IMO, there are only three other aspects of the game that I think should be even remotely as central to the game as economy: magic, diplomacy, and combat. One of my biggest reasons for this is that having an economy that takes into account location, distances, etc is about the only way to make location actually matter!

In 4X games, location tends not to really matter all that much. Defensibility is somewhat important in games like Civ IV but ultimately it's very minor (you can cross any terrain, and you can quite easily bypass cities that would be too much of a challenge to take). Likewise with resources - all you need to do is make sure you don't lose key resources, but that's the extent of that. With finite resources and localized storage, location all of a sudden because an actual factor - especially if combined with methods of making actual choke points and making borders meaningful. (Multi-tile cities helps with the former, and making 'heart-ripping' only one of many viable strategies helps with the latter). It means that you'll probably want to have your cities that are nearby industrial resources to be major industrial centers, to make most efficient use of them. Then you'll have to ship off most of their production to cities geared towards training troops & whatever else might use those products. It forces specialization, it forces location to actually make a difference. Is it worth holding onto that isolated mithril deposit? In a global, infinite resource system - probably! In a finite, localized resource system? Maybe not. Shipping the mithril to a more central part of your empire might be very risky, but it might be prohibitively expensive to set up the full production line and training facilities to make use of it in such an isolated location...

There are very few aspects of 4X games that have such wide-ranging effects on so many different parts of the game as the economy does. It provides one of the basic backbones to what you can and cannot do. A more complex economy lets you do more, and what to actually do becomes much more of a strategic choice. It affects diplomacy, it affects combat, it affects everything! In fact, I'd even venture to say that in a non-fantasy strategy game it is probably the fundamental core of the game. In Elemental, where magic is to be a major aspect, I'd probably put economy and the magic system on ~equal terms.

Civ IV has an incredibly simple economy system, and as a result many aspects of the game are likewise extremely simple. Training and maintaining an army depends only on the opportunity cost of the training time and the upkeep cost of the units. Maintaining control of strategic resources depends only on not losing all the cities around it so that the resource remains inside your cultural boarders - no matter that perhaps its on a small island next to one city in which you've stationed a giant army, and no matter that your enemies have completely sealed it off. There are tons of strategic limitations in Civ IV that are due to its dumbed down economy, and nearly all (if not all) of them would be removed very naturally and intuitively if you add in local resource storage.

Basically, implementing a dumbed-down economy will directly limit the strategic scope of the game and go a long ways towards destroying immersion. 

I'm not entirely sure what you mean. If each city automatically produces metal, then what are the caravans doing? Do they bring extra metal if you place a big enough order? What happens if you cancel the order while the caravan is in transit? Do those resources disappear? Go back? Continue to their destination? If there is no such thing as local storage then the only option is for those resources to disappear.

Additionally, if each city can produce X metal per turn, what happens if I don't use it? It vanishes? It was never made in the first place? That would result in quite the min/maxing problem. It'd encourage you to make the most efficient use of your resources/turn at each city. What if I'm building/training things that take a long time? By the time the next item in the queue comes up, I should've stockpiled quite a bit of resources while they weren't being used; but without resource storage - no. I'd have to wait even longer for the next item because I wouldn't have any surplus - there would in fact be no such thing as surplus! The most efficient building/training strategy therefore becomes to build/train things that go quickly and use most of your /turn resources. Doing anything different, which might be strategically more important, would result in huge waste.

This basically comes back to what I said before: I don't think finite resources can work without local storage. You could in theory use global storage and still have finite resources, but at the cost of location having any importance at all (and at the cost of immersion).

What you suggested, though, seems like a great addendum to a local storage resource system. I really like the idea that as long as your city has access to the resource somewhere, each city (maybe only each city with the appropriate infrastructure, or only if connected by road?) would produce some small amount of that resource automatically. This could simply represent some small amount of autonomous trade between your cities that occurs without your explicit oversight. 

This would allow you to build/train things in small quantities in places far from a resource source without having to mess around with sending caravans across huge distances. But it'd still prevent you from undertaking massive projects without using caravans and making sure all the resources are going where they're needed. The result would be a system with local resource storage, but one in which you don't really have to manage resource storage/transport except for relatively large-scale projects.

Also consider this: the ability to ship more resources than you immediately need to a city, and for them to be stored there, can greatly reduce tedious micromanagement. If I'm trying to build up a new city, and have to worry about resources every step of the way, then building that city will come down to min/maxing. On the other hand, if I can ship a boatload of resources to that city, I can build things the way and order I want them built. I won't have to worry about resources there for quite some time. Sure, there might be an opportunity cost in having resources tied up in storage when I maybe could've used them elsewhere - and I suppose min/maxers could min/max caravan shipments instead of their build queue, but in that case you are merely changing where people are min/maxing, not whether or not there is min/maxing to be done.

But with localized storage in place, you could even minimize that min/maxing! If you have a long production/training queue in place, the system could automatically send out caravans to arrive when they are going to be needed; if something changes (resources arrive from some other place/means, the queue changes, whatever), then those resources just go into storage. If a nearby city then puts out an 'order' for that resource, a caravan could bring it from there, rather than directly from the source much farther away!

I am a little confused now. So we have caravans, no warehouses, and a global access to a mine (example)? So training of one knight takes 10 turns, yes?

How does it change when I have additional barracks?
Is the blacksmith somehow needed in this chain?
If yes, then is one enough for whole empire?
The distance doesn't count, yeah?
It doesn't matter how many super-rare-and-powerful-resource mines I have - it's needed to have only one to crank out super units (tons of them)?

Well, I've been trying to not jump the shark because nothing is finalized, but these announcements on the simplification of the economy system are really disappointing. I just hope that this doesn't get hardcoded so at least through modding we can have the complex economy initially envisioned for this game.

I've really got to see more of what they have in mind but I am kind of in the same camp. One of the coolest things about the game is that it was going to be really an accomplishment to field a well equipped army using even just iron weapons and such. And depending on what actually ends up in place that could still happen and equipping an army will be a non trivial event.

I really liked how EVE's economy worked. You needed to mine raw materials, then have that refined, then have the knowledge of how to make something from one or more of the refined materials and then you made stuff and either created new ships or equipped your ships with the stuff you made. It's an online space MMORPG, that although I am not currently playing it I recommend anyone at least playing the two week trial.

For osme reason this 1B build is extremely unstable and I am getting CTD after maybe 30 turns, so I have not really had a chance to see the economic features that were in the build. (I have had good stability on Beta 1 and 1a though).

I'm not that worried about how the economy works out. Someday I would love to find a game with huge amounts of micro and even getting that first iron sword made requires some logistics and is a "big deal". It doesn't sound like Elemental is going to be the game for that, but there is so much more that is looking fantastic that I'm not too let down.

I just hope the game doesn;t get too consolized, which based on Frogboy's post that is not going to happen.

That wasn't the same thread I was reading. Option 1 was far ahead until option 3, and that took over (with option 1 as second choice). The really simplified system wasn't very popular.

Yeah, that is a good thing. Two iron mines should be better then one iron mine, especially if you have a lot of iron consuming cities.  The really important things are that attacking caravans should matter, and having extra mining capacity should matter. I don't think warehouses are needed to achieve those two goals either. You could give the town access to all the excess iron production it's connected to as long as caravans are getting through, and cut that off if a caravan gets attacked until another one gets through. That's a pretty simple mechanic, but it makes caravans meaningful and doesn't use warehouses.

The answer here is to do exactly as MoM did.  Excess production = Gold.  It makes sense as well, as it is simply the wealth of your nation as a whole.  The stuff doesn't disappear it makes your nation wealthy. 

The reason I'm not a fan of that approach is that it turns gold into a jack-of-all trades resource. If you're rich, who needs resources! I'm assuming, of course, that you can reverse that conversion (ie, that you can turn gold into resources, perhaps for a less favorable rate than the reverse). This basically trivializes resources entirely (especially if resources/turn is done on a per city basis, which which case you'd be turning per city resources into universal gold). If you can't turn gold back into resources, well then that doesn't even remotely solve the problem.

So basically, turning excess resources/turn into gold either largely defeats the purpose of having a system like this in the first place, or doesn't actually solve the problem... 

I like your idea, I am guessing why they don't go this route for gameplay reasons is, most people would not make the knights (and start paying their upkeep) they would just keep lots of raw materials on hand and then crank out their legions on an as needed basis. I do like the idea of a strategic reserve of resources, but am willing to take a wait and see attitude.

I was one of those who voted for #1 but that was partly because it was the hardcore way which is the "cool" thing around here. I fell for the grouppressure a bit....another part of it was that the more hardcore the system, the less consolised. (I realise now that I was wrong.)

Pigeon: I guess your opinion means that you don't play much games with global resource storage then..?

Global resourcestorage is a tried and tested way. The popular RTS games use it as do Age of Wonders and Master of Magic (beat THAT!)

I think I would be pretty happy with the currently solution Frogboy is proposing.  It strikes a pretty good balance.  I think it would be nice if there is a way to stockpile resources in certain cities as well, but I can definitely live without it.  Given the space limitations on how many buildings we can build I don't think a Warehouse/Silo would be built very often at all.  There will probably be much more important buildings. 

As a compromise I think an option to have cities set to always want certain resources from caravans might work.  That way caravans wouldn't wait until I was trying to build something to start delivering it, and my major cities could always expect to have a decent flow to tap into as needed, instead of having to wait to prime the pump. 

What this doesn't handle very well is stockpiling of any resources that absolutely require the resource to be produced.  If a mithril mine is absolutely required for mithril weapons (and it probably should be) then I want some way to guard against instantly losing my mithril if the mine is taken.  I guess I would have a little bit out there in caravans still.  That might be adequate.

Another question (which we may need to discuss here actually) is if we will have separate buildings for blacksmiths or enchanters or whatever to make special equipment or if that will just be done in the barracks or not need any special buildings at all.

MoM had a large number of resources but rather than being global they generally gave tile bonuses to different stats for city development (Gold&Silver deposits gave + Gold to city production, etc)