ABSTRACT
Chapter 5 presents the novel ERRE (Economic Risk, Resources and Environment) system dynamics model. The ERRE is a stock and flow consistent global impact assessment model that addresses the financial risks emerging from the interaction between economic growth and environmental limits under the presence of shocks. The ERRE was developed starting from the Limits to Growth World3–03, and the Energy Transition and the Economy model developed by John Sterman at MIT lab in 1981, and includes the hot house climate effect. As a result, the ERRE models the financial and governance system into the limits to growth framework, where the limits consist of fossil fuel resources, agricultural land, and hot house climate effect. The chapter presents the top level architecture of the system, highlighting cross-systems structure, major feedback loops generating behaviour, and the sectors that form the ERRE. A comparison to economic theory is provided in order to situate this work in economics. The ERRE computer model in this chapter is available at https://doi.org/10.25411/aru.10110710">https://doi.org/10.25411/aru.10110710.
