Research on ecological transitions

Despite 50 years of scientific research and several Earth Summits, simple and reliable assessment of the state of the environment is still largely out of reach. And with biodiversity collapse and the alarming effects of climate change in the background, this makes analysis of development trajectories all the more difficult. Most of the analytical tools that do exist suffer from an inadequate definition of environmental sustainability, lack relevant indicators and data, or are not based on relevant objectives.

To make up for this, we support research whose aim is to develop tools that allow decision-makers and citizens to judge the sustainability level of a country’s development trajectory. Our research contributes to the development of scenarios that take into account social and economic dimensions, as well as the vulnerabilities and risks related to climate change or the degradation of nature.

We are developing the Environmental Sustainability Gap (ESGAP) indicator, which estimates the disparity between the current state of the environment and the biophysical standards corresponding to what would be a good state of the environment. This indicator sheds light on the way forward and can serve as a guide for public policies to design national trajectories of sustainable development.

We also support research to better anticipate the physical impacts of climate change and the consequences of the pressures that human activities exert on natural resources. 

Other research addresses how to put into movement the transitions and transformative changes called for by IPBES, with analysis of the possible links or tensions between various imperatives such as preservation of biodiversity and reduction of carbon emissions. Among other topics, this research studies environmental and climate vulnerabilities, climate damage, as well as the mainstreaming of biodiversity into certain economic sectors. In particular, the ECOPRONAT research programme aims to promote the development of a pro-nature economy on the basis of research findings.

Much political discussion is being devoted to topics related to sustainable development trajectories, such as the country contributions to the Paris Agreement and Net Zero trajectories, fair transition objectives, and convergence between climate and biodiversity trajectories. Most of these trajectories combine aspects that are climate-related, ecological, social, technological, economic, financial, and political. We analyze these aspects through the lens of a strong sustainability concept that can be summed up by the question “How can we give maximum respect to ecology and at the same time guarantee a minimum of social welfare and macro-economic stability?”

It’s from this angle that the GEMMES and ESTEEM modeling tools combine the building of integrated empirical macro-economic models with the biophysical and social processes, which are fundamental to analyzing the sustainability conditions of transition processes. The resulting scenarios thus fuel public policy dialog on the development of sustainable development trajectories. 

Our modeling tools are unique; they differ from most modeling projects thanks to the rare combination of three characteristics: 

• Construction of a rigorous accounting framework, called “coherent stock-flow”: based on national accounting and financial balance sheets, this framework highlights the interactions between the real economy and finance, including the emergence of instabilities of a financial or other nature. 
• An institutionalist approach: the economy is considered to be driven by institutions that vary according to time and place. These different institutional arrangements guide the behavior of economic operators and determine the methods of resolving tensions between actors. 
• Multidisciplinarity: exercises of combining disciplines are carried out systematically, for example between economic trajectories and climatological, hydric, and agricultural dynamics.

To go further: AFD and Macroeconomic Modelling Tools for the Ecological Transition

The Addis Ababa Agenda, the Paris Climate Agreement, and the 2030 Agenda on the Sustainable Development Goals (SDGs) hone in on both the public and private financial sector. The financial sector is in fact asked to be a stakeholder of change, with the Paris Agreement emphasizing the need for “Making finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development” (article 2.1.c). While the mainstreaming of the environment into investment decisions (now the predominant form of sustainable finance) is moving in the right direction, its pace is not fast enough.

This situation justifies more in-depth reflection and research so that we can grasp how SDG financing can unify thinking on development, with the goal of better informing policy choices. Investment approaches based solely on financial profitability can no longer work.

In conjunction with research centers, universities, and international partners, we focus our research projects on the role of financial actors in the transition and on how their strategic outlook, financial products and analytical tools must adapt to this changing landscape.

 Our reflection is two-tiered. First, we focus on public development banks, which are at the interface of the public and private sphere. But we additionally focus on the issue of the responsibility of private finance, through the evolution of the measurement of its impacts on nature and biodiversity (TNFD), the leverage effect of official development assistance in the orientation of flows (blended finance), or in the development of new benchmarks to quantify financing that promotes the SDGs.