07 The Club of Rome Model


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This path breaking model was the first that showed the interrelationship between different growing systems of the world, and how in the process of achieving infinite growth, finite natural resources would be depleted forming a Limit to Growth. Increasing pollution and loss of agricultural land would also affect growth and welfare.

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07 The Club of Rome Model

  1. 1. The Limits to Growth The Club of Rome Model Meadows and Meadows Prof. Prabha Panth, Osmania University
  2. 2. Global Environmental Model • The Club of Rome model was the first global environmental model. • Formulated by Meadows in 1972. • Based on “Systems Dynamics” developed by Jay Forrester. • It uses computer simulation to study dynamic behaviour of complex systems. – Systems Dynamics: The structure of any system is as important in determining its behaviour as the individual components themselves. Prabha Panth 2
  3. 3. Infinite Growth is not possible in a Finite World • The Club of Model was the first to show empirically that: – There are limits to growth of the world economy due to: – the finite stock of Non-renewable resources and, – the finite capacity of the environment to assimilate pollution. Prabha Panth 3
  4. 4. Objectives of the Model • To determine whether: – The growth rates of population and capital accumulation can be sustained in the future – If so, then “how many people, at what level of wealth, and for how long” The answer Meadows found, depends on the physical support available on Planet Earth for population and economic growth. Prabha Panth 4
  5. 5. The Model • Analyses the simultaneous and interrelated growth of 5 systems at the global level 1. Industrial growth 2. Population growth 3. Depletion of Non-renewable resources, 4. Rising malnutrition, and 5. Deteriorating environment Prabha Panth 5
  6. 6. Assumptions 1. Aggregate global analysis 2. Non-renewable resources of the world are finite and given, 3. Technology is given, there is no technical progress 4. Present growth rates persist, 5. There is no change in the pattern of growth, 6. Present rates of population growth continue 7. Aggregate pollution 8. Distribution inequalities of food, resources and capital are included in the model. Prabha Panth 6
  7. 7. Exponential Growth • First explained by Rev. Malthus as the difference between Arithmetic (linear) and Geometric (Exponential) growth. • Exponential growth suddenly becomes huge, due to a rising base. • So limits are reached quicker than expected. Years Linear growth 1 (x + 2) Exponential growth (y Prabha Panth 2) 2 3 4 5 6 10 12 14 16 18 20 10 20 40 80 160 320 7
  8. 8. Difference between Exponential and Linear Growth Exponential growth 320 Million Tonnes 16 times Linear growth 20 0 1 Prabha Panth 6 Years 8
  9. 9. The Five Growing Systems • Meadows analyses the pattern of growth of five growing sectors and their interactions. – 1. Non-renewable resources: • The stock of Non-renewable resources on Earth is constant. • Economic development requires larger and larger inputs of non-renewable resources. • More the economic growth, more is depletion of non-renewable resources. Prabha Panth 9
  10. 10. Static Reserve Index • Static Reserve Index (S) shows the reserve position or life index of a mineral in the ground. S = Reserve of Non-renewable resource Current year‟s extraction • For example, known reserves of Copper = 1000 million tonnes, • Extraction in the present year = 10 million tonnes, • S copper = 1000 million tonnes = 100 years 10 million tonnes So it is assumed that the reserve will be exhausted in 100 years 10
  11. 11. • But there is a fallacy in this calculation. • Every year with economic growth, the total extraction increases. • With each year‟s extraction, the reserve stock in the mine decreases. • Both these lead to faster depletion of the non-renewable resource. • The limit will therefore be reached quickly and unexpectedly. • Therefore Meadows introduces another measure called Exponential Reserve Index. 11
  12. 12. Exponential Reserve Index • In this index, the increase in growth levels and the fall in reserves are included to estimate the life index of a mineral. • It includes growth rate of extraction on reserve position. • He calls it the „Exponential Reserve Index‟ or „e‟ e = ln[(r.s)+1] r (ln = natural log, r = average rate of growth of the resource, and s = static reserve index) 12
  13. 13. Approaching the limits A Copper (1000 million tonnes) So the reserves will be exhausted at T0 and not T1, because of increase in growth and decrease in reserves. Depletion of copper B 0 Prabha Panth T0 T1 Years
  14. 14. Exponential Reserve Index of important minerals Global Resource Aluminium Coal: Copper Iron Petroleum S (years) 100 2300 36 240 Av an gth rate % 31 3.9 6.4 4.1 4.6 1.8 e (years) 31 111 21 93 20 5 times increase 55 150 48 172 50 At present rates of extraction, all important minerals of the world will be exhausted in the next 100 years! Even a 5 times increase in reserves will push the limit by only a few years. 14 Prabha Panth
  15. 15. – 2. Pollution: • Pollution levels increase with population, industrial and agricultural growth. • Because all three systems are growing, pollution levels are also growing. • A certain amount of pollution can be absorbed by the environment, • But after the threshold is reached, pollution will grow exponentially and infinitely. • There are no inbuilt mechanisms to control growth of pollution and no stabilising factors that can mitigate it. Prabha Panth 15
  16. 16. Pollution – Feedback loops • Economic Growth adds to pollution (positive feedback) • Some pollution is absorbed by the environment. This is called Assimilative Capacity (negative feedback). It reduces the pollution levels. (+) Industrial Growth Prabha Panth Pollution ( ) Assimilative capacity 16
  17. 17. Population – Feedback loops – 3. Population Growth: • Population growth is also exponential, as explained by Malthus. • Death rate reduces population (negative feedback) • Birth rate increases population (positive feedback) • Death rate has been falling, leading to population explosion. (+) Birth rate Population ( ) Death rate Prabha Panth 17
  18. 18. Population and Environment • More population requires: – More food – more natural resources, – causes more pollution • Per capita consumption is also increasing • Thus resource depletion and pollution are driven by – increase in population, and – Increase in per capita consumption Prabha Panth 18
  19. 19. – 4. Industrial Growth: • Increase in industrial growth depletes natural resources and creates increasing pollution.. • Growth of capital i.e. Net Investment adds to capital stock ( K) (positive feedback loop) • Depreciation reduces capital stock (negative feedback loop) (+) Net Investment ( K) Industrial capital ( ) Depreciation Prabha Panth 19
  20. 20. – 5. Nutrition and Food Availability Increasing population, industrialisation and urbanisation place great pressure on agricultural land. • • • • Land is finite. Agricultural land diverted to non-agricultural use. Use of chemical inputs destroy the soil. Diminishing returns in Green Revolution techniques. • Skewed distribution of food, • Malnutrition in less developed countries. 20
  21. 21. Growth in demand for nonagricultural land Demand for Non agricultural land A g r i c u l t u r a l A Constant Supply B L a n d Supply of Agricultural land 0 T0 T1 Time 21
  22. 22. The Computer Model Meadows applies System Dynamics, taking global data (1970) to analyse the total impact of all the five growing systems. • Extrapolates from 1900 into the future. • Results compatible till 1970, when the book was written. • Future scenario of world growth may follow the above path traced by the computer model 22
  23. 23. Interacting Systems System 1. Industrial sector (exogenous growth) 2. Food (exogenous growth) 3. Population (exogenous growth) 4. Natural resources 5. Pollution Prabha Panth Affected by: Availability of Natural resources Pollution, population and natural resources Pollution, food and natural resources Growth of Industrial sector, population and food sector. Growth of industrial and food sectors 23
  24. 24. Standard Run: Overshoot and Collapse C Natural resources Population Pollution Food Industrial production Prabha Panth 1900 COLLAPSE time 24
  25. 25. Policy conclusions • Meadows suggested that there should be “Global Equilibrium.” • A piecemeal solution will not solve the problem of collapse, • All variables have to be attacked simultaneously due to • Interaction and interrelated impacts of growth of economic and environmental variables. Prabha Panth 25
  26. 26. Zero Growth • • Industrial growth should be made zero Investment = Depreciation. Stabilise population growth. Growth rate of population should be zero, Birth rate = Death rate. • Change in technology: Less polluting techniques. Renewable resource technology • Less-developed countries may be allowed to grow for some more time. Prabha Panth 26
  27. 27. Criticism 1. Zero growth rate criticised 2. As Natural resources get depleted, price will rise and signal new resources or new techniques. 3. New reserves will be found 4. Zero growth is unfair to less-developed countries 5. Maximum share will still be taken by developed countries. ----27 Prabha Panth