The Limits to Growth (LtG), published in 1972 by the Club of Rome, highlighted the potential relevance of resource constraints on global growth, and the role of ...
A hybrid System Dynamics – Agent Based model to simulate Complex Adaptive Systems: a new methodological framework for sustainability analysis IRENE MONASTEROLO1, ALED JONES 2, FLAVIO TONELLI3, DAVIDE NATALINI4 “Every person approaches his problems, wherever they occur on the space-time graph, with the help of models. A model is simply an ordered set of assumptions about a complex system.” Meadows, 1972.
Abstract: Sustainability analysis represents a form of Complex Adaptive Systems (CAS) because it involves multiple sectors and agents displaying non-linear and non-rational interacting behaviours characterized by feedbacks and time lags. Thus, it cannot be properly addressed with classical econometric models such as General Equilibrium Models (GEM), nor with traditional simulation models alone including System Dynamics (SD), Dynamic Systems (DS), Discrete Event Simulation (DES), Agent Based Models (ABM). We present a hybrid SD-ABM approach and argue that this may potentially better address such issues in a more informative and effective way because they exploit the strengths of both of these forms of models. In particular, we describe how this emerging modelling framework can contribute to understanding complex systems, increasing modelling accuracy and computational efficiency. Then, we highlight the methodological challenges of SD-ABM integration. Among the relevant applications, this new modelling approach would aid the understanding of the characteristics and evolution of the resources-economic growth-population nexus. There is an increasing need to research this nexus to help define the processes involved in the changes in prices of global commodities like oil and cereals since middle of the last decade which has partly been driven by a supply-demand mismatch. The SD-ABM hybrid model framework presented here will contribute to the wider development and refinement of hybrid models for sustainability analysis which will provide policy makers with meaningful and timely results on alternative policy scenarios in order to allow them to introduce more targeted low carbon, resource resilient environmental sustainability policies.
Key-Words: - Hybrid modelling, Complex Adaptive Systems, Sustainability analysis, System Dynamics, Agent-based.
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1. Introduction The Limits to Growth (LtG), published in 1972 by the Club of Rome, highlighted the potential relevance of resource constraints on global growth, and the role of human activities on resource depletion. Since then, it has been widely recognized (for example, UNEP Annual Report, 2011; FAO State of Food Insecurity, 2012) that we live in a planet with finite natural resources, which are fundamental for human life and our economic activities (e.g., land, fuel, metals, food), and these are being depleted at a faster pace than the planet can replace, causing environmental degradation through their usage or are not available in geographic regions to support local populations (e.g., water). For instance, the increasing pace of carbon dioxide (CO2) emissions from human activities, which reached the monthly record level of 400 parts per million (ppm) in May 2013 (ESRL, 2014), may cause significant impacts on ecosystems and economic growth (Mann, 1998, IPCC, 2013). Recent analysis (Turner, 2008) show that the LtG overshoot scenarios (which results in global human population collapse) track current global data well, with humanity’s total ecological footprint exceeding the global carrying capacity of the planet (Wackernagel et al. 2002). Steffen et al. (2011) argue that the human imprint on the global environment has become so large and active that it impacts on the functioning of the Earth system, while Rockstrom et al (2009) developed the concept of Planetary Boundaries (the nine global boundaries which potentially represent tipping points in ecological impact, such as of the nitrogen cycle impact on soil quality. These issues are interlinked and are causing the availability of natural resources to be more constrained (FAO, 2012; Randers, 2012) and uneven, with poor people in vulnerable and lowincome countries (WB, 2013) being the most disadvantaged in their pursuit for economic growth. The confirmation of the role of human activities on climate change events coincides with fast changing societal trends including increasing world population (estimated to reach a peak of 9.6 billion in 2050 (UN, 2012)), a rising middle class in fast growing emerging economies, and increasingly polarized distribution of income (OECD, 2008). Until now, the greater availability of statistical information on natural resource use, data on emissions from production activities and the development of more sophisticated models (e.g., OECD’s ENV-LINKAGES; Page, 2002 for the Stern review; Planetary Boundaries by Stockholm Institute) has not led to a transformation in political approaches to resource management that many have called for (for example, Elders, 2012). These interlinked issues show a “banquet” of multidimensional consequences (Sterman, 2013) which are a potential source of risks (Monasterolo and Jones, 2013), such as:
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- Increased uncertainty with regard to future economic growth due to increasing evidence of capital constraints (McKinsey, 2011), which lowers the ability of governments to raise money for investments; - The spread of systemic risks in highly indebted, resource-intensive countries, e.g. the USA; - The era of low resources prices being replaced by high volatility of commodity prices (Grantham, 2012, Jones et al., 2013; FAO, 2012); - Increase in inequality in accessing resources (WB, 2013) and their inequitable exploitation (e.g., land grabbing); - Unprecedented industrial sustainability challenges linked to a future increased demand while using a quarter of current resources. (Tonelli et al., 2013); - Risk for international political stability (i.e., the Arab spring, Lagi et al., 2011; Natalini et al., forthcoming). Therefore, there is a need at the global level to understand the multidimensionality and nonlinearity of resource insecurity and constraints. Since resource constraints are a potential source of risk and uncertainty for economic growth, then this should be modelled and further investigated. This issue cannot be properly addressed by using a single-model approach because it involves several stakeholders with different structural and behavioral characteristics which interact in the same system and are able to influence it at different steps in time. Therefore, we need to develop a multi-paradigm approach able to represent sustainability as a complex system. This paper provides an overview of neo-classical, general equilibrium and interdependencies modelling techniques and their application to socio-economic and environmental analysis in section 2, comparing them with Systems dynamics (SD) and Agent Based Modelling (ABM) in section 3. In the same section we show the research potential of SD-ABM integration into a hybrid model and we highlight the methodological challenges of their integration, focusing on the proper modelling of elements and on the role of linking variables. In section 4 we introduce the Global Resource Observatory (GRO) model, which provides an innovative methodological approach to sustainability analysis based on a hybrid SD-ABM. In the last section we provide preliminary conclusions and insights for future research and methodological development.
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