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Sustainable strategies for economic development

Gregory Claxton
last updated: March 22, 2005

Sustainable development is a vision for the future that is environmentally benign, equitable, and economically prosperous. At its core is the belief that these three goals, which are often separated as irreconcilable, can be pursued together. In the realm of economic development, many frameworks have been put forth for analyzing the sustainability of an economy, but there exist few resources that introduce, in a pragmatic way, how to begin looking at everyday economic activitiy and find sustainability. To that end, this entry introduces a few sustainabile development strateges that businesses and communities can explore.

Sustainable business practices and economic development

Sustainable business practices create jobs in four ways. First, green businesses—those that use environmentally benign processes or that manufacture goods that are environmentally benign—employ workers directly. Second, sustainable practices reduce material and energy consumption, which results in cost savings that can be reinvested in new job creating activities or used to make companies more financially secure. Third, sustainable practices improve worker health, productivity, and security, as workplaces become healthier, less toxic, and more pleasant places to be. (For example, better lighting and heating and cooling systems lead to greater employee comfort, which will increase productivity and decrease sick time.) Finally, these practices will increase firm competitiveness, which leads to job growth. [1]

Sustainable business practices emphasize many techniques already established within local economic development planning. Sustainable development is intensely concerned with local resources and constraints, because of its concern with wildlife habitats, ecosystems, and scarce natural resources. It can be high tech (such as research into polymers made from agricultural products rather than petroleum), manufacturing focused (such as of wind turbines, fuel cells, or even office chairs and carpeting), or labor intensive (organic farming), which allows for great flexibility in promoting new green jobs or in nudging current practices toward sustainability.

This interest in increased local self-sufficiency is also in line with current economic development practice. For example, local agriculture—bolstered by farmers' markets or community support (CSAs)—captures local dollars that might otherwise flow outside of a region, to the corporate headquarters of a chain supermarket or to farmers elsewhere in the country or world. Further, local agriculture is likely to be more benign environmentally through decreased reliance on monoculture.

Similarly, where economic development might be concerned with pulling backward linkages into a community, sustainable practices are concerned that products be produced in an environmentally benign manner across their life cycle. This is in contrast with standard business practice, where concern is only with price and performance. This creates additional incentives for green businesses to cluster, as information on prior stages in the manufacturing process can be more easily monitored when firms are close to one another.

Green business clusters often take one of five forms. First, businesses rooted in environmentally benign processes (and which often market their products on this basis) are subject to traditional clustering logic, based on economies of scale and localization. Second, businesses that process and use secondary raw materials (through re-manfacture, re-use, or recycling) will cluster together based on economies of scale. Third, industrial activities may share surplus or waste materials among different firms, as in eco-industrial parks. In this case, the logic of clustering becomes quite strong, as firms become integrated into a web of input and waste chains that will be difficult to replicate elsewhere at the same price. Fourth, businesses may cluster around common services or support functions, such as legal and management services targeted at environmental compliance or improvement. Finally, businesses may pool support for one another in dealing with environmental issues, such as through voluntary sectoral programs. While the first three have strong geographic bases, the last two may have geographic components or may be "virtual" clusters, unbound by geography. [2]

Example strategies

This section explores a few strategies for sustainable development in more detail. First, development of a "green" export base will be considered. Second, older economic development activities—building a good place to have a business—may be reinvigorated through broader planning activities that emphasize green infrastructure and affordable housing built green. Third, cities may develop a support system for efficient, environmentally benign production, by encouraging energy efficiency, promoting waste processing, and creating the frameworks that allow eco-industrial parks to develop. A fourth strategy—import substitution, or replacing imported goods (for which money flows out of the community) with locally produced goods—is presented here.

Green exports

Traditionally, local economic development has focused much effort on the export base of a community: the production of goods and services for sale outside of the community. This brings money into the community, which then filters through the community, supporting other jobs. (Some contest this characterization, arguing that exports are only necessary to the extent that the community relies on imported goods and services. While this may be important at the level of very long-range planning, it largely seems to be a distinction without a difference, given the high level of integration between local, national, and international economies.) Export bases may be simple, relying on a single large firm or activity for employment (such as a large manufacturer or mining a particular resource), or they may be complex, and composed of one or more clusters surrounding a industry, with jobs offered by a wide range of employers of different sizes. Generally, more complex bases are considered to be more robust for a local economy.

Export bases can be considered sustainable if they produce goods or services using environmentally neutral processes or that will be used for environmentally benign ends. For example, the chairmaker Herman Miller has a Design for Environment approach that evaluates new products based on the safety and quality of its material inputs, its ability to be disassembled for ease of recycling, and for the materials' recycled content and recyclability after disassembly. Alternately, Uni-Solar, a manufacturer of photovoltaic cells for solar energy, would also be considered here. Finally, ecotourism, though not exporting a service, imports money from outside of the local economy and, ideally, uses at least some of that money for protection of local natural features that are being showcased.

More resources

Build green amenities

More and more, cities are competing again on the basis of amenities, as some industries follow workers to high-amenity locations, such as those in the south and west, or those near to protected natural resources. Workers are often drawn to environments that are pleasing to be in, or that offer recreational activities in natural settings. Further, businesses located in such areas can use these amenities to draw outside workers, or to impress customers. Cities can pursue several goals in developing these, and similar, amenities.

First, traditional environmental management efforts, either public mandates or through private initiative, that prevent pollution or protect wildlife habitats will play a role in sustaining the amenities base of a community. Second, communities can also proactively develop further amenities, such as through parks planning or street improvements, such as bike lanes or pedestrian-friendly streets.

Third, cities can help to build healthy homes for workers by investing in affordable housing built with safe materials. Green buildings shift affordable housing away from the cheapest materials available, which may exacerbate health problems faced by poor households, and reduce the operating costs of homes, making them more affordable to live. Government-supported housing can build experience in green building techniques and demonstrate its value for market rate housing and for business buildings. Although evidence is still tentative, early studies suggest that green buildings increase productivity among workers, both because they take fewer sick days and because more care is taken in creating a working environment that is easy to work in, by improving the quality of light and air.

More resources

Support systems for efficient production

The final strategy is to increase the efficiency of resource use. While this is clearly important for sustainable development, it is too often assumed that less resource use means lack of growth or development. This is not the case: using resources more efficiently is one strategy for a competitive business environment, because it lowers the cost of inputs. In some cases, such as for energy efficiency, this may mean doing more with less. The energy efficiency model can be extended to other day-to-day goods, as is done in "Greening the Office" programs. Among other things, these program focus on the efficient use of paper products and related equipment. This kind of strategy can also mean re-using or recycling and even re-purposing wastes from other processes.

Recycling is a well-known strategy for recapturing waste that had previously gone to landfills. Materials saved through recycling offsets what must be extracted from the Earth. However, other strategies include developing businesses built around re-using materials before they need to be recycled. Businesses add value back to discarded goods, such as refillable bottles, dirtied cloth diapers, or tires, through activities such as cleaning, sorting, baling, and remanufacturing.

Finally, at a larger scale, businesses can form networks, using the wastes from one process as the inputs to another. While this is often done internally, more complex networks that use more waste more completely, can be coordinated across businesses, using an eco-industrial park strategy. The most famous example is Kalundborg, Denmark, where several private exchange such as wastes as excess heat from power generation, waste water, gypsum, ash, yeast slurry, and sludge. In so doing, the waste-producing company saves the money it would take to dispose of the waste, while the waste-using company saves what it would have spent on the virgin resource. Not only does this strategy reduce costs for resources, it can also make companies more reliant on their partners, which in turn makes relocation a much more costly proposition. However, eco-industrial parks must be developed cautiously, as many firms guard this kind of process information from competitors.

More resources

General sustainable development initiatives and networks


[1] "Sustainable Practices, Jobs, and Distressed Communities in the Pacific Northwest: an overview." Prepared fro the Center for Watershed and Community Health by ECONorthwest. N.D., accessed online in March 2005.
[2] Roberts, Peter, 2004. "Wealth from waste: local and regional economic development and the environment." The Geographical Journal, vol. 170, no. 2, June 2004, p126-134.