Ecological Modelling 112 (1998) 227 247

A simulation model to illustrate feedbacks among resource consumption, production, and factors of production in ecological-economic systems
John C. Woodwell *
Uni6ersity of Maryland Institute for Ecological Economics, Room 2111 Agricultural and Life Sciences Surge Building c 296, College Park, MD 20742, USA

Abstract A system dynamics production model illustrates feedbacks between economic growth and resource depletion. Man-made capital, renewable natural capital, nonrenewable natural capital, and human capital are factors of production in a Cobb Douglas production function. Technology in production sets the overall level of efciency in production. Feedbacks between production and factors of production, and biological and physical limits on the availability of natural resources, place limits on the scale of consumption of those resources. Output rises smoothly or dives toward zero depending on resource consumption strategies and the specication of the technology term in the race against a growing, resource-consuming population. Adjusting parameters within the model and changing the specication of some variables illustrates the isolated effect of resource depletion, technological development, or other factors, on per-capita production. These experiments with the model illustrate competing world views expressed in models of production and resource use, notably in Meadows et al.s (1972 The Limits to Growth, Universe Books,NY, pp. 204; 1992 Beyond the Limits, Chelsea Green, Vermont, pp. 300) world model and the models of its critics. 1998 Elsevier Science B.V. All rights reserved. Keywords: Economic; STELLA; World model

1. Introduction At the crux of the debate among ecologists and economists about the prospects for humanity is the question of what constitutes a sustainable use
* Tel.: + 1 301 4051782; fax: + 1 301 3144139; e-mail: woodwell@cbl.umces.edu

of resources. Many economists have been largely unconcerned about the big picture of resource depletion, observing that traditional measures of economic progress, notably the GNP, have been on the rise for decades or centuries, at least in the more developed regions of the world. They have argued that these traditional indicators of economic growth have risen during a period of pro-

0304-3800/98/$ - see front matter 1998 Elsevier Science B.V. All rights reserved. PII S0304-3800(98)00080-5

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gressive consumption of our endowment of natural resources, that technology has facilitated this process, and the substitution of one for the other is normal in a growing economy and not a cause for concern. In this school of thought, advances in technology have indeed played a large role in the rise in material standard of living, and have allowed ever more personal consumption to be wrung from a unit of natural resource. Part of the argument is that if the pace of technological development is sufciently high, technological development can increasingly substitute for resources in production at a rate that will overcome the drag of increasing resource depletion, and the traditional measures of economic progress will continue to rise (Beckerman, 1972, 1992; Nordhaus, 1992). Many biologists and some economists (Ehrlich and Ehrlich, 1981, 1990; Ehrlich, 1989; Goodland, 1992; Daly, 1994) place weight on the importance of natural resources and living systems. In this school of thought, the progressive depletion of nonrenewable resources, and the nonsustainable use of renewable resources, constitute a set of major problems related to economic growth. Extinction of species and growing rates of extinction, continuing loss of forests, rapid loss of topsoil, depletion of sheries, and global warming, among other widespread and growing ecological crises, indicate a continuing erosion of the planets lifesupport systems. This erosion is driven in part by increases in per-capita consumption, and partly by increases in population. In this view, the historical increase in the material standard of living comes at the expense of our inheritance of natural capital. Natural capital is being spent and consumed as income in a onetime liquidation. This liquidation of capital registers as an increase in the traditionally measured material standard of living and is not sustainable. Natural capital is a complement to man-made capital and technology.

illustrate several aspects of the competing economic and ecological-economic world views, including a concept of sustainable scale. Formulation experiments indicate the importance of the technology term in economic growth, and the sensitivity of the output to the specication of the term. Formulation experiments also illustrate how a natural capital-based limitation on the development of man-made capital affects output, how increasing scarcity of resources places a drag on output, and how that drag may result in overshoot and collapse, even when common assumptions of technological development and factor substitutability are employed.

3. Background Economists have long recognized technological development as an important force in economic growth. Barnett and Morse, (1963) said it boldly in 1963:

Advances in fundamental science have made it possible to take advantage of the uniformity of energymatter, a uniformity that makes it feasible without preassignable limit, to escape the quantitative constraints imposed by the character of the earths crust... Nature imposes particular scarcities, not an inescapable general scarcity. Man is therefore able, and free, to choose among an indenitely large number of alternatives. There is no reason to believe that these alternatives will eventually reduce to one that entails increasing cost that it must sometime prove impossible to escape diminishing quantitative returns. Science, by making the resource base more homogenous, erases the restrictions once thought to reside in the lack of homogeneity. In a neo-Ricardian world, it seems, the particular resources with which one starts increasingly become a matter of indifference. This full view is not uniformly accepted among mainstream economists, but the weight that the authors place on substitutability among the fac-

2. Objectives The objective is to illustrate an ecological-economic system at a high level of aggregation, and

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tors of production is indicative of a broader condence among many economists. Technological growth and accumulation of man-made capital explain the growth in output as natural capital erodes and the inputs of natural resources inexorably fall. Variations on these views, and the employment of traditional economic indicators, are so deeply rooted in mainstream economics that for many economists there is little or no distinction between the concepts of economic growth and sustainable development. The concept of sustainable economic development counts consumption of natural capital as depreciation. It recognizes limits on the capacity of the environment to supply natural resources at the front end of the economy, and receive wastes from the back end. Whereas a process of economic growth is open-ended in the size of the demands it may place on the environment, a process of economic development keeps these demands clearly within biological and physical limits and allows the economy to develop within these limits. A simplied view of the economic process puts the economy in empty space, operating without connection to the outside world. Money circulates from households (consumers) to rms (producers) and back around to consumers. Goods, capital, and labor ow in the opposite direction. There are no connections to the natural world. Increasing numbers of economists have improved on this simplied conception by affording greater importance to this ow of resources from the natural world into the economy, and the ow of wastes from the economy into the environment. Raw materials are factors of production, and wastes returned to the environment are externalities. A further conceptual step (Daly, 1994) places the growing economy within a larger, nonexpanding environment on which it is rmly dependent. Daly distinguishes between natural capital, endowed in and by nature, which can yield a ow of natural resources or services; and man-made capital, the equipment used to tap this ow of natural resources. Whereas mainstream economists have commonly assumed a high level of substitutability among the factors of production, in this new view, the relationship between natural and man-made

capital is more complementary. Since man-made capital cannot always substitute for natural capital as natural capital is depleted, this complementarity imposes some limits on the development of man-made capital. Similarly, the throughput of natural resourcesconsumption of resources at one end of the economy and disposal as waste at the otherfaces biological and physical limits. This complementarity between natural and man-made capital bears heavily on the concept of sustainable development. To the extent that natural and man-made capital can be substituted for one another, then it may be possible to consume one while building up the other, and still maintain or increase productive capacity. Daly calls this case weak sustainability. But if natural and manmade capital are more complementary to one another, then each must be maintained to preserve productive capacity. Preserving productive capacity by preserving each of the two forms of capital is called strong sustainability. In the extreme case of Barnett and Morses conception of the uniformity of energymatter, in which there is a very high degree of substitutability among the factors of production, it is hardly necessary to maintain natural capital intact. Perpetual substitution of man-made capital for natural capital, or of one untapped resource for another depleted one, always allows us to escape a general scarcity of resources. At the other end of the spectrum, by Dalys conception of strong sustainability, it is necessary to maintain natural capital intact as a complement to manmade capital. The strong sustainability criteria thus implies a clear concept of sustainable scale of throughput. The sustainable scale is not just for individual resources, but also for resources in the aggregate. The two denitions of sustainability leave open the question of how technological development should be counted. As a permissive accounting approach, technological development can be bundled in with man-made capital. Counted this way, technological development over time is counted as an increase in man-made capital. To maintain a sustainable income it is necessary to maintain capital, not increase it, so bundling technological development in with man-made capital opens the

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possibility of liquidating some capital as income. This approach is consistent with the denition of weak sustainability. Counting technological development separately from both man-made and natural capital is a more conservative course, in that future increases in productivity due to technological development will appear as increases in income, not as increases in capital. This approach is consistent with the denition of strong sustainability. In the short run and at the level of a single production process, the degree of substitutability between natural and man-made capital is generally low. For a given production process, technological development over time may tend to reduce the amount of natural capital necessary for a given output. Plastic replaced some steel parts in mechanical adding machines, and the steel parts were made smaller and lighter over time. At the level of this individual production process, the substitution described here is modest. However, hand-held calculators which contain hardly any steel subsequently replaced adding machines. If we bundle the production of mechanical adding machines and hand-held calculators and call the product computing power, we see that there has been a much greater substitution of plastic for steel than in adding machines alone, and a greater reduction of natural capital inputs over time. Observed degrees of substitution away from natural capital inputs increase over time with technological development, and also increase as production processes are bundled, or aggregated. Increasing the level of aggregation increases the possibilities for substitution. A principle widely accepted among scientists is that it is risky to extrapolate beyond the range of the data. Scientists sometimes do it and sometimes nd it helpful, but it is risky in that a relationship that is linear at one scale is not necessarily linear at another. For example, substances are commonly tested for their carcinogeneity at concentrations far above that at which humans would be exposed, and the results are extrapolated down to environmental concentrations to estimate a risk to people. Similar extrapolation with an endocrine-disrupting synthetic hormone could produce a major mistake. At ex-

tremely low concentrations, the response is not always linearly related to dose, and at some concentrations it may be inversely related or follow an inverted U response with respect to dose (Colborn et al., 1996). Writers on several sides of the debate routinely extrapolate beyond the range of the data in their anticipation of future long-term trends. Models by several authors use historic trends to anticipate future developments. The planet has never before seen a human population as large as todays, has never felt the impact of people on biological and other resources more intensively than today (Vitousek et al., 1986), and has never seen such a tremendous accumulation of technology. There is no experience with a global economy and a global impact on the environment as large as todays. These efforts to anticipate future trends are frustrated by this lack of experience. Extrapolation of historic trends means, for many variables, running beyond the range of the data. The question of what direction to run is prime turf for endless debate (Boulding, 1966; Beckerman, 1972; Meadows et al., 1972; Cole et al., 1973; Ehrlich and Ehrlich, 1981; Beckerman, 1992; Nordhaus, 1992). The principles and more formal models developed by these authors are sometimes used to extrapolate for decades into the future, not just one variable, but sometimes many variables. The relative importance of these variables, the validity of aggregating them, and more broadly the validity of the summary statistics used to describe them, goes to the core of our basic understanding of how the world works. Kuhn, (1969) had much to say about these basic understandings, the factors that shape them, and how they give rise to a paradigm that shapes peoples perceptions. We see these profound differences in basic understanding in these authors competing models. In his critique of the Meadows et al. (1992) World II model, Nordhaus (1992) identies four lethal conditions in the model, centered around complementarity among factors of production, that cause the economy to eventually run down in most model runs. As an essential natural resource is depleted, the economy does not nd substitutes and declines. By Nordhauss formulation, other resources and technological development take up

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the slack. Nordhaus rewrites the Meadows et al. model, adding substitutability among the factors of production, and shows that with a sufcient rate of technological development, output will continue to rise. The ndings are not a surprise in either formulation. Exponential growth within a conned space will ultimately come to an abrupt halt, and exponential growth unconned, will not. In Meadows et al.s formulation, the principles and historical examples of resource depletion, overshoot, and collapse weigh heavily in the formulation of the model, while Nordhaus points to historical trends of capital formation, technological development, the feedback of market prices, and historical examples of rising traditional indicators of wealth. The clash of paradigms is humorous at times. Meadows et al., (1992) book is about overshoot and collapse of economic and ecological systems. The title of the rst chapter is Overshoot, and the rest of the book is a series of descriptions and illustrations, with mathematical models and historical examples, of the process of exponential growth, overshoot, and collapse. Evidently Nordhaus, (1992) just doesnt see things the same way as Meadows et al. Relegated to a footnote in his lengthy critique of their book is his comment: In general, I have ignored the fascination shown in Limits II for overshooting.

4. General structure of the model The model employs a Cobb Douglas production function of the form Y= H*L aK bR cM dN eT f, where Y is true output, corrected for all externalities and disamenities, H is the level of technology in production, L is human capital inputs, K is the services of manmade capital, R is the ow of renewable resource inputs, M is the ow of inputs from nonconsumptive use of renewable resources, N is the ow of nonrenewable resource inputs except land, and T is land inputs. a, b, c, d, e and f are constant and sum to one, indicating constant returns to scale. When it is unconstrained, the Cobb Douglas function allows smooth substitution with diminishing returns among the factors of production.

There are seven sectors in the model. The factors of production are modelled in four sectors and there are separate sectors for technology in production, and population. Production can be consumed as income or invested in human capital development, man-made capital development, or technological development. All natural resources are depleted as they are consumed in production. There are feedbacks to depletion that tend to increase rates of depletion as production grows, and reduce rates of depletion as scarcity increases. Except in the CobbDouglas production function or as noted otherwise, diminishing returns are modelled with a MichaelisMenton function of the form Y= 1+ Ymax(X/(S +X)), where Y is an index between 1 and 1+ Ymax, Ymax is a constant, X is the level of investment, and S is the half-saturation constant, the level of X which yields the output (1+Ymax)/2. The Michaelis Menton function was chosen for diminishing returns because it is smooth, it is easily modied with two variables, and it has an upper bound. Rising per-capita consumption causes the death rate to fall. At subsistence levels of consumption, the birth rate rises with increases in consumption, then falls as consumption rises further. Running in reverse at very low levels of consumption, a fall in per-capita production net of investment causes a fall in population as the birth rate falls and the death rate rises. Production tends to fall as the labor pool shrinks, and the resulting falling levels of investment in factors of production can cause several factors to run down simultaneously and lead to a general collapse. Various combinations of rapid population growth, excessive depletion of natural capital, and stagnation in technological development can cause overshoot and collapse. The model is written in Stella II with a time step of 1 year, and a model run spans 200 years. The model is easy to use and modify to t various sets of assumptions. The model was constructed, and is displayed, in a diagrammatic form in its seven sectors (Fig. 1). This map shows the general structure of the model and the connections among variables, but not the specic relationships. Several of the variables are included on a more user-friendly interface and can be modied easily between, or during, model runs. Output of the

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Fig. 1. The full model in seven sectors.

model is displayed graphically. The full set of equations is shown in Appendix A. The model illustrates the connections between the economy and the environment, and can be used to show the isolated effects of individual variables. Because of the ease with which it can be

modied and run, the model is especially useful for testing assumptions about the connections. It can also be used to show how models of this type are sensitive to changes in parameters and specication, especially in the case of the technology term. This model has not been calibrated to the

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Fig. 1. (continued)

data of a single country or region and is not a tool to predict future trends.

5. Features of the model

5.1. Production sector

Production, or economic output, is dened here inclusively to count all economic benets, net of all disamenities. Production employs a Cobb

Douglas production function. The exponents in the function sum to one, indicating uniform returns to scale. A doubling of all factors of production will thus yield a doubling of output. Because of the fractional exponent for each factor of production, an increase in any one factor will yield smooth diminishing returns. For a given level of production, subject to a natural capital limitation on man-made capital development, a decline in any one factor of production can be made up by a disproportionate increase in another.

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Fig. 1. (continued)

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Technology in production is the level of efciency in production and is multiplied by the CobbDouglas production function to yield production. Investments in technology, man-made capital, and human capital are subtracted from production to yield production net of investment. The sector also includes a production lag variable, used in other sectors, to avoid a circular connection in the model.

5.5. Renewable natural capital sector

Growth in renewable resources follows a logistic curve dN/dt= rN(1 N/K), where r= growth rate, N= population, and K =carrying capacity. Growth is subject to a stochastic external inuence that may aid or hinder growth in each time step. The logistic curve grows slowly at low populations, more rapidly at intermediate populations, and then slows as it approaches the carrying capacity, which gives it its familiar sigmoid shape. The maximum growth rate (the maximum sustainable yield for consumptive uses) is at half the carrying capacity. The consumption of renewable resources enters the production function and is governed by four factors. A management rule is set to limit the harvest to a level that will reduce the stock to no lower than half the carrying capacity. The rule is a graphical function that reduces the maximum harvest as the stock of natural capital is depleted. The management rule sets an upper limit on the harvest such that in the long run the harvest does not exceed the maximum sustainable yield. As production grows, a renewable resource depletion factor scales the renewable resource consumption upwards toward the maximum allowed by the renewable resource consumption rule. The depletion factor moves upward from 0 to 1 with diminishing returns as production grows. A random inuence may push the harvest in any time step above or below the limit set by the renewable resource consumption rule. A harvest multiplier can scale the renewable resource consumption rule upwards. This scaling can push the harvest above a sustainable level to illustrate the effects of a nonsustainable harvest. Nonconsumptive use of renewable resources is also a factor of production. Nonconsumptive uses are those aesthetic or other uses that do not deplete the stock of natural capital. Nonconsumptive use is modelled with two MichaelisMenton functions, each indicating smooth diminishing returns. The rst function grows with population such that an increase in population tends to increase total nonconsumptive uses of renewable resources. The second function grows with the stock of natural capital. As renewable natural

5.2. Population sector

Births follow an exponential growth function, and deaths follow an exponential decay function. The birth rate falls with rising levels of per-capita production net of investment, except at very low levels, where the birth rate falls to zero. The death rate falls with rising levels of per-capita production net of investment. These birth and death rate multipliers are graphical functions that can be easily modied. They can also be removed from the model by switching off the population feedbacks variable.

5.3. Human capital sector

Labor is a fraction of the total population. Investments in education or other skills increase the productivity of human capital. These investments yield diminishing returns. The benets of investment in human capital are realized immediately through increased productivity of the labor pool. Reductions in the level of investment cause immediate reductions in productivity.

5.4. Man-made capital sector

Man-made capital growth is a linear function of investment. Depreciation is an exponential decay function. Man-made capital growth is set such that it is limited by the availability of natural capital. With this formulation, the sum of renewable resource consumption, nonrenewable resource consumption, and land, set an upper limit on the growth of man-made capital. This constraint can be removed.

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capital is depleted, the benets of nonconsumptive use fall.

5.6. Nonrenewable natural capital sector

Nonrenewable natural capital is modelled in two compartments; land, and all other nonrenewables. In each compartment the stock is xed initially, and is depleted over time. The upper limit on consumption and depletion is set according to an exponential decay function for each compartment. As production grows, the economy takes a progressively larger bite out of nonrenewable natural capital. Production is used in a MichaelisMenton function that scales nonrenewable resource consumption and land depletion upwards towards the exponential decay function. An inow into the nonrenewable natural capital stock can be switched on such that consumption of nonrenewable resources does not deplete nonrenewable natural capital. This state of affairs is unrealistic of course, but can be used as a baseline to show the effect of nonrenewable natural capital depletion on the output of the model.

5.7. Technology in production sector

Technology in production is a scaling factor that sets the overall level of production efciency. In the base case, growth of technology in production is exponential and is driven by production. Investments in technology yield diminishing returns. The source of technology growth can be switched such that technology grows autonomously at the chosen growth rate. The form of growth can also be switched to linear. Under the linear growth formulation, growth in each time step is equal to growth in the rst time step.

6. Results and discussion

6.1. Base run

Eight model runs illustrate the features and behavior of the model. The output from the base

run (Fig. 2) illustrates many connections and feedbacks of the system that help to explain the output of the model in subsequent runs. All runs begin with a full endowment of natural capital, such that renewable natural capital is at the carrying capacity. In the base run, the growth of man-made capital is limited by the sum of the services of natural capital. In this concept of sustainable development, natural capital and man-made capital are fundamentally complements, not substitutes for one another (Daly, 1994). The principle is illustrated by the complementarity of sawmills and forests; of shing boats and sh; or of reneries and petroleum deposits, where the man-made capital is only of use if the natural capital is maintained intact. No increase in the size or efciency of the shing eet will raise the sustainable harvest of sh above the maximum sustainable yield. The maximum sustainable yield is limited by biological constraints (i.e. natural capital), not by equipment (i.e. man-made capital). Increasing the stock of man-made capital (the shing eet) to increase the harvest beyond the biological limit of the maximum sustainable yield consumes the natural capital (the stocks of sh), so that future harvests will fall. In Fig. 2, both renewable and nonrenewable resource consumption rise as production grows. As depletion progresses, renewable resource consumption approaches a maximum sustainable yield and levels off, and nonrenewable resource consumption tapers toward zero. Fig. 2 also shows how the natural capital limitation on manmade capital is expressed in the output. Manmade capital grows rapidly at rst, with rapid growth in resource consumption, then more slowly as depletion causes resource consumption to level off. Nonconsumptive use of renewable resources (Fig. 2) includes all aesthetic or other uses that do not consume the stock of renewable natural capital. Growth in population tends to push nonconsumptive use upwards, as more people enjoy nonconsumptive benets, but there are diminishing returns to population growth as crowding sets in. As the stock of renewable natural capital

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Fig. 2. Base run: growth of man-made capital is limited by the services of natural capital.

is depleted, nonconsumptive use peaks and then begins to fall. Technology growth is driven by production and is proportional to production. As production rises, investment and growth in technology

rises proportionally, and technology in production curves upward. Technology then feeds back into production and contributes to the upward curve of per-capita production net of investment.

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6.2. Linear growth in technology

Fig. 3 shows the results of a run where growth in technology is linear. Production grows more slowly than in the base run, so both renewable and nonrenewable resource consumption proceeds more slowly than in the base run. Man-made capital peaks and then slowly declines. The decline is due to the resource consumption constraint on man-made capital, which limits the growth of man-made capital. Because of the low rate of renewable resource consumption, the stock of natural capital remains high, so there is a large potential to realize nonconsumptive benets. In contrast to the base case, as population grows, the nonconsumptive use of renewable resources continues to rise. Per-capita production rises slowly, then levels off, limited by resource use and manmade capital.

ity criteria are met, but the more stringent strong sustainability criteria, where man-made and natural capital are each maintained intact, are not met.

6.4. Lifting the natural capital constraint on man-made capital de6elopment

The resource consumption constraint on manmade capital development assumes that manmade capital and natural capital are complements. Man-made capital and natural capital must each be maintained intact. Lifting this constraint allows the full degree of substitution afforded by the CobbDouglas production function. Fig. 5 shows an explosion of production as man-made capital is freed of the resource consumption constraint. Production feeds back into growth of technology so that technology explodes as well. The rapid growth shifts natural capital consumption toward the early part of the run, causing a steep decline in both natural capital stocks and natural resource ows toward the end of the run.

6.3. Autonomous growth in technology

As Hicks (1946) dened it, income is the maximum amount that a community can consume over some period of time and still be as well off at the end of the period as at the beginning. This denition requires that productive capacity be maintained, in other words, that capital be maintained and not consumed as income. If technology is bundled in with capital and counted as a form of capital, then it can to a degree replace other forms of capital, which might then be consumed as a one-time addition to income. Fig. 4 illustrates the substitution of technology in production for natural capital. Technology is autonomous and exponential, that is, it grows at a constant exponential rate regardless of production. The rate of growth in technology is set such that per-capita production net of investment rst rises, then levels out indenitely. Both forms of natural capital are depleted, as in the previous two runs, and growth in technology and its substitution for natural capital are just sufcient to keep per-capita consumption net of investment from falling. Income is maintained, but physical capital is depleted. Daly, (1994) weak sustainabil-

6.5. Effect of renewable natural capital depletion

Both renewable and nonrenewable natural capital can be set such that progressive use of natural capital does not deplete either of these compartments. This formulation assumes that natural capital is superabundant; innitely available for use in production. This is of course an unrealistic scenario, but by switching off resource depletion, it is possible to measure the effect of resource depletion on the output of the model. Fig. 6 shows per-capita production net of investment under each of two scenarios. In the rst, renewable natural capital is depleted as in the base run. In the second run of Fig. 6, renewable resources are assumed to be superabundant. They are used in production, but the stock is immediately replaced. The difference between the curves is the effect of renewable natural capital depletion. The greater the distance between the curves, the greater the role of resource depletion in limiting per-capita production.

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Fig. 3. Linear growth in technological development.

6.6. O6ershoot and collapse due to nonsustainable use of renewable resources

The nal run (Fig. 7) illustrates the effects of extended nonsustainable use of renewable natural capital. The renewable resource consumption rule

is pushed upwards, so natural resource consumption at a given level of stock exceeds natural capital growth. The accelerated pace of the harvest spurs rapid growth in production, which in turn takes increasingly large bites of all forms of natural capital. Rapid consumption of natural

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Fig. 4. Exponential growth in technological development such that income is constant.

resources allows rapid growth of man-made capital, and production-driven investment in technology spurs rapid growth in technology. Stocks of both renewable and nonrenewable natural capital fall rapidly, and nonconsumptive use of renewable resources rst rises slightly with population

growth, then falls rapidly as resource depletion dominates. Increasingly large bites from the natural capital stock cause a rapid decline in stock toward the end of the run. The stock of renewable natural capital is depleted rapidly, forcing renewable re-

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Fig. 5. Growth with exponential growth in technology, with no natural capital constraint on man-made capital development.

source consumption to drop precipitously as the stock is nearly exhausted. Production drops in response, and per-capita production net of investment drops rapidly. When the standard of living falls below a subsistence level, the birth rate drops

and the death rate rises, and the collapse is complete. The collapse in this run resembles the collapses of some of the world model runs (Meadows et al., 1972, 1992). In contrast to that model, the model

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Fig. 6. The effect of renewable natural capital depletion. The lower curve is a standard run, the upper curve a run where capital is superabundant; its use does not cause it to become more scarce. The distance between the curves is the effect of increasing scarcity.

described here does allow substitution among the factors of production, and does include technological development in the efciency of produc-

tion, so there are more ways to avoid declining per-capita consumption as resources are depleted. The model also differs substantially from the

Fig. 7. Overshoot and collapse due to nonsustainable use of renewable resources.

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Fig. 7. (Continued)

model developed in Nordhaus, (1992) critique of the world model. While several conditions in the world model push the model toward collapse, Nordhauss rewrite and simplication removes those conditions and is almost immune to collapse. The tremendous variation in the output of the model runs described here show how these models are sensitive to even small changes in specication. The greatest value of the model is not in prediction or forecasting, but in revealing and developing our basic understanding of the relationships between the economy and the environment. To that end, this model advances the concept of a sustainable scale of throughput of natural resources in the economy. Exceeding the scale in one variable causes others to grow and can lead to an excessive scale in an aggregate sense, and to a general collapse. The model also yields insight into the possibilities for increasingly replacing resources with improvements in technology. The outcome of the model is highly sensitive to changes in the technology term. Production grows indenitely, falls gradually, or may drop suddenly depending on the specication of the technology term.

Appendix A A.1. Human capital HKmax=1 HK half sat const=100 HK invest per worker=Invest in HK/Labor pool HK invest rate=0.04 HK skills multiplier =(Hkmax*(HK invest per worker/(HK half sat const+HK invest per worker))) HK stock=Labor pool*HK skills multiplier Invest in HK=Production lag*HK invest rate Labor frac of pop=0.5 Labor pool=Population*Labor frac of pop

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A.2. Man-made capital Manmade K(t)= Manmade K(t-dt) +(MMK growth-MMK depreciation)*dt INIT Manmade K = 100 INFLOWS: MMK growth =((1-MMK sust criterion) *MMK-growth exponential) +(MMK sust criterion*(IF(MMK growth exponential BMMK growth res limited) THEN(MMK growth exponential) ELSE(MMKgrowthreslimited))) OUTFLOWS: MMK depreciation = Manmade K*MMK depr rate MMK depr rate = 0.045 MMK growth exponential =Production*MMK invest rate MMK growth res limited =(100*(Ren res cons + Nonren res cons)) + Land MMK invest rate = 0.08 MMK sust criterion = 1 A.3. Nonrenewable NK Land(t) = Land(t-dt)+(-Land depletion)*dt INIT Land=100 OUTFLOWS: Land depletion = Land*Crude land depl rate*Nonren depl factor

NK nonren(t)=NK nonren(t-dt) +(NNK depletion switchNonren res cons)*dt INIT NK nonren=100 INFLOWS: NNK depletion switch =(1-NNK depletion)*Nonren res cons OUTFLOWS: Nonren res cons=NK nonren*Crude nonrnw depl rate*Nonren depl factor Crude land depl rate=0.001 Crude nonrnw depl rate=0.025 Depl half sat const=10000 Dmax=1 NNK depletion=1 Nonren depl factor =Dmax*(Production lag/(Depl half sat const+Production lag)) A.4. Population Population(t) =Population(t-dt) +(Births-Deaths)*dt INIT Population=100 INFLOWS: Births=(Population feedbacks*Population*Crude birth rate*Pop grwth rt multiplier) OUTFLOWS: Deaths=(Population feedbacks*Population*Crude death rate*Pop death rt multiplier)

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Crude brith rate = 0.018 Crude death rate = 0.01 Per cap prod net = Prod net of invest/Population Population feedbacks = 1 Pop death rt multiplier =GRAPH(Per cap prod net) (0.0, 5.00), (5.17, 1.00), (10.3, 0.9), (15.5, 0.85), (20.7, 0.8), (25.9, 0.75), (31.0, 0.725), (36.0, 0.7), (41.4, 0.675), (46.6, 0.65), (51.7, 0.625), (56.9, 0.625), (62.1, 0.625), (67.2, 0.625), (72.4, 0.625), (77.6, 0.625), (82.8, 0.625), (87.9, 0.625), (93.1, 0.625), (98.3, 0.625), (103, 0.625), (109, 0.625), (114, 0.625), (119, 0.625), (124, 0.625), (129, 0.625), (134, 0.625), (140, 0.625), (145, 0.625), (150, 0.625) Pop grwth rt multiplier =GRAPH(Per cap prod net)(0.00, 0.00), (5.17, 1.00), (10.3, 0.9), (15.5, 0.84), (20.7, 0.795), (25.9, 0.75), (31.0, 0.715), (36.2, 0.695), (41.4, 0.67), (46.6, 0.645), (51.7, 0.635), (56.9, 0.63), (62.1, 0.625), (67.2, 0.625), (72.4, 0.625), (77.6, 0.625), (82.8, 0.625), (87.9, 0.625), (93.1, 0.625), (98.3, 0.625), (103, 0.625), (109, 0.625), (114, 0.625), (119, 0.625), (124, 0.625), (129, 0.625), (140, 0.625), (145, 0.625), (150, 0.625)

INFLOWS: Prod=Production OUTFLOWS: Production lag=Production lagged Growth in prod =(Production DELAY(Production, 1))/(DELAY(Production, 1)) HC exponent=0.4 Land exponent=0.1 MMK exponent=0.2 Nonconsump ren exp=0.1 Nonrenew exp=0.1 Production=Tech in production*(Manmade K MMK exponent) *(HK stock HC exponent) *(Ren res cons Renewable res exp) *(Nonren res cons Nonrenew exp) *(Land Land exponent) *(Ren res noncons Nonconsump ren exp) Prod net of invest=Production-MMK

A.5. Production Production lagged(t) = Production lagged(t-dt) +(Prod-Production lag) *dt INIT Production lagged = 1800

growth-Invest in HK-Invest in tech Renewable res exp=1-MMK exponent-HC exponent-Land exponent-Nonrenew exp-Nonconsump ren exp

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A.6. Renewable natural capital NK reproducible(t) = NK reproducible(t-dt) +(Ren res growth-Ren res cons)*dtINIT NK reproducible = 100 INFLOWS: Ren res growth =(RNKdepletion*(Ext growth inuence*Ren res grwth rt*NK reproducible*((Renewable re s K-NK reproducible)/Renewable res K))) +(1-RNK depletion) *(Ren res cons) OUTFLOWS: Ren res cons = Ren res consump rule*Ext harvest inuence*Renewable depl factor*Ren res harvest multi Depl half sat const ren = 100000 Dmax ren=1 Ext-growth inuence = RANDOM(0.85, 1) Ext-harvet inuence = RANDOM(0.95, 1.05) Renewable depl factor = Dmax ren*(Production lag/(Depl half sat const ren + Production lag)) Renewable res K = 100 Ren res grwth rt = 0.05 Ren res harvest multi = 1 Ren res noncons = RNKmax*(NK reproducible/(RNK Half sat const + NK reproducible))*RNK pop max*(Population/(R

NK pop half sat const+Population)) RNKmax=1 RNK depletion=1 RNK Half sat const=50 RNK pop half sat const=100 RNK pop max=1 Ren res consump rule =GRAPH(NK reproducible) (0.00, 0.44), (10.0, 0.52), (20.0, 0.64), (30.0, 0.72), (40.0, 0.88), (50.0, 1.04), (60.0, 1.36), (70.0, 1.76), (80.0, 2.24), (90.0, 2.72), (100, 3.24) A.7. Technology in production Tech in production(t) =Tech in production(t-dt) +(Tech-growth)*dt INIT Tech in production=100 INFLOWS: Tech growth=Tech growth autonomous+Tech growth prod driven Form of tech growth=1 Invest in tech=Production*Tech invest rate*Source of tech growth Source of tech growth=1 Tech auto growth rate=0.02 Tech growth autonomous= (1-Source of tech growth) *((Tech in production*Tech auto growth rate*Form of tech growth) +(1-Formof tech growth) *INIT(Tech in production)*Tech auto growth rate))

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Tech growth factor =Tmax*(Tech Invest rate/(Tech half sat const+Tech invest rate)) Tech growth prod driven = Source of tech growth*((Form of tech growth*Production*Tech growth factor) + ((1-Form of tech growth)*INIT(Production)*Tech growth factor)) Tech growth-rate measured = Tech growth/Tech in production Tech half sat const = 0.02 Tech invest rate = 0.02 Tmax=0.001

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