The IEEM Platform project collaborates with governments and other institutions to demonstrate its advantages for public policy and investment analysis. Today, I am going to tell you about our experience with The Central Bank of Costa Rica (BCCR) and how IEEM was the right tool for the BCCR for two main reasons.
As the Central Bank’s principal objective is to manage inflation, much of its decision-making is based on expectations of the future. Climate change and weather variability, however, have not been explicitly considered in the BCCR’s analysis in the past. Another of the BCCR’s key objectives is to promote sustainable economic growth and the efficient use of Costa Rica’s productive resources including agricultural, forest and tourism assets. The concept of sustainability is central here, as a country can deplete its environmental assets while accelerating GDP growth. Whether or not this growth in income reflected by GDP is sustainable is another matter, however, and requires thinking in terms of the underlying wealth of a nation. Growth strategies that are based on the unregulated exploitation of environmental resources do not enhance wealth and are thus unsustainable.
Check out why the IEEM Platform was the best choice:
- First, it provides the type of forward-looking analysis that is necessary so that the BCCR has better information on the potential impacts of decisions before they are implemented, while IEEM’s customized environmental modelling modules enable analysis of climate change impacts and how they may affect alternative public policy and investment scenarios.
- Second, analysis with IEEM and the indicators it generates provides the BCCR with the analytical capacity to objectively evaluate whether or not Government policies contribute to the long-run growth prospects of the nation as well as inter-generational equity.
As momentum and capacity for the application of the IEEM Platform increases, numerous other exciting opportunities exist for applying IEEM to evidence-based public policy and investment design in Costa Rica and beyond. In a number of countries, we are exploring applications of the IEEM Platform to examine deep decarbonization pathways with agriculture, forestry and other land uses as strategic sectors for emissions reductions. Certainly, there are various entry points to the public policy cycle to which IEEM can contribute (figure 1). For example, countries have an increasing number of quantitative targets set out in their Nationally Determined Contributions for emissions reductions and the Sustainable Development Goals to which IEEM can be applied in target-seeking scenarios. Some policies may be more effective than others in meeting these inter-related targets by capitalizing on synergies and minimizing trade-offs. IEEM illustrates with clarity potential win-wins and difficult compromises in policy screening scenarios (figure 1). Our work in evaluating lines of action for achieving the Sustainable Development Goals in Guatemala revealed the importance of an integrated framework when considering these complex inter-related targets.
Costa Rica has demonstrated itself to be a model in the region for the development and rapid application of its environmental accounts. Developed and managed within the BCCR, the environmental accounts have quickly gone from providing a snapshot of the historical use of natural capital, to their application in forward-looking applied policy analysis with the IEEM Platform. This demonstration of the application of natural capital accounts is powerful. If countries are to continue to secure the necessary political and budgetary support for the periodic production of environmental accounts, it is critical to demonstrate their use early on in informing solutions to the most pressing questions of public policy and investment that a country faces.
Figure 1. IEEM Platform points of intervention in the policy cycle.