Planning and investing in systematic adaptation action, and in the innovations that come with it, can unlock new opportunities and provide a triple dividend: avoiding economic losses, supporting economic growth, and delivering additional environmental and social benefits.
Through the Climate Resilient Economic Development (CRED) and DIAPOL-CE (Policy Dialogue and Knowledge Management on Climate Protection Strategies) projects, GIZ supports its partner countries to develop human and technical capacities within economy and planning ministries, subordinate sectoral authorities, and institutes in charge of economic modeling, to develop and disseminate methods and tools for climate economic modeling. This enables partners to independently model the economic impacts of climate change and translate results into policy advice.
- Including macroeconomic effects in the assessment and planning of adaptation action enables policymakers to make the investments necessary to direct the economy toward climate resilience. Evidence-based adaptation action can be incorporated into long-term economic and adaptation planning and thereby unlock climateresilient economic and job-rich development in the partner countries.
- Climate data and results from sector models need to be fed into macroeconomic models to map the impacts of climate change on key socioeconomic indicators such as prices, income, and employment, and to identify additional forms of appropriate adaptation action.
- Of crucial importance to GIZ’s activities are jointly developed country-specific macroeconomic models, which enable Ministries of Economy to model the economic impacts of climate risks. The results are then used to create country-specific policy advice and recommendations on implementation options for adaptation policies. GIZ also supports the identification of appropriate financing options.
This kind of modeling work has been undertaken in Kazakhstan, Georgia, Mongolia, and Nigeria. This experience provides valuable insights on capacity development, model building, and policy support for climate change adaptation planning and helps identify strategies to enhance coordination, streamline processes, and ensure the long-term success and sustainability of climate resilience initiatives for future applications.
To build capacity, it is important to consider the distinct needs of model builders and users. To help with this effort, it can be useful to hold regular, short training sessions; assign responsibilities; highlight data needs and partners; maintain a detailed model handbook, and transfer full ownership to local model builders.
High-quality data is crucial, and national statistical offices and international partners are needed to ensure its availability. The complexity of models should be kept low while ensuring policy questions are addressed. High-level support for the economic evaluation of adaptation options is critical before beginning a modeling exercise, and regular updates to high-level officials and stakeholders can foster common understanding and cooperation. Early feedback from national partners and a memorandum of understanding between relevant stakeholders are essential to avoid delays and obtain agreement on the method. At the political level, central domestic strategies are needed as entry points to ensure implementation, and institutionalization is key for longterm success.
Applying these lessons can strengthen cooperation and help ensure that economic modeling efforts are effectively integrated into the country’s fiscal policy framework, as well as contributing to informed decision-making. This involves emphasizing the practical application of modeling results in budgeting and financial planning, such that results are used to inform resource allocation decisions, prioritize investments in climate adaptation, and assess the long-term economic impacts of policy choices.
Keywords
adaptationcapacity buildinggreen growthmodelstechnical assistance
