The TERRA2000 project is intended to help policymakers operating in a European context respond to the challenges posed by an increasingly interlinked and complex world. The principal mechanism for doing so is the creation and analysis of a set of scenarios that explore various possible evolutionary paths and policy options, and focus on the implications of the global networked knowledge society (comprising ICTs, networking and globalisation) for sustainable development. This work focuses on specific socio-economic, technological, environmental and demographic themes.Crosscutting analyses that take account of linkages are critical to understanding. In addition to recognising trade-offs (e.g. between economic growth and environmental quality), such analyses should take account of linkages across policy areas (e.g. economic, social, environmental policy) and jurisdictions (e.g. local, national, supranational), as well as dynamic links between economic, political, demographic, environmental, etc. systems.

As is well known, (in the manner of Macaulay) the 'coupling' of these systems can greatly affect their dynamics, creating new challenges and opportunities for policy. For example, if economic, demographic and political interactions are considered, we can easily understand how what should be a self-dampening population shock (e.g. the 'Baby Boom' after WWII) can be magnified. In some countries, the economic growth that accompanied the original boom, sustained by technology, produced incentives for members of the Baby Boom generations to delay having children. At the same time, advances in medical science and the implementation of relatively generous 'pay as you go' social support mechanisms increased the linkage between public debt and the age composition of the population.

As the Baby Boom aged, the 'dependency ratio' (proportion of economically inactive people) increased, tax burdens rose, and work force participation and career length increased still further. Perceived needs to pay for elder care and make personal provision for one's old age combined with perceptions of population pressure to depress birth rates. In the short run, this exacerbated the ageing of the population, and in the medium run it increases the size and period of demographic fluctuations. In the economic sphere, these same phenomena produce an ageing work force, followed by a rapid 'juvenation' as the Baby Boomers retire. This puts pressure on the growth of economic efficiency, on the shape and pace of emerging technological change and even on those aspects of social preference for e.g. environmental quality, energy consumption, etc. that are expressed through market forces. The underlying instability of pay-as-you-go public expenditure systems in response to demographic shocks thus creates pressure for ever-increasing rates of economic growth and/or increasing tax burdens. Finally, the pressure of public expenditure manifests itself in political forces that threaten or at least change perceptions of intergenerational equity. These are clearly complex phenomena and need careful consideration: they cannot be handled by purely sectoral methods, and there is no force of necessity about the experience of any one nation or area.

The path described above is not inevitable; other countries have followed a different course. Neither is it a matter of identifying 'best practice' and following it independently. Europe, which has responded differently to these pressures from, say, the United States, Russia, China, the Southeast Asian economies or the developing world, must nonetheless share an increasingly interconnected and interdependent world with these other regions. This calls for a holistic approach that is sufficiently open and transparent to support joint discussion of the issues and possibilities, in order to preserve values of importance to Europe by making the case for adoption of European approaches and/or modifying European policies to protect European values where appropriate. The underlying values include the perceived need for coherence across a range of policy domains and jurisdictions and balance among the economic, social and environmental dimensions of sustainability.

The discussion must be able to trace the impact of trends and policies to all these dimensions, and to take account of feedback linkages and equilibrating or other dynamic forces operating at the system level. For instance, given aggregate levels of economic activity, resource use and communication may have entirely different implications depending on how the costs and benefits are distributed. Thus it is necessary to take account of the social fabric in its individual and institutional aspects. Only in this way can we focus policies on welfare measure relating to quality of life, employment and cultural expression, rather than indirect measures such as emissions levels, aggregate GDP, etc. Note that it is not suggested that the latter indicators are unimportant - we are merely observing that they are not directly connected either to policy or welfare, and that too narrow a concentration on sector-specific aggregate measures may lead to inaccurate predictions or even perverse policy consequences. In essence, the need to respond to these new challenges in the context of Europe's unique governance context calls for at least three types of capability.    

• An analytic ability is needed to represent the forces at work in meaningful terms and to project the consequences of combined policy initiatives in a transparent, modular, open and robust way.
• A series of scenarios can flesh out the analytic story, developing the underlying issues (including those that cannot be directly handled by scientific analysis) in a comprehensive and comprehensible fashion with clear implications for policy co-ordination and choice to a wide range of stakeholders.·        
• A societal dialogue to engage these stakeholders in the analytic and scenario development activities.