SUSTAINABLE APPROACHES: INDUSTRIAL ECOLOGY AND
1. Assume you are a city planner working on a new industrial park and contemplating the
use of an industrial ecosystem. Discuss the major advantages and disadvantages of an
industrial ecosystem that you would consider in making your decision.
Advantages are both environmental and economic. Expected environmental benefits are those
associated with health and ecological risk reduction attributable to the decreased amount of
polluting residuals released to nature. There also would be efficiency gains in resource and
energy use. Expected economic gains are reduced energy costs and lower expenditures on raw
materials for the participants in the industrial ecosystem.
Among the disadvantages of developing such a system is that it would require more elaborate
planning and greater oversight by engineers and city planners in the construction phase. Some
municipalities may lack the needed resources and expertise to undertake such a project. In
addition, the potential economic gains are shared by the participants, and hence market
incentives to be part of an industrial ecosystem might be considerably less than they would be
for a firm-specific pollution prevention program. Moreover, because of the interdependency
among firms, technological innovation might be dampened. That is, a participant might not
pursue a new technology if doing so would jeopardize the interrelationship of the system.
2. Choose a product that negatively affects the environment, assuming a linear flow of
materials. Then, use a cyclical materials flow approach, and conduct a hypothetical
life cycle assessment (LCA), pointing out at least two preventive initiatives that would
reduce environmental risk.
Teaching tip: Obviously, student responses will vary considerably depending on the product
selected. In any case, what students should address is an identification of those stages in the
product cycle that present the greatest risk to human health and the ecology. Using these
observations as a context, they then should suggest preventive solutions, such as design for
disassembly, design for remanufacturing, improved energy efficiency, better chemical
technology, and the like. Technically, recycling should not be accepted as a preventive
3a. Identify the economic incentives that motivate private firms to engage in pollution
One market incentive associated with pollution prevention is the potential cost savings from
having to use less abatement technology and fewer waste management services. In addition,
there are less tangible but nonetheless important gains in promoting an environmentally
responsible image, which can be enhanced by using preventive strategies. Ultimately, rational
firms will adopt pollution prevention as a management strategy as long as the costs to do so
are relatively low when compared to alternatives such as abatement or evading the law.
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b. How might the government devise policy initiatives to exploit these natural
Since relative costs are critical to firm decision-making, government can help foster pollution
prevention activities by lowering their associated costs. One way to do this is through the
provision of information about viable preventive schemes. This might be accomplished by
publishing announcements in trade journals, through mailings to trade associations, or by
setting up a hotline for prospective adopters. In virtually any context, the search for
information can be very costly. If government can reduce these costs by sharing information
about new energy-saving technologies or nontoxic input substitutes, firms will have a greater
incentive to adopt these strategies. Furthermore, fewer resources would have to be used for
information collection and dissemination than if every firm conducted its own independent
research. Firms also need to understand how to properly assess prevention strategies in their
budgeting practices, an issue being addressed by one of the projects under the EPA's DfE
program. Finally, subsidies and grant monies can be used to help finance pollution prevention
plans or programs.
4. Visit the Web site of Environmental Defense, and review the list of their recent
alliance partnerships at
http://www.environmentaldefense.org/alliance/partnersindex.html. Select one,
and summarize the cooperative efforts between Environmental Defense and a private
firm. Identify some of the potential environmental and economic benefits associated
with that partnership.
Teaching tip: Students should read through some of these alliance partnership reports before
making their selection. They then should select a good example of a collaborative effort that
they understand clearly and can discuss. For any given selection, the student should identify
the advantages to all participants, including achievement for EDF as an active environmental
group, improved environmental quality for all of society, and good public relations and
potentially higher profits for environmentally-responsible firms and industries.
5. Extended Product Responsibility (EPR) assumes that all participants in the product
cycle play a role in finding ways to reduce environmental risk. Identify the specific
role played by the average consumer in this effort.
Collectively, consumers make the ultimate decision as to whether a product is successful or
even if it remains on the market. Hence, the first step is for consumers to become
environmentally literate. Specifically, they must become aware of environmental hazards and
the relative risk of exposure to these hazards. Once done, the next step is for them to make
well-informed purchasing decisions. This means that they should consider such product
attributes as packaging, toxic substance content, and pesticide residuals, along with price and
product performance. If consumers avoid buying products with excess packaging or
unnecessary toxic content, environmental quality can improve. Moreover, firms that do not
address such environmental issues will have an economic incentive to alter their production
processes and product offerings or suffer economic loss. There are also more direct actions
consumers can take, such as finding ways to reuse products or participating in recycling
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6. Environmental technology is argued to be an important element in society's effort to
achieve sustainable development.
a. Choose a specific market-based instrument that likely would encourage the advance of
dark green technologies and improve U.S. exports of these goods and services.
Explain using economic analytical tools.
Teaching tip: Perhaps the most obvious response to this question is to suggest the use of
subsidies for research and development in these technologies. The funding should promote
more active research and help keep prices down on newly developed goods and services.
Lower prices should help these innovators capture a larger market share of worldwide
markets. Students can and should be creative in devising how these subsidies could be
awarded. They might suggest that the dollar amount be linked to the proportion of a firm's R
& D budget allocated to these types of technologies. They could also propose a subsidy tied to
the innovator's export revenues from dark green technologies in a prior period.
b. Now propose a different market-based instrument that would foster the use of more
light green technologies domestically and internationally.
Teaching tip: In this part of the question, students should recognize that the environmental
gain from light green technologies is an example of a consumption externality. Hence, the
market-based instrument should attempt to increase market quantity toward its efficient level.
One approach might be to use tax credits to encourage domestic purchases of light green
technologies. A similar incentive could be implemented internationally by lowering tariffs on
these commodities. As part of the discussion, students should make some reference to the
MEB associated with consumption of these types of goods and services. They should further
state that internalizing this externality brings about an efficient solution such that more of the
good is exchanged in the marketplace.
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