In the Summer of 2001 Zhat Massz, Economic Development Minister for the semi-tropical country of Qwanin, attended a high level briefing on industrial ecology as a path to sustainable development. He invited the presenter to lead a workshop for himself, the Ministers of Environment, Energy, Transportation, and Agriculture and their top aides. This session led the cabinet to commit to a basic development strategy. Qwanin would declare itself a world laboratory for sustainable development. It would apply industrial ecology and related systems approaches as the foundation for planning and implementation.

Nine years later we see a remarkable fulfillment of this strategy. Qwanin has gone through a rapid process of development, attracting both multinational corporations and innovative entrepreneurs. Local businesses have grown, seizing opportunities offered by industrial ecology. Energy and transportation systems have demonstrated the feasibility and profitability of alternative technologies. The diversified economy is strong and environmental conditions have improved throughout the country. How has this happened?

Building the vision and strategy

Initially, Qwanin leadership invited development agencies, corporations, non-governmental organizations, and universities from around the world to work with it as a test tube for sustainable development.

Development banks and major foundations provided funding for a national process to create the initiative's vision and to gather essential economic, environmental, and technical information. The visioning used The Natural Step process (developed in Sweden) to build consensus on objectives from the local to national level..

The first wave of research used basic IE methods to analyze Qwanin's industrial metabolism, tracing the dominant flows of materials and energy through its industries and agriculture. This analysis included identification of the largest inefficiencies in materials and energy use. On this basis, local and U.S. researchers created dynamic input-output models of the existing industrial base and baseline environmental conditions. These models enabled development teams to test different scenarios for development, sector by sector.

Students and faculty throughout the educational system helped fill the many gaps in knowledge of Qwanin's environment. In addition intellectual resources from around the world connected into the project via the Internet and research trips. The country became a magnet for both environmental research and economic development talent, wishing to contribute and to learn. Would-be sustainable communities around the world formed sister city relationships with cities in Qwanin, exchanging action teams to further two-way learning.

The national development team created an evolving economic development strategy involving all sectors of the private economy and public infrastructure and services. This strategy enabled each sector to apply industrial ecology in their own development activities. As with the vision building process, this planning involved effective communication between local and national levels and between private and public sector players.

Some critical elements of the overall strategy included:

• Base development strategies on an evolving understanding of Qwanin's local ecosystems, regional environments, and global natural systems.
• Focus external recruitment on companies with a stated commitment to sustainable development.
• Offer development incentives to foreign or domestic companies willing to commit to environmental, economic, and social performance objectives they set within the broad objectives of the national strategy.
• Balance external recruitment with development of new local businesses and support for existing industries.
• Support local business development in IE related fields.

Qwanin did not rely solely on development bank funding to implement its plan. Insurance companies, pension funds, foundation program related investment, and social venture investors all played a role. Domestic as well as Asian, European, and North American investors participated.

Energy and transportation infrastructure demonstrates Qwanin's innovative approach to development. These major projects used the industrial metabolism studies and dynamic input-output models extensively to put alternative infrastructure development scenarios through a what-if analysis. System designers then used life-cycle analysis and design for environment tools in planning specific energy and transportation projects.

Energy

The country's power grid was poorly developed so the strategy emphasized a decentralized energy system based on a combination of relatively small and clean fossil fuel plants and renewable sources. The diversity and scale of technologies was essential to creating a reliable and resilient system.

The Economic Development and Energy Ministries put out a request for qualifications (RFQ) defining this strategy and inviting energy companies to prove their capability to help implement it. The winning proposal came from an international consortium of small to mid-size companies at the cutting edge of energy planning and technology. This group projected targets for building energy capacity with efficiency higher and emissions of greenhouse gases far lower than Qwanin's performance objectives demanded.

Working with the Energy Ministry, this consortium developed a whole systems plan avoiding investment in large power installations and older technologies. The strategy emphasized phased development of smaller energy generating modules, as needed. Such modular systems are more flexible and resilient and require a much smaller initial investment. It called for modest improvements to the power grid rather than the massive grid proposed by a large Asian engineering company.

The relatively small fossil fuel plants use advanced technologies to insure low emissions. They were sited near industrial plants that could use their waste heat and material by-products. Industrial plants with large waste heat output used co-generation to create electricity for themselves and their neighbors.

The strategy's renewable energy sources included photovoltaics; passive solar design in new buildings and homes; small to medium hydro projects; wind power; geothermal, and ethanol production and other biomass technologies. Engineers often had to redesign technologies like wind turbines in order to safeguard them from the typhoons Qwanin experiences.

The consortium's plan eliminated the major costs of a traditional solution: large centralized power plants and a heavy power grid. Without these large investments in the project budget the energy system could make cost-effective use of photovoltaic cells (which would not be competitive with fossil fuels in a developed country). This plan also reduced Qwanin’s dependence on costly imported oil to fuel its energy system, a cut that made its economy much more competitive. As an additional benefit, the phased development will allow installation of newer renewable technologies, particularly hydrogen fuel cells, when they become cost-competitive.

Qwanin's energy strategy also called for the government and utilities to issue RFPs for 15 year contracts to acquire photovoltaics for all new government buildings and for new utility installations. With these guaranteed domestic markets, a photovoltaic plant broke ground to make PV modules, roof tiles, and film for windows

Transportation

Qwanin also had a relatively weak highway system but a well developed railroad network and several navigable rivers. The Transportation Ministry decided to emphasize these resources and recruit companies able to develop a comprehensive rail and water-based system.

A Japanese electronics company took the lead in assembling a team including local and foreign transport entrepreneurs, a European rail equipment manufacturer, and a U.S.-Japanese advanced automobile joint venture. The electronics company was in the lead because the success of the system depended upon advanced information technology providing seamless service to travelers and shippers.

The electronics firm was also the most advanced in both industrial ecology and general systems thinking. Its R&D team had started exploring industrial ecology in the early 80s, following the lead of a MITI think tank's ground breaking articles in 1973. Its executives and designers easily perceived the whole transportation system as an information driven organism, operating in the industrial ecosystems of the country.

A local entrepreneur joint ventured with a U.S. company to establish the a factory manufacturing advanced hybrid-electric cars and small trucks with design that built upon the hypercar concept first developed by an R&D team at Rocky Mountain Institute. The majority of these vehicles operate on a lease or rental basis, as needed for local transportation. Their use is integrated with access to all other means of transportation. Most longer trips and shipments are via rail and boats.

Now, after five years, Qwanin's transportation system generates lower emissions and higher energy efficiency per mile traveled than that of any other country in the world.  See our concept of an integrated transportation system.

Leaders in manufacturing and agricultural sectors also used industrial ecology and systems thinking to guide their progress toward sustainability.

Manufacturing sector

The Ministries of Economic Development and Environmental Quality invited Qwanin's existing manufacturing industries to set environmental performance objectives and goals using an IE framework. This voluntary program built upon the vision and consensus  process. The ministries also asked companies considering locating here to go through a parallel process. Participation of both groups was high since a crucial step was analyzing the potential financial and competitive benefits of improved environmental, social, and economic performance.

Developers planned several new industrial estates as eco-industrial parks, including ones focused on resource recovery, renewable energy and support to sustainable farming. These eco-estates became showcases for interfirm collaboration in sustainable manufacturing. The developers worked closely with local communities to insure new opportunities for entrepreneurs and workers and low environmental impacts. Similar projects in the Philippines, Japan, and Thailand provided strong support in implementing new development practices.

National and local economic development agencies helped business implement the IE concept of industrial ecosystems or by-product exchanges in established manufacturing regions. At first they encountered two stumbling blocks: mobilizing business leadership and achieving a sense of common interest among firms from Qwanin and a mix of other countries. The first pilot project in an older industrial region included local, Korean, Taiwanese, Swedish, and Canadian plants. In spite of a general intention to participate in inter-firm collaboration, it took over a year to work through the cultural barriers.

A breakthrough occured when a firm created a by-product utility whose mission was managing the transactions and flows of all unutilized products. A systems model enabled this firm to form a series of surplus energy, water, and materials exchanges. Developers of new eco-industrial estates learned from the experience of this first attempt and enjoyed the benefits of the growing enthusiasm in Qwanin's community of companies.

Developers planned several new industrial estates as eco-industrial parks, including ones focused on renewable energy and support to sustainable farming.

Agriculture

 A majority of Qwanin's people were still rural, farming their own land or working on corporate plantations. The sustainable development strategy emphasized maintaining a strong local farming economy that would avoid the massive displacement of rural populations to crowded cities experienced in neighboring countries.

Agricultural corporations and small farmers alike were invited to develop environmental and economic objectives for reducing their use of pesticides, chemical fertilizers, and energy intensive cultivation and processing technologies.

Two other important objectives were maintaining bio-diversity of the crop genetic pool and the ecosystems in and around farms; and preventing soil erosion. Traditional knowledge of Qwanin's farmers was complemented by that of organic farmers from Europe and the U.S. (Organic farmers can be seen as the original industrial ecologists. For decades they have operated successful businesses as managed ecosystems.)

Rice plays an important role in local diet and in the country's exports so one specific focus of biodiversity work was forming seed banks of all known varieties and closely related plants. This was a crucial precaution, given this crop's vulnerability to global waming and ultraviolet exposure due to ozone depletion.

Another facet of the agriculture strategy was developing agribusiness support companies focused on the different goods and services needed to support the transition to sustainable farming. These include processors and distributors; integrated pest management products and services; infrastructure for increased use of natural fertilizers (with chemicals used as supplements when needed for yield); light, energy efficient farm equipment; and information technologies that support education of farmers to gain high sustainable yields (such as sensors, geographic information systems, and satellite positioning systems). Developers created two eco-industrial parks focused on providing a home for this new breed of agribusiness firms.

Some larger farming operations introduced kenaf and hemp crops as paper mill feedstocks. (Mills had been using rice straw for years.) Other alternative crops included Gyal for latex and Jojoba for its high quality oil. Manioc, a food crop that grows well on marginal land, became a feedstock for an ethanol plant.

One other agricultural innovation in Qwanin was creating "edible landscaping" on industrial estates and municipal infrastructure land. Many facilities grew enough food for all their employees in greenhouses, ponds, and orchards. They also used waste water and heat from industrial processes, demonstrating IE's loop-closing principle. On-site treatment plants and constructed wetlands processed the industrial water. (See Indigo's industrial ecology framework for sustainable agriculture. )

Telecommunications

Early in the project Zhat Massz saw that building Qwanin's telecommunications infrastructure was essential to the process. He wanted the people in every village, town, and city to be able to participate. He knew that bottom-up planning was essential to the success of the broad national strategy. He also wanted to open the electronic doors for entrepreneurs' entry into the global economy.

A team of innovative small to mid-size companies in Asia and the U.S.-- partnered with a major European telecommunications company -- won the telecom contract. Their winning proposal emphasized initial use of satellite technology to establish the basic communications network across the country; information and communications centers and kiosks for broad public access; and leasing of integrated network systems for company and government offices. The plan called for phased development of wireless and fiber optic channels to replace the initial dependence on  satellite communications.

The team of companies saw Qwanin as a major opportunity to test the IE concept of the service economy proposed by Walter Stahel.  Rather than seeking to create a system to maximize sale of information products, the partnership would deliver telecommunications services to Qwanin's people, industry, and government. With revenues for service rather than goods as the economic motivator, preferred equipment would be durable, multi-functional, modular, and easily repaired and upgraded. These qualities extend the life of equipment and reduce demand on resources and energy.

Policy and regulations

When Qwanin declared itself a world laboratory of sustainable development, Zenan P'han, the Minister of Environmental Quality, was flooded with calls. It seemed that every environmental administrator in the world wanted to show him how to design sustainable policies and regulations. He politely asked each caller how they applied cybernetics to their regulatory processes.

After the silence or the puzzled questions, P'han would explain that cybernetics is the science of regulation for living and mechanical systems. He invited them to participate in the design of a new regulatory system that applied this science in team with industrial ecology.

In the first two years of design work, P'han moved from stop-gap traditional environmental regulations to a highly effective, information driven system. Industrial ecologists, cyberneticians, and other systems scientists helped his staff develop mechanisms for self-regulation in public and private sector operations. Regular consultations with industry insured their collaboration. Third-party auditing and monitoring, timely public access to reports, and channels for peer pressure helped keep firms and agencies honest.

This design for self-regulation unfolded within the broader policy development process that set broad national environmental objectives, sector and industry specific objectives and goals, and personal objectives and goals.

The basic guidance system

Parallel to these initiatives in various sectors of the economy, the people and leadership of Qwanin entered into a unique dialogue about the purpose of development. A fundamental premise guiding this dialogue was the belief that a nation's economy is a means to improve human welfare, not an end in itself.

From the earliest days the people and the leaders of Qwanin explored three questions never before addressed in a national development initiative:

What is quality of life for our people?

How will this development process improve our quality of life?

How will it improve the quality of our environment, the foundation for our lives?

Afterword

In this fictional account of Qwanin it may appear that we are saying industrial ecology is a universal panacea. Our real claim is that it is a strong systems framework for organizing more specific approaches, methods, and tools. In planning the energy infrastructure for this hypothetical country, for instance, IE (and basic systems thinking) enabled design of new infrastructure that integrated advanced renewable and fossil technologies, efficiency of equipment, and patterns of use. The consortium used dynamic input-output modeling to test competing designs against environmental, technical, and economic criteria.

The energy initiative's projected success came from years of innovation in fields like energy efficiency, renewable technologies, and clean fossil fuel technologies. The critical breakthrough was combining these innovations into a whole system tuned to its natural environment..

Many of the specific elements of Qwanin's story have actually occurred somewhere.

• Researchers have used industrial metabolism methods to analyze heavy metals dispersion in the Rhine River basin.
• Economist Faye Duchin has worked with Indonesia to explore alternative scenarios for ending deforestation, using dynamic input-output models.
• Wind power technologies are cost-competitive with fossil fuel sources in many situations.
•   Photovoltaic technology and passive solar becomes more cost-effective when integrated into building components and design.
• Companies, communities, and developers in North America, Africa, Asia, Latin America, Australia and Europe are planning eco-industrial parks and industrial ecosystems.

A few serious questions

If you were a leader in a developing country and you dreamed you could realize this vision . . .

How would you enlist your country's elite to participate if they believed their interests were more aligned with those of global institutions and markets than the interests of your people?

How would you overcome patterns of corruption that could disable the vision?

How would you handle the burden of national debt your country probably carries?

How would you recruit international lending institutions to your vision and overcome their bias toward traditional, centralized solutions.

How would you identify the corporations really able to help you fulfill your strategies of sustainable development?

How would you balance the messages of international media defining quality of life for your people?

How would you make each stumble along the way an occasion for learning?

Adapted From Lowe, Ernest, Warren, John, and Moran, Stephen. 1998. Discovering Industrial Ecology, an executive briefing and sourcebook on industrial ecology, Prepared by Indigo Development in association with Pacific Northwest National Laboratory under a cooperative agreement with the U.S. Environmental Protection Agency. LINK

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