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A causal loop diagram is a causal diagram that aids in visualizing how different variables in a system are causally interrelated. The diagram consists of a set of words and arrows. Causal loop diagrams are accompanied by a narrative which describes the causally closed situation the CLD describes. Closed loops, or causal feedback loops, in the diagram are very important features of CLDs.
The words with arrows coming in and out represent variables, or quantities whose value changes over time and the links represent a causal relationship between the two variables. A link marked + indicates a positive relation where an increase in the causal variable leads, all else equal, to an increase in the effect variable, or a decrease in the causal variable leads, all else equal, to a decrease in the effect variable. A link marked - indicates a negative relation where an increase in the causal variable leads, all else equal, to a decrease in the effect variable, or a decrease in the causal variable leads, all else equal, to an increase in the effect variable. A positive causal link can be said to lead to a change in the same direction, and an opposite link can be said to lead to change in the opposite direction, i.e. if the variable in which the link starts increases, the other variable decreases and vice versa.
The words without arrows are loop labels. As with the links, feedback loops have either positive or negative polarity. CLDs contain labels for these processes, often using numbering , and phrases that describe the function of the loop. A reinforcing loop is a cycle in which the effect of a variation in any variable propagates through the loop and returns to reinforce the initial deviation. A balancing loop is the cycle in which the effect of a variation in any variable propagates through the loop and returns to the variable a deviation opposite to the initial one. Balancing loops are typically goal-seeking, or error-sensitive, processes and are presented with the variable indicating the goal of the loop. Reinforcing loops are typically vicious or virtuous cycles.
Example of positive reinforcing loop: