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Publication | 2023

From Climate Risk to Resilience: Unpacking the Economic Impacts of Climate Change in Kenya


Substantial model variability exists regarding the likely meteorological impact of climate change on Kenya, particularly with respect to future precipitation levels. Significant regional differences are expected, largely due to Kenya’s diverse climate profile. Overall, temperatures are projected to increase while future precipitation levels are highly uncertain. Climate change is expected to significantly affect coastal areas, including because of sea level rise risks, stronger winds, and an overall warmer and drier climate. This will likely harm important ecosystems, including wetlands, mangroves, and coral reefs. Some models project that arid and semi-arid areas may become drier and hotter, which would exacerbate preexisting water scarcity and agricultural challenges for the already vulnerable communities living there. That said, these projections are not corroborated by all models. The climate change impact on other areas, particularly south and west of Mount Kenya, could generally be positive, as it would provide even better conditions for agriculture.

The key climate change risk for Kenya is from extreme events, in particular droughts and floods. The frequency and intensity of such events is likely to increase because of climate change. They also often lead to adverse knock-on effects, such as soil erosion, land degradation, and pest breakouts. Overall, Kenya’s updated Nationally Determined Contribution (NDC) (2020) estimates that between 2010 and 2020, adverse climate change-related events led to annual socioeconomic losses of 3–5 percent of total gross domestic product (GDP).

The main channels through which climate change is likely to impact the Kenyan economy are the agriculture and water sectors, again with significant regional differences. The livestock subsector is expected to suffer significant losses due to heat stress from the projected increase in temperatures. This is likely to disproportionately affect pastoral communities in arid and semi-arid areas, as poverty rates in these regions are already high relative to the rest of the country. Water scarcity—including increased glacial loss and reduced river flows from Mount Kenya because of climate change—is likely to have a broad socioeconomic effect, with adverse consequences for agricultural irrigation, hydropower, and sanitation.

That said, climate change may lead to new opportunities in the agriculture sector, particularly in higher elevations. Indeed, average crop yields are projected to increase, to a large extent due to the concentration of agricultural activity in the regions where climate change may have positive effects. Downside risks exist primarily from the potential effect of extreme weather events, particularly for crops cultivated for subsistence purposes and for staple crops, such as maize (which is a core part of the food system in Kenya but is vulnerable to heat stress).

In addition, climate change risks may be exacerbated by broader economic vulnerabilities. These include rising population, exposure to international price volatility (especially regarding food and petroleum prices), and fiscal challenges.

The Government of Kenya is a regional leader in addressing climate change risks albeit challenges remain. It published a National Adaptation Plan (2016) that is further advanced through additional climate change action plans and whose key messages are integrated in Kenya’s broader development strategy, Vision 2030, and Kenya’s NDCs. A number of adaptation projects are being advanced, with focus on support for vulnerable communities and disaster risk management. However, their uptake is uneven across counties. More broadly, coordination and information sharing remain a challenge (including across government functions and between central and local governments). Mobilizing financing for adaptation is another key constraint. Despite these challenges, Kenya’s adaptation efforts have led to improvement over recent years in Kenya’s climate vulnerability index, although it remains quite low due to preexisting social and economic vulnerabilities.

This note recommends that an ARIP (Adaptation and Resilience Investment Platform) in Kenya facilitates a transformative approach to climate adaptation and resilience. This could involve advancing and updating climate scenario analysis assessments, with focus at the county level, to inform a strategic approach to development of the agriculture sector, including identifying (i) how production of key crops (such as maize, tea, cut flowers, and coffee) will need to adapt to changing weather conditions, and (ii) opportunities for diversification in the sector.

A holistic consideration of the interaction between climate adaptation measures and measures that help risk management of extreme climate events (with focus on improving agricultural insurance practices and early warning systems) would also support adaptation efforts in Kenya. Effective water management, underpinned by strong regional and cross-departmental coordination on adaptation strategy development, could be an area of focus for an ARIP in Kenya, as it would help limit the risks of maladaptation and support economic growth. An ARIP could help move away from the current project-level financing approach and mobilize the scale of funding that transformative adaptation would require. To achieve that, it would be necessary not only to support the Kenyan government in further developing and updating its climate change action strategy but also to focus more on the process for effective adoption, reporting, monitoring, and evaluation.