Creating a Sustainable Society: Dynamics of Renewable

Resources

Jason JayLecturer in Sustainability

MIT Sloan School of Managementjjay@mit.edu

web.mit.edu/jjay/www

Slides care of John Sterman

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

“No technical solution can rescue us.…”

“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…”

“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 IcebergA Metaphor for Systems Thinking

Patterns of Behavior

Systemic Structure

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Events

Event level: the Headlines

Loopholes foundIn fishing rules

Fishing bannedat Georges BankLocal fishermen fear overcrowding

Lobstermen Snag record38m pounds

Codfish depleted off MaineRestrictions couldHurt local fishermen

N.E. lawmakers seek boat buyback ideas

Hearing casts fishery as sinking ship

Canada’s GunboatDiplomacyChrétien to protectAtlantic fish stocks

Limits may followas cod diminishes in Gulf of Maine

Feds approve boat buyback programHope to thin fishing fleet with $2m in incentives

Typical Game Behavior

Fish

Catch

Ships

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Typical Game Behavior - Fleet

Typical Game Behavior - Catch

Typical Game Behavior - Fish Stocks

Pattern #1: Overshoot and Collapse

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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 CodMassachusetts 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 Biomass in 1852

Estimated Carrying Capacity (Myers et al. 2001)

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Total Cod Biomass

Total Cod Biomass Age 5+

Estimated Cod Stocks, Scotian Shelf(000 Metric Tons)

Rosenberg et al., Frontiers in Ecology, 2005

Overshoot and Collapse

Why the pervasive pattern of overshoot and collapse of fisheries?

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Where are the leverage points for creating a sustainable fishery?

Where are they not?

The IcebergA Metaphor for Systems Thinking

Patterns of Behavior

Systemic Structure

Mo

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e

Events

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

Individuals know the boundaries and limitsOf the resource (“Common Pool Resource”)Of the community of users (“Appropriators”)Rules are locally made and adapted to contextDecisions are made togetherActive measurement and monitoringEffective, graduated sanctionsAccessible mechanisms for conflict resolutionLatitude from higher authorities to act locally

Design Principles for “Governing the Commons”

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.

2. Pollution and wastes can be emitted no faster than natural systems can absorb them, recycle them, or render them harmless.

3. Nonrenewable resources can be used no faster than renewable substitutes can be introduced.

Source: Herman Daly

1. Renewable resources can be used no faster than they regenerate.

2. Pollution and wastes can be emitted no faster than natural systems can absorb them, recycle them, or render them harmless.

3. Nonrenewable resources can be used no faster than renewable substitutes can be introduced.

Source: Herman Daly (e.g., H. Daly (1990) Ecological Economics 2, 1).

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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

Economy

The economy is the only consideration;There are no limits to growthEnvironmental inputs not needed for production:

Q = f(K, L, T)

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

Environment Society

Economy

Triple Bottom Line:

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

Environment

Society

Economy

In actuality:

Only one world, no boundaries (political, ideological, other) visible from space. Boundaries are “invisible fences in the mind” (Sterman 2002)

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

Environment

Society

Economy

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.

Another example

Home Energy Costs Drive Housing Affordability 2003 to 2008

• Average Household Energy Costs 2002-2003: 3.5% of median income

• Average Household Energy Costs 2007-2008: 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

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Causes of Overshoot

• Market failures Externalities Common Pool Resource (Tragedy of the Commons)

• Long Delays in Changes in Resource level (Physical/Biological

delay)Measuring resource level (Perception delay)Understanding causes (Research delay)Recommending action (Political/social delay)Implementing policies (Political/social delay)Policy impact (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 cascadeEvolutionary 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

Ave Growth Rate ≈ 3.5%/year

Doubling Time ≈ 20 years

At that rate, in 100 years GWP will be 32 times larger

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If everyone lived like Americans do today*

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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

Possible Futures

Time

HumanActivity

S-shaped Growth:Smooth, gradual transition to equilibrium

Fluctuation around

equilibrium

Overshoot and decline

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 DynamicCarrying Capacity:

LandSoil FertilityMaterial ResourcesEnergy ResourcesClean WaterClean AirWaste Absorption CapacityFavorable ClimateBiodiversityEtc.

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

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).

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.

The Impact of Delays

Delays due to physical processes in environmentExamples: Ozone Depletion, Chlorinated Hydrocarbons accumulating up food chain, Global Warming.

Diffusion and deployment delays caused by long lifetimes of existing structures, infrastructure, plant and equipmentIncreased by organizational inertia, lock in to existing infrastructure, complementary assets, income inequality, intellectual property laws, local resistance to globalization.

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.

Technology is not always helpful or benign. Technologies designed to solve one problem often create others. Examples: DDT, Nuclear Power, Dams, automobiles, many others.

Technological Side Effects

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

Self-reinforcing Collapse of Carrying Capacity?

Different Models, Different Futures

Where is the leverage to create a sustainable world?

Socio-technical innovation

V&V

I&S

I&RSTI

PC&L

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.