The Green Gap

In the Cold War, we feared a Missile Gap was a strategic weakness. Nowadays, we must awaken to the fact that the Green Gap is true strategic weakness: the nations whose economies will thrive in the coming years will not be those with the biggest factories, but those with the most sustainable, efficient, and ecological markets. What we require is a Strategic "Green Reserve" of ecological design to weather the coming changes that both climate and resource scarcity will force on the international economy.

Sunday, 27 February 2011

No Such Thing as Garbage

Calgary's budget (2009-2011 business plan) is divided into the following parts (each of these numbers is net budget taking into account both revenue streams and overall expenditures):

Asset Management & Capital Works  (public works, fleet management)

Community Services & Protective Services (EMS, Fire, Parks, Community services)

Corporate Services (the personnel who keep IT, customer service, and the books straight)

Planning, Development & Assessment (land use planning and development)

Transportation (Calgary Transit and Road infrastructure)

Utilities & Environmental Protection  (garbage, recycling, and water)

Calgary Police Service  (you get the idea)
$243,175,000 - 2009 budget

Corporate Administration (the people who run the city and bylaws)

Right now the main budget line I'm interested in is the Utilities and Environmental Protection. In effect, I'm proposing it ceases to exist entirely. Well, perhaps not water, seeing as it generates $60M overall revenue per year, but garbage and recycling services. These services do generate some revenue, through landfill fees and recycling and the like, to the tune of $82,238,000 in 2009. This acts to offset (along with some $11 million in recoveries) the total of $128,640,000 in gross expenditures on waste disposal and recycling services.

All this to say that garbage collection is not a total loss. $82 million is hardly chump change and those revenues and more are still available to the Calgary city economy if the ideas I'm going to talk about are adopted. I simply believe that the disposal of waste is idiotic when every ounce of "stuff" that normally ends up in a landfill can be returned to the economy. The more we start thinking of garbage as an input rather than waste, the more money everyone stands to make. The idea of making effluents and byproducts into "industrial nutrients" are of course core to McDonough and Braungart's Cradle to Cradle, and dealt with in Natural Capitalism. I'd like to make a slightly more concrete recommendation that could be initiated on a five-year window to increase jobs and save $42 million from the city budget. Let's not forget that the money also implies FTEs, that's government-speak for "full-time equivalents" - people. The waste management stream of the city government employs 574 FTEs, going to 610 FTEs this year. Those people have to be taken care of, or the elimination of this budget line would have to be considered a failure.

First priority, then, is to inform the people working for Calgary's waste management that their entire section is to be spun off over the course of 5 years. Each employee should be given a five-year guide explaining exactly what changes are going to take place and what opportunities they will have in the course of these changes. During the course of the change, the population of Calgary will have to be kept informed of the new methods for garbage and recyclable collection. In effect, the effort of garbage and recyclable collection is going to be decentralised and handed over to numerous independent operators. They (and their competitors) will negotiate to the population in their area to determine the best means to effect garbage collection.

The process would have to be people-oriented, and strive to meet the highest standards of transparency in order to work. Business thrives in environments where there are controlled risks. There has to be risk to make a margin, but not so much risk that the margin is constantly in doubt. Transparency regarding the process of transition must be complete and unburdened with the rarified language of bureaucracy. The plan would move through the following phases:

1) Research
The City government will engage business planners, designers, and policymakers in formulating some basic business plans that may then be verified by the Business Development Bank of Canada (BDC). The basic need in this phase is to formulate the regulatory framework that the new waste management system will evolve in (bylaws and instructions to the Calgary population regarding how and where to sort and set out their household garbage). It will also be good to identify several basic business plans that might survive and thrive in the new regulatory environment so that early buy-in by participants is easy and relatively painless.

2) Engagement
The City will then go to its waste management professionals and offer them a view of how the system will evolve over the next five years. With the assistance of the BDC, the City will assist early adopters in receiving financing. Calgary will purchase or provide insurance on the loans in order to make the option more attractive and less risky. The largest loans should be reserved for the group of waste managment professionals who opt in in the first year. The number of opt-ins in the first year should be artificially capped at 100 so as to avoid strong competition, and to avoid flooding the market with too many services. When a city employee opts to take a loan, and either adopt a pre-existing business plan or make his own, he will be granted an area of the city in which to start his operation that is a reasonable distance from competitors. He will not have exclusive rights to the area, but City of Calgary will agree to withdraw their competing services from that area. In the subsequent years after the first roll-out of new services, new services will be able to piggyback on the infrastructure and best practices of old and established ones. For instance, if Bob opts-in first year to collect cans in a region of town for resale to a foundry, Jane may be able to hitch a ride in his truck when she establishes her bottle-collection business in the same area. Horizontal integration of these collection services will, over time, reduce costs all around and necessitate lower and lower opportunity cost to buy in.

3) Market development
From day one, the City will be engaged in developing markets - preferably local ones - for these business activities. In participation with the BDC, composting and vermiculture units could be established, black soldier fly processing companies started, or glassworks constructed. By creating a market for lawn clippings in the form of biochar, perhaps mixed with worm castings, the City will encourage the establishment of the gasification plants that can produce that biochar. The city itself - for instance, in parks and recreation - can create a market for compost tea and worm castings for its gardening work. An office in the city could be established in order to subsidise the purchase of these products through creating easier access to carbon sequestration credits.

As the plan progresses, the initially risk-averse should slowly be able to rationalise a start in a new business. Those who would prefer to leave the industry can be given a simple golden handshake. In five years, this budget line will have been removed, but by saving $42 million, the city will be creating milions more dollars worth of jobs fuelled by waste. The economic knock-on effects are staggering to consider: all of this stuff that previously had no value and left the market will be given value again. Ingenuity and entrepreneurialism can create new industries within this market that will fuel a new period of export creation and import replacement. By turning this industry over to the private sector in a humane manner, everybody benefits.

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