Tunisia is a territory particularly exposed to the impacts of climate change, on environmental, social and economic levels. Due to inappropriate agricultural practices, the availability of water resources has decreased, the salinisation process has worsened, and land and plant cover have experienced significant degradation. Since September 2018, the Tunisian Institute of Competitiveness and Quantitative Studies and the Tunisian Ministry of Agriculture have been working in collaboration with AFD on the development of a macroeconomic model within the GEMMES programme to make projections of agricultural yields until 2050 and to consider possible policies. 

This project is part of the modelling work that integrates the impact of climate change into macroeconomic forecasts in order to inform public policy choices in this area. AFD 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 Tunisia model. 

This partnership is carried out in the context of the memorandum of strategic dialogue between AFD and the Tunisian Ministry of Development, Investment and International Cooperation. This collaboration involves the joint production of studies, diagnoses and modelling tools to promote inclusive and sustainable development policies.

More about GEMMES: AFD and Macroeconomic Modelling Tools for the Ecological Transition

GEMMES Tunisia aims to analyse the macroeconomic effects of climate change on agriculture. By modelling development trajectories, it improves the understanding of the interactions between the economy and the environment, and helps inform public decision-making.

Aspiring to promote exchanges between researchers and political decision-makers, this project aims to place the issues of ecological transition and strong sustainability at the heart of political dialogue. It thus aims to become a tool at the service of the Tunisian authorities, by helping to evaluate the advantages of adaptation policies that could possibly be implemented.

The GEMMES model is based on a trans-disciplinary analysis, which is able to take into account sectoral heterogeneity, whether in terms of market structures, access to financial markets or employment, as well as the structural imbalances inherent in a change as profound as climate change. GEMMES Tunisia is using this method to test different scenarios concerning the mechanisation of agricultural production, the improvement of agricultural practices and investment in water resources. 

The GEMMES Tunisia project is divided into three phases:

• The first year was devoted to identifying the macroeconomic and ecological fragilities due to the impacts of climate change on agriculture and the water cycle.
• The second year focused on the construction of the macroeconomic framework and the choice of the agricultural model.
• The third year is dedicated to combining the macroeconomic model and the water cycle model by adding agricultural dynamics.

The scenarios established by the GEMMES Tunisia model reveal that the implementation of adaptation policies is necessary and desirable:

• The absence of such policies would lead to a significant increase in external debt, which would reduce the value of the national currency and thus the purchasing power of the population, while threatening the country's food security. Similarly, food inflation is reaching very high levels, which will have a massive impact on increasing poverty among Tunisian households.
• The benefits of sustainable development policies outweigh its costs by limiting the rise in rural unemployment, rapid urbanisation and declining per capita incomes. As an important result, the social and economic benefits of the adaptation policies envisaged for Tunisia are even higher if these policies are financed by low-cost foreign currency loans from climate funds, green bonds or international financial institutions. In this case, the adaptation policies have a much more beneficial effect and the costs of food imports put much less pressure on the balance of payments, food inflation, the exchange rate and thus the per capita income of Tunisian households.

Thus, the results of this project are in line with AFD's positioning in favour of strong sustainability.

This research project highlighted the difficulty of quantifying the impacts of climate change in a context of limited data availability. Nevertheless, producing national models in this context has prompted research teams to test a greater diversity of scenarios or to gather different data sources, for example. 

• Download the research paper: Climate change, loss of agricultural output and the macro-economy: the case of Tunisia (June 2023)

Contact:

• Devrim Yilmaz, senior economist in the GEMMES Macroeconomic Modelling Unit, AFD

Interactions between socio-economic and ecological spheres make the elaboration of strong sustainability development trajectories a particularly difficult exercise. Morocco expressed its willingness to embark on a development plan based on prosperity, inclusion and sustainability in a report published in May 2021, but the country is facing one of the highest water stress conditions in the world. A technical cooperation request concerning the modelling of the impact of climate change on agriculture by 2050 was therefore sent to AFD, which the GEMMES Morocco model is attempting to satisfy.

This project is part of the modelling research that integrates the impact of climate change into macroeconomic forecasts in order to inform public policy choices in this area. AFD is developing a general theoretical macroeconomic model on the one hand, and on the other hand national models applied to concrete cases and adapted to the characteristics of each country, including the GEMMES Morocco model. 

This partnership is carried out in the context of the memorandum of strategic dialogue between AFD and the Directorate of Studies and Financial Forecasts (DEPF) of the Ministry of Economy and Finance of the Kingdom of Morocco. The research program is financed by the 2050 Facility, which aims to contribute to capacity building and the development of long-term strategies in line with the commitments of the Paris Agreement. In addition to the partnership with the DEPF, the project is developed with the Mediterranean Institute of Marine and Terrestrial Biodiversity and Ecology for the hydro-agricultural part.

The GEMMES Morocco project carries out simulations of agricultural production and available surface water resources for the year 2050 according to different climate scenarios, and analyses the impacts on the country's economy. This approach is rooted in the will to inform public decision-making, through the collaboration between Moroccan, French and international experts. The GEMMES Morocco model is intended to be an additional simulation tool for the Directorate of Financial Studies and Forecasting.

The specificity of this project lies in the coupling of two models: the macroeconomic model GEMMES, adapted to the specificities of Morocco, and the hydro-agricultural model Lund-PotsdamJena managed Land (LPJmL). The latter, widely used in the international scientific community, produces simulations of the country’s most important surface hydrology and crop yields. It uses projections of temperature and precipitation from the ALADIN regional climate model and compares the water requirements for Moroccan agriculture to the resources that will actually be available. The GEMMES Morocco model then uses these agricultural yield projections to integrate them into its macroeconomic framework.

Preliminary results were presented at COP26 in Glasgow in 2021, along with a summary for policy makers. The initial findings highlight the adverse effects of climate change, particularly on the water resources available for irrigation. In 2050, an irrigation level corresponding to 75% of the needs would lead to an agricultural production 3.7% higher than if only 50% of the irrigation needs were covered. GDP and household consumption would then be 0.5% higher. Thus, investing in water infrastructure seems essential to limit the impacts of climate change. 

The GEMMES Morocco project reveals the usefulness of coupling two types of models responding to different areas of expertise. By encouraging dialogue between researchers from different disciplines, the different perceptions of each can be explained and thus lead to a greater relevance of the political debate.

The contributions of this project can also continue beyond the framework of AFD, either because of the integration of some of its results into a World Bank exercise or because of its use in the Moroccan long-term strategy.

Contact:  

• Antoine Godin, economist at AFD, head of the GEMMES Macroeconomic Modelling Unit