New Bottom Line Volume 3.8 – Building an Environmental Economy: A Municipal Strategy

April 29, 1994

There is increasingly widespread agreement that major economic growth will occur in the next decades across a wide spectrum of environmentally related businesses. Many analysts call the emerging environmental market the most significant business opportunity of the next twenty years.

Governmental agencies are taking account of this major economic development opportunity with a wide range of programs, ranging from technology development, demonstration and commercialization, like the EPA’s Environmental Technology Initiative, to export promotion, like the California EPA’s Environmental Technology Partnership.

But these programs are not limited to federal and state levels. Many cities have begun to develop municipal policies to aid and encourage the emerging environmental industry. San Jose (California), for example, has targeted recycling-based industries, for active business attraction and support services, including a range of financial resources, such as revolving loan funds, as well as traditional economic development resources like siting assistance. The “Sustainable Cambridge” (Massachusetts) Coalition has charted the major resource flows for that city, to identify opportunities for environmental and economic improvement. Chattanooga (Tennessee) has developed an ambitious effort anchored around water resources and transportation.

The Berkeley (California) City Council recently endorsed a report commissioned to craft a systematic strategy to support development of the emerging “environmental business sector.” The analysis and report (conducted by the author’s firm) focused on Berkeley; the methodology, should be applicable to any city: chart the full scope of the emerging “Environmental Business” universe; identify the distinctive economic, intellectual and cultural resources of the city, and examine the universe through that distinctive filter, to select the specific sectors for proactive focus; implement high-leverage, collaborative programs to both nurture environmental business and to improve the environmental quality of all local businesses.

The “Environmental Business” Universe

Traditional definitions of “Environmental Business” have narrowly focused on regulatory-driven activity like pollution control and waste management; many early “environmental investment” funds focused on resource recovery and hazardous waste management companies. A more comprehensive definition includes a broad range of environmental quality and efficiency focused activities; estimates of a $120 billion per year US environmental industry may well understate actual market size.

The key sectors of this expanded universe which can expect significant growth in the next decade include: energy, especially renewable energy, energy efficiency and energy storage; air quality, including both pollution control equipment and process efficiency improvements; consulting, especially “integrative” consulting focusing on process, efficiency and quality improvement in context of strategic environment management; resource recovery, including recycling, manufacturing with recycled materials, “reverse manufacturing” (disassembly of products down to recyclable components), and resource mining (“high-grading”); instruments & control equipment, including both pollution control and manufacturing efficiency equipment; and water efficiency, including both water efficiency/conservation and water quality/reclamation technologies.

Berkeley’s Environmental Economy

Berkeley has been home to pioneering efforts in many sectors of the environmental business universe, a result of indigenous factors including both the intellectual resources of University of California, local business and non-governmental organizations and the environmental motivation of its citizens. Filtering the key environmental business sectors through a lens of Berkeley’s distinctive resources suggested significant opportunities in: bioremediation; pollution prevention; analytic & pollution control equipment; consulting services; manufacturing monitoring, modeling and control; energy storage; transportation-related products and services; and environmental restoration.

Municipal Environmental Industry Strategy

The strategy that emerged from this analysis should integrate well with any city’s traditional economic development goals and strategies, including manufacturing revitalization and job development:

– Meet with key potential collaborators to involve them in modifying and implementing the plan.

– Target key environmental business sectors for proactive support, in addition to reactive support provided to all sectors.

– Create strong public/private partnerships–including local universities and federal labs–to rapidly mobilize economic, intellectual, and technical resources; leverage limited public resources through full engagement of the private sector; help the existing environmental businesses find each other, through a directory, database or events.

– Develop environmental business incubators to nurture emerging companies through pooled business support services.

– Use the economic development department as an information broker for local businesses–both an “on-ramp” and a tour guide for the information superhighway.

– Craft a balanced program that emphasizes what the Center for the New West calls “gardening” –growing local businesses–over “hunting”–attracting them from elsewhere; targeting both global and local markets; and seeking job development for blue collar as well as more highly skilled workers.

– Flatten regulatory and bureaucratic obstacles, while maintaining high environmental quality standards.

– Improve environmental efficiency of all local businesses by reducing wasteful utility expenses, and supporting product and process efficiency improvement.

– Collaborate with other cities working to build an environmental economy–to both learn from each others experiences and influence state and federal programs.

(c) 1994 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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