4.2. What factors drive (un)sustainability in social-ecological systems?
The SESs modelled reveal their susceptibility towards various factors affecting (un)sustainability. An analysis of such mechanisms is included below:
4.2.1. Monetary debt and financial entities: avoiding the blindness of the market economy
The ABM 1 (conceptual model) shows that the current debt-driven SES creates a context where continual economic growth becomes a necessity. Under this scenario, an ever-faster growth rate, fuelled by increasing debt stocks, requires the use of resources and emission of pollutants. Interestingly, Model 1 shows that the economy does not collapse due to the debt burden, or the debt-based nature of the economic system itself. Yet, this is the outcome due to the inappropriate use that firms and speculators make of debt. The system does not, therefore, impose a growth imperative per se, i.e., the debt-based economic system may not be, by definition, environmentally unsustainable. Rather, the speculative and profit-seeking behaviour of agents show a tendency to increase natural resource unsustainability.
Similarly, ABM 2 (Indonesian case-study) shows an increase of CO2 emissions and biodiversity loss due to the inappropriate use of bank credits by oil palm companies. Here, again, the problem is not the “what” —i.e., the (type of) SES—, but the “how”—i.e., the role of entities and their use of credits. More specifically, ABM 2 shows that allocating bank credits for other purposes than fuelling deforestation could help in halting biodiversity loss and carbon emissions, while still meeting CPO production demand targets. In this regard, increasing the production efficiency of existing oil palm cultivations and planting oil palms on degraded land (Koh and Ghazoul, 2010) could help meet the global CPO demand, while avoiding the release of excessive CO2 and further biodiversity loss.
The problem here is that debt-dependent palm oil companies are unlikely to use credit facilities to finance less profitable, financially riskier ‘innovative’ CPO production processes, e.g., high-yielding oil palm genome projects, or information systems providing real-time results on palm oil plantations. Similarly, banks are unlikely to lend credits to firms unless the credit is used to finance processes or activities that ensure short-term profits and, thus, provide financial security for banks. Additionally, ‘innovative’ palm oil companies (i.e., firms implementing the above-noted sustainable strategies) would be under-cut on international markets by traditional palm oil producers from other countries, unless there was a premium paid for their products. As a result, current traditional oil palm cultivation takes place mainly in biologically rich areas since it provides security for banks and higher short-term profits for firms.
Our models show that SES systems can result in a complete collapse of both natural and economics systems due to debt burdens. However, the results show that debt-driven fractional-reserve economic systems do not impose a growth imperative per se, i.e., the debt-based system is not by definition unsustainable. Rather, the behaviour of entities and agents, and their environmental decisions and relationships, show a tendency to increase natural resource unsustainability. Thus, there is a need to shift the current speculation- and profit-based debt use to a production- and efficiency-based one.
4.2.2. Technological development: two sides of the same coin
Our models show that technological development is another key factor driving SES (un)sustainability. Yet, SES collapses are not specifically driven by the net peak values reached by technology efficiency (i.e., high technological efficiency rates), but rather by the speed (i.e., growth rate) at which technological development takes place. For instance, Model 1 shows how technology efficiency, under full-reserve systems —i.e., systems with low investments in technological development— reaches a higher long-term net value compared to fractional reserve systems —i.e., systems with no government intervention. However, the speed of reaching this value is higher in the latter. We argue that a slower, yet constant, increase in technological development, focused on production efficiency rather than speculation, could help create win-win scenarios for GDP and natural resource availability.
Overall, there is a social tendency to believe in technology as an article of faith or based on statistically flawed extrapolations of historical trends, despite the lack of support for this proposition (Brown et al. 2011). Economists have usually resorted to technology and innovation as a source of ever-increasing efficiency and economic growth, regardless of the uncertainty and unpredictable nature of technological innovation (Ritter et al. 2011). Technological progress is, in fact, a discontinuous process, in which most significant innovations occur by “fits and starts” (Lafforgue 2008). The discontinuous nature of technology has the risk of affecting the entire economic system and can lead to far-reaching changes in different social factors (Helpman 1998), as well as socioeconomic collapse (Diamon 2005). Moreover, the Jevons Paradox establishes that increases in efficiency of resource use are usually outpaced by the rate at which consumption of those resources increases (Jevons 1865).
Conversely, it is important to note that technological development, applied to different fields, has positive implications for SES sustainability. For instance, those implementations of technological development focused on improving waste management (e.g., reduce, reuse, recycle) are beneficial for the environment, among many others. Therefore, it is important to specify and analyse the particular use of technology at the time of arguing or stating whether technological development enhances/diminishes SES sustainability.
4.2.3. Speculation and price volatility: the need to recouple economic and natural systems
The economic and natural systems are currently decoupled: not only in terms of GDP and environmental impacts —which is a yet-to-achieve key goal for global sustainability— but regarding the idea that the economy needs to behave and act upon, and within, the state and condition of the environment.
Our models show that speculation, and its effect on price volatility, is an important factor enhancing the decoupling process between economic and natural systems. International policy makers and non-governmental actors have become increasingly concerned that the entry of speculators into the system might distort commodity prices by creating excess price volatility (Cox 1976; UNCTAD 2011). The fractional-reserve banking scenario in our ABM 1 creates volatile, artificial and difficult-to-predict speculative markets. This is because monetary debt is not used by the private sector to increase profits through increasing productivity and, thereby, benefit society (e.g., by enhancing technological efficiency); rather, it is mainly used by speculators to increase their own profits. As a result, prices and demand processes are rather influenced by economic (i.e., the grade of speculation in the system) instead of environmental factors (i.e., resource availability). Thus, those periods in our models when speculation follows positive increasing trends show weak coupling values between the economy (represented by the GDP) and the environment (represented by natural resource stocks), while those periods where artificial speculative markets are absent show a strong coupling between the economy and the environment.
These results support our previously described argument that debt is not the main cause of SES unsustainability, but rather the use that firms and speculators make of it. Our results also align with Keen (2009), who states that money funding in the current debt-based economic system occurs according to speculation, instead of production-oriented goals. We argue that commodity price changes should be linked to supply-demand processes and the availability of natural resources, rather than speculative processes and markets, thus helping to move towards decoupling GDP and the use and availability of natural resources.
4.2.4. Government timely interventions: the importance of tipping points and supporting long-term views
As previously mentioned, the economy does not necessarily have to grow, or become unstable, due to the debt burden encouraged by the monetary system; yet this is the common outcome because of the inappropriate use that firms make of credits (Sealey, Binder and Burch 2018). In our models, this is addressed by implementing government policies focused on enhancing natural resource conservation and more sustainable practices by firms.
In this regard, late government intervention in our models is incapable of either enhancing a reduction of firms' resource extraction rate or increasing resource replenishment rates. The slower pace at which conservation policies are implemented by the government under our BAU scenarios is not sufficient to counterbalance the negative effects exerted on resources by faster technological development rates. Hence, a mismatch occurs between government's capacity to implement conservation policies and the promotion of economic growth induced by firms.
This is related to the difficulty of detecting tipping points and predict environmental changes in complex coupled SES (Dawson et al 2010). Complex systems are characterized by having multiple scales, non-linearity and interactive dynamics that are often unpredictable (Axelrod and Michael 2001; Holling, Berkes and Folke, 1998). Institutions have the difficult task of anticipating the complexity of SES dynamics over multiple temporal and spatial scales to avoid SES collapse, as seen, for example, in common pool resources, such as marine fisheries (Beddington, Agnew and Clark 2007) and freshwater systems (Alaniz et al. 2019).
The mismatch between government's implementation of conservation policies and economic growth under our BAU scenarios could be addressed through timely governmental interventions. Such interventions could prevent market failures through environmental policies that focus on the long-term stability and resilience of SESs. For instance, our Indonesia case-study (Model 2) shows that market intervention through different policies could address the Indonesian smallholders’ aversion to risk, currently represented by their unwillingness to use credit facility to create new plantations in degraded lands (Ruysschaert et al. 2011). Hence, cheaper bank financing mechanisms (e.g., interest-free loans) offered by more secure financial entities, e.g., micro-finance institutions (see Ruysschaert et al. 2011) could incentivize a more sustainable use of bank credits by farmers.
A balance is likely needed between government interventions and the market. The problem here is that, as shown by our models, seeking long-term objectives under the current economic paradigm is penalized by a system focused on short-term gains. Increased opportunities should be given to the economic system to invest in long-term environmental goals. Using climate change as an example, Nordhaus (2007) argues that limited and gradual government interventions in the economy are necessary, where optimal regulation should reduce long-run growth by only a modest amount. Stern's (2007) view is less optimistic; it calls for more extensive and immediate interventions and argues that these interventions need to be in place permanently even though they may entail significant economic cost. The more pessimistic answers, such as those coming from degrowth economics (Jackson and Victor 2015; Meadows et al. 2004; Victor and Rosenbluth 2007), argue that, essentially, all growth needs to come to an end in order to save the planet.
Our results stand between both viewpoints: responsible, partial and gradual, yet not marginal, and strong interventions are needed to prevent the economy from collapsing.
4.2.5. Overcoming government powerlessness and unwillingness to protect the environment: the need to combine bottom-up and top-down conservation forces
Our models show that there is a need to enhance, and integrate, both top-down and bottom-up conservation forces to engender SES sustainability. This challenging context is currently being achieved in the Wet Tropics of Queensland (see Model 3 results). Thus, the BAU scenario in the forested landscape of the Wet Tropics is helping to provide food, conserve biodiversity and sequester atmospheric carbon.
Such results have their origin in the stronger conservation forces compared to economic, land clearing forces. Back in the 1970s, bottom-up forces started to rise on account of an increasingly growing public awareness about the importance of wilderness areas in this region (Burg, 2017). Scientists, conservation groups and the society overall started to mobilise and take action against the economic forces driving land clearing for agriculture. Eventually, this bottom-up movement was able to influence top-down conservation processes (Burg, 2017), culminating in the listing of the Wet Tropics rainforests on the World Heritage Register in December 1988, as well as the formation of the Wet Tropics Management Authority. As a result, a solid and multilayer policy network —top-down conservation force—, focused on the protection of rainforest biodiversity, was created (Weber et al. 2021).
This top-down–bottom-up initiative can be considered a remarkable example of polycentric governance, i.e., a governance system in which multiple governing bodies interact to make and enforce rules within a specific policy arena or location, to achieve collective action in the face of disturbance change (Morrison et al., 2019). The Wet Tropics case shows the importance of developing a multilayer set of rules, efficiently coordinated by different centres of authority (see Morrison et al., 2019), that allows the protection of nature in the face of land clearing forces.
As a result, currently almost 80% of the Wet Tropics is protected (Wet Tropics Management Authority, 2021), mainly rainforest, helping to protect biodiversity and enhance the supply of multiple ES, such as climate regulation, air quality regulation, and cyclone protection (Alamgir et al., 2016). The Wet Tropics case of combining both bottom-up and top-down conservation forces is unique due to various local and regional conditions and characteristics (see next section). Poorer, developing countries have weak environmental governance schemes, which means that they need external financial support to strengthen their conservation governance. Governments from developed countries need to assist developing countries through different incentive mechanisms (Balmford et al. 2002). In this regard, international schemes, related to payment for ecosystem services (PES) (Farley and Costanza 2010), have been offering incentives to developing countries to preserve and enhance forests through REDD programs (Angelsen 2008). As an example, Indonesia signed a US$1 billion deal with Norway in 2010, under the REDD framework, aimed at reducing deforestation (Lang 2010). So far, the agreement has not made much difference to the rate of deforestation, due to corruption, bad practices, and stronger economic forces compared to conservation (Lang 2010, 2017). Yet, supporting these types of international agreements and schemes is key to overcoming the political difficulty of implementing policies that, indirectly, reduce the power of influential financial institutions that are not interested in any paradigm shift. In fact, governments from poorer countries are forced to take account of the influence of industries and other interest groups (Abel et al. 2006), due to the high dependency of national economies on very few corporations or monopolies.
In conclusion, there is a need to shift market-driven, capitalist forces to support environmental conservation, for which strong bottom-up and top-down conservation forces will be needed. Achieving sustainability largely depends on whether national and international governments are prepared to either pay the financial and societal externality costs of those industries built upon the current development model, or accept a comparatively smaller trade-off with agricultural land in return for increasing SES sustainability.
4.2.6. Careful with extrapolations: considering specific factors and conditions to each social-ecological system
Besides the rather generalist factors addressed so far, there exist particular factors, specific to each SES, that need to be considered separately. This is, for instance, the case for the Wet Tropics of Queensland (ABM 3). The current BAU context in the forested SES of the Wet Tropics region is helping to reconcile biodiversity conservation, climate change mitigation and sugarcane production. We use this case-study to highlight the importance of analysing and considering specific local and regional factors in SES studies.
The forested area of the Wet Tropics shows an unusual example of a tropical SES where both economic growth and environmental conservation are achieved under the current economic system. While most tropical regions world-wide, located in developing countries, find it challenging to achieve this win-win scenario, the forested landscape of the Wet Tropics possesses specific local and regional characteristics that facilitate this scenario: (1) Economic —temperate forests are around twenty times more productive of timber than tropical forests, being the prior the main provider of industrial wood worldwide (FAO, 2004; Sedjo and Simpson, 1999). Additionally, the banning of logging due to the World Heritage protection in 1988 reduced the use of tropical wood for timber production (Vanclay, 1994), making timber production from forests in the Wet Tropics an uncompetitive economic use (Valentine and Hill, 2008) compared to other sectors, such as tourism (Wet Tropics Management Authority, 2015). Furthermore, Australia, as a developed country, attracts and has more access to funding for conservation programmes than any other developing countries with tropical rainforests, which are more focused on solving poverty and social issues (Ceddia et al., 2014; Hill et al., 2013). (2) Governance —different public governance indicators, such as corruption and poor governance, show more positive results for Australia compared to other countries in Southeast Asia (Sodhi et al., 2010). In fact, countries with lower values for some indicators such as corruption control and quality public services are more likely to support or experience the spatial expansion of agriculture through deforestation (Ceddia et al., 2014). (3) Legal —under the Australian Constitution, the national government can over-ride the States and Territories over matters tied to international treaties, such as the World Heritage Convention. Thus, the Australian Government can stop environmentally unsustainable activities, such as the logging of the Wet Tropics forests. (4) social-political —additionally, conservation of tropical forests was strengthened by politicians seeking their own political benefit (Redfield, 1996). Timber harvesting in north Queensland had ceased since the inscription of the region on the World Heritage List in 1988 (Vanclay, 1993); thus, the national government took advantage of the previously described bottom-up conservation mobilisation to make forest conservation a vote-winner nationally (Redfield, 1996). As a result, support for conservation by politicians was a key factor to enhance SES sustainability in the Wet Tropics. (5) Environmental-scientific —the importance of the Wet Tropics World Heritage Site from a scientific and environmental perspective facilitates the justification and the reception of both political and financial support for conservation. (6) Geographical —from a land-use, landscape and protected area management perspective, Australia has no spatial conflicts with neighbouring countries. Thus, the Queensland Government can manage the Wet Tropics without dealing with potential cross-national or international conflicts.
In conclusion, the positive results obtained for the Wet Tropics case-study (ABM 3) are worthwhile exploring further. This is an outstanding achievement for a tropical region; considering that most of other areas of the tropics are characterized for having stronger economic, land clearing forces compared to conservation, thus enhancing biodiversity loss, habitat destruction, climate change, and other environmental issues. However, the context present in the Wet Tropics forested landscape should not be compared, nor extrapolated, to other SESs or tropical areas worldwide. For example, the political, cultural, environmental, and socioeconomic context in Indonesia, as shown by our ABM 2, is completely the opposite, thus the Wet Tropics scenario cannot be implemented in Indonesia. In fact, specific factors to the Indonesian SES could be preventing it from achieving sustainability. First, Indonesia is the top exporter of palm oil in the world (USDA 2014), where the contribution of the national economy is essential (Zen et al. 2005). Second, CPO production has resulted in economic improvement of rural areas by providing jobs for local people (Hirawan 2011). Third, the current debt-based palm oil industry is supported by both banks and the industry itself, since it enhances a win-win economic context, where the former gain benefits from the interest on their loans and the latter continues to increase its turnover due to the rising demand for CPO. As a result, the current debt-based palm oil industry is supported by both banks and the industry itself. Last, but by no means least, weak conservation governance in Indonesia does not help to counterbalance the stronger land clearing processes, thus placing BAU economic forces at a privileged position at the expense of conservation forces (Hill et al. 2015).