Dynamical Modeling for Sustainable Development

Background Information

About MRC

The Mauritius Research Council (MRC) is an apex body that promotes and coordinates national investment in research, and advises Government on issues related to Science and Technology. To these ends, the MRC promotes multi-stakeholder collaborations in order to enhance the Quality of Life of the people of the Republic of Mauritius through Sustainable Development (SD).

About Millennium Institute

MI is a not-for-profit development research and service firm headquartered in Arlington, Virginia, USA, and it is committed to finding practical means to promote SD. Our vision is of a sustainable and more peaceful and equitable future for the Earth. MI’s mission is (1) to develop and provide advanced analytical tools for national and global development; and (2) to formulate values-related questions and analyses on the consequences of alternative development strategies.

Integrated Planning for Sustainable Development

As you may be aware, sustainable development remains elusive for most countries today because of the highly complex interactions between the three spheres of development, namely Economy, Society and Environment. In fact, defining and achieving sustainability are arguably some of the most challenging issues confronting humanity today. It is well recognised now that the non-linear causal interactions between these spheres of development cannot be understood using mental models, often resulting in policy outcomes contrary to long-term objectives of improving people’s wellbeing. In this context, computer modelling has become an integral part of planning for SD and to improve the QoL of people.

The Millennium Institute (MI) has developed a unique tool based on Systems Dynamics (Threshold 21 or T21) to model an entire economy or specific industry sectors by customizing the interactions between Economy, Society and Environment. T21 is recognized as one of the most advanced modeling tools available for integrated planning of SD, and has been used as a planning in both the developed and developing countries over the past 20 years.

Threshold 21 (or T21)

Threshold 21 (T21) is a dynamic simulation tool designed to support comprehensive, integrated long-term national development planning. T21 supports comparative analysis of different policy options, and helps users to identify the set of policies that tend to lead towards a desired goal. This insights into how different indicators of development interact with one another to produce an outcome and deepens users’ understanding of development challenges. More specifically, T21 allows the complex interactions between all aspects of development (economic, social and natural environment) to be considered, which often escape mental representations. T21 allows the unique positive and negative feedback loops between the three spheres of development – Economy, Society and Environment – to be set given the specific stage of development of a community or country.

T21 Conceptual Framework

The conceptual framework behind T21 is illustrated in Figure 1.

The following discussion expands briefly on the four spheres (Energy, Economy, Environment and Society) and highlights some of their main interactions.

The Social sphere contains detailed population dynamics organized by sex and age cohort and health (using ‘life expectancy’ as a proxy). It also includes employment disaggregated for the primary, secondary and tertiary production sectors.

The Economy sphere describes the three production sectors by augmented Cobb-Douglas production functions with inputs of resources, labour, capital and technology. A Social Accounting Matrix (SAM) and a System of National Accounts (SNA) are used to elaborate the economic flows, and balance supply and demand in each of the sectors.

The Environment sphere tracks land allocation, fossil fuel emissions, and climate change. Land is further divided into urban, agricultural, fallow, forest and desert. There are feedback loops between greenhouse gases (plus other emission) from the consumption of fossil fuels, the carbon cycle, climate change and life expectancy.

The Energy sphere adds important feedbacks to Society, Economy and Environment. Energy, seen as a ‘meta-technology’, is used to produce food, heat houses, and fuel transportation, and, in sum, is ubiquitous to modern life. In a T21 model, Energy may be linked to Society through employment, access to electricity, and life expectancy. In parallel, population demands energy for residential use and for transportation. Economy is intertwined with Energy through energy demand and consumption for production activities. Both private and public investments to maintain and increase production capacity and improve energy efficiency (i.e. lowering the energy intensity of the economy) are included. Energy prices negatively impact on GDP, decreasing total factor productivity, and energy expenditure reduces households’ net income available for other discretionary consumption. Energy and environment are also interconnected through depletion of non-renewable resources, generation of greenhouse gases, and water and land utilization for energy and biofuels production.

All of the above interactions take place via negative and positive feedback loops that are captured mathematically as stochastic processes.