The natural advantage of nations: business opportunities, innovation, and governance in the 21st century

550 Pages·2005·4.44 MB·English

by  Karlson Hargroves

THE NATURAL ADVANTAGE OF NATIONS
THE NATURAL ADVANTAGE OF
NATIONS
Business Opportunities, Innovation and Governance
in the 21st Century
Edited by
Karlson ‘Charlie’ Hargroves and Michael H. Smith
London • Sterling, VA
First published by Earthscan in the UK and USA in 2005
Copyright © Karlson James Hargroves and Michael H. Smith, 2005
All rights reserved
ISBN: 1-84407-121-9
Typesetting by MapSet Ltd, Gateshead, UK
Printed and bound in the UK by The Bath Press
Cover design by Andrew Corbett
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A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
The natural advantage of nations : business opportunities, innovation, and governance
in the 21st century / edited by Karlson ‘Charlie’ Hargroves and Michael H. Smith.
p. cm.
Includes bibliographical references and index.
ISBN 1-84407-121-9 (hardback)
1. Sustainable development. 2. Economic development—Environmental aspects.
3. Technological innovations—Environmental aspects. 4. Business enterprises—
Environmental aspects. 5. Environmental policy—International cooperation.
6. Environmental protection—International cooperation. 7. Sustainable
development—International cooperation. I. Hargroves, Karlson, 1974- II. Smith,
Michael H., 1969-
HC79.E5N3546 2004
338.9'27—dc22
2004019814
This book is printed on elemental chlorine free paper
Until one is committed, there is hesitancy, the chance to draw back.
Concerning all acts of initiative (and creation), there is one elementary
truth the ignorance of which kills countless ideas and splendid plans: that
the moment one definitely commits oneself, then Providence moves too. All
sorts of things occur to help one that would never otherwise have occurred. A
whole stream of events issues from the decision, raising in one’s favor all
manner of unforeseen incidents and meetings and material assistance,
which no man could have dreamed would have come his way. Whatever you
can do, or dream you can do, begin it. Boldness has genius, power, and
magic in it. Begin it now.
William H. Murray, The Scottish Himalayan Expedition (1951),
incorporating the words of Johann Wolfgang von Goethe
CONTENTS
List of Figures and Tables xiii
Forewords by
Alan AtKisson xvii
Amory B. Lovins xix
William McDonough xxiii
L. Hunter Lovins xxix
Michael Fairbanks xxxv
Preface by Karlson ‘Charlie’ Hargroves and Michael H. Smith xxxviii
Acknowledgements xlii
List of Acronyms and Abbreviations xlvi
Introduction: Insurmountable Opportunities 1
SECTION 1: THE NEED FOR A NEW PARADIGM
1 Natural Advantage of Nations 7
Progress, competitiveness and sustainability 7
Significant potential for resource productivity improvements 12
Creating competitive advantage of the firm 14
A critical mass of enabling technologies 16
Externalities: who pays? 22
Benefits of valuing nature 24
Implications and benefits for global development 25
2 Risks of Inaction on Sustainable Development 34
A great transition 34
A sense of urgency 36
Declining ecosystems: a new limiting factor for growth? 39
Can we replicate nature’s services? 41
3 Asking the Right Questions 43
How should we measure growth? 43
What is meant when we speak of ‘sustainability’ and ‘sustainable
development’? 45
Achieving sustainable genuine progress or sustainable development 46
Can we achieve no major trade-offs and win–win opportunities? 47
How do nations measure progress? 50
How do we design for legacy? 52
Can we turn ‘vicious cycles’ into ‘virtuous circles’? 54
viii The Natural Advantage of Nations
4 A Dynamic ‘Platform for Change’ 57
Economic policy: the broader context 57
The invisible hand 58
Collaborative approaches 60
Tripartite world 63
Whole of society approach 64
Importance of capacity building 67
5 Thinking Locally, Acting Globally 68
SECTION 2: NATURAL ADVANTAGE: A BUSINESS IMPERATIVE
6 Natural Advantage and the Firm 75
The changing nature of competition 75
Achieving competitive advantage through strategic positioning 81
What will be the major driver of innovation in the 21st century? 83
Moving early to exploit structural change 85
Why integrate sustainable development into corporate strategy? 87
Downsizing: a strategy that no longer cuts it 88
The shifting nature of competition in emerging economies 90
Additional drivers for sustainable development 94
Achieving radical resource productivity 98
New opportunities for product differentiation 101
Increasing profitability and minimizing risk (Porter’s 5 Forces Model) 104
Threats of new entrants 104
Threat of substitute products or services 105
Bargaining power of buyers 105
Power of suppliers 108
7 Innovation and Competitiveness through Industry Cluster
Development 109
Cocoa beans… and what else? Michael Fairbanksand Andrew Smith 110
The cluster development process 111
Government role in promoting cluster competitiveness 116
A way forward 117
8 The Political and Social Context: A Sixth Force on Business? 118
Consumer demand change: knowing your market 118
Human resources: attracting the best people 120
Staying ahead of changes to government regulations 121
Can market based mechanisms be designed to assist firms to
achieve competitive advantage? 121
Can regulation be designed to assist firms to achieve competitive
advantage? 122
Raising the bar: independent certification schemes 123
The insurance industry: responding to climate change 124
The finance industry: a new paradigm in investment 127
The practice of ethical and socially responsible investment 130
9 Accelerating the Sustainability Revolution 135
Overcoming short-termism 135
Incentives for business leaders 136
Reform of fiduciary duty for pension and superannuation funds
trustees L. Hunter Lovins and Walter Link 137
Contents ix
Environmental management accounting in Japan
Chika Saka, Roger Burritt, Stefan Schaltegger and Tobias Hahn 141
Grounds for change: the exciting developments in firm level economics 150
Efficiency gains within firms under voluntary environmental initiatives
Bruce Paton 157
10 Operationalizing Natural Advantage through the Sustainability Helix 161
The business case for sustainability 161
The management helix for the sustainable organization
(Sustainability Helix) 162
Sustainable Business Practice: The Fieldguide to Natural Capitalism 163
SECTION 3: ACHIEVING A NATURAL ADVANTAGE OF NATIONS
11 The Role of Government 171
The tragedy of the commons: 35 years on 178
Government mechanisms 181
The regulatory measure response 182
Mental models of voluntary environmental initiatives Bruce Paton 188
Voluntary agreements: effectiveness analysis – tools, guidelines and
checklists Roger Burritt 193
Allars’ characteristics of effective voluntary agreements 193
The generic Canadian pro forma for voluntary initiatives 194
The United Nations Environment Programme’s (UNEP’s) Industry and
Environment Technical Report 196
The Organisation for Economic Co-operation and Development’s
(OECD’s) approach 199
Can regulation be designed to improve competitiveness? 200
Effective economic measures to complement either voluntary or
regulatory approaches 202
Natural resources 205
Government–industry partnerships to improve innovation 208
From clusters to national systems of innovation Rob McLean with Jaya Pillia 209
Managing industry transitions through waves of innovation Philip Sutton 212
12 Towards a Deeper Understanding 217
Markets and efficiency 217
What is a market? 217
How do economists define efficiency? 218
The classical understanding 218
Perfect complete markets 219
The economics of information 220
Financial markets: what they do and why they are fragile 222
Anti-monopoly legislation: competition policy 224
Challenges to governments and institutions Stephen Dovers 226
Attributes of policy problems in sustainability 227
Clarifying government, governance and institutions 228
Available scales of sustainability governance 230
Scaling responses 231
Principles and elements of policy and institutional reform 233
Is there ‘credible commitment’ to sustainabilty? 236
National Councils for Sustainable Development Stephen Dovers 238
Features of NCSDs 239
x The Natural Advantage of Nations
Specific NCSDs as examples 239
NCSDs and international agreements 242
General observations 243
13 National Systems of Innovation 244
Paul M. Weaver
Practice makes perfect 244
Innovation systems are part of today’s development paradigm 246
The challenge to innovation systems 246
The Dutch National Sustainable Technology Development programme 253
The Netherlands context 255
Recent developments 258
Lessons from the Dutch and other programmes 260
Concluding remarks 264
14 Sustainability in the Wild West (State Government) 271
Peter Newman
The Fremantle Declaration: ‘Passing the Torch to the Regions’ 272
The Western Australia State Sustainability Strategy: is change happening? 272
Process for developing the strategy 276
Public engagement 276
The policy change process 277
What have we learned? 282
15 Delivering Sustainability Through Local Action (Local Government) 285
A worldwide movement of local governments Wayne Wescott,
Martin Brennan and Yolande Strengers 285
Sustainability Street: it’s a village out there Vox Bandicoot and
Environs Australia Projects 288
Leadership in the local government sector: working from inside out
Valerie A. Brown 289
Sustainability leadership in the local government sector 290
Profile of sustainability leadership 290
‘When everything is said and done – more is said than done’ 293
Sector-wide action 294
Sustainability advocacy in the local government sector 295
SECTION 4: SUSTAINABLE CITIES: THE CHALLENGE OF THE
21ST CENTURY
16 Tomorrow’s Mega-cities: How Will They Develop? 301
Governance of municipalities: a snapshot of sustainable development in
China Mark Diesendorf 303
The Goa 2100 Project: a breakthrough project from India Alan AtKisson 306
17 Profitable Greenhouse Solutions 316
Michael H. Smith and Alan Pears
Energy systems: drivers for change 316
Vulnerabilities in the energy system 317
Threat of climate change 320
Greenhouse solutions that do not cost the earth 326
A historic opportunity 337
Issues identification 342
Contents xi
18 Greening the Built Environment 346
Cheryl Patenand Janis Birkeland with Alan Pears
Building positive examples 347
The significance of greening the building and development industry 350
Perceived barriers to change 352
Information failures 352
Market failures 352
Institutional failures 352
From pioneers to systemic change: cultural reform 355
Information reform 356
Market reform 359
Institutional reform 360
Rating schemes 361
Design practice reform 364
Design process elements 364
Residential buildings 365
The future in design approaches 368
Summary 370
19 Sustainable Urban Transport 371
Jeff Kenworthy,Robert Murray-Leach and Craig Townsend
Economic impacts of transport choices are significant 371
Methodology of the Millennium Cities Database 373
Characteristics of urban transport systems 373
Sustainable transport systems 380
The importance of urban form 381
Sustainable urban development 382
Designing around the mind: understanding behaviour 383
Civil society and business 384
20 Water: Nature’s Gold 387
Michael H. Smith with David Dumaresq
Key drivers for change 388
Rationale for dams in the past 391
Creating a robust foundation and framework for water management 396
The Council of Australian Governments Agreements on Water Policy 398
The COAG communiqué to develop a National Water Initiative 399
A robust separation framework 401
Water access entitlements: allocations and use conditions 401
Conclusion 404
SECTION 5: A NATIONAL COLLABORATIVE APPROACH:
THE BIGGER PICTURE – BUILDING RESILIENCE
21 Integrated Approaches to Sustainable Consumption and Cleaner
Production 407
Christopher Ryan
Consumption and low impact affluence 407
Patterns of consumption are a global issue 410
Policy approaches and action 411
Summary of policy approaches for sustainable consumption 412
Industry attention and action 417
Strategies for the future 418
Clarifying the focus for action on consumption 418