A04 Assignment: CLD

Cases for Mid-term Test

Score
TIARA SHINTA R (NPM. 2106663723)
BERPIKIR SISTEM – SALEMBA - 2021
1. 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.
• Make a CLD of this model. What can be learned from it?
• In case of undesirable conclusions, change the diagrams to turn undesirable into desirable.
Modern fishing ships have sonar tracking and other high tech equipment to aid in finding and catching fish. As a result, the ships are able to return with nearly a full load even if the fish
population begins to drop. It is not until the fish population has dropped dangerously low that fishing companies detect any significant decline in the catch. To represent this fact in a
model we will need to redefine catch per ship and have it dependent on a new factor, that is density. Density is the number of fish in the area where the fish population lives. The catch
per ship will be 0 when density is 0. As density increases, catch per ship will increase. There is a feedback loop present in this subsystem. An initial increase in the total catch per year
increases the depletion rate of the fish population. As a result, fish density is lower than it would have been, and so is catch per ship. Finally, the total catch per year decreases.

Area

Fish death rate

Number of B2 Fish density

R1 fish B3
Fish hatch rate
Catch per ship

“The connection subsystem contains the link

Total catch per
between the fish and the ships stocks. The major
Number of ships year characteristic of this subsystem is the delay
The investment between fish and catch per ship.”
costs per ship
R5
The ship Costs Revenues
B4 Fish price
building rate
The unit ship
operating costs
Annual Profits
 R1 Number of B2 Fish death rate
fish
Fish hatch rate

Number of ships Total catch per B3

year Fish density
The investment
costs per ship

Catch per ship

R5
B4 Costs
The ship
building rate
Area

The unit ship Fish price

Annual Profits operating costs

Revenues

Total Profits
2. 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,

• Make a CLD of this description.

• What kind of dynamics would you expect to see in property prices?
• What would be an adequate strategy of a smart construction company?
• Make a CLD of this description.
Supply/Demand Ratio
Completed real estate
construction projects

R2 B1 Price

Delay Real Estate Demand

New Projects

Construction project by other Densely populated urban area

companies

• What kind of dynamics would you expect to see in property prices?

The kind of dynamics I would to expect to see in property price is market dynamics. Market dynamics are the interaction of supply and demand as the basis
for setting prices. A fundamental concept of macroeconomics is the relationship between supply and demand as the principle forces behind the price of
goods and services. Market dynamics consider how price patterns result from ongoing shifts in supply and demand for specific products. Pricing signals
occur when a shift in supply or demand results in a commensurate shift in the other. In this case, suppose there is an increased demand for real estate. This
results in a price increase that encourages real estate’s construction project completed to increase output to meet the new level of demand. The result is in
an increase in the supply of real estate. Real estate's market price should consequently return to its level prior to the initial rise in demand once the supply
increase stabilizes demand.
 1) Create a flow of communication - Communication is essential to every phase of any construction project.
Establish a flow of communication with everyone on the ground and every stakeholder and supplier in the
plan. This transparency will make the process smoother.
2) Make a habit of continuous planning Construction company should start planning long before actual
What would construction begins, and continue revising and developing plans until the project ends. The design, pre-

be an construction, and procurement stages of a construction project each require extensive planning and each
may need to be revised as the next stage unfolds.
adequate 3) Observe and ask questions Construction is a constantly evolving industry, with new equipment, practices,
strategy of a safety requirements, and advancements every year.

smart 4) Budget projects with a work executive platform - In construction, the permits, wages, materials, and
equipment needed for projects are often exchanged between an array of financial sources and vendors.
construction 5) Embrace automated reporting systems - Automated delivery tools will save significant time over the span
company? of the build. This automation will ensure the right reports go to the right people on time, allowing you to
focus on other tasks and communication. Other reporting systems, such as safety and health management,
can prevent hazards, track incidents, and streamline worksite analysis when issues do arise.
3. 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.

• 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?
• What are the possible systems behaviors suggested by this CLD?
• 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?

ANSWER :
There are three possible feedback loops, they are two balancing feedback loops and one reinforcing feedback loop.

The bank failure Liquid bank reserves

Tendency to withdraw
personal savings

R1 B2
Information about
potential problems

Liquidity of the bank

The perceived
solvency the bank B3

Economic conditions Looses

Solvency
• What are the possible systems behaviors suggested by this CLD?
The possible system behavior suggested by this CLD is goal seeking behavior, where the system needs to find a common objective or a goal. In other
words, the system must be stabilized to achieve its goal. The system needs another feedback to self- stabilized. Balancing feedback loops cause variables
to adjust discrepancies in frequent tendency to withdraw personal savings. Hence, the system undertakes corrective action, such as reducing the bank
failure to decrease tendency to withdraw personal savings, to bring the system back to equilibrium.

The perceived solvency

Goal
the bank

Time
4. 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.
• Make a CLD of the pre-battlefield struggle. How many loops are there? What is their polarity? What would be appropriate
names?
• What policy recommendations could be derived from this CLD?
• Make a CLD of the pre-battlefield struggle. How many loops are there? What is their polarity? What would be appropriate names?
Willingness to invest
Resources for
investments
Investments

R4 R3
Success of Entrepreneurial
investment Potential success motivation R5

Stage of
Delay R2 development
Perceived
Certainly
Success of actions Resources for actions

Uncertainty Willingness to act

The entrepreneurial Perceived

willingness to acquire risk
knowledge

R1

From the CLD above, there are five possible feedback loops, they are five reinforcing feedback loops. The appropriate names of this CLD are entrepreneurial motivation and actions
and uncertainty.
• What policy recommendations could be derived from this CLD?

Policy recommendations that could be derived from this CLD are.

1) Entrepreneurs need to be intrinsically motivated
2) Uncertainties and risks need to be reduced
3) Sufficient resources for actions to reduce uncertainties need to be made available
4) Administrative/bureaucratic delays need to be avoided or kept to a minimum
5) Sufficient resources for initial investments need to be made available.