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Chapter 15: System Dynamics

Prepared by Prof. Michael J. Radzicki

Sustainable Development from the System Dynamics Point of View

A well-known concept in development and environmental economics is "sustainable development." This concept can be represented in a precise manner with system dynamics.

In terms of a stock and flow structure, sustainability occurs when the inflows to a stock exactly match the outflows from the stock. In Figure 1 for example, the stock of people (population) will remain stable if the sum of the two inflows, births and inmigration, is exactly balanced by the sum of the two outflows, deaths and outmigration. Similarly, the stock of trees will remain constant (and sustainable) as long as the harvest rate does not exceed the planting rate.

Note that the idea of sustainability does not necessarily imply a diminished use of a nation's resources. What it does imply is that the rate of resource use cannot exceed that rate of resource replenishment. In other words, if resource replenishment is high, resource use can be high. The higher the planting rate, the higher the sustainable rate of harvesting that is possible.

Steps an IQP Team would Follow to Produce a System Dynamics Study

In order to produce a system dynamics study an IQP team would have to pursue the following steps:

1. Identify the reference modes associated with the problem to be studied.

   This means obtaining measured numerical time series data when available, and constructing time series graphs based on written information and detailed interviews (mental information) when numerical information is not available. Figure 15.4 is the characterization of information types put forth by Jay W. Forrester, the inventor of system dynamics. The point of the figure is that, by far, the most prevalent and important form of information is mental information. The amount and importance of available written and numerical information is less by several factors. Obtaining mental information by being "on-site" and talking to people intimately acquainted with the problem under study is thus the most important source of input into a system dynamics model.

2. Identify the relevant stocks and flows.
3. Identify the relevant feedback loops.
4. Create a first cut of the model. See if its variables replicate the reference modes.
5. Iterate through steps 1-4. Modeling is an iterative process!

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Last modified: November 07, 2006 12:44:56