Creating a Sustainable Society:
Dynamics of Renewable
Resources
Slides care of John Sterman
Jason Jay
Lecturer in Sustainability
MIT Sloan School of Management
jjay@mit.edu
web.mit.edu/jjay/www
Fishbanks Debrief
Winslow Homer, Fishing Boats, Key West (1903)
“The Tragedy of The Commons”
Garrett Hardin. Science 1968; 162:1243-8.
G. Hardin,
1915-2003
Photo: 1986
The Tragedy of the Commons
“Each man is locked into a system that compels him to
increase his herd without limit—in a world that is limited.
Ruin is the destination toward which all men rush, each
pursuing his own best interest…”
“No technical solution can rescue us.…”
“We may well call it ‘the tragedy of the commons,’ using
the word ‘tragedy’ as the philosopher Whitehead used it:
‘The essence of dramatic tragedy is not unhappiness. It
resides in the solemnity of the remorseless working of
things.’
“Common Pool Resources”
•
•
•
•
Limited Stock
Limited Rate of Renewal
Easily Appropriable (Low barriers to access)
Rival (What you use, I can’t use)
EXAMPLES:
•
•
•
•
•
•
Pastures
Fish
Forests
Irrigation
Clean Air & Water
Climate
•
•
•
•
•
Roads and Highways
Parking Spaces
Views
Server Resources
Trust among consumers
The Iceberg
A Metaphor for Systems Thinking
Events
More Leverage
Patterns of
Behavior
Systemic
Structure
Event level: the Headlines
Codfish
depleted
off Maine
Limits may follow
as cod diminishes
in Gulf of Maine
Restrictions could
Hurt local fishermen
Lobstermen
Snag record
38m pounds
Fishing banned
at Georges Bank
Local fishermen fear overcrowding
Hearing casts fishery as sinking ship
Loopholes found
In fishing rules
N.E. lawmakers seek boat buyback ideas
Feds approve boat buyback program
Hope to thin fishing fleet with $2m in incentives
Canada’s
Gunboat
Diplomacy
Chrétien to protect
Atlantic fish stocks
Typical Game Behavior
Catch
Fish
Ships
0
1
2
3 YEAR 4
5
6
7
Typical Game Behavior - Fleet
Typical Game Behavior - Catch
Typical Game Behavior - Fish Stocks
Pattern #1: Overshoot and Collapse
4
12
3
2
1
0
1950
16
Thousand Metric Tons/year
Thousand Metric Tons/year
5
Pacific Bluefin Tuna
Catch
Atlantic Swordfish
Catch
8
4
0
1960
1970
1980
1990
2000
1950
1960
1970
1980
1990
2000
North Sea Herring Catch
Mark Wise, Common Fisheries Policy of the European Community, New York, Methuen, 1984.
Consider the Cod
• Northern or Atlantic Cod
–Long-lived, slow to mature
–Once immensely abundant
• Early fishers (e.g., Basque) claimed fish so dense you
could walk from Spain to the New World on their
backs.
• John Cabot, exploring Newfoundland in 1497, noted
fish so thick they practically blocked his ship.
–Harvest ≈ 250,000 metric tons/yr through 1950s
–Vital in feeding the Old World, in the
development of the New World,
…and of Massachusetts:
The Sacred Cod
Massachusetts State House
Prevailing Mental Model: Unlimited Abundance
“Probably all the great fisheries are
inexhaustible; that is to say that
nothing we do seriously affects the
number of fish.”
– Thomas Henry Huxley, 1883
Source: US National Marine Fisheries Service
Estimated Cod Stocks, Scotian Shelf
(000 Metric Tons)
Estimated Biomass in 1852
1200
Estimated Carrying Capacity
(Myers et al. 2001)
800
400
Total Cod Biomass
Total Cod Biomass Age 5+
0
1850
1870
1890
1910
Rosenberg et al., Frontiers in Ecology, 2005
1930
1950
1970
1980
Overshoot and Collapse
Annual fish catch
Why the pervasive pattern of
overshoot and collapse of fisheries?
Where are the
leverage points for
creating a
sustainable fishery?
Where are they not?
Time
The Iceberg
A Metaphor for Systems Thinking
Events
More Leverage
Patterns of
Behavior
Systemic
Structure
+
+
+
Revenue
+
Price of
Fish
Fisher
Profit
Investment
B
-
DELAY
Costs
+
Operating
Costs
R
Profitable
Growth
Fleet
+
+
Total Catch
+
Catch per
Ship
+
+
+
Fisher
Profit
Investment
B
-
DELAY
Costs
+
Operating
Costs
Revenue
+
+
R
Profitable
Growth
Price of
Fish
Fleet
+
Total Catch
+
Fish Stocks
+
Net Fish
Fertility
Ocean Carrying
Capacity for Fish
B
+
Catch per
Ship
No Fish,
No Catch
R
DELAY +
Regeneration
+
B
Fish
Density
+
Population
Growth
+
R
Economic
Growth
+
R
Population
+
Wealth
+
+
+
+
Demand
for Fish
Fisher
Profit
Investment
B
-
DELAY
Costs
+
Operating
Costs
Revenue
+
+
R
+
Profitable
Growth
Price of
Fish
Fleet
+
Total Catch
+
Fish Stocks
+
Net Fish
Fertility
Ocean Carrying
Capacity for Fish
B
+
Catch per
Ship
No Fish,
No Catch
R
DELAY +
Regeneration
+
B
Fish
Density
+
+
DELAY
Population
Growth
+
R
Economic
Growth
+
R
Population
+
+
+
Wealth
+
+
Demand
for Fish
Technical
Innovation
Fisher
Profit
-
Costs
+
+
Profitable
Growth
Price of
Fish
Fleet
+
Total Catch
Technology
Race
+
Fish Stocks
+
Net Fish
Fertility
Ocean Carrying
Capacity for Fish
B
+
B
+
Catch per
Ship
No Fish,
No Catch
R
DELAY +
Regeneration
+
Fleet
Productivity
R
+
R
+
+
DELAY
Operating
Costs
Revenue
DELAY
Investment
B
Fish
Density
+
Collective Action
Elinor Ostrom: Winner, 2009 Nobel Memorial Prize
in Economic Sciences
“Common Pool Resources”
•
•
•
•
Limited Stock
Limited Rate of Renewal
Easily Appropriable (Low barriers to access)
Rival (What you use, I can’t use)
EXAMPLES:
•
•
•
•
•
•
Pastures
Fish
Forests
Irrigation
Clean Air & Water
Climate
•
•
•
•
•
Roads and Highways
Parking Spaces
Views
Server Resources
Trust among consumers
Rule-Base for Alanya
•
•
•
•
List of eligible fishers each September
List all usable fishing spots
Assign spots by lottery – one per fisher
September – January: Each day each fisher
moves east to next spot
• January – May: Each day each fisher
moves west to next spot
Design Principles for “Governing
the Commons”
• Individuals know the boundaries and limits
– Of the resource (“Common Pool Resource”)
– Of the community of users (“Appropriators”)
•
•
•
•
•
•
Rules are locally made and adapted to context
Decisions are made together
Active measurement and monitoring
Effective, graduated sanctions
Accessible mechanisms for conflict resolution
Latitude from higher authorities to act locally
Teaching Resources
• MIT Sloan Learning Edge
• https://mitsloan.mit.edu/LearningEdge
1. Renewable resources
can be used no faster than the rate at which they regenerate.
Regeneration
Resource
Available
Consumption
2. Pollution and wastes
can be emitted no faster than natural systems can absorb
them, recycle them, or render them harmless.
Waste
Generation
Pollution,
Waste
Recycling,
Decay
3. Nonrenewable resources
can be used no faster than renewable substitutes can be
introduced.
Resource
Available
Source: Herman Daly
Consumption
1. Renewable resources
Regeneration
Renewable
Resource
Harvest
2. Pollution and wastes
can be emitted no faster than natural systems can
absorb them, recycle them, or render them harmless.
Recycling,
Decay
Pollution,
Wastes
Waste
Generation
3. Nonrenewable
resources
Nonrenewable
Resource
can be used no faster
than renewable substitutes can
be introduced.
Nonrenewable
Resource
Extraction
Source: Herman Daly (e.g., H. Daly (1990) Ecological Economics 2, 1).
Human Activity
Ecosystem Services
can be used no faster than they regenerate.
Planetary
Boundaries
Rockström, J. et al. (2009) A Safe Operating Space for Humanity. Nature 461 (24 Sept.) 472-475.
Beyond the Limits
Approaching
the Limits
Mental Models about the Environment
The economy is the only
consideration;
There are no limits to growth
Environmental inputs not needed
for production:
Q = f(K, L, T)
Economy
Economic output = function of
capital, labor, and technology,
With no need for energy, water,
clean air, stable climate, or any
other ecosystem services.
Mental Models about the Environment
Triple Bottom Line:
Environment
Society
Economy
Economic outcomes (firm
profit, national income)
only one consideration;
important to consider
impact of firm and
national activities on
social and environmental
concerns.
But: frames each of
these domains as
separate, in opposition.
Mental Models about the Environment
In actuality:
Only one world, no
boundaries (political,
ideological, other) visible
from space. Boundaries
are “invisible fences in
the mind” (Sterman 2002)
Environment
Society
Economy
Sterman, J. D. (2002). All Models are Wrong: Reflections on Becoming a Systems
Scientist. System Dynamics Review 18(4): 501-531.
Mental Models about the Environment
The economy, society and
environment are not in
opposition.
Economic activity is embedded
in a social and political context,
which in turn is embedded in
the ecosystems of the world
upon which all life depends.
Destroy the environment and
you destroy the economy.
Environment
Society
Economy
Another example
Home Energy Costs Drive
Housing Affordability 2003 to 2008
• Average Household Energy Costs 20022003: 3.5% of median income
• Average Household Energy Costs 20072008: 8.5% of median income
• Median Household Income: $60,000
• Increase in Annual Energy Costs: $3,000
Transportation Energy Cost
•
•
•
•
•
•
Household miles driven/yr: 40,000
Miles/gallon: 20
Gallons consumed: 2,000
2002-2003 price: $1.50/gallon
2006-2008 price: $3.50
Increase in costs per household: $4,000/yr
The Result: Economic Meltdown
• American families saw a 15% drop in
after-tax income
• This was the only substantial change to the
economy
• $583 per month drop in disposable income
• Any homeowner on a tight budget was
pushed over the edge
The Result:
Housing crisis, then economic meltdown
due to housing-based financial products
Quarterly U.S. All Grades Conventional
Retail Gasoline Prices
(Cents
per Gallon)
Mortgage Payments Past
Due
60-89 Days: United
States (SA, %)
2.00
1.50
1.00
0.50
1
19
Q 95
1
19
Q 96
1
19
Q 97
1
1
Q 998
1
19
Q 99
1
20
Q 00
1
20
Q 01
1
20
Q 02
1
20
Q 03
1
20
Q 04
1
20
Q 05
1
2
Q 006
1
20
Q 07
1
20
Q 08
1
20
Q 09
1
20
10
0.00
Q
Q
1
1
Q 995
1
1
Q 996
1
1
Q 997
1
1
Q 998
1
1
Q 999
1
2
Q 000
1
2
Q 001
1
20
Q 02
1
2
Q 003
1
2
Q 004
1
2
Q 005
1
2
Q 006
1
2
Q 007
1
2
Q 008
1
2
Q 009
1
20
10
500
400
300
200
100
0
Causes of Overshoot
• Market failures
Externalities
Common Pool Resource (Tragedy of the Commons)
• Long Delays in
Changes in Resource level
Measuring resource level
Understanding causes
Recommending action
Implementing policies
Policy impact
(Physical/Biological delay)
(Perception delay)
(Research delay)
(Political/social delay)
(Political/social delay)
(Physical/Biological delay)
Note: Delays are partly physical and partly political and social. Those with
vested interests in the status quo often misrepresent the situation to delay
action (e.g. tobacco, lead in gasoline, toxics in food, climate change).
Causes of Collapse
Collapse of the carrying capacity can occur when
underlying resources are
Nonrenewable or
Renewable but Consumable or Degradable
Collapse is worse with
Slow or limited regeneration potential
Tipping points created by positive feedbacks
Irreversibilities due to e.g.
Trophic cascade
Evolutionary impacts
Common pool resources (Tragedy of the Commons)
World Population Growth
November 2010:
6.88 Billion
Net Increase today: ≈ 77 million/year
Gross World Product, 1950-2008
Doubling Time ≈ 20 years
At that rate, in 100 years
GWP will be 32 times larger
http://databank.worldbank.org
Ave Growth Rate ≈ 3.5%/year
In 2050, 9 Billion people would be driving
7.8 billion passenger vehicles,
consuming 382 Million barrels of oil per day
(> 5 times total world production today),
emitting 60 Billion tons of CO2 per year
(almost double total world emissions today),
and taking up 143,000 sq. kilometers
(an area the size of Bangladesh)
just in parking spaces.
* 2008 data
Photo: J. Sterman
If everyone lived like Americans do today*
Possible Futures
Human
Activity
Fluctuation
around
equilibrium
Overshoot and decline
S-shaped Growth:
Smooth, gradual transition
to equilibrium
Time
How will growth end?
Growth in human activity cannot continue
indefinitely.
How will we make the transition?
Voluntarily or involuntarily?
Sustainably or unsustainably?
What population?
What standard of living?
What quality of life?
What degree of equity?
What role for nature, other species?
How robust to surprises?
Growth Arises from Positive Feedback
Adding the Carrying Capacity of the Environment:
the Naïve Malthusian
Carrying Capacity is Dynamic
Carrying Capacity:
Land
Soil Fertility
Material Resources
Energy Resources
Clean Water
Clean Air
Waste Absorption Capacity
Favorable Climate
Biodiversity
Etc.
We Alter the Carrying Capacity
Technological Innovation
The Impact of Delays
Delays due to population age structure;
slow adjustment of norms for family size
& income aspirations; slow change in
infrastructure & settlement patterns, etc.
The Impact of Delays
Delay in creating and testing technologies: Building research resources,
knowledge base; developing ideas, testing and evaluation,
commercialization & scale up, field testing, learning-by-doing, side
effect evaluation & defect correction.
Delays in perceiving environmental problems, building
scientific consensus, political will, passing legislation;
Delays in reaction of markets due to corporate
opposition, inertia; time needed to reallocate resources
and build research infrastructure. Delays lengthened by
opposition of entrenched corporate & political interests
(e.g,. CAFE standards, CFCs, climate change).
The Impact of Delays
Diffusion and deployment delays caused by long lifetimes of
existing structures, infrastructure, plant and equipment
Increased by organizational inertia, lock in to existing infrastructure,
complementary assets, income inequality, intellectual property laws,
local resistance to globalization.
Delays due to physical processes in environment
Examples: Ozone Depletion, Chlorinated
Hydrocarbons accumulating up food chain, Global
Warming.
Technological Side Effects
Technology is not always helpful or benign.
Technologies designed to solve one problem
often create others. Examples: DDT, Nuclear
Power, Dams, automobiles, many others.
The Precautionary Principle can reduce
the risk of Harmful Side Effects from new technologies.
But the PP entails long delays in the evaluation of new technologies and
slow, gradual diffusion, weakening the Technological Fix feedback.
Shortening the delays in the Technological Fix feedback to avoid limits to
growth increases odds of harmful side effects.
Self-reinforcing Collapse of Carrying Capacity?
Loss of carrying capacity can compromise
the ability of the environment to
regenerate, leading to a vicious cycle
that further erodes the carrying capacity.
Examples: Overfishing, Albedo feedback and
warming, desertification, ecosystem collapse
Different Models, Different Futures
Where is the leverage to create a sustainable world?
Human Activity
B2
Net
Births
Net Increase in
Human Activity
+
+
Net
Investment
Population
+
DELAY
Productive
Capacity
DELAY
Resource Prices,
Social Concern,
Gov't Policy
-
Population and
Economic Growth
-
+
B1
Involuntary Limits
to Growth
B5
Voluntary Limits
to Growth
Voluntary Limits
Technology
B4
DELAY
Innovation
+
R1
Net Fractional
Growth Rate
Resource
Consumption
-
DELAY
+
Technological
"Side Effects"
R3
Technological
Nightmare
DELAY
-
+
+
Consumption and
Degradation
Global Carrying
Capacity
Adequacy of
Resources
Regeneration and
Restoration
+
DELAY
Technological
Solution
B3
Regeneration
R2
Environmental
Tipping Points
-
+
DELAY
Regeneration
Capacity
+
V&
V
PC
&L
STI
I&S
Socio-technical innovation
I&R
Scaled Solutions to
Sustainability Challenges
Strategies for Sustainable Business
From: Porter & Kramer, 2006. “Strategy and Society.” Harvard Business Review.
From: Porter & Kramer, 2006. “Strategy and Society.” Harvard Business Review.
From: Porter & Kramer, 2006. “Strategy and Society.” Harvard Business Review.