System dynamics is a quantitative methodology. It uses numbers and equations to model the links between the parts of a system. With system dynamics, we can integrate social, economic, and environmental indicators in a single analysis. This helps us to calculate the impacts of infrastructure projects on different economic sectors, people, and the environment. System dynamics allows us to look at both short- and long-term developments.
For example, system dynamics allows us to calculate the dollar value of avoided flood damages after reforestation, or we can model how many tonnes of carbon a reforestation project would store.
The central tool for system dynamics modelling is the causal loop diagram (CLD).