In this paper, we use a computable general equilibrium model to simulate the effects of drought and a decrease in agricultural productivity caused by climate change in Guatemala. A reduction in agricultural productivity would mean a considerable drop in crop and livestock production, and the resulting higher prices and lower household income would mean a significant reduction in the consumption of agricultural goods and food. The most negative effects of a drought would be concentrated in agriculture, given its intensive use of water. Because agricultural production is essential to ensuring food availability, these results suggest that Guatemala needs a proper water-distribution regulatory framework.
