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The dynamic interaction between economy and ecology

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  • Scheffran, Jürgen

Abstract

The interaction between economic and ecologic dynamic systems is analyzed with a multi-player dynamic game, in which each player invests and allocates available capital to the production or consumption of natural resources and goods, and evaluates the outcome of all players’ actions as well as the reactions of the ecosystem. During the course of repeated actions a dynamic process evolves such that the players adapt the amount of investment and the direction of its allocation according to their action preferences. For stability of the interaction matrix the players can form stable coalitions. Cooperation and negotiation on the amount and the allocation of investment could lead to more sustainable use of natural resources. The dynamic coalition-formation process corresponds to a self-organized transition from unilateral action (Nash equilibria) to multilateral cooperation (Pareto optima). With increasing number of players the complexity–stability tradeoff limits the stable coalition size. As an example for resource conflicts the exploitation of fish resources is simulated, for different fish populations and different players harvesting fish.

Suggested Citation

  • Scheffran, Jürgen, 2000. "The dynamic interaction between economy and ecology," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 53(4), pages 371-380.
    • Handle: RePEc:eee:matcom:v:53:y:2000:i:4:p:371-380
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    Cited by:

    1. Luo, Yi & Miller, Shelie, 2013. "A game theory analysis of market incentives for US switchgrass ethanol," Ecological Economics, Elsevier, vol. 93(C), pages 42-56.
    2. Bartus, Gábor, 2008. "Van-e a gazdasági tevékenységeknek termodinamikai korlátja? [Is there a thermodynamic constraint on economic activity?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1010-1022.
    3. Eisenack, K. & Welsch, H. & Kropp, J.P., 2006. "A qualitative dynamical modelling approach to capital accumulation in unregulated fisheries," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2613-2636, December.
    4. Todorov, Vladislav & Marinova, Dora, 2011. "Modelling sustainability," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 81(7), pages 1397-1408.
    5. BenDor, Todd & Scheffran, Jürgen & Hannon, Bruce, 2009. "Ecological and economic sustainability in fishery management: A multi-agent model for understanding competition and cooperation," Ecological Economics, Elsevier, vol. 68(4), pages 1061-1073, February.

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