A simulation model to illustrate feedbacks among resource consumption, production, and factors of production in ecological-economic systems

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 efficiency 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 specification of the technology term in the race against a growing, resource-consuming population. Adjusting parameters within the model and changing the specification 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.