Sustainable Development:

Thinking Outside the Box

Dr. John Shilling Chairman Board of Trustees

Millennium InstituteMay 16, 2012

You cannot solve the problem with the same

thinking that created the problem Albert Einstein

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

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

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

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

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

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

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

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

Why Take a Systemic View?

We Need to be Careful

To Avoid Unexpected Results!

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

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

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

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

The Basic T21 Structure

The Key Connections in T21

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

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

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,

MI Around the World

T 21 Countries

MI Partner

MI Head Office

M 3 Countries

MEG Countries

Demonstrate Running T21

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

Thank You for Your AttentionThank You for Your Attention

Questions and comments are welcomeQuestions and comments are welcome

www.millennium-institute.orgJed.shilling@verizon.net

• “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

What Partners and Clients Are Saying