.39 Combined 0.35 1.48 0.60 -1.53 -2.84 Source: DEMETRA simulations. Table 6. Impacts on household energy demand (% changes). Fuels Fertilizer Petroleum Rural Urban Rural Urban Residues -1.39 0.65 Wood -0.12 0.02 -0.03 -0.76 Manure -5.42 -3.20 -0.98 -1.33 Petroleum -1.78 -0.98 -45.95 -31.38 Biogas -0.81 0.16 Ethanol -1.26 -0.67 13.55 7.12 Electricity, off-grid -0.41 -0.16 -9.06 -6.24 Electricity, grid -0.66 -0.31 -5.16 -3.84 Source: DEMETRA simulations. 234 Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Amsalu Woldie Yalew, Victor Nechifor, Emanuele Ferrari opia is yet at its niche phase (Kamp & Forn, 2016; Yalew, 2021), support for the biogas sector has the potential to help agrifood and energy sectors in the face of world petroleum price crises. 3.6. Senstivity analysis Finally, we performed sensitivity analyses for the Armington (import) substitution elasticities (as the exogenous shocks analysed are related to import price changes) and two main assumptions pertaining to the crop sector (as the sector is important source of domes- tic food supply and exports). First, the overall results and conclusions remain less sensitive to increasing or decreasing the Armington import substitution elastici- ties by 30% (Table A3). An exception is that with high- er elasticity of import substitutions, as import prices increase, the demand for imported goods become rela- tively elastic and decline further with which the aggre- gate exports decrease as exchange rates depreciates lesser compared to the case with low import elastici- ties. Second, the severity of the impacts partly depends on the crop phenological response factor to inorganic fertilizer use. For instance, if crop yields would be less sensitive to the amount of inorganic fertilizer applied, the combined impact on the real GDP drops to -0.39% (Table A4). Third, we deviated from our initial assump- tion regarding the flexibility of cropland allocations. We assumed cropland is partially mobile by fixing the land for 14 perennial crops (of the total 32 land-based activi- ties). We then assumed all land is crop-specific (fixed to all activities), i.e., land cannot be reallocated in respons- es to shocks compared to the initial assumption such that farmers would easily and quickly switch between the crops they want to cultivate in response of actual and anticipated shocks. The sensitivity results (Table A4) show that adverse effects worsen when cropland is assumed to be immobile across activities. The impacts are notable on the export sector which decline by 0.91% compared to an increase by 0.55% when cropland is assumed to be freely allocable (or mobile) to growing different crops. The contraction of exports implies that there will be lesser resources to finance imports, and thus total imports decline by 6.2% compared to by 5.5% under the assumption of fully mobile cropland. 4. DISCUSSIONS The Russian invasion of Ukraine, since February 2022, had profound implications for the global and Afri- can economies. The war caused massive supply chain dis- ruptions and mounting trade costs globally (UNCTAD, 2022) producing price spikes for many globally traded commodities (World Bank, 2022). In Ethiopia, informa- tion from the past decade shows that local price chang- es for domestic commodities with competitive imports exhibit similar trends to that of world price changes. This implies that global price changes would contribute or exacerbate the price changes due to domestic market conditions. This necessitates to evaluate the implications of global commodity market shocks for Ethiopia. This study showed that the global market repercus- sions due to the war on Ukraine are likely to have nega- tively affected the aggregate imports, households’ con- sumption, and labor wage rates in Ethiopia. The effect on the real GDP is approximately -0.65% and is com- parable to Diao et al. (2022). Nevertheless, the impacts are unevenly distributed among different sectors and households. Crop growing activities substitute animal manure (domestic) for inorganic (imported) fertilizers that eventually could dampen the adverse effects on crop production. This, however, would reduce manure avail- able as cooking fuel which substantiates the relevance of the food-energy nexus in the country (Mekonnen et al., 2017; Yalew, 2022). The impacts on consumption are worse for urban households compared to rural ones except under fertilizer import price changes. The results of this study are comparable to previous studies show- ing the detrimental effects of world commodity market impacts on African economies (Arndt et al., 2008; Dil- lon & Barrett, 2016; von Arnim et al., 2018). Three caveats apply to this analysis. First, the behav- ioral and crop phenology parameters used in the model (i.e. model elasticities) influence the simulation results. Despite the model and the adjusted SAM employed allow capturing several contexts of the Ethiopian econ- omy, as in most CGE models, the results are still influ- enced by the neoclassical assumptions of perfect com- petition in the CGE model. Likewise, in line with the tradition in CGE model calibrations (Lofgren, 1994; Devarajan & Robinson, 2013), most of the production, international trade, and consumption are ad hoc values in the range of previous literature and economic theo- ry. We therefore performed several sensitivity analyses for a selected set of parameters and assumption affect- ing import substitutions (Table A3) and crop activi- ties (Table A4). The results from the sensitivity analy- sis regarding cropland mobility across activities are in accordance with the findings of previous research (e.g., Salazar-Espinoza et al., 2015; Martey et al., 2022) which showed farmers shift land use away from cash and per- manent crops (and thus Ethiopian exports fall) and devote more to growing staple crops in response to 235The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 adverse natural and man-made shocks. The sensitivity analysis also substantiates the important role of inorgan- ic fertilizers to enhance cropland productivity (Rashid et al., 2013; Sheahan et al., 2016) and of crop agriculture in Ethiopia (Mengistu et al., 2019; NBE, 2023). Our find- ings that farmers substitute animal manure for inorganic fertilizers are similar to Abay et al. (2024). The study, citing survey data, indicated that the surge in inorganic fertilizer price in recent years might have encouraged Ethiopian farmers to shift to organic fertilizers. How- ever, more research on the empirical estimates for the elasticities of substitution between organic and inorganic fertilizers, and between land and fertilizer for Ethiopia and other agrarian countries is highly needed. Second, the study does not explicitly incorporate the impacts from interactions with domestic crises (e.g., armed conflicts, droughts) that have severely impacted Ethiopia in 2022. The armed conflicts in northern Ethio- pia, between 2020-2022, might have pushed additional 3 million peoples deeper into poverty (Endale, 2023) while the droughts in the southern and southeastern parts of the country had affected an estimated population of 24 million in 2022 (ACAPS, 2023). We assumed that the impacts due to the domestic crises are accounted in the projected GDP growth rate (IMF, 2022) which is used to calibrate the baseline scenario. This could be a limitation as such compounding factors could influence the magni- tude of the impacts from world market shocks (Headey & Fan, 2008; Abbott & Borot de Battisti, 2011; Meyim- djui & Combes, 2021). Thirdly, we assumed the Govern- ment of Ethiopia would not consider the possibility of adopting policy responses counteracting these global shocks. Government responses to global commod- ity market shocks such as social protection programs, export restrictions, price caps, subsidies, and tax reliefs (Abay et al., 2023) could have dampened the adverse impacts on production and consumption but mostly by transferring the burden to fiscal deficits (Headey & Fan, 2008; Ntah et al., 2024). Future research examining the interactions, and the combined effects of domestic and international market disruptions will be helpful. 5. CONCLUSIONS This study assessed the consequences of the global commodity price changes in 2022, which followed from Russia’s invasion of Ukraine, on Ethiopia. The results show that repercussions from global commodity mar- ket price increases adversely affect imports and house- holds’ consumption in Ethiopia. Rising petroleum pric- es increase households’ demand for ethanol and biogas that can be considered as co-benefits to expanding sugar manufacturing and household biogas digesters. Rising fertilizer prices tighten the competition for the use of animal manure between cropping activities (as fertilizer) and households (as fuel). Policy measures to support the expansion of household (domestic) biogas digesters pro- ducing biogas (fuel) and bio-slurry (fertilizer) could be one mechanism to promote an optimal use of animal manure at the time of contemporaneous shocks to ferti- lizer and petroleum oil prices. The study gleaned insights on how the different parts of the Ethiopian economy would respond to the world global commodity market shocks without explic- itly incorporating other important internal natural and man-made crises that have battered the country in and around 2022. Further research on how these multiple impacts have interacted is highly needed to identify pol- icy measures to build an economy resilient to simultane- ous domestic and global market crises. The nature and size of these additional adverse conditions may become clearer in the medium-term. 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Notes on SAM adjustment This study used a modified version of the 2015/2016 SAM for Ethiopia (Mengistu et al., 2019). Important adjustments were made particularly pertaining to the agriculture, forestry, electricity, and transport sectors. For 14 crop growing activities, irrigated farming was separated from rainfed farming using information from agricultural surveys (AgSS, 2016) and other research reports (NCDS, 2017; Tilahun et al., 2011; Hagos et al., 2009). The livestock sector was further disaggregated to explicitly account for 7 types of activities (cattle, sheep, goats, camels, equines, poultry, and beekeeping) using information from agricultural survey (AgSS, 2016) and national income accounts (MoFED, 2012). Animal feed Table A1. List of activities in the SAM and their group for reporting results. Group Activity Group Activity Crops Growing rainfed teff Primary sectors Managed natural grass fodder Crops Growing irrigated teff Primary sectors Fish Crops Growing rainfed barley Primary sectors Forestry Crops Growing irrigated barley Primary sectors Mining and quarrying Crops Growing rainfed wheat Food & Beverages Processed and manufactured foods Crops Growing irrigated wheat Food & Beverages Sugar Crops Growing rainfed maize Food & Beverages Beverages and tobacco Crops Growing irrigated maize Textiles, clothes… Textile, leather, clothes, and wood processing Crops Growing rainfed sorghum Rest of manufacturing Rest of manufacturing Crops Growing irrigated sorghum Construction Construction Crops Growing rainfed pulses Utilities Water supply Crops Growing irrigated pulses Utilities Off-grid electricity, diesel Crops Growing rainfed oilseeds Utilities Off-grid electricity, solar Crops Growing irrigated oilseeds Utilities Grid electricity, hydro, Abbay basin Crops Growing rainfed vegetables Utilities Grid electricity, hydro, Omo basin Crops Growing irrigated vegetables Utilities Grid electricity, hydro, Awash basin Crops Growing rainfed fruits Utilities Grid electricity, hydro, Tekeze basin Crops Growing irrigated fruits Utilities Grid electricity, hydro, Wabi-Shebele basin Crops Growing coffee Utilities Grid electricity, hydro, Rest of basins Crops Growing enset Utilities Grid electricity, wind Crops Growing rainfed sugarcane Utilities Grid electricity, geothermal Crops Growing irrigated sugarcane Utilities Grid electricity, solar Crops Growing rainfed chat Utilities Grid electricity, municipal waste Crops Growing irrigated chat Utilities Grid electricity, diesel Crops Growing tea Utilities Grid electricity, transmission & distribution Crops Growing rainfed cotton Private Services Transport services, electricity-based Crops Growing irrigated cotton Private Services Transport services, fuel-based Crops Growing rainfed crops nec Private Services Rest of private commercial services Crops Growing irrigated crops nec. Public Services Public administration Crops Forage & bioenergy crops Public Services Education services Crops Cut flower Public Services Health services Livestock Cattle Public Services Health services Livestock Sheep Livestock Goats Livestock Camel Livestock Poultry Livestock Beekeeping Livestock Equines Livestock Domestic biogas 240 Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Amsalu Woldie Yalew, Victor Nechifor, Emanuele Ferrari sources include grass fodder, crop residues, animal for- ages, and proceed animal feed (AgSS, 2016). Forest products were disaggregated into three distinct prod- ucts – wood fuel, industrial wood, and non-timber forest products (NTFPs) using product shares from the nation- al income (MoFED, 2012) and forest sector accounts (MoFECC, 2017). Electricity production is disaggregat- ed into off-grid and grid connections (MoWIE, 2013), and then by technology using information on installed capacities information (LMSIS, 2017; NBE, 2020; Pappis et al., 2021; GSE & JICA, 2015; EAPP, 2014) in line with the recent discussion regarding the power sector in CGE models (e.g., Chepeliev, 2020; Peters et al., 2016; Cai & Arora, 2015; Sue Wing, 2008). Electricity output also accounts for electricity from bagasse as byproduct from sugar manufacturing (ESC, 2019; Kruger et al., 2019). Further adjustment was made to account for the implicit subsidies to the state-owned electricity utility enterprise (Trimble et al., 2016) and export to neighboring coun- tries (NBE, 2020). Electricity-based transport services (of Ethio-Djibouti Railway and Addis Ababa Urban Light Rail services) are distinguished from fuel-based (road and air transport) services. To better account for the interlinkages between agriculture and energy sec- tors, the adjusted SAM also contains biogas (activity and commodity) (Yalew, 2021) and biofuel (mainly as a byproduct from sugar molasses in sugar manufactur- ing (ESC, 2019; Tesfaye, 2020). Finally, compared to the initial SAM (Mengistu et al., 2019), the adjusted SAM contains highly aggregated manufacturing (as rest of manufacturing) and private services (as rest of commer- cial services). For some of the adjustments, when cor- respondence allows, cross-checks were made with the supply and use tables of the 2005/2006 SAM for Ethiopia (IFPRI, 2014). 2. Model calibration Figure A1. Production technology nest structure (author’s elaboration). 241The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Table A2. Range of production, trade, and consumption elasticities. Type Nest Description Range Production L Elasticities of substitutions among different labor categories (e.g., skilled, semi-skilled, unskilled workers). 0.30–1.50 K Elasticities of substitutions among different capital categories (e.g., animal draught power, agricultural machinery, and non-agricultural capital). 0.20–1.50 FERT Elasticities of substitutions between organic and inorganic fertilizers. 0.70 LAND-FERT Elasticities of substitution between composite fertilizer and land factor. 0.30 ENG Elasticities of substitution between energy commodities for intermediate consumption (e.g., wood fuel, biofuel, petroleum oil, electricity). 0.30 VA Elasticities of substitutions among composite primary factors (e.g., labor, land, capital) 0.30–1.50 VA-ENG Elasticities of substitutions between composite energy and value-added. 0.30 Intermediate Elasticities of substitution among different intermediate inputs other than fertilizers and petroleum fuels. 0.00 Top level Elasticities of substitution between composite VA-ENG and intermediate inputs at the top of the nest. 0.00 Trade Imports Elasticities of substitution between import and domestic varieties of a commodity 0.80–3.00 Exports Elasticities of transformation between exports and domestic varieties of a commodity 0.80-3.00 Consumption Households Elasticity of substitution among consumption goods (only for those under CES nests) 0.75–2.50 Households Income elasticity of consumption demand 0.50–1.20 Households Frisch parameter -1.50 Figure A2. Households’ utility nest (authors’ elaboration). 242 Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Amsalu Woldie Yalew, Victor Nechifor, Emanuele Ferrari 3. Sensitivity analysis Table A3. Sensitivity of simulation results to Armington (import) substitution elasticities. Level Variable Armington elasticities [Table A2-30%] Armington elasticities [Table A2] Armington elasticities [Table A2 +30%] WHT FRT PTR CMB WHT FRT PTR CMB WHT FRT PTR CMB Macroeconomic Indicators GDP -0.04 -0.33 -0.28 -0.66 -0.04 -0.32 -0.27 -0.65 -0.05 -0.32 -0.27 -0.65 Private consumption -0.33 -0.74 -1.63 -2.69 -0.32 -0.74 -1.64 -2.70 -0.31 -0.74 -1.65 -2.70 Investment demand 0.07 -0.13 -1.36 -1.44 0.13 -0.10 -1.34 -1.34 0.18 -0.09 -1.33 -1.26 Absorption -0.18 -0.46 -1.39 -2.03 -0.16 -0.46 -1.39 -2.01 -0.14 -0.46 -1.40 -2.00 Government consumption -0.06 0.27 0.31 0.56 -0.12 0.22 0.25 0.39 -0.16 0.18 0.21 0.26 Imports -0.82 -0.81 -3.61 -5.24 -0.87 -0.83 -3.81 -5.53 -0.90 -0.85 -3.98 -5.76 Exports -0.77 -0.19 2.56 1.49 -1.21 -0.25 2.12 0.55 -1.55 -0.29 1.73 -0.23 Activity Outputs Crops 0.25 -1.45 1.67 0.45 0.35 -1.48 1.70 0.52 0.43 -1.51 1.73 0.59 Livestock -0.15 -0.06 -0.17 -0.36 -0.17 -0.07 -0.14 -0.35 -0.18 -0.07 -0.12 -0.34 Primary sectors – grazing, fishing, forestry, mining -0.14 0.27 -0.46 -0.35 -0.19 0.27 -0.41 -0.35 -0.23 0.27 -0.37 -0.34 Food and Beverages -0.80 -0.16 0.24 -0.74 -0.87 -0.13 0.42 -0.57 -0.93 -0.12 0.58 -0.43 Textiles, clothes, leather, and wood processing -0.02 0.25 -0.61 -0.36 -0.07 0.31 -0.32 -0.04 -0.12 0.34 -0.09 0.18 Rest of manufacturing -0.01 0.52 -0.22 0.35 -0.08 0.59 0.09 0.68 -0.15 0.62 0.32 0.88 Utilities - electricity and water -0.06 -0.07 -2.72 -2.87 -0.08 -0.06 -2.72 -2.87 -0.09 -0.05 -2.73 -2.88 Construction 0.04 -0.07 -1.14 -1.18 0.08 -0.04 -1.06 -1.03 0.11 -0.01 -0.99 -0.91 Services - Private -0.11 0.05 -2.46 -2.57 -0.15 0.08 -2.59 -2.69 -0.18 0.10 -2.71 -2.82 Services - Public -0.06 0.20 0.11 0.28 -0.11 0.16 0.07 0.14 -0.14 0.13 0.03 0.04 Consumption Rural -0.01 -0.59 -1.25 -1.93 -0.01 -0.62 -1.29 -2.00 0.00 -0.64 -1.31 -2.04 Urban -0.26 -0.38 -2.70 -3.39 -0.35 -0.41 -2.72 -3.52 -0.42 -0.42 -2.74 -3.62 Source: DEMETRA simulations. Notes: WHT – Wheat, FRT – Fertilizer, PTR – Petroleum, and CMB – Combined price scenarios. 243The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Bio-based and Applied Economics 13(3): 225-243, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-15364 Table A4. Sensitivity of simulation results to assumptions affecting crop activities. Level Variable Crop phenology is less sensitive to the level of chemical fertilizer Land partially mobile across activities Land immobile across activities WHT FRT PTR CMB WHT FRT PTR CMB WHT FRT PTR CMB Macroeconomic Indicators GDP -0.05 -0.05 -0.28 -0.39 -0.04 -0.32 -0.29 -0.67 -0.04 -0.32 -0.33 -0.71 Private consumption -0.33 -0.33 -1.64 -2.28 -0.32 -0.75 -1.64 -2.70 -0.31 -0.75 -1.67 -2.72 Investment demand 0.15 -0.12 -1.43 -1.41 0.14 -0.09 -1.44 -1.42 0.18 -0.07 -1.67 -1.58 Absorption -0.16 -0.23 -1.41 -1.79 -0.15 -0.46 -1.42 -2.03 -0.14 -0.46 -1.48 -2.08 Government consumption -0.13 0.10 0.36 0.34 -0.12 0.20 0.34 0.46 -0.17 0.18 0.67 0.70 Imports -0.83 -0.53 -4.06 -5.38 -0.83 -0.82 -4.06 -5.72 -0.68 -0.74 -4.77 -6.15 Exports -1.10 0.56 1.54 1.03 -1.10 -0.20 1.54 0.14 -0.74 0.03 -0.18 -0.91 Activity Outputs Crops 0.35 -0.41 1.61 1.54 0.33 -1.40 1.55 0.44 0.40 -1.36 1.19 0.19 Livestock -0.19 0.01 -0.04 -0.22 -0.12 -0.26 0.21 -0.15 -0.12 -0.25 0.34 -0.03 Primary sectors – grazing, fishing, forestry, mining -0.19 0.13 -0.41 -0.46 -0.12 0.14 -0.38 -0.37 -0.14 0.12 -0.31 -0.33 Food and Beverages -0.88 -0.08 0.48 -0.48 -0.87 -0.13 0.46 -0.53 -0.92 -0.07 0.61 -0.36 Textiles, clothes, leather, and wood processing -0.08 0.13 -0.19 -0.14 -0.07 0.29 -0.22 0.03 -0.13 0.26 0.16 0.31 Rest of manufacturing -0.11 0.26 0.29 0.47 -0.10 0.57 0.26 0.82 -0.20 0.52 0.89 1.27 Utilities - electricity and water -0.08 -0.05 -2.72 -2.86 -0.07 -0.06 -2.74 -2.88 -0.09 -0.06 -2.72 -2.88 Construction 0.09 -0.08 -1.11 -1.10 0.09 -0.03 -1.12 -1.08 0.11 -0.02 -1.24 -1.18 Services - Private -0.16 0.02 -2.56 -2.71 -0.15 0.07 -2.59 -2.69 -0.19 0.05 -2.46 -2.61 Services - Public -0.12 0.07 0.15 0.11 -0.11 0.14 0.14 0.20 -0.15 0.12 0.41 0.40 Consumption Rural 0.01 -0.28 -1.44 -1.75 0.02 -0.64 -1.41 -2.12 0.09 -0.60 -1.93 -2.48 Urban -0.36 -0.08 -2.74 -3.19 -0.34 -0.44 -2.72 -3.53 -0.34 -0.42 -2.79 -3.57 Source: DEMETRA simulations. Notes: WHT – Wheat, FRT – Fertilizer, PTR – Petroleum, and CMB – Combined price scenarios. Under ‘land partially mobile’ sensitiv- ity test, cropland for selected crops (i.e., fruits, coffee, tea, sugarcane, enset, chat, cotton, forage and bioenergy crops, grass fodder, and cut flower) was assumed to be activity-specific and hence cannot be reallocated in response to the anticipated impacts. Guns, Germs and Climate: Food Security and Food Systems in a Risky World Francesco Pagliacci1,*, Valentina Raimondi2, Luca Salvatici3,* The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia Amsalu Woldie Yalew1,2,*, Victor Nechifor3, Emanuele Ferrari3 Participation of farmers in market value chains: A tailored Antràs and Chor positioning indicator Tulia Gattone Adapting to climate change: what really drives the choices of the producers of Geographical Indications? 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