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Originally published in Perspectives, Spring 2009
FOR DECADES environmentalists have been warning us that human economic activity is exceeding the planet’s limits. In recent years, the imperative to respond to climate change has propelled environmental issues to a high level of public concern. The environment seemed to be the issue — that is, until the economic shocks that occurred last September and October bumped the environment off the front pages. Now the fi nancial crisis-failing banks, volatile stock markets, the credit crunch and unemployment — has become the major concern. Indeed, the fear of a devastating worldwide recession is foremost on everyone’s mind and a major reevaluation of our current financial system is just beginning. So has the economy now displaced the environment as our primary issue? Are these issues actually so isolated from each other in their respective silos that we can only deal with one at a time, or are the seeds of a solution to
one problem embedded in the other? The pending restructuring of our economic system may provide us with a historic opportunity to reorder our priorities and to shift our economic system to a more sustainable one — financially, environmentally and socially.
In a booming economy, (almost) everything sells. In the past decade we saw robust growth in all sectors of the housing market — both single-family suburbs and urban intensification — often with disappointing results. In the strong real estate market there seemed to be little critical evaluation of the quality of neighbourhood planning or building design, as people rushed to buy units before the bidding got out of control. Although there were some notable projects during this period, there was also a considerable amount of mediocrity that was tolerated in the haste to buy and sell. In a slowing market this will of course change dramatically; indeed, it already has. Purchasers will now have time to consider, evaluate, perform due diligence and compare alternatives. Some projects will fail, others will have to be reconsidered. This should be an opportunity for those projects with stronger attributes — in walkable neighbourhoods, closer to good transit, with more innovative design and sustainable green features — to differentiate themselves from the pack and hold their value better than the competition. Market transformation will occur as purchasers give value to design quality, energy use, operating costs, daylight, indoor air quality and comfort, instead of just granite counters and stainless steel appliances. It should provide an incentive for developers to work harder to plan better neighbourhoods and to design better projects in order to compete in a market where they can’t take their buyers for granted.
The industrial infrastructure needs to be retooled to focus production on products that lighten our collective footprint, replacing blue-collar jobs with “green”-collar jobs. Smaller, energy-effi cient vehicles, wind turbines, solar collectors and LED lighting would be a good starting point. There are countless innovative new firms in Ontario with emerging technologies that can rejuvenate our near bankrupt automotive factories. Some have already begun. An innovative solar panel company, Menova Energy Inc., based in Pickering, manufactures receptors that not only capture solar energy for direct hot water heating but also refl ect and concentrate the sun’s rays to power photovoltaic cells. Other industries, unfortunately, have not found a receptive environment here and have had to relocate. A new Torontobased company ZENN (Zero Emission No Noise) has begun production of small electric cars in Saint-Jérome, Quebec. Ontario has not yet approved the use of its innovative vehicles on our streets.1 Arise Technology, an Ontario company that manufactures photovoltaic cells has recently set up a massive new manufacturing facility in Germany, encouraged by a government that was willing to co-invest in the new facility.2 Rather than propping up ailing industries from our last industrial age, new investment (by government or private investors) could be encouraging the “next industrial evolution.” 3
ALIGNING INTERESTS AND VALUES
In a slowing economy, consumers look for value. Decisions can make both economic sense and ecologic sense if values are aligned. Saving energy also saves money. Durability increases a building’s lifespan. Recycling and reusing means consuming fewer resources, as well as saving money. Those are the easy correlations. The challenge is to find more ways in which the economic system can encourage good environmental behaviour. Carbon trading provides a mechanism to reward good stewardship and discourage waste or pollution. It is in its infancy but has the potential to put a “price” on carbon that will ultimately discourage its production. In cases where large expenditures are required to achieve long-term savings, innovative financing methods are required to bridge the gap. Total cost accounting, long-term leases and green loans are all examples of currently available means to finance capital expenditures over a proper life-cycle costing period. Our taxation system can be adjusted to encourage innovation and entrepreneurship and discourage practices that degrade the environment. Carbon taxes provide a strong incentive to conserve more and pollute less. Simultaneously, income and corporate tax relief can be phased in to encourage new investment and offset the additional tax burden of the carbon taxes. With the pending massive reordering of our economic system, now may be the time to reconsider our hasty dismissal of this effective tool in the recent federal election, especially with the new US administration moving strongly in this direction.
LABOUR AND MATERIALS
Until now, our economy has focused on the assumption that resources are plentiful and cheap and that labour is very expensive — the resulting industrialization depends on large factories using lots of “cheap” resources —materials and energy — to reduce the “expensive” labour component as much as possible. This model made sense when there were seemingly unlimited natural resources and far fewer people on the planet.4 We are now realizing that our resources are indeed limited and that there are lots of people who require meaningful productive work, especially in a recessionary environment when jobs begin to disappear. If full-cost accounting is allocated to resources, people can be put back to work doing more labour-intensive jobs that also conserve materials and energy. Refi tting our existing building stock with better insulation, cladding and energy systems, rebuilding infrastructure to conserve water and energy, repurposing transportation networks to align transit with density, sorting and recycling materials from both consumers and industry, reforestation programs, urban agriculture — there are countless ways to provide back-towork employment that are not simply make-work programs, but would fundamentally reorder the labour/materials balance.
The economic crisis we face has been compared to the Great Depression, with Obama preparing to undertake major infrastructure projects, as did FDR, to create employment. The NewDeal built dams, federal buildings and highways. If, in fact, such major capital expenditures are now needed, they can be used to encourage an emergent greener economy: transit lines, intensification of cities, renewable energy facilities, green infrastructure solutions for water supply and drainage, energy saving initiatives to reduce energy use in buildings and industry, local food production in greenbelts or even in suburbs, incentives to retool industry. . . . The list is endless. In effect it would be a New New Deal —one designed to put people back to work in a meaningful way that reduces our environmental footprint.
An example of government that has shown strong leadership in linking the economy with the environment is Germany, which now derives 15 per cent of its power from renewables: wind, solar and biofuels. This transformation has occurred because the new industries created jobs and economic development opportunities and in so doing provided a secure, reliable and clean source of future energy. If Germany continues on its present course, it will derive 100 percent of its power needs from renewables within 25 years and create wealth and security for its people in the process.5 Our governments are now in the process of providing new capital to industry. This places them in a pivotal position, able to infl uence corporate decision-making so that it aligns with the public interest and strong environmental values. Rather than just throwing money at corporate bailouts, governments can leverage their position as new stakeholders by showing leadership and vision in their newfound role.
Although government leadership is important to the establishment of a framework, change can not be effective if it is mandated ”from the top down.” Rather, the strongest driver for this profound change will come from the “bottom up,” from education, research, community action, corporate innovation, committed individuals, and just regular folks concerned about the future.
A well-known Chinese maxim states, “Out of crisis comes opportunity.” The current fi nancial crisis is a transformative event for our society that offers us the opportunity to alter our economic DNA and reorder our priorities. Will we seize that opportunity? The major rethinking of the fundamentals of our market economy has the potential to embed sound environmental values in our economic system to ensure a future that is enduring, of sound value and sustainable for us and for the generations to come. ❚
Alex Speigel is an architect and developer with a strong interest in sustainabledesign. He is currently President ofONE Development Corporation, focused on green, innovative urban redevelopment and is a member of the OAA Sustainable Built Environment Committee.