Organisation for Economic Co-operation and Development SG/NAEC(2019)4 Unclassified English - Or. English SYSTEMIC THINKING FOR POLICY MAKING – THE POTENTIAL OF SYSTEMS ANALYSIS FOR ADDRESSING GLOBAL POLICY CHALLENGES IN THE 21st CENTURY 17-18 September 2019, OECD Conference Centre Resulting from collaboration of OECD and the International Institute for Applied Systems Analysis (IIASA), this publication (in pdf format only) demonstrates the potential of systems analysis and systems- based strategies to address critical global issues and guide policy options, drawing on innovative methodologies, models and tools for research and policy analysis. It is presented for comments and contributions of policy communities to stimulate discussion on how systems approaches could be implemented in policymaking. Gabriela Ramos – [email protected] William Hynes – [email protected] OFDE This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 | Systemic Thinking for Policy Making The potential of systems analysis for addressing global policy challenges in the 21st century Edited by Gabriela Ramos, William Hynes, Jan-Marco Müller and Martin Lees 1 Table of Contents 1. Introduction to the OECD-IIASA strategic partnership .......................................................... 3 New Paradigms, Approaches and Methodologies............................................................... 6 2. New paradigms and approaches for economic growth and well-being ................................ 7 3. Improved methodologies, data and tools for modelling ...................................................... 13 The Environment and Sustainable Development .............................................................. 21 4. Developing pathways to sustainability: fulfilling human needs and aspirations while maintaining human life support systems ................................................................................. 22 5. A concerted approach to biodiversity, water, food and trade ............................................. 33 6. Integrated policies for climate, air, ecosystems, energy and transport .............................. 42 7. Systemic approaches for sustainable cities ........................................................................ 52 8. Systems-based approaches for development co-operation to meet diverse needs and aspirations in an interdependent world.................................................................................... 62 Social and Economic Change .............................................................................................. 75 9. The potential of integrated education and population policies ............................................ 76 10. Long-term strategies for employment and well-being in the digital age ........................... 85 11. Managing innovation and new technology for enabling economic and social progress .. 97 Systemic Risk and Resilience ............................................................................................ 106 12. Understanding and evaluating resilience to systemic risks ............................................ 107 13. Strategies to govern systemic risks ................................................................................. 118 Proposals for the Way Forward ......................................................................................... 128 14. Public sector innovation: adapting institutions to systems thinking ................................ 129 15. Human capabilities for systems leadership: disseminating systems thinking through education and training ........................................................................................................... 137 16. Outlook: towards an OECD-IIASA Multiannual Work Programme ................................. 148 2 1. Introduction to the OECD-IIASA strategic partnership By Gabriela Ramos (OECD Chief of Staff and Sherpa to the G20) and Martin Lees (Chairman, OECD-IIASA Task Force) The issues we face in the 21st Century are of an unprecedented scale; they are essentially connected and in processes of rapid, dynamic change; and they are fundamentally systemic. We have learned from experience that we cannot manage such complex, connected systemic issues through ad hoc, short term, sectoral interventions. We must recognise that systems evolve and behave in ways largely determined by their own characteristics and properties. It follows that, if we are to intervene successfully, we must understand their behaviour so as to know how, where and when to intervene. However, our established approaches to analysis and policy are heavily based on the Western scientific tradition of reductionism – where we separate complex realities into specialised disciplines, fields of research, agencies and ministries, each focused on a part of the overall truth. We are then confronted by the need to pull all these disparate views together in order to organise an effective policy response. Systems thinking, in contrast offers a more-integrated perspective and a number of proven concepts, tools and methods to improve our understanding of the complex systemic issues which threaten the future. Thus, systems thinking can improve the prospects for successful policy outcomes. • The systems approach offers a methodology and a range of simple tools to disaggregate, understand and act on connected systemic issues – while taking proper account of the critical linkages between them. • This can enable us to understand better the behaviour of complex, dynamic systems so as to anticipate their future evolutions, to assess and manage risks and to decide how and where to intervene through selected, targeted policies. • This also helps us to identify and understand critical linkages, synergies and trade-offs between issues generally treated separately and thus to reduce unintended consequences. Systems thinking is not simply a means to improve multidisciplinary, cross-sectoral collaboration. Beyond this, it can provide vital insights into systems behaviour and management by rigorous analysis of such aspects as: systems dynamics, feedbacks, sensitivity and non-linear responses; the “emergence” of systems behaviour driven by intrinsic properties; control theory and the optimisation of systems performance over different time horizons or for different groups; the anticipation and assessment of systemic risks; and the strengthening of resilience to external change and shocks. As demonstrated in this publication, the application of systems thinking extends beyond the fields of analysis, modelling and the formulation of policy. It includes the design and management of organisations and institutions: clearly, more integrated, science-based 3 analysis, if it is to become effective in the real world, must be implemented through reorganised and more integrated policies and institutions. And, systems thinking has immediate application in the field of human resource development, through education, training and team building to implement a systems approach. The material discussed is disparate and perhaps at times lacking full coherence but this more accurately reflects the types of complex challenges we are grappling with. Perspectives are drawn from a range of disciplines and methodologies, from economics, social science and policymaking of course, but also from the physical, biological sciences and engineering. The publication shows how cross-sectoral, multidisciplinary collaboration can take account of the crucial linkages between issues generally treated within different specialisations and scientific and institutional “silos”. It provides valuable evidence to demonstrate the value of combining “hard” sciences and physical evidence with the social sciences and the humanities, to strengthen the basis of public policy. Naturally, the authors don’t all agree with us or with each other on the approach and value of systems analysis, but a number of common views have emerged and a coherent work programme based on shared priorities is evolving. For all these reasons, there is growing recognition of the relevance and potential of systems thinking to complement established approaches to policy analysis and implementation by providing greater insight into the complex, dynamic systems of the modern world. In December 2017, OECD Secretary General Angel Gurria and Pavel Kabat, Director General of the International Institute of Applied Systems Analysis (IIASA), signed a Memorandum of Understanding establishing a Strategic Partnership which should “tighten links between science and analysis on the one hand with policy and action on the other to better address global challenges through the development of systems approaches.” This joint publication, initially proposed in June 2018 by Prof. Pavel Kabat, has been prepared through intensive collaboration between authors from the two organisations. Its purpose is to demonstrate the relevance and power of the systems approach to understand and act on a number of the critical systemic issues which confront policy-makers today. This publication is a first step to establish strong practical collaboration between the two organisations. It is principally focused on the strategic level, that is, the relevance of systems thinking to the formulation, implementation and evaluation of national policies in line