Highly exposed to the effects of climate change and to the degradation of natural resources, Colombia is strengthening its climate policy, considering a green growth strategy, particularly since the 2014-2018 National Development Plan. Nevertheless, the country's dependence on raw material exports and its strong integration into international financial markets generate monetary, financial and commercial vulnerabilities.
AFD is supporting Colombia in its efforts to tackle climate change through the GEMMES Colombia project, which is part of the third climate policy loan since 2018. The GEMMES project, by integrating the impact of climate change into its forecasts, is developing a general theoretical model on the one hand, and national models applied to concrete cases and adapted to the characteristics of each country on the other, including the GEMMES Colombia model.
The GEMMES Colombia project, in line with AFD's commitment to develop strong sustainability trajectories, aims to:
- Highlight possible fragilities in the Colombian economy through a better understanding of the interactions between fiscal, monetary and trade policies and the objectives of the NDC;
- Assess the macroeconomic impacts of NDC-related investments, particularly in the financial and fiscal sectors;
- Provide a decision support tool for policy makers on climate policies, with a view to mitigating the identified consequences without compromising the implementation of Colombia's NDC objectives.
Read also: Colombia caught in financial turmoil
In addition to its specific transdisciplinary approach, which makes this project one of the few to integrate the notion of strong sustainability, the originality of GEMMES lies in its consideration of macro-financial imbalances and the impact of the low-carbon transition on all elements of the balance of payments.
Moreover, GEMMES Colombia is part of a partnership initiative that is organised around two phases:
- The first phase is based on the development of the model and the macroeconomic analysis of the Colombian NDC trajectory, in partnership with the National Planning Department (DNP) and the Ministry of Finance (MHCP) supported by AFD's modelling teams.
- The second is intended to ensure the sustainability of the project after the end of the support, with the analysis by the National University of Bogota (UNAL) of the interactions between trade, fiscal and monetary policies and the NDC trajectory, as well as the training of students in sustainable development through the Catedra course as well as in the GEMMES methodological approach.
The partnership between governmental and academic institutions has allowed the projects to produce robust and relevant outcomes. On the one hand, the partnership with the University of Bogota guarantees the quality of the scientific analysis, while on the other hand the partnership with DNP ensures the policy relevance.
A university course on sustainable development (Catedra), partly based on the results of the GEMMES Colombia project, was launched on 7 March 2022 at UNAL to raise awareness of the issue.
In addition, a collective work summarizing the results of the project will be published in 2023 to present the scientific conclusions and policy recommendations drawn from the GEMMES Colombia project.
Results have already been presented at the DNP virtual congress "Conexión DNP: transfiriendo conocimiento para innovar" on 2 and 3 December 2021. The project partners underlined their satisfaction, with the MHCP expressing in particular its desire to update itself on modelling after a year spent at a distance due to the health crisis.
The GEMMES Colombia model, by presenting scenarios for financing the NDC trajectory, contributes to informing decision-makers in their political strategy to address global warming. In particular, it has allowed the DNP to analyse the consequences of typical shocks, such as the loss of the country's investment grade, the reduction of coal exports or the bankruptcy of Evergrande in China. The model also highlights the importance of using a combination of private investment and public green bonds to finance Colombia's climate ambition.
Download the research papers:
on the same region