LocationsTargeted Scenario Analysis advances policy coherence
Ammunition to accelerate policy reform
December 1, 2025
In an era where data-driven decision-making is crucial for advancing sustainable development policies and national-level SDGs, the UNDP’s Targeted Scenario Analysis (TSA) has become a powerful tool to link evidence-based economic data with policy decisions, encouraging reform of unsustainable sector development policies. Many Global Environment Facility (GEF) projects use TSA and the GEF has played a key role in enabling this effort. TSA is assisting policymakers in more than 20 countries to assess the economic impacts of policy choices and drive transformative change.
Now there is to be a next-generation TSA methodology. In Washington, DC, USA, experts from UNDP, including Marlon Flores, Lead Technical Advisor on TSA, and Ana María Díaz, UNDP Resident Representative in the Dominican Republic were invited by the GEF Secretariat to share insights and real-world applications of TSA across sectors and geographies in their learning series and look ahead to the next generation.
What is TSA?
TSA is a demand-driven, policy-centered economic analysis tool that compares different policy paths, including unsustainable “Business as usual” (BAU) policies, with more advanced, nature-positive, and sustainable sector development policies by comparing their potential economic losses and gains. Unlike conventional approaches to economic analysis, TSA doesn’t just produce numbers—it generates options to achieve coherent policy that are tailored to the decision-makers’ policy objectives.
As Marlon Flores explained: “The aim of this tool is actually not to provide you with just static and isolated value numbers; it’s to provide you with ammunition to accelerate policy reform.” He emphasized that from the outset, TSA defines policy targets, and the final product of TSA is a set of coherent policy recommendations supported by economic analysis that reveals the economic cost of continuing with BAU and the subsequent responsibility of policymakers for this.
TSA’s Five-Step Approach
Flores outlined TSA’s structured policy-driven methodology, which includes:
1- Engaging decision-makers and defining policy questions.
2- Establishing BAU and sustainable scenarios.
3- Selecting criteria and indicators (e.g., financial, economic, employment, equity).
4- Conducting the economic analysis.
5- Translating economic findings into policy recommendations.
He stressed that TSA is not just about environmental valuation but about connecting the dots between economic analysis and sustainable sector development policy formulation. “We assess how ecosystems are being degraded and incorporate that data into the economic analysis.”
Real-World Impact: Dominican Republic
One of the most compelling recent examples of TSA’s impact comes from the Dominican Republic, where the tool was applied to the coffee and cocoa sectors. UNDP Resident Representative Ana María Díaz described how TSA was not originally part of the project but was later integrated to demonstrate the need for a financial mechanism supporting sustainable production.
“In 2022, we identified with our counterparts the need to apply TSA to demonstrate the importance of establishing a financial mechanism for the sustainable production of coffee and cocoa,” Díaz said. The analysis revealed that without intervention, the country could lose $750 million in the coffee sector over the next 10 years and $2.3 billion in the cocoa sector over 19 years, compared to adopting the sustainable route.
These findings led to the design of an Investment Fund for Sustainable Coffee and Cocoa Production, developed in collaboration with key national institutions, including the Ministry of Environment, the Ministry of Agriculture, the Dominican Coffee Institute, and the National Cocoa Commission. Diaz highlighted the importance of this collaboration: “We have been able to put forward a joint public-private vision… and this has enabled the design of the investment fund.”
Stakeholder Engagement
A recurring theme in the discussion was policy coherence—the alignment of actions across government departments toward common goals. Flores cited the OECD’s definition and emphasized that TSA promotes “mutually reinforcing actions across sectors.”
Díaz echoed this, noting that TSA helped build ownership and joint ambition among stakeholders. “You can never do too much in terms of consultation,” she said, especially in contexts of political change. The Dominican Republic’s recent elections brought new politicians into the mix, making stakeholder engagement even more critical.
The conversation also explored synergies between the TSA and other UNDP initiatives, such as the Biodiversity Finance Initiative (BIOFIN). Díaz confirmed that in the Dominican Republic, TSA is being mainstreamed in BIOFIN and other initiatives, such as the Natural Capital Project. “Synergies are being made,” she said, with cocoa and coffee identified as strategic areas of interest.
Sustainability and Capacity Building
One challenge raised during the session was the sustainability of policy reforms beyond the lifespan of donor-funded projects. Flores acknowledged this as a key issue: “You need a longer time to actually change policies and commitment from decision-makers and sponsoring institutions to follow up beyond short-term projects and carry out a strategic follow-up after the project ends.”
To address this, UNDP is working on a next-generation TSA methodology that includes a follow-up section. Flores also emphasized the importance of local capacity building, integrating national economists and sector specialists into TSA teams.
“In the future, the new version of the approach will strengthen policy analysis, locally driven expertise with minimal impact from external consultants. TSA is a great first step… but then we have to think bigger and translate this into concrete, actionable, and revenue-based models for the sector.”Marlon Flores, UNDP TSA Lead Technical Adviser
Peter Umunay, Senior Environmental Specialist (OR Thematic Lead for Food Systems and Land Use), Integration and Knowledge Division of the GEF Secretariat, highlighted some key takeaways of the session:
- Policy reform is a critical element for GEF Projects, and tools like TSA provide practical, policy-centered economic analysis that facilitates engagement across multiple sector decision-makers, particularly with Ministries of Finance, Economy, Environment, and Agriculture.
- The TSA’s coherent policy output are especially compelling to the GEF, which is pushing for policy coherence.
- The need to address policy reform recommendations and the sustainability of the policy change, given the GEF’s short-term projects. Lastly, he noted the need to coordinate the use of multiple policy-related tools available to FOLUR (Food Systems, Land Use and Restoration) projects.
Looking Ahead
Over 30 TSAs have now been applied across 20 countries, including in the GEF-funded FOLUR programme in Peru, Indonesia, Papua New Guinea, and also in non-FOLUR countries such as Uganda, Mongolia, and Kyrgyzstan. Its ability to quantify the costly economic impacts resulting from BAU, engage stakeholders, and produce actionable policy recommendations makes it a vital tool for governments seeking to align economic growth with environmental sustainability.
Download the Targeted Scenario Analysis (TSA) Guidebook here.
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