UK Centre for the Understanding of Sustainable Prosperity (CUSP) A - - PowerPoint PPT Presentation

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

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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

• f Canterbury (New Zealand).

CUSP research themes:

Meaning and Moral Framing of the Good Life Arts and Culture in developing visions of prosperity Political and Organisational dimensions of sustainable prosperity Social and psychological understandings of the good life Systems 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”

Research context

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.

100 200 300 400 500 600

Maize, $/mt, real 2010$ Wheat, Average, $/mtv, real 2010$ Rice, average ($/mt) Average

Cereals, Global price, real 2010$

2 4 6 8 10 12 14 16 18 20 Oil price Gas Price Coal Price

Fossil fuels , Global price, 2010$

1. We live in a finite planet (Rockstrom et al. 2009, Limits to Growth, 1972) 2. Resources getting scarcer as environmental depletion, population, urbanization increase (Jones et al., 2013) 3. Implications for food security threatened by climate change risk (IPCC, 2013)

Where do we stand in 2015 according to Limits to Growth?

(Pasqualino et. Al 2015)

1972 2003 1991

• 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

• f growth
• Higher food production due to

technology improvements and Lower impact of food production to Land Erosion due to good practice in land use

Gap in the literature

(1971, 1972) Forrester, Meadows et al. World dynamics and Limits to Growth (1976) Forrester’s System dynamics national model (SDNM) Senge - 1978 comparison of investment function

• f SDNM with

economic theory Sterman - 1981 application of SDNM framework to Energy transition (conventional to unconventional) and the economy in the US 1980s (2014-2016) Pasqualino update and application of such a framework to food and energy system modelling 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
• ver money and credit
• government services
• foreign sector

A model to evaluate the systemic risk generated by food and energy supply trends and shocks and their interactions with the material and financial economies, in the short term and under the constraints of a finite planet.

Two closed system economy models

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Global Economy Energy supply Manufacturing Goods and Services Food and Biofuels Fossil Fuels Renewable Energy Households Banks Public Sector

Large size model

• 240 stocks, 2500 auxiliaries, 600

parameters

• Out of equilibrium based on natural

resources depletion, labour productivity change, population growth Medium size model

• 60 stocks, 650 auxiliaries, 200

parameters

• Simplified version to study

inequality, and test consumption change patterns, productivity growth

Closed system Generic economy Banks Public Sector Households Firms

Sensitivity analysis of shock scenarios

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06 Sen 001 06 Run 003 06 Rin 003 06 Run 001 50.0% 75.0% 95.0% 100.0% n price of output 7.0e-6 5.3e-6 3.5e-6 1.8e-6 1990 2000 2010 2020 2030 Time (Year)

06 Sen 001 06 Run 003 06 Rin 003 06 Run 001 50.0% 75.0% 95.0% 100.0% f price of output 600 450 300 150 1990 2000 2010 2020 2030 Time (Year)

A double top-down approach

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Towards a Hybrid SD-ABM model:

• Current model as framework for a

generic macro-region splitting the world according to Currency/trade unions/…

• Modelling of foreign markets
• Look at trade of labour, food, energy,

debt as connections among sectors

• Focus on analysis and relative

parameterization among different regions

Updated version of the Limits to Growth with a team of 25 scientists

• Based on LtG, proposal of a new simple

model of the global economy (As Simple As Possible)

• Focus on Narratives and Prosperity
• APPG on LtG
• Focus on the CUSP of the Global

Economy, Climate change, Consumption patterns, Restructuring of the economy, Risk in Finance, New set of Indicators, Planetary Boundaries…

1900 1950 2000 2050 2100 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 Year

5: Nonrenewable resources 3: Industrial output 4: Pollution level 2: Food

• utput

1: Population

?

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• 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

Summary

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Global Sustainability Institute, Anglia Ruskin Univertisy, Cambridge, UK