Economic Welfare Implication of Ghana’s Cocoa Production in a Changing Global Climate

Abstract

This paper assessed the economic welfare implications of cocoa production as is currently practiced in Ghana. This is against the background of global consensus to cut down on carbon emissions, putting a demand on cocoa producing countries like Ghana to mitigate climate change through cuts in deforestation and forest degradation. Secondary data was quantitatively analyzed, following an integrated impact assessment model process to determine the net economic welfare effect of cocoa production in Ghana, in a changing global climate. The results show that Ghana makes a net welfare loss of at least US$1.3 billion per annum by producing cocoa the way it does currently. Thus cocoa production in its current form in Ghana reduces economic welfare. To avoid the needless welfare loss through the quest for economic growth through the current cocoa production framework, Ghana would need to resort to carbon trading, serious government commitment to the course of climate change mitigation from land use change and forestry and sustainable agroforestry.

Keywords: Carbon emission, climate change, cocoa, economic welfare, Ghana.