Modelling the impact of environmental policies on minerals investment

This paper describes an application of the tools and techniques of the system dynamics method to the complex problem of understanding those factors which impact the flow of international mineral investment funds. The theoretical underpinning of the paper is a simulation model developed in Powersim in the system dynamics tradition. The model, comprising over 180 variables, provides a means of examining the effects of varied environmental, fiscal and corporate policies on the flow of investment funds and mineral resources between 4 simulated mining firms and 4 competing countries. It attempts to expose – to policy makers – the complexity of the dynamics of international mineral investment, in the hope that future policymaking efforts will incorporate an understanding of this complexity, particularly in relation to the economic impacts of environmental policy.