Urban Dynamics Model

The dynamics affecting the growth and/or decline of cities is a classic concern for those
in the field of system study. Jay Forrester wrote a controversial book, “Urban
Dynamics,” that indicated that much of the “wisdom” of city planners who were trying to
stop urban decay in the latter part of the 20th century was, in fact, on the wrong track. He
suggested that some of their policies to improve urban decay may have, instead,
intensified it. He went on to suggest that urban growth/decay issues involve complex
interconnections that are not linear, and as such, must be studied by methods (computer
simulation) that illuminate the multiple feedback loops such dynamics entail. Using
computer simulation to study policies for change provided conclusions that stimulated
heated discussions among city leaders because some were counterintuitive.

Considerable thought has been given to how one might approach the broad topic of urban
dynamics.

In your journal, respond to each of these questions:

J1. When you travel to a new city, what visual characteristics might indicate the city is
thriving as opposed to decaying?

J2. What are some important variables that people think about when they decide to move
into a different city from the one in which they are currently living?

The concern with city growth or decline usually centers around economic change and we
will choose to study the increase, and/or decrease, in actual physical commercial
buildings as an indication of the economic health of a city. We will build sub-model
structures that represent important factors in the study of city dynamics, and then put all
the pieces together in the last problem. Periodically we will test some policy strategies
using our model.

1 This lesson was written by Diana M. Fisher. Thanks to George Richardson for guidance in the
development of this model scenario. Two excellent resources are Jay Forrester’s “Urban Dynamics” and
"Introduction to Urban Dynamics" by Alfeld and Graham.
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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
Problem 1a: Business
The growth of an urban area could be characterized by two dynamics. First, business
gives birth to more business. Second, the development of new business takes up space.

If a city is able to attract new business then it usually necessitates the construction of
some new buildings. Construction of new commercial buildings is one factor that is
readily observable in a (seemingly) healthy city.

The first model structure will concentrate on the growth of commercial buildings in a
city. As the number of businesses increase, the city growth is stimulated because existing
businesses create a demand for more supporting businesses. For example, a new factory
built in a city will require the support of other companies or businesses in order to operate
successfully. Those other companies might provide maintenance for machines, or supply
raw materials and power. Support businesses might be restaurants for the workers to use
at lunch, etc. Similarly, as the variety of businesses increases in an area, it stimulates
more businesses to move to the area because there are resource businesses available. So
businesses, as represented by commercial buildings, stimulate the growth of new
businesses.

J3. In your journal, draw a BOTG representing the Business Structures

high
change in the number of business structures in a Draw your
healthy, thriving city over a simulated 100 years. graph in
Write a one or two sentence explanation for the reason you drew your journal.
low
the graph as you did. Explain, very briefly, how we might 0 100
recognize, in a graph, that a city is not healthy? years

To start the first model structure we will use the following information: Assume there
are 1000 commercial buildings currently in the city we are studying. New buildings are
normally constructed at an annual 7% rate. There are 1000 acres zoned for all
commercial buildings, with each building consuming, on average, 0.2 of an acre.

Of course, as the land zoned for commercial buildings gets used up, the rate of new
construction should slow down. You should include this in your model by using a
converter called “Effect of land fraction on construction.” This construction rate
modifier will have a value between 0 and 1. In your model, the modifier will be
multiplied by the normal construction rate to determine the current construction rate.

The normal construction rate should be used as long as Effect of land fraction on construction
the ratio of land occupied by businesses to land zoned 1
is 30% or less. The construction rate modifier should
remain high as long as possible and drop quickly when
the occupied land is between 85% and 95%. There
should be no construction allowed if there is no land
available. Sketch the general shape of the graph on 0
the axes shown at the right. 0 1
Land occupied / Land zoned

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
Design the diagram for this scenario. Be sure to include units when defining each
component. (Be sure your stocks do not have the "non-negative" box checked. Set the
DT to 0.125 and the simulation time to 100 years.) Use the graph to help you determine
if this section works correctly. The graph should contain the number of buildings and the
number of new buildings being constructed.

What will you look at to build confidence that your structure is doing the right thing?

Problem 1b
Before going on, lock the previous graph pad. It will be used as a reference for this
problem.

Modify the previous model to include the fact that buildings do not last forever. Assume
a building has an average lifetime of 40 years, after which it is demolished.

Before running your model, describe how you think your new model output might be
different with regard to the number of buildings and the new constructions.

Make a new graph showing the number of buildings, the new constructions flow, and the
demolition flow.

Print the diagram, equations with units, and the graph all on one page.

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
Problem 2: People
This city is very unrealistic at present, because it has no people! Who will work in all of
these businesses? We need to design a population structure. The population segment of
this model will be constructed as a separate segment, for now.

The simple population model structure should include a birth rate of 3% of the current
population, a death rate of 1.5%, immigration to the city of 8% and emigration from the
city of 6%. Start with a population of 40,000 people.

Be sure to include separate converters to represent each growth/decay rate. We may want
to change some of the values later, and it is easier to do that if they are specified
separately. (This is always a good practice to follow.)

Before executing this model segment describe what you think should occur with the
population size over time. (It should be easy to determine.)

Why should the population size change as you predicted?

Run the simulation to make sure this section actually works as you expected.

Stop for a moment and consider the two structures you have built so far. We will be
connecting these two structures soon. Is there anything that troubles you about the
growth pattern of businesses and people at this point?

Problem 3: Connecting People & Businesses

A healthy city will be more attractive to the influx of new people because it provides
jobs. When the two previous model segments are connected, the connecting components
will have to do with the labor force and the availability of jobs. We will want to include
the following new components:

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
We will assume that 35% of the population is in the paid labor force. We will also
assume that each building provides 16 jobs.

We will want to determine the labor to jobs ratio.

The "Labor to Jobs Ratio" will have a significant impact on the attractiveness of the city
to other people who might think of moving to the city.

J4. In your journal, describe what you think happens to immigration when a
city has plenty of jobs, not enough jobs, and just the right number of jobs for
the current population.

This “attractiveness” converter would be a graphical Attractiveness from jobs

function, have a value between 0 and 2, and would modify 2
the immigration rate. Call this modifier "Attractiveness
from Jobs." We could reasonably expect that the multiplier
would be 1 as long as the ratio of labor to jobs is 1. The 1
multiplier value should be at its highest if there are lots of
jobs and no people to fill them. But, if there are twice as
many people as jobs (the largest possible situation for the 0
0 1 2
ratio) then this multiplier will reduce the immigration to Labor / Jobs
1/10th of its normal rate. Sketch what the graph of this
multiplier should look like on the axes at the right. Then add this component to your
model.

The "Labor to Jobs Ratio" will also affect the construction of new buildings.

J5. In your journal, describe what you think happens to the rate of new
construction of buildings when there is a large supply of labor available,
insufficient labor available, and just sufficient labor available for the current
number of jobs.

A modifier called "Effect of Labor/Job on Construction"

Effect Labor/Job on Construct
would be a graphical function, have a value between 0 and 2, 2
and would modify the normal construction rate. As before, we
could reasonably expect that the multiplier would be 1 as long
as the ratio of labor to jobs is 1. If there are very few workers 1
available (a very low labor to jobs ratio), new construction
should be low, because there would not be enough people
available to work in the new buildings. So the modifier 0
0 1 2
should be, say, 0.2 when the labor to jobs ratio is less than Labor / Jobs
10%. When the labor to jobs ratio is at 2 (the largest possible
situation), then the modifier would double the normal construction rate. Sketch what the
graph of this multiplier should look like on the axes at the right. Then add this
component to your model.

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
Would you expect the population and number of buildings to be:
• growing,
• one growing and the other steady,
• both steady,
• one growing and the other growing and then declining,
• or both growing and then declining?
(This will not be easy to determine! But try anyway, before running the simulation.)

Over time I think the buildings will...

Over time I think the population will...

Run the simulation. Print the diagram, equations with units, and the graph of the
buildings, the population, and the labor to jobs ratio on no more than two pages.

Identify one feedback loop in the system that contains either buildings or population and
contains labor to jobs ratio. Draw the feedback loop. Explain the loop and indicate
whether it is reinforcing or counteracting.

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
At this point save your current model. You will be modifying your model to test some
policies. Save your model a second time, giving it a new name so you can test the
situations described in 3a, 3b, and 3c below.
Now let's test some scenarios designed to try to reduce unemployment. The labor to jobs
ratio is a crude indicator of unemployment. When the ratio is greater than one, we have
unemployment. When the ratio is less than one, we have under-employment. So we
want to try to find a policy that will reduce the labor to jobs ratio.

3a. Assume one city council has decided that if more business is attracted to the city, the
unemployment will decrease. Increase the building construction rate to 0.1 in the 10th
year to reflect this policy. Graph the number of buildings, the population, and the labor
to jobs ratio. What happened? Why? (Hint: Use a feedback loop to help you. You may
want to include other factors in your graph to see what is influencing the change.)

3b. Undo the change from the previous policy. Assume the city council of another city
decides to build business structures that will contain more businesses per structure.
Modify your model so that in the 10th year the number of jobs per business structure
increases from 16 to 20, to reflect this policy. Graph the number of buildings, the
population, and the labor to jobs ratio. What happened? Why? (Hint: Use a feedback
loop to help you. You may want to include other factors in your graph to see what is
influencing the change.)

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
3c. Undo the change introduced in the previous policy. As a consultant to a third city,
decide which policy you would suggest and explain why you chose the one you did. Or
(extra credit), come up with a policy of your own that would improve unemployment in
the long term. (If you decide to devise your own policy, do not put the policy into effect
until the 10th year. Also, print a diagram, equations with units, and a graph containing
businesses, population, and labor to jobs ratio. Then explain your policy. Use the back
of the diagram printout if you need more space for your explanation.)

Problem 4: Housing
Re-open the model you saved before experimenting with potential solutions to the
unemployment scenarios above.
Housing represents another issue that has a significant impact on whether people want to
live in a city. The structure for a housing segment should follow exactly the structure
used for buildings. An increase in housing can influence more people to move to an area,
which will increase the demand for more housing. The specifics for this segment are
listed below:

Initially there are 10,000 houses. Housing construction is growing at a normal rate of 6%
per year.

The total acreage available for houses is 7,500, and each house occupies, on average, 0.1
of an acre.

Houses last an average of 70 years.

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
As the amount of land occupied by houses increases, the construction rate decreases (and
it will decrease in the same general pattern as the buildings rate decreased). This "Effect
of land fraction on construction rate" will be a value between 0 and 1 and will be
multiplied by the normal construction rate to determine the current construction rate.

A multiplier of 1 should be used as long as the fraction of land occupied is 30% or less.
The "Effect ..." on construction rate should remain high as long as possible and drop
quickly when the occupied land is between 85% and 95%. There should be no
construction allowed if there is no land available (as was the case with the building
segment of the model).

Design this model component. Execute the simulation and study the "houses" and "new
houses constructed per year" graphs to determine whether the segment is working as you
would expect.

Problem 5a: Putting All the Pieces Together

Well, the diagram is going to look very large now, but all the pieces should make sense.
When we add the housing segment, the primary impact on city growth is whether there is
enough housing to attract more people to the city. The information needed to properly
connect the housing segment to the buildings and population model segments is as
follows:

Set up a "Population to Houses Ratio" converter that calculates the ratio of the city
population to the number of people that the current houses could contain. Assume that
each house would contain 4 people.

Next, design a graphical converter called "Attractiveness of Housing", whose value will
be between 0 and 2, and whose value will modify the current immigration rate. When
there is a small population to housing ratio (10% or less) the modifier is 1.4 (people
would be attracted to the city at greater than normal rates). When the ratio of population
to housing is 2 (the housing is insufficient to satisfy the demand for housing) the modifier
becomes 0.4 (because people will live in neighboring towns and commute, if necessary,
but this is not as attractive to most people as being able to live in the city itself). It is
expected that meeting the housing demand exactly will result in a normal immigration
rate.

Note: Residential construction will not be affected by labor shortages in this model.

Finally, there is the "Effect of population to housing ratio on housing construction." If

the ratio of population to housing is low (less than 10%), there is not much demand for
new houses so the construction rate would be modified to 20% of its normal rate. If the
population to housing ratio is 2 (the largest ratio that will be considered), then the
construction rate should be doubled. As before, a ratio of 1 should not change the normal
construction rate.

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
Below, sketch the shape of each multiplier graph you decided to use. They should make
sense.
Attractiveness of Housing Effect of Ratio on House Construction
2 2

1 1

0 0
0 1 2 0 1 2
Pop/House Pop/House

Print the diagram, the equations with units, and the graph of the buildings, the
population, and the houses.

Identify one feedback loop in the system that contains either houses or population and
contains the population to housing ratio. Draw the feedback loop. Explain the loop and
indicate whether it is reinforcing or counteracting.

Problem 5b
Finally, we can simplify the model by combining the two area converters into a total area
available converter. We can determine the fraction of land occupied, taking into
consideration both the building need for land, and the housing need for land. The "Effect

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
of land fraction on construction rate" would modify both the housing construction rate
and the building construction rate (since the graph for each was defined exactly the same
way).

Why do you think we could combine each area into a total area since each area has been
zoned differently? (Hint: What do you think a city would do if the previous zoning
requirements did not meet the current growth situation?)

Now define a graph that will show the number of buildings, population, and houses over
time. Run the simulation.

What do you notice about the growth of buildings, houses, and population now,
compared to their growth pattern in problem 5a?

Print out the diagram, the equations with units, and a graph of buildings, population, and
houses, on no more than two pages. Print a table (include all stocks, flows, and ratio
values). Have the table display values every 5 years.

Again we will test some scenarios to see if we can improve the situation.

5c. One city council decides that if more housing is available, more people will come to
the city, causing the city to grow and prosper. Test this scenario by increasing the
housing construction rate to 8% in the 10th year. Create two graphs: one containing
buildings, houses, and population, the other containing labor to jobs ratio and population
to housing ratio. What happened? Why? (Hint: Use a feedback loop to help you.) Is
this a good policy?

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
5d. Undo the change from the previous policy. Assume the city council of another city
decides to build high-density housing that will contain townhouses and apartments.
Modify your model so that in the 10th year the number of people per housing structure
increases from 4 to 15, to reflect this policy. Create two graphs: one containing
buildings, houses, and population, the other containing labor to jobs ratio and population
to housing ratio. What happened? Why? (Hint: Use a feedback loop to help you.) Is
this a good policy?

5e. Undo the previous change. A third city council decides that, to improve the
unemployment rate (and hence the economy of the city), both job and housing
availability must be considered. They think that if they can free up land to allow more
business to be built, then the unemployment rate will decrease. Let's see if they are
correct. In the 10th year, decrease the housing lifetime from 70 years to 35 years. This
will make more land available to the city. In the 10th year increase the business
construction rate from 7% to 10% per year. This will cause the businesses to take up
more of the land share than the houses will take up. Create two graphs: one containing
buildings, houses, and population, the other containing labor to jobs ratio and population
to housing ratio. What happened? Why? Is this a good policy?

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher
 J6. (Extra Credit) In your journal, reflect on this situation. In the 1960's
many city governments built low-income housing developments in their
cities.

a. Do you think this made life better for the poor? Why or why not?

b. What do you think it is like to live in a low-income housing project?

c. Do some research and identify some unintended consequences of the policy to build
low-income housing projects. Be sure to list your sources and, if possible, include the
actual articles from some of your sources.

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Modeling Dynamic Systems: Lessons for a First Course 3rd Edition © 2011 Diana M. Fisher