Decision-making framework and processes for holistic evaluation of environmental and climate policies.

Project Information

DECIPHER

Grant agreement ID: 101056898

DOI

10.3030/101056898

Project closed

EC signature date 6 May 2022

Start date 1 October 2022

End date 30 September 2025

Funded under

• Climate, Energy and Mobility

Total cost

€ 2 613 000,00

EU contribution

€ 2 613 000,00

Coordinated by

E3-MODELLING AE
Greece

Periodic Reporting for period 2 - DECIPHER (Decision-making framework and processes for holistic evaluation of environmental and climate policies.)

Reporting period: 2024-04-01 to 2025-09-30

Summary of the context and overall objectives of the project

Climate change and biodiversity loss are interconnected crises that threaten the resilience of societies and economies. Conventional policy evaluation frameworks, often based on narrow economic metrics, fail to capture systemic risks, long-term disruptions, and broader societal dimensions. The DECIPHER project responds to the need for effective policy measures that address escalating climate, environmental, and economic challenges globally. It tackles decision-making shortcomings by creating a holistic framework that integrates advanced economic and biophysical modelling, empirical social science insights, and participatory governance. Its overarching aim is to transform how climate and environmental policies are assessed and designed, moving beyond static cost-benefit approaches toward dynamic, multi-criteria evaluations that incorporate risk, resilience, and opportunity. The project also seeks to increase transparency in tools supporting policymaking and improve the use of economic models in policy design and evaluation. The framework embeds environmental damages and climate-related financial risks into economic decision-making while enhancing models to reflect behavioural dynamics, technological innovation, and systemic vulnerabilities. Co-created with stakeholders from government, industry, academia, and civil society, DECIPHER ensures transparency and legitimacy throughout its processes. By applying this framework to real-world EU policies, the project generates actionable insights that strengthen Europe’s capacity for evidence-based, inclusive, and forward-looking environmental governance, contributing to a sustainable and climate-resilient future.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

DECIPHER successfully completed the planned technical and scientific advancements, leading to the application of its holistic decision-making framework for climate and biodiversity policy assessment. Stakeholder co-creation was central to the process, with targeted workshops informing methodological guidance and the design of an interactive engagement tool that enables indicator selection and scenario exploration. Empirical research provided new insights into policy innovation and the role of economic modelling in EU climate governance, including ex-post evaluations of major policies and econometric analyses of disruptive events such as COVID-19 and financial crises.
On the macroeconomic modelling front, significant progress was achieved in coupling economic and physical systems. Novel modules for biodiversity and coastal flooding were integrated into macroeconomic models (GEM-E3 and E3ME), enabling realistic representation of climate damages and adaptation strategies. Enhancements in economic theory introduced behavioural dynamics, systemic risk valuation, and improved treatment of investment decisions and financing conditions. These innovations were scaled into large-scale models, supporting nuanced scenario design.
DECIPHER also operationalised a risk-opportunity lens and multi-criteria evaluation framework, embedding resilience, systemic risk and transformative potential into policy assessments. Climate-related financial risk modelling was coupled with macroeconomic tools, enabling stress-testing of transition and physical risks. Finally, the unified framework was applied to EU and global policy scenarios, delivering integrated assessments of mitigation, adaptation, and biodiversity strategies. Results show proactive adaptation reduces GDP losses, biodiversity investments are affordable, and financial risks amplify macroeconomic impacts. These outcomes position DECIPHER as a transformative tool for evidence-based, resilient, and inclusive environmental policymaking.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The DECIPHER project has delivered a new generation of tools and methods that improve how climate and biodiversity policies are assessed. At its core, the project developed an integrated decision-making framework combining advanced macroeconomic models, biophysical modules, and multi-criteria evaluation approaches under a risk-opportunity lens.
Key technical achievements include operationalising biodiversity and coastal flooding modules and coupling them with GEM-E3 and E3ME models. Economic modelling was enhanced through rational expectations, improved capital mobility, technology diffusion, labour market frictions, investment behaviour, and financing dynamics, allowing more nuanced assessments of policy impacts. Climate-related financial risk modelling was developed and linked to macroeconomic tools, providing stress-testing capabilities for transition and physical risks.
The project’s scientific contribution has been disseminated through peer reviewed publications, conferences and workshops. DECIPHER also provided the scientific basis for NGFS short term climate risk scenarios, trained young researchers through its Summer School, and produced a White Book on Sustainability.
To ensure uptake, further steps include scaling the framework to additional policy domains, continued research on land-use biodiversity impacts and health co-benefits, deeper integration of uncertainty considerations, and operationalising the triple-dividend effect via model-based assessments.

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