The wisdom of sustainable communities in the digital era: the case of efficient energy management


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  • Good basic ideas I would like to get in contact with the autors. Guenter Schmittberger.
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  • Hardin’s paper had a strong influence; for long time it was believed that CPR should be regulated by the government or privatized Communication: in face-to-face discussions participants tend to discuss what they all should do and build norms Currently there is much discussion on community-based management (but it only works in certain conditions) Privatization = internalization of externalities Often modeled with prisonner’s dilemma
  • Without top down enforcement or privatization, e.g. local community-based management, global commons such as climate Multitude of factors (empirical studies in forestry, irrigation, fisheries, Ostrom 1990)
  • Is it stable when resource dynamics change? ABM
  • Researchers have found a non-linear relationship between the number of users and self-organization. Small groups are frequently unable to undertake costly activities while transaction costs are higher for large groups. The impact U1 on self-organization also depends on its relationship to size of the resource system ( RS3 )
  • Game theoretic approach
  • Resource extraction guided by fairness norms (based on a commonly agreed upon level of sustainable resource extraction) Norm of restraint and norm of fairness (that everybody follows the norm of restraint), failure to obey the rules is a violation of a social norm “punished” by ostracism Integration of resource dynamics with evolutionary game or learning dynamics
  • We never think about the labor needed for the production of the good itself, but only about the labor needed to extract the resource which is then used in production Total effort = sum of individual efforts
  • Omega (fC) increasing in fC; first derivative >0 The fairness norm: Failure to follow the norm of restraint as everybody else is “punished” by refusal of help which exerts a material damage on the defector that is proportional to the difference in payoffs
  • Monitoring Updating based on comparison of payoffs Full information versus local information
  • Mention the x and y axis labels
  • Initial conditions and path dependence
  • The wisdom of sustainable communities in the digital era: the case of efficient energy management

    1. 1. Fairness and cooperation in energy use <ul><li>The wisdom of sustainable communities in the digital era: the case of efficient energy management </li></ul>Alessandro Tavoni Luigi Telesca
    2. 2. Outline <ul><li>Motivation </li></ul><ul><li>A Model of Equity-driven Cooperation in Energy Management </li></ul><ul><li>Two Cases of Agent Interactions (Monitoring) </li></ul><ul><li>Outlook </li></ul>
    3. 3. The commons dilemma <ul><li>“ Tragedy of the Commons” (Hardin, Science, 1968) </li></ul><ul><li>Individual Gain Shared Disadvantage </li></ul><ul><li>“ Mutually agreed upon coercion” </li></ul><ul><ul><li>sustainable resource management only possible with regulation from agency or privatization </li></ul></ul><ul><li>But … based on restrictive assumptions </li></ul><ul><ul><li>open access </li></ul></ul><ul><ul><li>unmanaged (no norms, no institutions) </li></ul></ul><ul><ul><li>no communication </li></ul></ul><ul><ul><li>all individuals are selfish, maximize short term returns </li></ul></ul>
    4. 4. Avoiding the dilemma – managing the Commons <ul><ul><li>Self-organization of users to develop norms and institutions, to design sanctions, etc. (Ostrom, 1990) </li></ul></ul><ul><ul><li>to establish and maintain cooperation, i.e. individual restraint from short-sighted resource overexploitation </li></ul></ul><ul><ul><li>Dependent on characteristics of the resource system and the user community </li></ul></ul>Pictures from
    5. 5. Resource Dynamics - Adaptation <ul><li>Mostly static view on resources in the cooperation literature </li></ul><ul><li>Resource dynamics -> feedbacks to human behavior </li></ul><ul><li>Examples: </li></ul><ul><li>Over time community members have reached an understanding as to what effort level will permit a reasonable exploitation of the resource -> what if the resource dynamics suddenly change? </li></ul><ul><li>Resource & institutional uncertainty leads to opportunistic behavior such as over-harvesting (field observations) </li></ul><ul><li>High risk of loss can promote cooperation (Milinski et al. 2008) </li></ul>
    6. 6. Factors of success in resource management (after Pretty 2003, Ostrom 2007 and Ostrom, forthcoming) Resource System Social System Clarity of system boundaries Number of users Size of resource system Norms, Rules, Social Capital (incentives/sanction) Resource unit mobility Relations of trust Productivity Connectedness in networks and groups Storage capacity Resource Dynamics/ Predictability
    7. 7. Pro-Social Behavior / Fairness Norms <ul><li>Evidence from experimental economics on deviations from solely self-interested behavior (except for in highly competitive environments) </li></ul><ul><ul><li>&quot;prosocial&quot; value orientations (other-regarding preferences) </li></ul></ul><ul><ul><ul><li>e.g. subjects resist inequitable outcomes (Fehr & Schmidt 1999, Goeree & Holt 2004) </li></ul></ul></ul><ul><ul><ul><li>e.g. the group ostracizes norm violators (Bowles & Gintis 2004) </li></ul></ul></ul><ul><li>Evidence from field research (e.g. Ostrom 2007) </li></ul><ul><li>Evidence from a case study on local water management in Uzbekistan </li></ul>
    8. 8. Our Aim <ul><li>bring together insights from research on the evolution of cooperation and commons management , i.e. integrating resource dynamics with social (replicator) dynamics </li></ul><ul><ul><li>Enforcement of norms (Sethi and Somanathan, AER 1996) </li></ul></ul><ul><ul><li>Social capital (Oses-Eraso & Viladrich-Grau, JEEM 2007) </li></ul></ul>Under which conditions can pro-social, equity-driven behavior lead to establishment of cooperation in a CPR? How can cooperation evolve and be maintained when social and resource conditions change ?
    9. 9. Research Background <ul><li>Resources Sustainability is key in the future of the network society </li></ul><ul><ul><li>ENERGY </li></ul></ul><ul><li>Today, household consumers perceive electricity as a commodity which can be consumed at will and in unbounded quantity. </li></ul><ul><li>Why? </li></ul><ul><ul><li>Poor Feedback (monthly or bi-monthly bill) based on poor estimates -> Now intelligent meters will provide more details but not better system </li></ul></ul><ul><ul><li>Complex pricing model </li></ul></ul><ul><li>Effect of individual behaviour is lost! </li></ul><ul><ul><li>Individual monitoring solutions, if not linked with community profiling, local data conditions and energy production information, will have a limited impact due to lack of visibility and understanding on the user part. </li></ul></ul>
    10. 10. Energy Aware Paradigms <ul><li>The facts: </li></ul><ul><li>Energy demand: Fossil production peak close, rapidly increasing demand from emerging countries </li></ul><ul><li>Climate change: EU must reduce by 8% its CO2 emission by 2012 for first Kyoto protocol phase </li></ul><ul><li>European Vision of Future Power Network: </li></ul><ul><li>An order of magnitude more many energy sources (RES) </li></ul><ul><li>Demand reduction through monitoring, management and local optimization (cogeneration, real-time suply-demand matching) </li></ul><ul><li>=> made possible by ICT (Smart Power Networks) </li></ul><ul><li>Open problems: </li></ul><ul><li>Controling the network: bi-directional and stocastic flows, real time production adaptation, complex optimization </li></ul><ul><li>Speeding up its growth: variety of actors, disparate interest, which policy? </li></ul>
    11. 11. A visionary approach <ul><li>Advocating a web 2.0 approach: </li></ul><ul><li>Policies will be too slow </li></ul><ul><li>An open energy playground would speed-up innovation (see Internet) </li></ul><ul><li>Future Energy Grid is a complex system </li></ul><ul><li>We research ICT solutions for such systems: </li></ul><ul><li>Networks for massively distributed (pervasive) systems </li></ul><ul><li>Improving CS predictability through distributed control </li></ul><ul><li>Real-time distributed resource negociation to achieve global optimization </li></ul><ul><li>Designing large scale simulation and emulation environment </li></ul>
    12. 12. Assumptions <ul><li>We want to endow communities with a multi-layered technological framework </li></ul><ul><li>Innovative P2P infrastructure </li></ul><ul><li>Linked with smart metering systems allowing an open, distributed monitoring and control plan for local energy grids. </li></ul><ul><li>These, in turn, enable community-level organization of users and new services and business models. </li></ul><ul><li>Such a bottom-up radical reform of the energy system develop and survive in a world divided between socially-inclined individuals as well as selfish ones? </li></ul>
    13. 13. The Model - Environmental Settings Common pool resource such as a groundwater reservoir <ul><li>cooperative agent extracts at socially acceptable level non-cooperative above socially acceptable level </li></ul><ul><li>two types of resource users: </li></ul>cooperators defectors
    14. 14. Extraction Levels Adapted from Sethi & Somanathan 1996 Efficient Total Effort Level Static Nash Total Effort Level Total Costs of Effort Total Production <
    15. 15. Equity – driven Cooperation Payoff: Utility: Net Average Product “ equity” Proportion cooperators Community benefit fn Excludable cooperation benefits
    16. 16. Interactions of resource users Note: payoffs are dependent on effort and state of resource Case 1 Perfect Monitoring Case 2 Local Monitoring C D C D C D C D
    17. 17. Population evolution / Learning <ul><li>Replicator Dynamics (evolutionary game theory): imitate successful behavior </li></ul><ul><li>For case 1: </li></ul><ul><ul><li>Agents update their strategy with probability equal to utility difference </li></ul></ul>
    18. 18. Perfect Monitoring (Case 1A) <ul><li>Utility of prosumer : </li></ul><ul><li>Cooperation if UC>UD </li></ul><ul><li>Coexistence if UC=UD </li></ul>
    19. 19. Perfect Monitoring (Case 1B) <ul><li>Utility of prosumers </li></ul><ul><li>Cooperation if UC>UD </li></ul><ul><li>Coexistence for </li></ul>intensity
    20. 20. Local Monitoring (Case 2) <ul><li>If defector meets another defector they still get the community help (they disguise themselves as prosumers) </li></ul>C D C D
    21. 21. Summary of results <ul><li>Defectors are always identified (Case 1A) -> all cooperator equilibrium when rewards > payoff difference (gains of defection) </li></ul><ul><li>Cooperation among prosumers dependent on the intensity of defection (Case 1B) -> coexistence when effort differences are large With small differences results are same as Case 1A. </li></ul><ul><li>Defectors can free-ride on prosumer’s cooperation (Case 2) -> bistability when rewards ~ payoff difference otherwise Case 1A </li></ul><ul><li>Fairness norm can promote sustainable energy management if </li></ul><ul><ul><li>proportion of norm followers is large enough & monitoring is sufficient </li></ul></ul><ul><ul><li>norm violations are not excessive </li></ul></ul>
    22. 22. Outlook <ul><li>Analytic treatment (coexistence & identity matters) </li></ul><ul><li>Interaction of agents through social networks </li></ul><ul><li>Impact of shocks in resource dynamics (stability of cooperation) </li></ul><ul><li>Simulate agents that learn to adjust the extraction level to new resource conditions </li></ul><ul><li>Uncertainty </li></ul>
    23. 23. Acknowledgements <ul><li>The Levin Lab and Princeton Environmental Institute </li></ul><ul><li>Princeton’s Ecology and Evolutionary Biology department </li></ul><ul><li>Advanced School of Economics in Venice </li></ul><ul><li>CREATE-NET </li></ul>