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The DEFINE (Dynamic Ecosystem-FINance-Economy) framework is an ecological stock-flow consistent (E-SFC) modelling framework that analyses the interactions between the ecosystem, the financial system and the macroeconomy. It aims at examining economic policies and strategies that can allow our societies to live within the biophysical limits of a finite planet.

DEFINE draws on the post-Keynesian stock-flow consistent approach and the ecological economics tradition that goes back to Georgescu-Roegen. By doing so it provides an integrated approach to the combined analysis of physical and monetary stocks and flows. DEFINE explicitly incorporates the laws of thermodynamics, the Law of Conservation of Mass, as well as the finite nature of natural resources and their imperfect substitutability in production processes. It also incorporates the endogeneity of money, the interaction between demand-side and supply-side factors, the impact of finance on macroeconomic activity, the effects of the macrofinancial system on ecosystem depletion and degradation, as well as the impact that environmental change has on macrofinancial stability through transition and physical risks. 

The DEFINE modelling framework is used to generate scenarios about the environmental crisis and its macrofinancial implications. It is also used to evaluate the effects of various types of environmental policies and strategies, paying particular attention to the role of finance.

There are three categories of DEFINE models:

  1. The DEFINE-GLOBAL model which is a large-scale model for the global economy and the global ecosystem. 

  2. The country-specific DEFINE models that are large-scale models whose structure reflects the features of specific economies. So far, this category includes the DEFINE-UK model as well as the DEFINE-ALBANIA and the DEFINE-PHILIPPINES models that are under development.

  3. The simplified DEFINE models that are small-scale or medium-scale models that focus on specific elements of the economy or the ecosystem, assuming away interactions with other elements. The simplified DEFINE models are either components of the large-scale DEFINE model or stand-alone models. So far, this category includes DEFINE-SIMPLE, DEFINE-CLIMATE, DEFINE-MATTER and DEFINE-HOUSING. 

The R codes for the DEFINE models are available on GitHub.