This paper presents a theoretical model of the relationship between Renewable Natural Resources (RNR), local economy and industrial economy. Through system dynamics modelling, this study tests the impact of three policy interventions, 1) Resource efficiency, 2) Resource efficiency and green growth and 3) Localisation of economy, on RNR and the economy. The base case simulation indicates overshoot and collapse of economy due to resource depletion. Resource efficiency and green growth policies are successful in delaying the overshoot and decline of the economy but fail to offer economic recovery. Localization of economy increases the economy‘s responsiveness to depletion of the natural resource stock, thereby enabling it to avoid the economic overshoot and decline within the simulation time. In the extended time scenario the local economy also goes into an overshoot and decline but it manages recovery resulting into long term oscillations. Through these scenarios the paper highlights the need for economy to be proactively responsive towards changes in levels of stock of RNR rather than flows (i.e. supply) in order to avoid an overshoot and fall. The paper concludes by making a case for promotion of slow growth local economies as a strategy to enable transition towards long term ecological-economic equilibrium.