UK Centre for the Understanding of Sustainable Prosperity (CUSP) A system dynamics model Prof Aled Jones* & Roberto Pasqualino* aled.jones@anglia.ac.uk; roberto.pasqualino@anglia.ac.uk
Agenda • Introduction to CUSP • SD approaches & CUSP • Next steps 2 10/04/2017
In search of Sustainable Prosperity A prosperous society is concerned not only with income and financial wealth, but also with the health and wellbeing of its citizens, with their access to good quality education, and with their prospects for decent and rewarding work. Prosperity enables basic individual rights and freedoms. But it must also deliver the ability for people to participate meaningfully in commons projects. Ultimately, prosperity must offer society a credible and inclusive vision of social progress. Prof. Tim Jackson, Director of CUSP
CUSP partners The research programme of CUSP is coordinated from the University of Surrey under the direction of Professor Tim Jackson. CUSP’s academic partners include: University of Surrey, Anglia Ruskin University, Keele University, Goldsmiths College London, University of Leeds, Middlesex University, York University (Canada), University of Canterbury (New Zealand).
CUSP research themes: M eaning and Moral Framing of the Good Life A rts and Culture in developing visions of prosperity P olitical and Organisational dimensions of sustainable prosperity S ocial and psychological understandings of the good life S ystems Analysis: Narratives of sustainable prosperity
Bottom up Systems Analysis See also http://www.prosperitas.org.uk Macroeconomic modelling project - Tim Jackson and Peter Victor PASSAGE project supported by ESRC System dynamics model of Financial Assets and Liabilities in a Stock-Flow consistent Framework (FALSTAFF) Four-sector, demand-driven model of Savings, Inequality and Growth in a MAcroeconomic framework (SIGMA) Blog: Prosperity and Sustainability in the Green Economy http://www.prosperitas.org.uk/blog.html#.VvKC EMfC6FI
Top down Systems Analysis Building a global systems dynamic model incorporate finance and short term behaviours
Prof Forrester’s thoughts on the System Dynamics National Model • Forrester (1980): • “When fully assembled, the National Model will include 15 production sectors , such as consumer durables, manufacture of capital equipment, agriculture, housing, construction, services, and energy” • Forrester (2003): • “The system dynamics economic model has been developed over several decades. Initially it was to have been much larger than the current simplified model, which now has somewhat over 200 levels and 1400 auxiliary equations .” • “Some people have questioned the need for such a large and complex model. Indeed, many applications in education and in policy design might be better handled with a collection of far simpler models. But I have felt that it is important to have a model in which the major modes of economic behaviours exist simultaneously for examining how the different modes may interact . … After the larger system is understood, it will be desirable to revert to much simpler special purpose models”
Cereals, Global price, real 2010$ Research context 600 Maize, $/mt, real 2010$ 500 Wheat, Average, 400 $/mtv, real 2010$ 300 Rice, average ($/mt) 200 1. We live in a finite planet (Rockstrom Average 100 et al. 2009, Limits to Growth, 1972) 0 2. Resources getting scarcer as Fossil fuels , Global price, 2010$ environmental depletion, population, 20 Oil price 18 urbanization increase (Jones et al., 16 14 2013) 12 Gas Price 10 8 6 3. Implications for food security 4 Coal Price 2 threatened by climate change risk 0 (IPCC, 2013) Our financial and economic system is exposed to catastrophic risks from climate change and resource scarcity that it is unable to address in its current form.
Where do we stand in 2015 according to Limits to Growth? 1972 1991 2003 • Lower productivity of the Industrial sector shows the concern of human society in coping with global constraints • Higher productivity of the Service sector shows the focus of human society to follow a different paradigm of growth • Higher food production due to technology improvements and Lower impact of food production to Land Erosion due to good practice in land use (Pasqualino et. Al 2015)
Gap in the literature SDNM – Includes: • production sectors • labor and professional mobility • demographic sector and consumption sectors • commercial banking to make short- term loans • a monetary authority with its controls (2014-2016) over money and credit Pasqualino update • government services Sterman - 1981 and application of • foreign sector application of such a framework to SDNM framework food and energy system modelling to Energy transition Senge - 1978 (conventional to comparison of unconventional) investment function and the economy in of SDNM with the US 1980s economic theory (1976) Forrester’s System dynamics national model (SDNM) Global Economy Energy supply A model to evaluate the systemic risk (1971, 1972) Manufacturing Forrester, Banks generated by food and energy supply trends Food and Biofuels Meadows et al. and shocks and their interactions with the World Households dynamics and material and financial economies, in the short Fossil Fuels Limits to Growth term and under the constraints of a finite Public Sector Renewable Goods and planet. Energy Services
Two closed system economy models Large size model Medium size model • • 60 stocks, 650 auxiliaries, 200 240 stocks, 2500 auxiliaries, 600 parameters parameters • Simplified version to study • Out of equilibrium based on natural inequality, and test consumption resources depletion, labour change patterns, productivity productivity change, population growth growth Global Economy Closed system Generic economy Energy supply Manufacturing Banks Households Banks Food and Biofuels Households Fossil Fuels Public Sector Public Sector Renewable Firms Goods and Energy Services 12 10/04/2017
Sensitivity analysis of shock scenarios 06 Sen 001 06 Sen 001 06 Run 003 06 Run 003 06 Rin 003 06 Rin 003 06 Run 001 06 Run 001 50.0% 75.0% 95.0% 100.0% 50.0% 75.0% 95.0% 100.0% n price of output 7.0e-6 f price of output 600 5.3e-6 450 3.5e-6 300 150 1.8e-6 0 0 1990 2000 2010 2020 2030 1990 2000 2010 2020 2030 Time (Year) Time (Year) 13 10/04/2017
A double top-down approach Updated version of the Limits to Growth Towards a Hybrid SD-ABM model : with a team of 25 scientists • Current model as framework for a • Based on LtG, proposal of a new simple generic macro-region splitting the model of the global economy (As Simple world according to Currency/trade unions/… As Possible) • • Modelling of foreign markets Focus on Narratives and Prosperity • • Look at trade of labour, food, energy, APPG on LtG debt as connections among sectors • Focus on the CUSP of the Global • Focus on analysis and relative Economy, Climate change, Consumption parameterization among different patterns, Restructuring of the economy, regions Risk in Finance, New set of Indicators, Planetary Boundaries… Global Economy Global Economy Global Economy Energy supply Energy supply Manufacturing Manufacturing Energy supply Banks Food and Banks Food and Biofuels Biofuels Manufacturing Households Banks Households Food and Fossil Fuels Fossil Fuels Biofuels Renewable Public Sector Renewable Public Sector Energy Goods and Energy Goods and Services Services Global Economy Households Fossil Fuels Energy supply Manufacturing Food and Banks Global Economy Biofuels 3: Industrial output Energy supply Renewable Public Sector Manufacturing Energy Goods and Households ? Services Banks Food and Biofuels Fossil Fuels Households Fossil Fuels Renewable Public Sector Energy Goods and Services 5: Nonrenewable resources Renewable Public Sector Goods and Energy Services 1 2 3 1 Global Economy 5 2: Food Energy supply Manufacturing Banks 5 Global Economy Food and output Biofuels Energy supply Manufacturing Households Fossil Fuels Food and Banks 4 Biofuels 1: Population 1 2 Global Economy 3 Households Renewable Public Sector Energy supply 2 Energy Goods and Manufacturing Fossil Fuels Services Food and Banks Biofuels 1 5 Households Fossil Fuels Renewable Public Sector 2 5 Goods and Energy Services 3 Renewable Public Sector 3 4 4: Pollution level 4 Energy Goods and Services 4 0 1900 1950 2000 2050 Year 14 2100 10/04/2017
Summary • A “positive” critique on LtG and current global economic framework will be available at: • Pasqualino R. and Jones A. – “Resources, Financial Risk, and Dynamics of Growth”, Routledge publisher - TBP in 2017 • Regionalization of the global model and move towards a hybrid System Dynamics-Agent Based model. • Update on “simple” Limits To Growth model and focus on communication and narratives based on key scenarios • Focus the model on inequality, prosperity, happiness 15
Global Sustainability Institute, Anglia Ruskin Univertisy, Cambridge, UK 16
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