The system boundaries are set by the biosphere, and the harsh reality that we only have one planet, which is a closed system – meaning there is transfer of energy across the boundary (sunlight in, and radiant heat out) but no movement of matter across the boundary (with the exception of insignificant movement in the form of satellites/spaceships out and asteroids in). Within that system of the biosphere, we’ve got society cranking along with all of its economic activity that takes resources from the earth’s crust and the biosphere and releases waste back into the biosphere.
These concepts are very closely related to understanding the System (Level 1) that we talk about in the 5-level framework, and the 4 Sustainability Principles (Level 2).
The old, yet still dominant world view is radically different. The economy is not considered in relation other realities – it is considered on its own with growth defining success. Natural resources are seen as inputs and outputs that drive the economy, and boundless growth is assumed to be possible and desirable:
When compared to GDP, some interesting conclusions can be drawn. The results may or may not be surprising to you depending on how you see the world. In most cases, these indicators clearly show that while GDP and a growth-focused model is an effective approach to development initially, there is a threshold point, where continued growth actually starts to result in a decrease in welfare.