DEVELOPMENT OF NATURAL CAPITAL ACCOUNTS, DATA, TOOLS, AND ANALYSES
In FY25, the CIC grant supported activities in Kenya that advanced natural capital accounting (NCA) across multiple areas, including land, water, ecosystems, forests, and energy.
The main achievement was formation of technical working groups for land, forests, and ecosystem accounts with representation from multiple ministries, departments, and agencies. (There were existing water and energy technical working groups.) The support enabled compilation of data (in close coordination with the technical working groups) and capacity building of the technical working groups. For water, a physical water input- output table and SEEA-style water supply and use table have been developed. For ecosystems, a draft report on extent and condition has been completed. For energy, a monetary supply-and- use table was developed, accompanying the physical supply-and-use tables. For forests, data for asset accounts for timber and non-timber products has been compiled. Further development and finalization of this work is foreseen for FY26, including contributing to a compendium on natural capital for Kenya that the Kenya National Bureau of Statistics will issue.
Beyond NCA, the GPS grant equipped the National Treasury with tools and analytical capacity to embed climate and natural capital into its macro- fiscal modeling. Through the previous TTA on Strengthening Natural Capital and Climate Policy and Governance, the World Bank and Treasury co-developed an augmented KENMOD, a Kenya- specific extension of the Macroeconomic and Fiscal Model (MFMOD). KENMOD was augmented to include climate and natural capital channels. The new GPS CIC grant (Integrating Natural Capital and Ecosystem Service Considerations in Macro- and Investment Decisions) supported several hands-on trainings with the Macro and Fiscal Affairs Department to build internal capacity to run scenarios, calibrate climate and natural capital parameters, and interpret results for policy. The new report Kenya Standalone Macro-Fiscal Model with Climate and Natural Capital Considerations: Inputs for Budget Policy Statement produced simulations of the effects of policy shocks on GDP, household consumption, private investment, inflation, and fiscal aggregates, quantifying the macro impacts of climate shocks and the benefits and trade-offs of green fiscal measures and restoration investments.
Progress in developing these accounts and the report, along with technical support for capacity building, helped accelerate formal adoption of Kenya’s National Plan for Advancing Environmental-Economic Accounting, a national roadmap for integrating natural capital into official statistics and decision making. The GPS support will help operationalize the plan and supports Kenya’s ambition to align its statistical systems with its sustainable development priorities by providing harmonized, geographically specific data on how land resources are changing and why these changes matter for national planning, investment, and climate action.
INFORMING INVESTMENTS AND POLICIES
The GPS grant informed Kenya’s Budget Policy Statement through the analysis of the extension of MFMod, feeding directly into Budget Policy Statement preparation by improving the evidence base for setting strategic priorities; informing sector ceilings and national–county allocations with quantified climate risks; testing consistency of proposed measures with growth, inflation, and debt objectives; and increasing the coherence of climate, natural capital, and fiscal policy. The GPS-financed work also addressed data gaps and modeling readiness, enabling Treasury to iteratively use the extension of MFMod for the Budget Policy Statement cycle to prioritize resilient, low-carbon investments and transparently communicate macro-fiscal implications of climate policy.
CAPACITY BUILDING AND INSTITUTIONALIZATION
In FY25, Kenya increased its capacity-building and institutionalization efforts in NCA and environmental management through a series of targeted events and trainings. With GPS support, it organized virtual (with Uganda and South Africa) and in-person (with Zambia) South-South exchange sessions, bringing together a diverse group of agencies including the Climate Change Directorate, Kenya Space Agency, and National Land Commission. The virtual exchange engaged 65 participants, 17 of whom were women, and the in-person event included 17 participants from key regulatory and statistical organizations.
Kenya also conducted one-day capacity-building trainings on land accounts, ecosystem extent accounts, and ecosystem condition accounts, each with 13 to 20 participants and strong female representation.
