Sustainable Development: Thinking Outside the Box

1. You cannot solve the problem with the same thinking that created the problemAlbert Einstein Sustainable Development: Thinking Outside the Box Dr. John Shilling Chairman Board of TrusteesMillennium InstituteMay 16, 2012

2. Foundation of Development • Both the economy and society depend on the environment to function and survive • The economy also depends on the society to progress • The economy sits on top and can only function if its foundations remains solid over the long term

3. Conventional Wisdom • GDP and GDP/capita growth are the main targets • Free Trade assures security • Achieving the MDGs results from more growth • Environmental Impact Assessments are sufficient to protect the environment

4. Conventional Assumptions • No limits to economic growth • It depends on population growth • Resources are always available • Or technology will produce alternatives • Short term targets are best considered as they will accumulate over time • Externalities, public goods, and the commons do not affect GDP so are not important

5. Questions About Them • Consider exponential growth over the longer term • Consider limited stocks of resources • Consider the effects of externalities, including climate change and volatility • Consider the importance of public goods and the commons

6. The Risk of Staying in the Box • Ignoring effects beyond one’s sector of interest • Predictions by sector specialists more often wrong than expected • Hard to reach agreement with other special interests • Don’t take account of critical limitations • These pose a risk to sustainable development • Our global footprint rose from 1 in 1975 to 1.5 now and will be more than 2 by 2050

7. How MI Got Out of the Box • Global 2000 Report in 1980 by US Gov. • International interest, but not national • MI’s founder, Jerry Barney, sought more integrated modeling tools to have a more consistent approach • Discovered System Dynamics and created the Threshold 21 model

8. Conventional Models in the Box • Accounting models • RMSM – X and IMF • Mostly exogenous assumptions to check balances in the short term • Computable Equilibrium Models • Basic ones, up to MAMS • Start with comparative statics, do little to describe transition process, take little account beyond the economy, mostly short term

9. The SD Approach in T21 • Based on real world causal relations • Includes economic, social, and environmental dimensions • Takes account of relations within and across sectors and dimensions • Generates long term scenarios to take account of lags and see what is likely to happen over time • Compares the results of different policies and assumptions going forward

10. Why Take a Systemic View?

11. We Need to be Careful

12. To Avoid Unexpected Results!

13. Factors to Take into Account • Economic and social factors • Impacts of depletion of resources – forests, fish, minerals • Impacts of waste and pollution • Food and Energy Security • Health and education factors • Public Goods and the Commons • Climate change impacts and clean air • Ecosystem protection, Water management, etc. • Resource access for poor • Positive and negative feedbacks • Assuring wellbeing of humans and bio-systems • Keeping track of all these factors over the long term to maintain the security of our life styles for our posterity

14. To Address Challenges • Understand real relations in the situations we face, within and beyond sector-specific focus • Incorporate interactions and feedback loops across different sectors into models • Take account of longer term effects and lags of different impacts coming into play • Make sure depletion of natural capital contributes to investment in human and physical capital • Examine the results of different assumptions, investments, and policies to make better decisions

15. A Systemic Approach Works • We need to deal with systemic issues • Economic activities affect society and the environment -- Pollution and GHG leading to climate change • Social activities affect the economy and environment -- Migration and deforestation • Environmental factors affect the economy and society -- Soil erosion and heat waves • A longer time frame is important • Some beneficial long-term have short term costs – Watershed management, infrastructure, agricultural transformation • Some short-term benefits reduce sustainability – deforestation, mineral exploitation • Integrating sectors provides a more comprehensive and beneficial basis for better policies and ROI

16. The Threshold 21 Approach • Composed of three main pillars • Economic -- SAM, key market balances, and production • Social -- dynamics in population, health, HIV/AIDS, education • Environmental – natural resource use, GHG emissions, land availability • Adapted to priority goals and vision for each individual country based on its own data, structure, and patterns of activity • Highlights inter-sectoral feedbacks • Tracks progress on MDGs and other indicators • Calibrated against history to provide reality checks • Generates multiple medium-to-long-term scenarios to compare • Transparent and easy to use

17. The Basic T21 Structure

18. The Key Connections in T21

19. Key T21 Characteristics • Adapted to structure and speficif issues of country being modeled • Incorporates other sector models into its framework and adds cross sectors links • While highly complex, it is also quite transparent and provides causal tracing • Building model contributes a lot of understanding about country’s structure • Remains a work in progress • Provides the basis for inter-ministerial cooperation • Taking account of these relations would help achieve better results on the Bank’s goals

20. Critical Issues T21 Addresses • Climate Change mitigation and adaptation • Energy and Food security • Natural resource management • Conflict and Risk analysis • Natural disaster management • Achieving sustainable development and MDGs • Long term analysis • Building indigenous support

21. Examples of T21 Work • Bangladesh and education • Bhutan and expenditure sharing • Mozambique and health effects of economic • Ghana and achieving MDGs quicker • USA and CAFÉ standards • China and GHG emissions and behavior change • Jamaica and natural disasters and civil risks • Assisting UNEP on the Green Economic Report and GEO-5 • Dealing with Climate Change in countries like Bangladesh, Kenya, Namibia, Indonesia,

22. MI Around the World T 21 Countries MI Partner MI Head Office M 3 Countries MEG Countries

23. Demonstrate Running T21

24. How T21 Is Applied • Build country advisory committee • Train local team • Define objectives and policies to be considered, including CC and food security • Develop with the local team and transfer the model to them • Provide continued support for updates and M&E

25. Thank You for Your Attention Questions and comments are welcome www.millennium-institute.org Jed.shilling@verizon.net

26. What Partners and Clients Are Saying • “MI’s integrated dynamic models have been vital for GM’s sales forecasts” Paul Ballew, GM • “MI’s long-term, integrated perspective is essential” Pablo Guerrero, World Bank • “MI’s T21 analytical tool is essential for effective national development strategies”Ed Cain, Carter Center • Fascinating! David Cohen, Counterparts International • If only we had known such a tool existed…. Chorus of planning experts from 11 countries in Southern Africa • We need to use this tool at the Headquarters, in our embassies and help our country partner acquire it… Dutch Ambassador Ton Boon von Ochsen • I want that T 21 planning team in my office… Président Amadou T Touré, Mali • It has been my dream since ten years to get the the POIJ departments to work together…now its happening with T21; With T21 I can see team building and networking across the ministries and government agencies and effective communication Wesley Hugh, Director Planning office Jamaica