from The Jobs Letter No.127 (14 July 2000)
P A U L H A W K E N
IN CHRISTCHURCH
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At the REDESIGNING RESOURCES conference, held in
Christchurch last month, 200 invited business, government,
science, arts and community leaders spent two days in
presentations and workshops around the theme of Natural
Capitalism.
The conference was hosted by the Christchurch Employers'
Chamber of Commerce and the Christchurch-based
Recovered Materials Foundation. It included presentations
from Paul Hawken (co-author of the book Natural Capitalism),
Ray Anderson (Chairman and CEO of the Interface
Corporation, one of the world's largest carpet companies), and
New Zealand Prime Minister Helen Clark (who shifted her
weekly cabinet meeting in order to attend).
PAUL HAWKEN argues that the environment cannot be
"saved" - nor can unemployment be "solved" - as long as
people cling to the outdated industrial assumption that the best
business strategy is to use more natural capital, and fewer
people. He told the conference that moving the economy
toward greater resource productivity can drastically reduce the
impact we have on the environment, while at the same time
creating more profitable businesses and increasing the overall
levels and quality of employment.
Several members of the MAYORS TASKFORCE for JOBS
also attended the conference, and took time for a special
meeting with Paul Hawken to discuss sustainable cities, local
government, and the employment advantages that come from
following a Natural Capitalism agenda.
In this special feature, we give an essential summary of
Hawken's comments from this meeting.
ON RE-IMAGINING CITIES
o I spend most of my time with corporations - yet the most
interesting conversation for me is about "cities", and how to re-
imagine them. The fact is that cities are the basic unit of
sovereignty in the world - they always have been, and still are.
Cities are where the rejuvenation, and all the juice, is
happening � they are where the most imagination is, and
where the most impact on people is. In the next century, cities
are where social entrepreneurship will be much more dynamic
and interesting than business entrepreneurship.
o The largest corporate sector in the world is cities. It's not
insurance, not energy, not transport, it's cities. And we forget
that they are corporations. They don't have shareholders, but
they certainly have stakeholders.
But cities are just so much larger in scope and size than any
other corporate sector, and yet they are always seen as
"other", and we don't include them with business. But, without
exception, a city of 100,000 people is far more complex than a
company that turns over $100 billion in revenue. In other words
your city is more complex than Royal Dutch Shell or Exxon or
IBM or whatever.
ON FLOWS, LOOPS AND LEAKS
o What all cities lack is the fact that they don't have a map of
themselves. I don't mean a road map � I mean that cities have
no idea what their inputs and outputs really are. They do know
perhaps about their water, energy and things that they have
direct responsibility for � but the fact is a city is a very
complex organism indeed, and what they don't have is a map
of their capital flows. Their capital flows are not just their natural
capital flows, it's also the financial capital - all the forms of capital
that are going in and out.
o Generally speaking, what you find is that cities range
between capital exporters and capital concentrators. Cities that
are capital concentrators, like Auckland, do very well. It doesn't
mean they don't have problems, it just means that they have a
surplus of cash. But many cities are in fact capital exporters
and they have no idea why. They wonder why they have trouble
maintaining their tax base, why the kids are leaving, why their
education is faltering, why the housing stock is slipping, etc.
And they wonder about this because they actually have no map
of the capital flows in their city.
A city that is a capital exporter is just like an organism that is
slowly starving itself. With people, it's called anorexia � an
anorexic eats just a little bit less every day than the amount of
energy they expend and they slowly degrade as an organism.
First they become skinny but later it's a real internal breakdown
in terms of the organism until they die. Now, cities don't die that
way but the fact is that the analogy is perfectly apt.
Whether cities are capital concentrators or capital exporters is
something anyone can feel by looking at the revenues, or
population demand, or housing stock or things like that. But in
fact there is no map, there's no mechanism, software, or
inventory that allows cites to really understand and measure
their capital flows, and get to see the changes that are
occurring.
The problems attendant on capital exporters or concentrators
are very different. The problems of capital concentrators are
growth and sprawl and noise and traffic and pollution etc. The
cities who are de-capitalising tend to have crime and
unemployment and drugs, poor housing etc. But whether a city
is capitalising or de-capitalising, the fact is that in both cases
the strategies to create a more healthy city and more jobs is to
actually the same. The strategy is to close the capital loops,
and to plug the capital leaks. That's why it is important to
understand what the leaks are.
o If you had a meter somewhere that told you how many
miles to the gallon every car in your city was getting per litre
and you could see the amount of money that's being exported,
say from Christchurch, every second. This is happening in
terms of the car stock, in terms of petrol - putting aside any
mention of damage to the atmosphere and pollution. This
information would give you a picture of the true capital flow of
what's going on in Christchurch. And you would be astonished.
The fact is the money goes through the dealer ... but it keeps
going right out of this country to Japan, to the rest of the world.
The fact that money is being transacted is a good thing - but
the point is that the transaction doesn't come back to New
Zealand very much. Maybe they buy some lamb, maybe they
buy some wool � but the fact is it is not coming back to you.
o So when mapping the capital flows in a city you are really
starting to look and ask: Where is it leaking? Where's all the
money going? Where's it coming in too? And when it comes in
- keep it. Keep it and have it turn around more there in your city.
This will raise more real income. And the more people who are
working, the better the tax base. And so you can actually lower
taxes because your gross taxable revenues are going up. All
this reinforces the kind of action that you want to take on behalf
of social issues, environmental issues, and quality of life in the
city.
o So a healthy city is one in which you look at all the capital
flows and start to close the loops. A healthy city is like a healthy
watershed. A healthy watershed receives water quickly, sucks it right up
and releases it slowly. A sick watershed, whether it is forested or
overgrazed, receives water slowly ... the rain runs right off because the
sick watershed gives it up very quickly. A sick economic watershed - such
as a city - doesn't accept money very quickly. It accepts it slowly ...
and the money goes right out of the city the next day.
ON ENERGY RETROFITTING
o My colleagues and I have worked with cities to try to
reverse capital flows. In the case of energy, we have worked
with a town in the United States where they have hot summers
and cold winters - so there was a lot of air conditioning in the
summer and a lot of heating in the winter. It has a large
population of people who were not that economically well-off,
they could not afford the kind of housing stock that was well
insulated and energy-efficient. A great percentage of their
income was going out on their utility bills ... so of course that's
money they're not spending on education, or on a lot of other
things. Furthermore, the energy utility was not in their town, it
was a nuclear utility 200 miles away and so that money was just
gone � it didn't come back to town at all. Again, that's an
unhealthy economic watershed.
o What we did is we worked with a window company, to
establish a factory that would be co-owned with the city. This
company would retrofit all the substandard housing with thermal
panes that were manufactured in the city and then installed
directly. Actually this was cheaper than buying the windows
through a dealer network, and it employed people in the city.
The people whose houses the windows were installed in had to
pay nothing. In fact they were paid five hundred dollars for the
trouble and inconvenience of having all their windows replaced
... and also because the energy audit showed that the amount
of money the customers were spending on energy was far
greater than the cost of the retrofit even with interest payments.
We were going to use the power of the city to borrow money -
in the United States a city can issue industrial development
bonds which are tax deductible which have very low interest
rates. So we would use IDDs to finance the factory, finance the
retrofit, and people would pay for the windows over time but
they would pay for it in the savings of energy that they were
getting from having their houses retrofitted ... which also
included insulation and other types of energy conservation
measures.
o So now what you have is the people in the houses having
better and more comfortable houses, and their utility bills were
actually going down. The project was providing work in the
town, and people who were jobless were now being trained.
We were upgrading their skills, so that they would have skill
sets that would be valuable after the town was retrofitted, which
would take quite a number of years. So the "wins" went right
across, because we were literally plugging the energy leaks -
and closing the capital flow loops as well.
ON WATER AND CAR "PARKS"
o The Environmental Protection Agency (EPA) mandated the
same city to build a secondary wastewater treatment plant. The
EPA said that the water that was running off the streets was
polluted, which it was, because of cars. But it was going into
the Tennessee River, which meant the city had to meet the
new Clean Water Act, which also meant they had to built a
$100 million secondary wastewater treatment plant.
Well, it was the last thing the city wanted. They wanted clean
water, but they didn't want to spend $100 million, and the last
thing they needed was a higher tax rate. This is a city that had
seen industry leave, not come � and they were trying to make
the city more attractive to business, not less attractive with
higher taxes.
And so again they came to us and asked: "What would you do
using natural capitalism?" We studied it and looked at it � and
then we asked them a question: How were you going to tax the
businesses on their water run-offs? They replied that they were
going to tax businesses by the square footage of roof and
parking lots. This makes sense - the bigger the footprint, the
bigger the water runoff , and the more you pay a fair share. But
we thought about it and said: Well, we think you should tax the
runoff by the gallon, not by the square foot. They asked:
What's the difference? The answer is that the businesses have
no incentive not to have a runoff. There's no incentive at all.
o We showed them a plan to retrofit all of the parking lots in
town. They were all classic solid paved areas built with slopes
starting in the middle and draining towards the edges so that
the water would go to the streets and not leave the cars sitting
in water.
What we talked about is retrofitting them with permeable or
pervious paving which is used in industrial parks all throughout
Europe. It is standard operating procedure over there right now
- but somehow America never figured that out.
o At the same time we were doing work in the city on a
design to make that part of the city into a botanical garden. This
area in Tennessee is actually an area of the greatest botanical
biodiversity in the United States. So that seemed like a good
idea.
What we suggested is making the parking lots - whether they
be private or public - into "parks" that you park cars on. So not
only was there pervious paving � but we also put very tough
resistant sedges and grasses in these tiles so that they take up
a tremendous amount of water, and act to recharge the
groundwater. And in all the medians and perimeters of the
parking lots, we planted trees that were water-loving and fast-
growing that also reflected the variety of trees that were once in
the area. We actually named them - just like in a botanical
garden
o The point is that if you did all this you wouldn't need a
secondary wastewater treatment plant. This retrofitting of
parking lots means you're not contracting to a big business in
San Francisco to treat waste water in Tennessee. You're
treating it right there using the ground, the earth, the rocks, the
sand � which basically filter what pollutants are all in the water.
So then we asked businesses: If retrofitting your parking lots is
cheaper than paying the taxes, would you do it? And they said:
That's a no-brainer, of course we'd do it!
o This retrofitting is a classic local job scheme. It means
you're giving people work over years and years of retrofitting �
and it is good work, they're making beautiful places. They're
not just working in the streets and digging them up, which is
okay, but I mean they're actually making beautiful places.
We suggested to the city that since they were going to pass a
$100 million bond anyway (for the secondary wastewater
treatment plant) that had to be paid for in perpetuity� we
suggested that they pass a $10-15 million bond and this bond
would be used to hire youth during the summer to maintain the
parking lots - to trim the shrubberies, and the trees and the
flowers and so forth, because this is when the trees grow the
fastest, and you're gonna have to do some trimming work. So
not only would you be employing in the summer the youth in the
city, they'd also be learning the unique botany of the region.
ON JOBS IN SUSTAINABLE CITIES
o These examples give you a way of thinking about a city as
an organism, how to think about the flows, how to imaginatively
close the loops, plug the leaks, and how you create more jobs
and you reduce taxes or don't raise them. You also employ
more people in meaningful living wage jobs and you retain the
money that the city has within the city.
The normal idea is that, if you want to create jobs� you've got
to spend a lot of money. People usually need money to make
jobs. But the fact is these examples are taking the money
people were already spending on their cities and re-circulating
it in an entirely different ways to create local employment.
And when you look at these examples, they end up with better
cities to live in, they're better cities to walk in, they're better
cities for business, and they raise property values. So again,
the "wins" are so endless. It sounds ridiculous, but in fact as
you can tell here that the solutions are cheaper than the
problems as they existed. And yet you create jobs.
Source - Paul Hawken meeting with the Mayors Taskforce for
Jobs, Christchurch Conference Centre, 27 June 2000
REDESIGNING RESOURCES
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- growing the economy while healing the environment
Christchurch Conference Centre
25-27 June 2000
o Many participants at the Redesigning Resources
conference believe that Natural Capitalism is a ground-
breaking paradigm for the new economy and one which could
transform our fundamental notions about commerce and its
role in shaping a sustainable future. The conference organisers
repeated the recommendations of many world leaders, such
as President Bill Clinton, who were heralding the growing
corporate interest in its principles. (Tachi Kuichi, Managing
Director of Mitsubishi Electric Corporation and Chairman of
The Future 500, describes Natural Capitalism as "a manifesto
for the second industrial revolution�" )
o The Christchurch conference brought together six leading
companies and organisations who agreed to be "case studies"
in workshops on how these businesses could be redesigned
under a natural capitalism agenda.
These included: The Warehouse (NZ's largest retail group),
Macpac (manufacturers of outdoor and wilderness equipment),
Landcare Research (a NZ Crown Research Institute), Orion NZ
(A national electrical network management company), the
Christchurch City Council, and the Shire of Yarra Ranges (the
largest metropolitan council in Melbourne, Victoria).
The workshops at the conference were challenging and
creative � and sometimes combative and argumentative. It's
not every day that six major companies and organisations open
themselves up to direct and frank feedback from a cross-
section of business, government and community leaders.
But the Redesigning Resources organisers were clear from
the outset that this conference was also designed to be a
catalyst for action. At the end of the two-day workshops, these
six "case study" organisations committed themselves to
genuine progress on their own natural capitalism agenda. They
drew up specific goals covering a two-year timeframe, and
progress on these goals will be reported on in the Resigning
Resources website � soon to be online.
o The Mayors from the Mayors Taskforce for Jobs who
attended the Christchurch forum included: Sukhi Turner
(Dunedin), Garry Moore (Christchurch), Claire Stewart (New
Plymouth), Jenny Brash (Porirua), Michael McEvedy (Selwyn),
Jill White (Palmerston North), Tim Shadbolt (Invercargill) and
John Chaffey (Hurunui).
o For more information on the Redesigning Resources
conference, contact Mark Prain at Redesigning Resources,
P.O.Box 6320, Upper Riccarton, Christchurch phone 03-341-
1959 email [EMAIL PROTECTED]
NATURAL CAPITALISM
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o What is Natural Capitalism? Hawken says it's what
capitalism might become if its largest category of capital - the
"natural capital" of ecosystem services - were properly valued.
Hawken and his co-authors, Amory and Hunter Lovins,
describe a journey towards natural capitalism which involves
four major shifts in business practices:
- Dramatically increase the productivity of natural resources.
" Reducing the wasteful and destructive flow of resources from
depletion to pollution represents a major business opportunity.
Through fundamental changes in both production design and
technology, farsighted companies are developing ways to
make natural resources - energy, minerals, water, forests -
stretch 5, 10, even 100 times further than they do today. These
major resource savings often yield higher profits than small
resource savings do and not only pay for themselves over time
but in many cases reduce initial capital investments."
-Shift to biologically inspired production models (bio-mimicry).
" Natural capitalism seeks not merely to reduce waste but to
eliminate the very concept of waste. In closed-loop production
systems, modeled on nature's designs, every output either is
returned harmlessly to the ecosystem as a nutrient, like
compost, or becomes an input for manufacturing another
product. Such systems can often be designed to eliminate the
use of toxic materials, which can hamper nature's ability to
reprocess materials."
- Move to a solutions-based business model.
" The business model of traditional manufacturing rests on the
sale of goods. In the new model, value is instead delivered as
a flow of services - providing illumination, for example, rather
than selling light-bulbs. This model entails a new perception of
value, a move from the acquisition of goods as a measure of
affluence to one where well-being is measured by the
continuous satisfaction of changing expectations for quality,
utility, and performance. The new relationship aligns the
interests of providers and customers in ways that reward them
for implementing the first two innovations of natural capitalism -
resource productivity and closed-loop manufacturing."
- Reinvest in natural capital.
" Ultimately, business must restore, sustain, and expand the
planet's ecosystems so that they can produce their vital
services and biological resources even more abundantly.
Pressures to do so are mounting as human needs expand, the
costs engendered by deteriorating ecosystems rise, and the
environmental awareness of consumers increases.
Fortunately, these pressures all create business value."
Source - Harvard Business Review (May-June 1999)
o For a fuller overview of the principles of Natural Capitalism,
see The Jobs Letter No.61 (available on
www.jobsletter.org.nz), or visit the Natural Capitalism website at
www.natcap.org.
o For specific comments by Paul Hawken on employment
issues from a Natural Capitalism perspective, see The Jobs
Letter No.118 (our special issue on "Jobs from Waste", also
available on our website).
C R E D I T S
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edited by Vivian Hutchinson for the Jobs Research Trust
P.O.Box 428, New Plymouth, New Zealand
phone 06-753-4434 fax 06-759-4648
Internet address -- [EMAIL PROTECTED]
The Jobs Letter -- an essential information and media watch
on jobs, employment, unemployment, the future of work,
and related economic and education issues.
The Jobs Research Trust -- a not-for-profit Charitable Trust
constituted in 1994 to develop and distribute information that
will help our communities create more jobs and reduce
unemployment and poverty in New Zealand.
Our internet website at
http://www.jobsletter.org.nz/
contains our back issues and key papers,
and hotlinks to other internet resources.
ends
------
vivian Hutchinson
[EMAIL PROTECTED]
phone 06-753-4434 fax 06-759-4648
P.O.Box 428
New Plymouth, Taranaki, New Zealand
visit The Jobs Research Website
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