DOI
http://dx.doi.org/10.1016/j.gloenvcha.2016.02.003

Summary
The paper elaborates new methods for modelling policy interventions for sustainability transition, which are able to account for complexity and agent heterogeneity. First, the authors point to the drawbacks of current optimization/equilibrium-based economic models. In fact, they are dismissed for 5 reasons:
- Their normative nature does not allow to elaborate realistic accounts of systems’ behaviors (e.g. consumers, firms, governments, ect);
- Their unrealistic reliance on the full-rationality of agents establishes an idealistic representation of agents’ behaviors, as they are often forced to take decisions with limited information (i.e, bounded rationality);
- They are not able to capture mutual influences among agents, failing to describe related self-reinforcing behaviors (positive feedback);
- Due to their normative nature, they fail to describe technological lock-ins, path dependence processes and multiple solutions;
- They are not able to properly account for agents’ heterogeneity, as they make use of average/idealistic representations of their behaviors (e.g. consumers described as “utility maximizing agents”).
The paradigm shift proposed in the article makes use of non-equilibrium economics in order to take into account agent heterogeneity and complexity in the analysis of four key areas for climate policy:
- Technology adoption and diffusion
- Macroeconomic impacts of low-carbon policies
- Interactions between socio-economic system and the natural environment
- The anticipation of policy outcomes.
The policies designed by using this model are able to better describe real-world complexity, provide adequate accounts of causal relationships between human behavior and policy outcomes, as well as quantify the likelihood of policy success, instead of providing a normative, simplified perspective. The article concludes by calling for a methodological shift aligning the modelling of the socio-economic system with that of the climatic system.

Relevance for Complex Systems Knowledge
The paper provides relevant insights for Complex Systems knowledge, as it makes direct use of complex systems perspectives to elaborate a model capable of suggesting policy design for sustainable development transition. It presents a thorough account of its advantages when compared to traditional normative/equilibrium-based models, as well as presenting four specific applications:
- The diffusion of transport technology;
- The impact of low-carbon investment on income and employment;
- The management of cascading uncertainties;
- The cross-sectoral impact of biofuels policies.
As described in the article, the model overturns many theoretical paradigms that have proven inefficient.

Point of Strength
It clearly presents the advantages of the new model proposed and its novelty;
It provides different practical applications for complex theory in policy design;
It makes reference to sustainability development and green policy;
It is a data-driven analysis that makes use of social sciences’ insights;
It moves policy analysis towards the range of probability instead of certainty.