Environmental Entrepreneurship
A. Environmental problems often have large components of uncertainty, value mis-matches and continual change. There are 4 types of problems ( 4 problem types) and only "simple" problems are candidates for optimal control over processes and/or incentive structure. The other types of problems have to deal with these components.
1. Uncertainty: Uncertainty includes what we don't know about the problem and context at this time and what the response is to any attempted change or solution. We need to try new approaches, i.e. we need to innovate. Innovation will need to be accompanied by changing the institutions and infrastructure.
2. Value mismatch: Potential solutions may be valued differently by individuals or society. This fundamental missmatch of values means there is no single dimension that can be used to assess the problem and makes it difficult to set up markets (since some of the benefits will be outside marketable, monitary impacts).
3. Continual change: As processes that lead to potential solutions are implemented there will be continual change in the character of the problem and what we have learned from the process. As we proceed we will gain new knowledge and create different uncertainties. The challenge is to manage the process such that we are continually learning, and using what we have learned to adjust the process (reflexive epistemology).
B. Our ability to learn and react to new information (while attempting to solve a problem) is an issue of reversibility. Only small scale (time and space) solutions are reversible. For larger problems that take more energy we have to apply the Precautionary Principle or the Safe Minimum Standard. Although these decision standards protect the environment, they severely limit learning.
1. When mistakes are made on small or short duration projects, we can learn and adapt.
2. Surprises should be expected and the infrastructure for assessing the project should include mechanisms to learn from surprises. These mechanisms are ****
3. Small scale and short projects obviously work best, but we need to understand how to cross-scales to provide restoration projects for very large areas.
C. Even in contentious environmental situtations, it is often possible to find areas of substantial agreement. There are mediation and problem definition techniques that help diverse groups identify their common values.
1. see methods presented by Barry Anderson
2. these common goals can be pursued
3. progress on some goals will help create conditions for future environmental success. Shared success builds trust which is essential for good environmental governance, and trust is a crucial component of dealing with surprises.
D. The full impact of environmental projects should consider more than just profit. This "mission" based projects are more similar to social entrepreneurism than to environmental capitalism. (Dean and McMullen)
1. Social and community issues are often caused by underlying environmental problems. Even large scale, national disruptions, can be linked to resource depletion and environmental degradation (Diamond)
2. Ecological improvement can result from more profitable uses of the environment (York and Venkataraman 2010), it doesn't have to be an environment vs. economy tradeoff.
3. It is difficult to address these with simple one-dimensional metrics, such as money. Multiple metrics and indexes can help. Dashboard type presentation of multiple indicators can be used for communication.
E. Environmental entrepreneurial activities address these problems and contexts.
1. Market failures often have a component of value that was not properly accounted for. Making it easier to look at a diverse set of values (that are non-convergent) will help avoid these failures.
2. Value propositions that combine multiple benefits can be established. These multiple values may not converge to one dimension because of scale.
a. cross-scale discontinuities
b. emergence of behaviors
3. Innovative approaches require technology and institutions to be created and implemented together. It is not sufficient to just make technology availalble. Entrepreneurs create these institutions whereas the incumbant industries do not.
4. The description of what constitutes success may be different in a highly coupled environmental-social-economic issue.
a. relates to tracking and accounting - may use something like dashboards (BSC) or triple bottom line
b. Mode 2 science is more appropriate in these situations than traditional science (see links)
F. Summary of advantages of entrepreneurial approach to environmental problems.
1.
2.
G. Example 1: Solar drip irrigation systems in rural Nicaragua
1. The project included ecosystem restoration, use of several forms of technology, community building, and economic benefits for local farmers.
2. The project was carried out through a university project that focused on service learning and included a US NGO, a Nicaraguan NGO, the Nicaraguan government and a funding agency from the US (NCIIA).
3. The technical innovation was to combine solar power with water pumps and drip irrigation and put this at the right spot on the landscape. Solar products were being made availalbe through a local store-front operated by one of the NGOs. Information needed to be made availalble to both farmers and the store to find which areas were suitable for drip irrigation.
4. Rural Nicaragua is an information poor environment. There is insufficient information at the plot level to make these decisions (that is readilyt available in the US). Land owners have constructed shallow wells and dams for water, but there is no map of these and some have been abandoned. A topological/hydrological model was applied to find areas that are most likely feasible optitions.
5. The project resulted in:
a. a demonstration drip irrigation system that worked for one season and provided tomatos and other vegetables to market.
b. a report to the US NGO that summarized the overall project
c. a website that provided a template for how to make all this information on land condition and weather to be made available (cuenca-clima)
d. student involvement and continuing courses that promote solar technology skills at PSU
H. Example 2: Floating treatment wetlands for lake restoration, proposed project. How does it align with theories of environmental entrepreneurism?
1. Floating treatment wetlands have been proposed as part of a larger set of technologies that should be considered for restoring water quality in Upper Klamath and Agency Lakes. A proposal has been submitted that would test the technical aspects of employing FTW that were paid for by government agencies.
2. The entrepreneurial approach to this would be to study the conditions that might allow individuals to employ innovative technologies to remove P from the lake using something like FTW.
3. An example environmental entrepreneur might be able to grow native plants on floating islands, remove the islands, compost the high P parts and maybe use the other parts for some product. The operator would get paid for: removing P (tradeable units), compost, other products. Regulatory and compliance conditions would be very important. For example it costs $750 for a permit from DSL to anchor anything in the lake and obtaining permits to compost material in Klamath County costs about $2300.
4. There are aspects of this in which the theory about enviromental entrepreneurism will help inform the project.
a. Dean and McMullen (date)
- failure of the market has led to environmental degradation (P input without any penalties)
- claim that sustainable entrepreneur is profit driven whereas social entrepreneurism is mission driven, referencing Dees
- list 5 categories of market failure that seem to apply to the Klamath Basin (KB)
- entrepreneurs play a proactive role in creating institutions to meet their needs (more than incumbant firms)
- internalize externalities rather than a political solution - but I think the political approach is a necessary adjunct in this case - but making money off plants that grow in high P environments would be a good example
- the water in the lake is covered by rights and these are highly regulated. Would there have to be permits for removing water in the plants or for the increased evapotranspiration from floating wetlands?
- The Coasian entrepreneur might use some regulations to exclude others from a public setting. For example, maybe only a certatin number of anchoring permits would be allowed. Another example might be to put an embargo on importing P fertilizers into the drainage basin as has been done in other, much smaller, areas.
- The env-entrep should reduce transaction costs. For example the TMDL model and enforcement is very expensive. Independent verification (through lab tests) of the amount of P actually removed in plant batches would be much more certain and free to the government.
b. York and Venkataraman 2010
- environmental entrepreneurs address uncertainty, provide innovations and locate resources
- there is not always a tradeoff between improving the environment and improving the economy - for example hiring local people to operate FTW
- it is unclear what conditions are necessary for env-entrep
- 3 factors: uncertainty, innovation and politcal and instutional conditions that provide resources
- uncertainty -claim that entrepreneurs deal with multiple value systems better than incumbant firms. Env-Entrep are driven by the opportunities created by uncertainty, knowledge assymetry and ambiguity.
- innovation includes both technical and social. Env-Entrep are more likely to introduce innovations than incumbent firms
- resource allocation requires political and economic freedom, eco-augmenting systems need to be at a delicate balance between regulation and freedom. Strict valuation of resources restricts experimentation. There needs to be the ability/freedom to make mistakes and learn from them (which is missing in most government agencies).
- The more uncertain and intractable the problem is then the better Env-Entrep are able to handle the problem relative to incumbent firms.
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