Targeted Scenario Analysis

A powerful tool for sustainable development decision making

 

UNDP developed Targeted Scenario Analysis (TSA) as a response to growing demand from decision makers and stakeholders for more policy-relevant sustainable development analysis to support national Sustainable Development Goals. Confronted with diverse policy, management and investment choices, decision makers often cannot determine how different options affect the multiple economic, environmental and social objectives that decision makers want to achieve.

TSA is an innovative approach that provides focused direction towards specific sustainable development policy and investment choices for public or private sector actors. It captures and presents the value and the contribution of ecosystem services to sectorial development within a decision-making framework, thereby helping make the business case for sustainable policy and investment choices.

As the name suggests, Targeted Scenario Analysis has three pillars:

Targeted: Within a participatory process, TSA helps decision makers and stakeholders target a critical decision to be made at a policy or management level, which involves a change on how ecosystem service(s) ara managed, and improvements in sustainable development outcomes. TSA targets management and/or investment policies, both public and private.

Scenario: It does this by developing and contrasting two future scenarios – Business as Usual vs. Sustainable Ecosystem Management – that link changes to biophysical and socio-economic indicators as the scenarios develop.

Analysis: It presents an analysis of selected sustainable development indicators into the future. Decision makers select the priority and relevance of these, e.g. changes in soil fertility or water availability, changes in natural resources-based productivity, costs, net revenues, jobs, and equity and gender indicators.

 

The product of a TSA is a balanced presentation of evidence, for a decision maker, that weighs up the pros and cons of continuing with business as usual (BAU) or following a sustainable development path in which ecosystems are more effectively managed. This alternate path is termed sustainable ecosystem management (SEM).  

A TSA should be conducted for a particular productive sector, and with a specific decision maker in mind.  Decision makers will be primarily government officials or business managers, who generally come from a specific productive sector (e.g. Minister of Agriculture, Minister of Energy, hydropower plant manager, plantation owner or cattle farmer).  The results of a TSA can show the impact of certain policy options or management practices on specific ecosystem services or resources, to help decision makers understand the circumstances in which maintaining ecosystems and their services may generate greater economic benefit than promoting economic processes that degrade and deplete ecosystems.

TSA builds on and combines traditional cost benefit analysis and economic valuation methods, broadening the type of information captured. It differs from these traditional approaches in that it takes a sector-specific approach to valuation, to reflect the perspective and remit of policy makers and companies. Rather than determining the general value of a particular resource or ecosystem service, TSA looks at ecosystem services from a stakeholder point of view. So, for example, rather than coming up with a single number that estimates the overall value of a coral reef, TSA will find the value of preserving the health of that reef from a fisheries perspective or from a tourism perspective, i.e. from the perspective of those influencing the management of the coral reef. This makes the approach demand driven, rather than supply driven, asking: What information do decision makers need in order to judge the importance of a particular ecosystem service and the benefits of enacting a particular policy or management option that maintains it?

The main product generated using the data amassed during a TSA is a graph or graphs, with time on the horizontal axis and a measurable indicator, such as revenues or number of jobs, on the vertical axis. In the graph there are two curves, one capturing and depicting BAU and one the SEM scenario. The graph should be accompanied by a narrative that explains whom it is for (stakeholders), how it was generated (assumptions, data sources) and levels of confidence and uncertainty, among other things. This complementary text both rationalizes the graphs and also acts as the bridge between the graphs and policy decisions. 

 

Steps of TSA

Step 1 – Purpose and Scope

Identify the key decision makers (the client) and their objectives for a TSA; Refine the policy focus and scope of the TSA objective; Define the scope of the analysis and assess and verify available data.

Step 2 – Define BAU and SEM

The importance of consensus and clarity; define the Business-as-Usual (BAU) baseline interventions; define the Sustainable Ecosystems Management (SEM) interventions; and refine the definitions of BAU and SEM.

Step 3 – Select Criteria and Indicators

Determine the criteria for the analysis, e.g. financial, economic, employment, equity and fairness. Select SMART indicators for each criterion, that are important for decision-making and identify issues to consider when choosing indicators.

Step 4 – Construct BAU and SEM

Establish a causal link between BAU or SEM interventions and changes in ecosystem services and relevant indicators; project changes to the selected indicators resulting from changes to ecosystem services; generate data to populate the BAU and SEM curves; Manage uncertainty in constructing the scenarios, and organize the results of the TSA for decision-making.

Step 5 – Make Policy Recommend Actions

Assist decision-makers in choosing among the policy interventions by reviewing the scenario projections, the magnitude of the outcomes, and the assessment of the criteria.

   

 

 

For further information:

 

Marlon Flores, UNDP Senior Technical Advisor on Targeted Scenario Analysis:

[email protected]

 

Download the TSA Methodology in English

Download the TSA Methodology in Spanish

TSA Success Stories From Around the World

 

Currently, the UNDP Green Commodities Programme, UNDP-GEF and PAGE are supporting TSA studies in different sectors, for instance: several TSA in Cuba including key sectors such as human settlements, tourism, fisheries, agriculture and protected areas; forest/cattle farming in Colombia; artesian and small scale mining in Ecuador; cocoa in Peru; forest/cattle farming in Paraguay; forest/forestry in Liberia; illegal wildlife trade in Thailand, and forest/palm oil in Indonesia. A wide range of new TSAs are being planned and designed for 2020.

In Guatemala, the results of Targeted Scenario Analysis demonstrated that under conditions of “sustainable use” and by the year 2025: capture fisheries benefits increase more than 10-fold; tourism benefits are more than GTQ 200 Million, and aquaculture's per hectare per year income – in contrast to Business as Usual – reaches a massive $40,000 more. The UNDP’s Flor Bolanos says that “The Guatemala case demonstrates how strategic advocacy can positively impact on a number of coastal and marine management initiatives: it has helped fill a critical community fishing data gap; introduced participatory strategies for sustainable use and management; sprung a programme for the prevention, reduction and control of pollution from land-based sources in Marine Protected Areas; among other changes”.

UNDP’s Kifa Sasa said that “In Costa Rica, the TSA analyzed the benefits of sustainable pineapple production and led to the development, endorsement and implementation of the Pineapple Action Plan through 4 Ministries. The TSA determined that, over the course of 5 years, implementing the Action Plan would cost approximately US$6.5 million while the increase in benefits could be valued at US$15 million”.

In Mongolia, Dr. Ganzorig Gonchigsumlaa, co-author of a TSA study on protected areas, states “the TSA demonstrated its value as an effective tool for advocating for both immediate and longer-term changes by the Minister of Environment. The study helped to secure the existing funding for protected areas, based on the valuation of the ecosystem services they provide, and enabled the creation of a fund for the long term”.

 

A mongolian farmer with his herd in June 2019. Photo by Nicolas Petit from UNDP GCP.

 

Ecuador – Artesian and small-scale mining

In Ecuador, nearly 100,000 people directly depend on Artisanal and Small-Scale Gold Mining (ASGM). Gold is the main export mineral, and ASGM produces at least 85% of Ecuadorian gold, which corresponds to more than USD 300,000,000 in annual income. Despite this importance, the sector lacks access to financing, which produces technological inefficiencies, and the persistent pollution from the use of mercury represents a cost of at least USD 80,000,000 per year. Read Ecuador´s Completed TSA and Policy Brief.   

 

Kazakhstan – forestry/forest

To  support the achievement of the goals set by the Government of Kazakhstan to increased forest cover,  UNDP  commissioned  Wolfs Company and the VU University Amsterdam to perform a Targeted Scenario Analysis (TSA) for the Ministry of Ecology, Geology and Natural Resources (MEGNR) of the Republic of Kazakhstan.

The TSA  assesses  the  impact  of  two  forest  management  scenarios  that  have  been  identified  in  consultation with stakeholders in Kazakhstan:

1.     The Business-As-Usual scenario (BAU), in which current management practices are continued and historical trends in forest cover continue.

2.     The Sustainable Ecosystem Management (SEM) scenario, in which investments are made to improve  forest  management  and  reach  the  forest  cover  target  of  5%  of  the  surface  of  Kazakhstan by 2030. Read Kazakhstan´s Completed TSA and Policy Brief.

 

Liberia - High value conservation forest/palm oil

The Government of Liberia has prioritized the development of agroforestry concessions, and interest from global companies confirms palm oil as a significant economic opportunity for the country; they have already invested on the order of US$500 million since 2008. Communities and smallholder producers in and around allocated concessions are eager for concessions to proceed, as employers and purchasers as well as funding sources for socioeconomic benefits such as improved roads and schools. Nevertheless, development of the oil palm sector has stalled.

This study compares economic gains and losses from different possible oil palm development paths in Liberia using Targeted Scenario Analysis (TSA). The UNDP developed the TSA methodology to help decision makers incorporate the value of ecosystem services into public policy. This methodology involves five principal steps. Read Liberia´s Completed TSA and Policy Brief.

 

Paraguay - Livestock/high value conservation forest

Livestock plays an important role in the Paraguayan economy. In the last 5 years, livestock has contributed almost 10% of GDP, employed around 300,000 people and meat exports have injected an average of 1,100 million dollars annually (MF Economía, 2020). The Chaco region supports 47% of Paraguayan livestock and in turn is an ecosystem of national, regional and global importance due to its biodiversity and natural forests.

However, the growth of the sector is characterized by horizontal expansion and the change of land use to enable new productive plots. In total, it is estimated that only in the western region of the Chaco pastures went from covering six million hectares in 1991 to more than ten million in 2008 (PNC ONU-REDD + Py / SEAM / INFONA / FAPI, 2016). Since then there has been a continuous growth of the sector. To face these challenges, Paraguay has a set of policies and legal instruments related mainly to environmental aspects, such as Forestry Law 422/73 and Law 294/93 on Environmental Impact Assessment, among others. At the same time, many producers state that these laws are rigid and excessively bureaucratic and that they put the economic and environmental sustainability of the sector at risk. Read Paraguay´s Completed TSA and Policy Brief.

 

Peru – Cacao/palm oil

The Cacao and the Palm Oil TSA study compares the financial, economic and environmental effects of continuing with current practices in cocoa production and oil palm production, versus the adoption of alternative practices, which can generate higher profitability and at the same time are more environmentally sustainable. The main premise for the definition of alternative practices is to satisfy the demand levels projected to 2030 by reducing the pressure on forest ecosystems. To do this, the study analyzes the effects of increasing productive yields with an adjustment in technological management that allows cultivation on degraded lands. Read Peru´s Completed TSA Cacao, Completed TSA Palm Oil and Policy Brief for both Cacao and Palm Oil.

 

For more information on TSA, contact Marlon Flores at [email protected] or Usman Iftikar at [email protected].