Economics Webinar Presentation October 2014

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Webinar by Stephen Passmore (The Ecological Sequestration Trsut) and Rembrandt Koppelaar (IIER/ICL) that will explain the platform focusing on its core capability in providing cross-sector decision support for a city and its hinterland. We will provide an overview of how the resource-economic simulation model operates and provides the evidence in city region decision-making for investment, procurement, policy making, and planning, to achieve more resilient solutions. We will focus on the interconnections between resource flows from human and ecological agents as well as the socio-economic activity of people and companies, and how these deliver regional outputs. Areas that we will be addressing include: Resource flows and socio-economic model interconnections. Links to planning, procurement, policy making, and investment decisions. Data acquisition, maintenance, and sharing cross-sector and regional interdependencies.


  • 1. resilience.ioWebinar28th October 2014@resilienceIO

2. Agenda1.Introduction 5 minsStephen PassmoreHead of Platform Development - TEST2.Model Processes and Functions 30 minsRembrandt KoppelaarModelling research lead - IIER3.Questions 25 minsEnquiries: 3. Some Fundamentals We are facing the combined challenges of climate change,population increase and urbanisation, increasing resourcescarcity and its impact on our economies, society andenvironment. This is a systemic challenge we need to meet it withsystems thinking and a coordinated response thatstimulates closer collaboration between the public, private,knowledge and community sectors. City-regions are on the front line and where systemicchange has the potential to deliver the most rapid benefits. 4. The Ecological Sequestration Trust TEST is a UK Charity formed in 2011 to speed up and scaleup transformative urban/rural development towards aresilient, low carbon, resource efficient way of living. We operate in the space between private, pubic,knowledge and community sectors to facilitate systemsintegration and to support collaborative decision makingon policies and investment. TEST has brought together world-leading modellers andsector experts to design and create the worlds first open-source,fully integrated resource and economics systemsmodel for city-regions. 5. PlatformTechnical Brief on ModelArchitecture & Decision Support28 October 2014Rembrandt Koppelaar Modelling Research LeadInstitute for Integrated Economic Research (IIER) 6. A new approach to sustainabilityand resilienceNowWhere we could be with systemsthinking and an urban-ruralapproach Sequential approach in project evaluation Conventional economic assessment dominates Short term political and finance cycle perspective Environment plane silo-ed (i.e. water-food-energy,urban and rural viewed separately) Social benefit at the end of the line (not transparent) INTEGRATED DESIGN INTEGRATED PLANNING ACCELERATED DEVELOPMENTDEVELOPMENT PLANNING DESIGNDESIGNPLANNINGDEVELOPMENT 7. Approach to Sustainable Regions A Regional Approach Is Fundamental Gather regional data, develop regional knowledge, embed integratedregional planning, build regional capacity and shared confidence to act Must unite economic, societal and environmental perspectives and shapeinterventions with a common/credible economic analyses 8. Overview Linking Resource Flows & Socio-Economics Simulation Modelling for Decision Insights Building a Regional Demonstrator Model Cross-Sector Collaboration 9. Components OverviewModel core is a link between: Resource conversions(material & energy balance +labour). Agent based socio-economics(human activities & decisions).Both components are calibratedfor each location and run with aset of selected rules forinstitutions and policies 10. Biophysical resource conversions All activities across sectors can bedescribed as resource conversions withlabour inputs in space and time. Systematic Resource ConversionProcess Library across all sectors (14). Hard-coded boundary description forallocation to spatial landscapes. Modular setup to enable creation oflocal configurations.Source of top figure: Brandt et al. (2013) Calculating systems-scale energy efficiency and net energy returns : A bottom-up matrix-based approach. Energy 62. p.235-247Source of bottom figure:: Kuosmanen, N., Kuosmanen,T., (2013). Modeling Cumulative Effects of Nutrient Surpluses in Agriculture: A Dynamic Approach to Material Balance Accounting. Ecological Economics. 90. p. 159-167. 11. Spatial resource conversion allocationIdentification of Infrastructure:Company or HouseholdSpatial locationOutputs produced (company)Production typology (company)Infrastructure typologyFacilitates automated spatial allocationof resource conversions, labour &employee requirements, infrastructurematerial stocks, embodied flows.Distribution centreMeat process factoryFootball stadiumHospitalResidences 12. Activity Based Consumption Simulated people carry out activitiesin time and space. Core activities include leisure, work,food consumption, travel,maintenance, and sleep. Activities linked to ResourceConsumption Baskets of Materialsand Energy. Simulated activity profile translatedto resource consumption profile inspace and time.Source of figures: Keirstead, J., Sivakumar, A., 2012. Using Activity-Based Modeling to Simulate Urban Resource Demands at High Spatial and Temporal Resolutions.Journal of Industrial Ecology. 16(6). pp. 889 900. 13. Agent Decision Socio-EconomicsPPeeooppleleGGoovveerrnnmmeennttInstitutionsInstitutions(Regulatory, Planning,Soft Policies, Culture)(Regulatory, Planning,Soft Policies, Culture)DDeeccisisioionnssMMaarrkkeettssOutcomesOutcomes(Production, Investment, Activities,Well-being as happiness and health,(Production, Investment, Activities,Well-being as happiness and health,etc.)etc.)DDeemmooggrraapphhicicssFFirirmmooggrraapphhicicssCCoommppaannieiessHHoouusseehhooldldssLabourSupply &DemandSupply &DemandShapeShapeShapeMakeMakeMakeInfluenceInfluenceExternalWorldExternalWorldRegulateSupply & Demand 14. Agent interactions organised by markets Exchange of Goods and Servicesfrom Transactions Markets. Change in occupations and jobsfrom Labour Markets. Change in Physical Capital frominvestment & property markets(Biosphere + Technosphere). Change in Human Capital fromEducational and Labour Markets(Degrees + Experience) as wellas Health Markets.Transactionsof Goods &ServicesMarketsLabourMarketsAgents as1) Consumers2) ProcessorsHealth 3) OwnersMarketsInvestment &PropertyMarketsEducationalMarkets 15. Linkages between EcosystemServices and Human Well-being 16. Creating Visibility on Ecosystems,Environment & Health relationships Simulated resource conversions result in flows of waste andpollution to air, soil, surface, water bodies in space and time. Flows can be combined with existing databases of human andeco-toxicity indicators for environmental impact assessment. Simulation framework facilitates connection to existing regionalecosystem models with feedbacks (flows, ecosystem services). Impacts on Human Health in space and time become visible byenvironmental exposure, activity decision change, feedbacks ofecosystem degradation or improvements. 17. Overview Linking Resource Flows & Socio-Economics Simulation Modelling for Decision Insights Building a Regional Demonstrator Model Cross-Sector Collaboration 18. Decision Support for Regional Design is not a predictivemodelling platform which describesthe future. is normative as itcreates insights in how to shape thefuture. Its value is the ability to simulateinvestment, planning, and policydecisions. And giving users visibility ondecision impact at economic, social,and environmental dimensions.ModelRegionalDesignSimulationResultsInvestmentPlanningPoliciesVisibilityResiliencePerformanceStates 19. Investment, Policy, Planning,Impacts visible at multiple levelsLevel 2 :Indicator relational details& graphical outputLevel 3:Quantitative & QualitativeVariable and ParametermappingLevel 1 Key Performance IndicatorsLevel 4: Technical reportIdentification of relationaland data gaps andpotential forimprovementComprehensiveness ofprocess and agentrelations and datainput 20. Indicators include Stability and Resilience Value at Risk due to Natural & Societal Events are measured by impact onCapital (Social, Economic, Natural, Physical) Stability continuity in supply of goods and services + pursuit of activities Resilience ability to mitigate shocks and prevent irreversible capital lossEconomic Response-Capital Re-allocation-Capital Re-configurationEconomic Impact-Capital Mitigation-Capital LossNatural-Climate Change-Pathogens-Ecosystem changeSocietal-Social Disruptions-Supply Chains-Market Shocks 21. Economic InstrumentsTaxes and taxconcessions Purchasing TradablePermitsLegislative & Public InstrumentsEducationalprogrammesStandards andPenalties CovenantsAccreditationsystemsLicensingSubsidies andgrantsPublic serviceprovisionSimulating Policy Decisions The model is delivered with a library of policy options. Policy effects are simulated based on changes in market operation and decisions. Impacts become visible through changes in outcomes (production, consumption,activities) and indicators (social, economic, environmental) in space and time. Users can put policies into effect and vary their degree. 22. Simulating Investments and Procurement Companies start investment decision evaluation based onthreshold conditions (e.g. capital, market conditions, credit). Simulated investments decisions are based on a three-stepprocedure, first: technology choice, second: selection ofplausible options, third: cost-benefit analysis. Users can analyse investment condition impacts by adjustingparameters requirements (NPV, ROI, BCR, Diversification, TimeHorizon), value inclusion (Economic, Social, Environmental),and degree of cross-sector information in simulation. Users can as central planner choose their own investmentdecisions at both company and government levels, overridinginternal simulation decisions. 23. Simulating Planning Decisions At baseline for each demonstratorthe local spatial planning map isreconstructed in the model. The platform user can adjustplanning rules as a planningpermission authority about landuse, construction, and demolition,based on parameter settings. Any investment or policy decisiongenerated in the simulation will beevaluated and accepted or rejectedbased on the user set planningrules.Simulated PlanningSimulated Planningconsideration (company /consideration (company /government)government)BuiltBuiltenvironmentenvironmentchangechangePlanningInvestmentPlanningInvestmentSimulated PlanningSimulated PlanningApplicationApplicationAcceptance/Rejectionbased on user rulesAcceptance/Rejectionbased on user rules 24. Overview Linking Resource Flows & Socio-Economics Simulation Modelling for Decision Insights Building a Regional Demonstrator Model Cross-Sector Collaboration 25. Inclusive Regional Model Roll-out 26. Data sources for simulating people, companies andecology in time and spacePopulation Status Population census data Birth-death, marriage registers Labour, employment records Education & Health records Happiness surveysMarket & Societal structures Business and tax records Company Location Data Activity & Consumption data Sector and Utility Networks Crowd-sourced SurveysTransport & Exchange Public transport records GPS, traffic & signal sensors Cross boundary Imp./Exp. data Market purchasing data Property investment dataEcological Information Land registries Soil and Water Quality Biomass Productivity Climatic ecosystem records Local Ecosystem ModelsResilience.ioSimulation 27. Satellite Remote Sensing UrbanEnvironment Information - Edinburgh 28. Social Data - Multiple Deprivation Scoreat Ward/ Street Level LondonCrown copyright and database rights 2011 Ordnance Survey. London Borough of Tower Index of Multiple Deprivation 2010 Hamlets 100019288 29. Overview Linking Resource Flows & Socio-Economics Simulation Modelling for Decision Insights Building a Regional Demonstrator Model Cross-Sector Collaboration 30. Creating visibility for cross-sectorcollaborationEcosystems (Terrestrial, Aquatic)xConstructionEnergy GenerationTransportationHuman andanimal ServicesMineralExtractionFoodprocessing ForestryPhysicalmanufacturingChemicalmanufacturingRecycling, disposal,remanufacturingWater SupplyAgriculture &SeafoodBiologicalprocessingHumanconsumption 31. Getting People Working TogetherDemonstrate Approachthrough Parallel Actionin a Network of 3-5Strategically ImportantDemonstrate Approachthrough Parallel Actionin a Network of 3-5Strategically ImportantLocations(1-5m people)Locations(1-5m people)Getting People Working TogetherRegional CollaboratoryOpen-sourceModel livingmaster planOpen-sourceModel livingmaster planCross sectorcapacity buildingprogrammes integratedsystems thinking& designTangible linking ofsocial/wellbeingbenefit to physicalinterventionsIntegratedtechnology andinfrastructureproject plansMobilised financeand inwardinvestmentPublic, Private &CommunitySector PartnerPublic, Private &CommunitySector PartnerAccess/Access/collaborationcollaborationLive regional datacloud andperformance KPIs& metricsIntegrated regionaldevelopment plan 32. Collaboratories on the groundCambridge, Sainsbury Laboratory Arizona, Decision TheatreWarwick Research ExchangeStanford, Clark Center Stanford D. school 33. Resilience.ioTechnical Brief on Model Architecture& Decision 34. Questions.. 35. Global ICES ESAGlobal Climate andInsuranceCatastrophic RiskOASISModelling 36. UserCockpits 37. Integrated urban systems design/planning andprocurement for sustainability and resilienceNow Where we could be with systems thinkingand performance based procurement Sequential and silo-ed approach conventionaleconomic assessment dominates how we design (cities,policies, technology interventions etc) Short term political and finance cycles dominateeconomic plane Environment plane silo-ed (i.e. water-food-energy,urban and rural viewed separately) Social benefit at the end of the line abstractrelationship to earlier planes . INTEGRATED DESIGN INTEGRATED PLANNING ACCELERATED DEVELOPMENTDEVELOPMENT PLANNING DESIGNDESIGNPLANNINGDEVELOPMENT 38. OutputSuccessfulimprovement inenergy-water-foodsecurity and quality oflifessEvidence-basedtrustedindependentmodelProjectportfolioReturn InvestmentRegional Funding for Projects- Green Growth Climate Adaptation Social Impact BondsSources of capital-MNBs Pension Funds Sovereign Wealth FundsAssuranceHigh qualityinclusive resilientgrowth 39. Appendix-Process Library Example-Technological Progress-3D Visualisation-Full (Eco)nomic Value 40. Process Library Sector ExampleData improvementFull supply chain accountingData accounting robustnessIdentification of data gapsCrosscheck validation potentialTechnology appraisalR&D technology effectsProcess substitution optionsCost accounting of suppliersEco-efficiency prioritiesSupply chain environmentalimpact calculationEnergy GenerationSolar Energy Wind EnergyThin Film Solar Photovoltaic SolarMonocrystalline Polycrystalline AmorphousIngot based RibbondrawnA B C D E F GSets of processes 41. Technology progress forecasts 42. 3D visualisation provides a communication tool for stakeholders &investors data menu enables interactive overlay of relevant information 43. Full (Eco)nomic ValueLabour hoursto retrieve & processmaterials (incl. energy)across supply chainsto transport anddistribute materialsEmbodied ininfrastructureTemporal storage costrequirements for supplychain functioningMarket Prices (Eco)nomic valuePrice markupsMarket organizationOwnershipSkill and knowledgedemand/supplySocietal valuationpresent vs. the future(discount rates )Scarcity of goods inrelation to demand andpreferencesEcosystem servicesProvisioningRegulatingCulturalHuman well-beingSecurityWealth for a good lifeHealthGood social relationsFreedom of choiceTechnology Base Labour / Energy needsMarket Structure Markups & DistributionSocietal Valuation Priceas a marker for valuePhysical costs