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This paper presents a modelling study on regional sustainable development. First, the use of formal modelling for studying the multi-level relationship between economic, environmental and development processes is discussed. Such a relationship is analyzed for an island region in Greece. A potential conflict exists here between environmental conservation, local interests and rapid growth in tourism. A dynamic model is used to depict the development of the economies of three main islands and their interactions with the terrestrial and marine environment. The presentation of the case study model is followed by a discussion of scenarios, indicators and simulation results. [ABSTRACT FROM AUTHOR]