Cases Exercise of Causal Loop Diagram

Fish Bank Model
Below you find a description of a very simple fisheries model, also known as the
basic Fish Banks model. The two main variables in a fisheries model are fish and
ships. Suppose the number of fish only increases through the fish hatch rate and
decreases both through the fish death rate and the total catch per year. Suppose
that the fish hatch rate equals the fish times the hatch fraction. The fish death
rate is equal to the death fraction times the fish.
The death fraction is a function of the carrying capacity and the number of Fish.
The total catch per year depends on the number of ships and the annual catch
per ship which is a function of the fish density. The density is defined as the
amount of fish in the fishing area divided by the area.
Suppose that the number of Ships increases via the ship building rate which is a
function of the investment costs per ship, annual profits and fraction reinvested.
The annual profits are calculated as the revenues minus the costs. Assume that
the revenues equal the total catch per year times the fish price and that the costs
equal the unit ship operating costs times the number of ships.
• Mak e a CLD of this model. What can be learned from it?
• In case of undesirable conclusions, change the diagrams to turn undesirable
into desirable.
1
Housing Policies
Real estate demand in densely populated urban areas with sufficient land to
extend is often rather price sensitive: declining property prices for instance
caused by relative oversupply, i.e. real supply exceeding real estate demand,
results in rapid demand rises. Construction companies often initiate new projects
based on the demand for properties. Increased demand leads to new projects
being initiated. Real estate construction projects are often completed with
relatively long delays of about 2-3 years. Many construction companies tend to
operate in these areas. And they are mostly unaware or do not keep track of
construction projects in
• 1. Make a CLD of this description.
• 2. What kind of dynamics would you expect to see in property prices?
• 3. What would be an adequate strategy of a smart construction company?
2
A Traditional Bank Run
• A traditional bank run starts when (correct or incorrect) information about

potential problems at a bank leads to fear of a bank failure. More fear leads to
a higher tendency to withdraw personal savings. An increase of withdrawals
leads to a decrease of the perceived solvency of the bank which leads to more
fear of a bank failure. An increase of withdrawals also leads to a decrease of
liquid bank reserves and hence to a lower liquidity of the bank. Banks then
need to turn more and more illiquid assets into liquid assets (money) to have
sufficient liquid assets to pay for (future) withdrawals. Due to the speed
required to liquidate illiquid assets, huge losses are often made, resulting in a
reduction of the solvency of the bank. The lower the solvency of the bank, the
lower the perceived solvency of the bank, which leads to more fear of a bank
failure. Weak or uncertain economic conditions result in more fear and lower
perceived solvency.
• 1. Make a causal loop diagram of this description. This causal loop diagram
should be similar to the ones described in (Richardson 1991; MacDonald
2002). How many feedback loops are there? What is their polarity?
• 2. What are the possible systems behaviors suggested by this CLD?
3
Energy Transitions
• Energy Transitions are dynamically complex: they are governed by many feedback effects and long
delays. Energy transitions are also deeply uncertain: major uncertainties –related to individuals,
particular technologies, the entire system, and hence for policy/decision makers in the energy field–
are omnipresent. Energy technologies face many uncertainties and need to overcome many hurdles,
even before becoming commercially viable and entering the energy technologies battlefield.
• One of these hurdles is the so-called ‘valley of death’. That is, quite often, entrepreneurs and
technology developers bring a new technology to the pre-commercial stage, but due to a lack of
investments, it does not survive the phase between (subsidized) entrepreneurial technology
development and large-scale commercial take-off in which subsidies are (often) forbidden. It is hard to
predict which promising technologies will actually make it, and hence, which might possibly become
the technologies of the future.
• Many self-reinforcing uncertainties influence perceived certainty related to each new technology. The
lower the perceived certainty, the higher the perceived risk and the lower the entrepreneurial
willingness to acquire knowledge/experiment/lobby/. . . in order to bring a technology to the point
where it would be considered a good investment. Resources for actions to reduce uncertainty may
actually help to take this hurdle and may lead to more perceived certainty and raise perceptions about
the potential success of the technology. This in turn reinforces (intrinsic) entrepreneurial motivation,
resulting in more willingness to act. A reduction of the perceived risk and an increase of the
entrepreneurial motivation are the preconditions to further the state of development and increase the
willingness to invest of entrepreneurs and risk-taking energy companies, which in turn leads to more
real investments, contributing to the success of the technology, reinforcing the willingness to invest,
etc.
• 1. Make a CLD of the pre-battlefield struggle. How many loops are there? What is their polarity? What
would be appropriate names?
• 2. What policy recommendations could be derived from this CLD?

Cases Exercise of Causal Loop Diagram

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Fish Bank Model

• A traditional bank run starts when (correct or incorrect) information about

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