19. Complexity and Economics Chair: Aart de Zeeuw, The Beijer Institute of Ecological Economics, Stockholm, Sweden and Dept of Economics, Tilburg University, The Netherlands Panel members: Anastasios Xepapadeas, Athens University of Economics and Business, Greece Florian Wagener, CeNDEF , University of Amsterdam, The Netherlands Description: Traditionally, dynamic economic theory has been based on a linear view on the topic of attention. Resource extraction and capital accumulation, for example, were usually modelled as linear processes and analyzed accordingly. This has changed, especially if natural environments are part of the analysis, due to a better understanding of the behavior of ecological systems. Concepts such as resilience, flips to other domains of attraction, hysteresis, and multiple steady states have entered the domain of economic analysis. This implies that techniques such as optimal control theory, to study optimal management, and differential games, to study strategic interaction and common pool resource management, had to be adjusted to be able to handle these non-convexities. This panel will present some recent developments in this area. First Aart de Zeeuw will give an overview of some work on the by now well-known shallow lake model. The lake is a resource for water, fish and recreation, for example, but the state of the lake is affected by the release of phosphorus from agriculture. It reflects one of many human-ecological interactions. An important result is that non-cooperative behaviour may lead to outcomes in a bad state of the lake with low welfare. Three parameters play an essential role: the relative weight attached to the different uses of the lake, the parameter indicating the level of hysteresis or irreversibility, and the initial condition of the lake. Florian Wagener will present possible outcomes of the model, in relation to these parameters. The results provide an important tool for the analysis of this type of problems. Anastasios Xepapadeas will shift focus to semi-arid ecological systems that are characterized by patterns of vegetation and dry lands. In this case the human-ecological interaction consists of raising cattle in these areas. The technical difficulty is that the system has two state variables. Some first results on the optimal spatial-temporal control of semi-arid systems will be presented.