Climate change has turned to be a major economic threat in many developing countries. In this paper, we assess the economy-wide effects of climate change induced productivity and labor supply shocks in agriculture in Ethiopia. Overall, we find falling agricultural output but increasing prices for agricultural commodities. The net effect is declining real consumption by households. The larger is the proportion of subsistence consumption expenditure, the higher is the welfare loss due to climate change. This substantiates the argument that climate change severely affects poor households in a given country and low-income countries in general. Therefore, climate change and its likely impacts shall be accounted along with proactive measures in national economic plans of the country.