An Exploration of Dynamical Systems Modelling as a Decision Tool for Environmental Policy

A weakness often found in conventional environmental management tools is that of treating the dynamics of environmental effects and the underlying dynamics of structural change as external factors, precluding their ability to capture the evolutionary behaviour which characterizes economic systems. This article suggests a spatial dynamic modelling framework which addresses explicitly complex sectorial linkages and their environmental effects. The economic dynamics of the model are given spatial reference by means of a set of sector-based suitabilities, which allows us to explore both local environmental degradation effects as they unfold, and how these impacts then affect the economic productivity of the system as a whole. The approach is illustrated by calibrating the model with 1971-1981 data for the island of Crete, and then running it to explore how the economic dynamics of the island might evolve to the year 2001. This article presents a means through which to endogenize the environment and its explicit linkages with sectorial economic dynamics which can be of considerable use to environmental management in all its dimensions.