WORLD DEVELOPMENT PROBLEMS:YOU CANNOT SOLVE THESE PROBLEMS

WITH THE SAME THINKING THAT CREATED THEM

Dr. Hans R Herren President

Millennium InstituteApril 18, 2012

Knowledge, Technology, and Social Systems Seminar at Columbia University

The Millennium Institute

• MI was established in 1983 to promote holistic, long-term strategic planning based on lessons learned in Global 2000

• MI’s Vision is to help countries and people reduce poverty, increase sustainable growth, and improve living standards

• MI’s Mission is to achieve this by • Providing countries tools for better strategic decision making• Helping them convert strategic visions into achievable

sustainable development plans with the tools• Building capacity in countries to use the tools so they can

achieve their development goals sooner• Incorporating stakeholders’ concerns into the process

Our experience

Sustainable strategic development, customized models, and reports Assisted many countries

• CC Mitigation and Adaptation: USA, China, Denmark, Ecuador. Bhutan, Bangladesh, Kenya

• Energy: USA, North America, China, Denmark, Mozambique, Jamaica, Ecuador, ECOWAS

• Poverty, MDGs, Malaria, HIV/AIDS: Ghana, Mali, Malawi, Mozambique, Jamaica, Bhutan, Swaziland, Kenya

• Natural disasters and External shocks: Jamaica, Mali, Mozambique, USA, Denmark

• Sustainable Development: Papua, Abu Dhabi, Maui, ECOWAS

• Business: GM, National Commission on Energy Policy

• Current activities: Swaziland, Mauritius, Senegal, Ohio, Maui, Abu Dhabi, China, USA, GM, Mongolia, UNEP GER, ECOWAS, Namibia, Malaysia

• Post conflict: West Balkan

MI Around the World

T 21 Countries

MI Partner

MI Head Office

M 3 Countries

MEG Countries

The need for sustainability

• Human survival depends on natural resources and ecosystems, as do our societies and economies

• In the 21st Century, we have reached the limits of environmental sustainability and must adapt

• Climate change, resulting from expanded economic activities, is a major example of the risk we face

• Others include food, water, and energy security, protecting our eco-systems.

• Continuing business-as-usual leads to serious problems as our footprint exceeds the Earth’s capacity

• We need to make transformations at all levels in order to assure sustainability for this and the next generations

The development challenges

• Managing energy and natural resources to assure the sustainability of the ecological foundation

• Enabling social structures and governance to function equitably

• Providing social and environmental services as well economic growth to reduce poverty

• Taking account of the vital interactions among the Economic, Environmental, and Social factors

• Adapting to climate change and protecting the environment requires serious and urgent changes in our economic and social activities

…more challenges challenges

• Economies and societies depend on energy and natural resources – the foundation of development

• Economies depend on social structures and governance to function equitably

• Reducing poverty requires social and environmental services as well economic growth

• Economic, Environmental, and Social factors all interact, which poses challenges and risks

• Climate change results from economic and social activities and raises hurdles for sustainability

• Exponential growth exceeding global footprint

How best address these challenges

• Understand real relations in the situations we face, within and beyond economics

• Take account of interactions and feedback loops across different sectors and from different policies

• Manage depletion of natural capital and allocate resources to investment in human and appropriate physical capital

• Take account of longer term effects and lags

• Examine the results of different assumptions, investments, and policies to make better decisions

• This needs to be done at the country level, where the key policy decisions are made, but in the context of the global commons

Factors to take into account

• Economic and social externalities– Impacts of depletion of resources – forests, fish,

minerals

– Impacts of waste and pollution on health and resources

– Impacts of urban development on land and water

• Public Goods and the Global Commons– Climate change impacts and clean air

– Water scarcity

– Access to resources and biosystem protection

• Assuring wellbeing of all humans and bio-systems

• How to keep track of all these factors

….so far• Growth based models

• Focus on market economics– Promotion of free trade

– Attention to GDP/capita, not Gini coefficient or well being/happiness

– Assumption private sector is efficient

– Lack of attention to governance

– Ignoring externalities and commons

– Potential sources of conflicts

Limitation of usual tools

• Conventional models focus on sector specific and beneficial economic results, assuming markets work

• Normal economic models– Accounting models– Econometric models– Simultaneous solution models: CGEs

• They typically take a short term or comparative static view without attention to the environment or social externalities or equity and the Gini coefficient

• Environmental models provide information about climate change and other environmental factors, but few economic impacts

• More comprehensive approach is needed

A complementary, “Systemic and integrated” approach

• It can take account of the relations among economic, social, and environmental issues comprehensively– Economic activities affect society and the environment (ie, Pollution, GHG

emissions, etc.)

– Social activities affect the economy and environment (ie, Migration, deforestation, etc.)

– Environmental factors affect the economy and society (ie, Soil erosion, heat waves, floods, etc.)

• It can incorporate any factor considered important

• It illustrates how activities in any sector can effect other sectors: direct and indirect -- good and bad

• It takes account of lags before impacts are evident, which many be many years

Why take a systemic view?

…we need to be careful

...and avoid unintended consequences

• System dynamics methodology Based on existing sector analyses Reflects observed real world relations Analyzes cross-sector links and feedback loops

• Composed of three main pillars Economic -- SAM, key market balances, and production Social -- dynamics in population, health, HIV/AIDS, education Environmental -- area specific issues and information

The Threshold 21 model

The Threshold 21 model cont’d

• 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 (soon the SDGs) and other indicators

• Calibrated against history to provide reality checks

• Generates multiple medium-to-long-term scenarios

• Transparent and easy to use

The basic T21 structure

The key connections in T21

First steps in SD model development

• Identify key variables in area of focus• Establish basic links• Determine causal relations and quantify

relations• Extend to additional variables to give more

complete picture - both input and output• Initial example with MDGs

Examples of T21 Work

• USA T21 model and CAFE standards (+game)

• China (T21 and sector models on GHG emissions)

• Jamaica (full T21 and natural disasters)

• Bhutan (equitable distribution of public expenditures)

• Mozambique and other countries (megaprojects)

• UNEP (Green Economy Report models (+game))

• Climate Change adaptation policies (Kenya, Namibia, Mozambique, BF, Mali, Sénégal, etc.)

Work on CC Adaptation

• Include impacts of changes in temperature and rainfall patterns

• Assess impacts on water, energy, helath and food security

• Illustrate effects of different coping policies to address these issues

• Builds local capacity to deal with these issues over the longer term (changing conditions)

T21 and sector models China

• Work with GM and early country model

• Expanded to Cement and Steel sectors on GHG emissions

• Now covers full economy with focus on energy and productivity

• Shows importance of life style change as well as technology change to meet China’s goal of reducing GHG/GDP emissions

• Link with the PADIS population model

Bhutan and Ghana

• Bhutan, – promoting cooperation among ministries to help

Gross National Happiness index

• Ghana – Coordinating sector programs aimed at MDGs

could reduce the cost of achieving them by 15% and increase growth

T21 Jamaica

• Sponsored by PIOJ for 2030 Strategy• Learned about several unexpected factors,

like the effect of Crime on industry and tourism

• Included effects of natural disasters• Still being used and expanded by the

Jamaica Team

UNEP and the GER

• GER focus: positive macro economic effects of green investments, jobs etc.

• Model applied in twelve sectors and global scale

• Incorporate links across sectors, and within them

• Demonstrates effects of Green investments and shows long term benefits compared to BAU

• Helps policymakers follow greener paths

Example for LT: Conventional model of agriculture is ecologically and economically unsustainable “GR is linear thinking”

David Tilman et al. Science 2001

Grain Unctad 2011

GHG contribution of agriculture

-50% -15%0%

+35%+15%2080

CC impact on and of agriculture

Biodiversity loss (just when we need it)

Waste of natural resources (GR bases is also socially unsustainable)

SustainableUn-sustainable

Low

pro

ducti

vity

Hig

h p

rodu

ctivi

tyTransitioning: ….. sustainable, organic, agroecological, resilient, equitable agriculture

SD in the field :“Push – Pull” approach, makes ecological sense….

Ecological agriculture the main solution: Multifunctionality paradigm for sustainable development

sustainable

viable

livableequitable

Thinking in system: in agriculture….

Global investments across sectors (1% and 2% of GDP, Stern report); 0.1% and 0.16% of GDP invested in agriculture for:

- Pre harvest losses (training activities and effective bio-pesticide use)- Ag management practices (cover transition costs from till to

no till, organic, agroecological agriculture, training, access to small scale mechanization and irrigation)- R&D (research in soil science and agronomy, crop improvement (orphan crops), appropriate mechanization, irrigation, and more)- Food processing (better storage and processing in rural areas,

efficient processing, marketing)

A system model for the transition: scenarios from the UNEP GER ag chapter 2011

…some results (UNEP GER Report – 2011), Investing 0.1% or 0.16% of total GDP ($83-$141 Billion) / yearInvesting 0.1% or 0.16% of total GDP ($83-$141 Billion) / year

Year 2011 2050

Scenario Unit Baseline Green BAU

Ag production Bn US$/Yr 1,921 2,852 2,559

Crops Bn US$/Yr 629 996 913

Employment M People 1,075 1,703 1,656

Soil quality Dmnl 0.92 1.03 0.73

Ag water use KM3/Yr 3,389 3,207 4,878

Harvested land Bn ha 1.20 1.26 1.31

Deforestation M ha/Yr 16 7 15

Calories p/c/day forconsumption Kcal/C/D 2,081 2.524 2.476

Strengths of Dynamic Approach

• Provides a transparent tool to unite various parties around consistent policies and build support for necessary actions.

• Helps link short- medium- and long-term planning to assure more sustainable policy choices

• Identifies needed behavioral changes that influence all society, economic, and environmental spheres.

• Provides scenarios, not perfect projections

Promoting Cooperation

• T21 is a tool to bring stakeholders together

• Builds support by taking account of each party’s concerns

• Generates integrated scenarios, compares them and visualizes the results

• Helps understand synergies and negative feedbacks to reach consensus

• Would be valuable for OneUN

Thank YouThank You

Questions and comments are welcomeQuestions and comments are welcome

www.millennium-institute.orghh@millennium-institute.org

You cannot solve the problem with the same kind of thinking that created the problem

Albert Einstein

• “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

My Experience with Development

• 16 years with the CGIAR (R&D, CB Africa)

• 11 years ICIPE

• 6 years CGIAR Science Council

• Co-Chair IAASTD

• President and Founder Biovision Foundation

for Ecological Development, 2001-

• President Millennium Institute, 2005-