Making a stronger case for industrial energy efficiency by quantifying non-energy benefits

This paper describes a more compelling case for industry to promote the non-energy benefits of energy efficiency investments. We do this in two ways to actively appeal to chief executive officers (CEOs) and chief financial officers (CFOs) primary responsibility: to enhance shareholder value. First, we describe the use of a project-by-project corporate financial analysis approach to quantify a broader range of productivity benefits that stem from investments in energy-efficient technologies, including waste reduction and pollution prevention. Second, and perhaps just as important, we present such information in corporate financial terms. These standard, widely-accepted analysis procedures are more credible to industry than the economic modeling done in the past because they are structured in the same way corporate financial analysts perform discounted cashflow investment analyses on individual projects. Case studies including such financial analyses, which quantify both energy and non-energy benefits from investments in energy-efficient technologies, are presented. Experience shows that energy efficiency projects’ non-energy benefits often exceed the value of energy savings, so energy savings should be viewed more correctly as part of the total benefits, rather than the focus of the results. Quantifying the total benefits of energy efficiency projects helps companies understand the financial opportunities of investments in energy-efficient technologies. Making a case for investing in energy-efficient technologies based on energy savings alone has not always proven successful. Evidence suggests, however, that industrial decision makers will understand energy efficiency investments as part of a broader set of parameters that affect company productivity and profitability.     

Equitable distribution of green stormwater infrastructure: a capacity-based framework for implementation in disadvantaged communities

This study seeks to understand the factors that influence the variability in distribution of public and private sector investments in green stormwater infrastructure (GSI) projects across the diversity of neighbourhoods in the City of Philadelphia, PA, U.S.A. using indicators of community context and capacity. For this study, context is defined as characteristics of disadvantaged communities and capacity as factors that facilitate individual and collective action. Community context and capacity are deemed integral to the success of the Philadelphia GSI programme as the Philadelphia Water Department is relying upon collaborative approaches to facilitate public investments in neighbourhoods and voluntary implementation of GSI practices on publically and privately owned lands. Private sector investments in GSI mandated by stormwater regulations for new construction and major rehabilitation also are assessed in relation to these two sets of indicators. The geographic information systems and statistical analyses reveal an inequitable distribution of GSI projects, which largely is driven by market forces. The paper concludes with a community capacity-based framework to prioritise public sector investment in disadvantaged communities to achieve more equitable distribution of GSI projects and associated benefits.     

Modeling the impact of revegetation on regional water quality: A collective approach to manage the cumulative impacts of mining in the Bowen Basin,Australia

In this paper we quantify the additional water quality benefits that can be achieved through coordinated cumulative impact management. To do this we simulate coordinated and un-coordinated revegetation investments and compare their impact on achieving regional water quality goals. Our results show that coordination between multiple mining companies achieves additional benefits since prioritization is enabled across a broader range of investment opportunities. Additionally, when coordinated investment is permitted beyond the boundaries of coal mining leases, results show that additional benefits are greatly enhanced since these regions provide more rewarding investment opportunities. Results illustrate (a) how regional coordination may influence reputational benefits of investments, and (b) that coordination is beneficial when investment opportunities are unevenly distributed across the landscape. When additional benefits are achievable, we suggest that mining companies should develop collective investment projects with an understanding of how coordination influences project costs. Similarly, investment projects should be developed with an understanding of investment tradeoffs and how these may adversely impact on regional stakeholders and hence industry reputation. The mining industry has significant potential to contribute to regional wellbeing; however, land management policies must be flexible and promote incentives to enable companies to invest beyond compliance.     

Improving corporate environmental performance through economic value added

These days, corporate annual reports are full of references to shareholder wealth creation. In today's highly competitive capital markets, most chief executives understand that unless they are seen as value creators, investors will place their scarce capital somewhere else. Clear evidence of the growing importance, even dominance, of shareholder wealth creation is the growing use of a performance measure known as economic value added (EVA®).¹ Within ten years, it is almost certain that most large, publicly traded companies in the United States will be using EVA or something like it as a primary performance evaluation tool. Recently, many non-American companies have also adopted it to better align the incentives of managers with shareholders and to signal their commitment to value creation. EVA is not widely known or understood among environmental specialists, and those who have heard about it often fear it. We find this attitude unfortunate. In this article, we discuss EVA and how its use can aid corporate environmental managers in promoting more proactive environmental investments, and in funding capital investments on environmental improvement, waste reduction, and pollution control in their companies. The use of EVA and other shareholder value measures can also improve general capital investment decisions by integrating environmental factors that affect the long-term interests of the corporation into the managerial decision-making process.     

Private and public interests in water and energy

Based on empirical evidence from developed, transition and developing countries, the article looks at how the introduction of private operators’ interests into the water supply/sanitation and energy sectors may conflict with public interests in socio‐economic, environmental and political dimensions. Case studies are used to illustrate the dynamics of these interactions, covering phenomena such as unsolicited proposals, misrepresentation and corruption; the exploitation of established positions by taking advantage of asymmetry of information and negotiating capacity in relation to public authorities; and exit from contracts or concessions when acceptable profitability cannot be attained. This experience indicates that the introduction of private companies into these sectors creates the permanent possibility of conflict between private and public interests. The services are too vital both socially and economically to rely on corporate self‐regulation, and countries lack effective capacity to regulate such corporations. The authors conclude that policies relying on corporate activity in these sectors are unnecessarily risky, and that policy development should focus on building strong public sector institutions to provide these services.     

Regulation and private participation in the water and sanitation sector

Private-sector participation is widely perceived to be the solution to the failure of many publicly owned and managed water utilities to operate efficiently and make the investments required to meet community needs. However, there are no guarantees that privatisation will actually yield the desired performance improvements. Simply converting a public-sector monopoly into a private one provides no competitive incentives for the utility to operate efficiently, make appropriate investments or respond to consumer demands. Likewise, privatisation per se need do little to improve sector performance if governments are unwilling or unable to tackle such underlying problems as overmanning, uneconomic water pricing policies, financing the provision of public and merit goods, and restricting over-intrusive political intervention.
Given the characteristics of the water and sanitation sector it is inevitable that some form of continued public regulation of the private companies will be necessary. The regulatory burden can be reduced by adopting a competitive form of privatisation, choosing a more competitive sector structure and devising an appropriate regulatory regime. However, it has to be recognised that there will be a trade-off between making a venture attractive to private firms and introducing a notionally 'ideal' regulatory system. Regulation, in practice, is as much about creating the conditions under which private firms can operate effectively and efficiently as it is about protecting specific customer and public interests.     

Review of Agri-Environment Indexes and Stewardship Payments

Agri-environment programs aim to secure environmental and social stewardship services through payments to farmers. A critical component of many agri-environment programs is an agri-environment index (AEI) used to quantify benefits and target investments. An AEI will typically comprise multiple indicators, which are weighted and combined using a utility function, to measure the benefit of investment options (e.g., projects, farms, regions). This article presents a review of AEIs with 11 case studies from agri-environment programs in the United States, Australia, and the United Kingdom. We identify a generic procedure used to define AEIs and explore the implications of alternative methodological approaches. We conclude that AEIs have become an extremely important policy instrument and make suggestions for their improvement.     

Mining during the next 25 years: issues and challenges

This article examines possible future trends in the mining industry in the light of past developments. After a preliminary discussion, the article considers various aspects of demand, supply, corporate structures, geographic distribution of investment, and social and environmental factors influencing the minerals industry. Scepticism is expressed about the smooth, exponential growth envisaged by many commentators. Some risks are elaborated, and a digression about gold is included.
The article argues that, while the minerals industry has concentrated on reducing cash costs through technical innovation and productivity improvement, new approaches may be needed in future that are not directly linked to economies of scale. Contracting out is an interesting trend with major implications.
The view that the mineral industry's corporate structure is becoming increasingly concentrated is challenged. Developments in consumer countries as well as historical precedents strongly suggest a more diverse structure.
The spread of minerals investment from North America and Australasia, and the resurgence of foreign direct investment in minerals projects, are placed in context and discussed from the viewpoints of both companies and host countries.
Although the appropriate responses to many of these issues can only properly be made by governments at all levels, the industry has to play its part.     

Green economy: Private sectors’ response to climate change

The focus of this paper is to present a discussion of the role of the private sector in response to the need for climate change adaptations. The study, which was conducted through a literature review, investigates the concept of the green economy and climate change, as well as businesses’ commitment to advance climate actions in ways that build resilience in vulnerable communities in developing countries. The paper calls on companies with national, regional, and/or global reach to adopt or develop strategies that improve resource efficiency, reduce greenhouse gas emissions, and reduce the loss of biodiversity. Businesses can accelerate this transition by aligning their investments with climate change adaptation opportunities, and thus, “green” the economy. In addition, green growth could be achieved through tactical public and private investments in mitigating climate change. The paper concludes that the private sector is a key sector in addressing the challenges of vulnerable communities, and it has much to contribute to the planning, development, and implementation of climate adaptation strategies, including sector‐specific expertise, technology, efficiency, financing, and entrepreneurship. Finally, some social conditions and environmental boundaries have been highlighted in this paper to attract the attention of business leaders who are trying to build initiatives and advance climate actions that will reduce socio‐community risks from climate change. Also, comprehensive initiatives and strategies have been recommended to private companies seeking to address climate vulnerabilities.     

IMPROVING URBAN WATERWAYS IN EMERGING COUNTRIES: AN ACTION PLAN FOR MADRAS1

ABSTRACT: Typically, infrastructure agencies build massive water projects to serve expanding populations in emerging country cities, but collect and treat only a fraction of the resulting wastewater. This effluent often overwhelms existing sewerage systems and fouls waterways. Cleaning urban waterways requires large investments over long terms and the political will to make and sustain them. This challenge - difficult in advanced countries - becomes daunting with the scarce resources and weak institutions typical of emerging countries. This paper presents a framework to structure such a strategy, and applies it to Madras, India. It consists of three parts: (1) setting a vision through a participatory process; (2) macro investments mainly in wastewater treatment that use least-cost methods; and (3) micro investments in small projects that involve local people and galvanize public support. The macro investment, $350 million for Madras, appears very large, but averages out to $66 per capita, far below the $1,000-$2,000 typical of advanced country cities. Micro projects to be undertaken by Non-Governmental Organizations (NGOs) included an independent wastewater monitoring program, sanitary upgrading of slums along waterways banks, a cattle waste demonstration project, and an industrial pollution survey. Together, a macro/micro strategy promises the funding and political will to achieve a balanced vision of waterways quality.     

Forestry-based carbon sequestration projects in Africa: Potential benefits and challenges

Carbon sequestration through forestry and agroforestry can help mitigate global warming. For Africa, carbon sequestration also represents an opportunity to fund sustainable development through financial inflows. However, with a low share of global carbon trade, there are strong concerns that African countries are losing out on this valuable opportunity. Through a comprehensive review of 23 carbon sequestration projects across 14 countries, this paper discusses ways to overcome critical challenges to scale up carbon investments in Africa. These projects are expected to sequester 26.85 million tCO₂ beyond the baseline situation. Within the continent, East Africa is the preferred destination for carbon investors. Most projects are non‐Kyoto compliant and represent voluntary emission reductions. While project benefits such as increased local incomes and improved natural resources are promising, there are concerns that conversion of grasslands into tree plantations can harm local ecosystems. Insecure land tenure constrains new investments and increases the risk that local communities will lose access to forests. Another challenge is that projects with smallholders have high transaction costs. These costs can be overcome by building strong community institutions and simplifying project guidelines. To attract more projects, African governments will need to build their capacity to identify relevant opportunities.     

Assessing corporate–community involvement strategies in the Nigerian oil industry: An empirical analysis

The desire of oil companies operating in the Niger Delta to secure their social license to operate, and address their community development obligations, has led in recent years to the adoption of corporate social responsibility (CSR) policies and strategies. Drawing on quantitative and qualitative data collected in host communities within the Niger Delta in Nigeria, the paper compares the effectiveness of two different corporate–community involvement strategies. The evidence suggests that while the corporate–community foundation model has certain advantages over the in-house community investment model, both approaches suffer from a common shortcoming that limits the impact of oil companies’ efforts on community development in their host communities. The paper concludes by exploring the implications of the research findings for corporate–community involvement in the Nigerian oil industry.     

Mining and social development: Refocusing community investment using multi-criteria decision analysis

This paper addresses the question: How can mining companies assess social investment projects so that projects create value for the company and communities in which they operate? Mining companies are still wrestling with the limits of their responsibility in relation to social development even though they accept the business case for community investment at a general level. Fully aware of the practical hazards involved in taking an active role in facilitating local development, companies increasingly avoid methods that are overly paternalistic or assume the functions of the national or local governments. Gaining senior management's commitment to long-term social projects, which are characterised by uncertainty and complexity, is made easier if projects are shown to benefit the site's strategic goals. Case study research on large global mining companies, including interviews with social investment decision makers, has assisted in developing a Social Investment Decision Analysis Tool (SIDAT), a decision model for evaluating social projects. Multi-criteria decision analysis techniques integrating business planning processes with social impact assessment have proved useful in assisting mining companies think beyond seeking reputational benefits, to how they can meet their business goals and contribute to sustainable development.     

Maintaining land use agreements in Papua New Guinea Mining: ‘Business as usual’?

Most large scale resource extraction projects in Papua New Guinea (PNG) require companies to negotiate with customary landowners for access to development sites. In the discussion of process and challenges of development and operation of projects, particularly mines, the paper, basing as a case study of land use arrangements in PNG mining, has several objectives to address. First, it discusses land use arrangements in the mining industry and how they have evolved over the last few decades. Today, most of these arrangements involve pluralistic framework agreements which have been shaped by land tenure debates, civil uprisings, government initiatives and increasingly politically savvy customary landowners. This pluralistic process encourages key stakeholder involvement, particularly customary landowner participation which has been an innovative piece of sustainable mineral policy development in PNG. Second, the paper argues that ‘it is not business as usual’ for mining companies as it would generally be the case in developed and many developing countries because they are increasingly forced to be proactive in addressing landowner and community interests while managing mining projects. A brief overview of land use debates in PNG is summarised at the outset to provide background to mining and development in the country. Third, the significance of the corporate social responsibility (CSR) paradigm and its impact on business, particularly the mining industry is acknowledged intermittently in the discussion to shed light on how it is influencing development of local communities. Finally, the paper argues that the post-Bougainville period has led to a change of the old enclave model of mining development to a broad based community driven form of development around mining. However, it is difficult to predict as to how this model of mining led development in rural PNG will span out in the long run. In the meantime, genuine landowner partnerships with developers and government in the management and operation of mining projects in the country are proving to be a positive outcome for everyone despite some major challenges.     

AESTHETIC PREFERENCE FOR WATER RESOURCE PROJECTS: AN APPLICATION OF Q METHODOLOGY1

ABSTRACT Many of the resources generating aesthetic and visual benefits are publically owned and their optimum use and development depends upon public investment. Traditionally, public investment decisions have been couched in economic terms requiring quantitative measurement of benefits and costs. Since many of the benefits these resources provide are not consumed when they are enjoyed, the total contribution of the resource is imperfectly measured in the usual market sense. Thus, if the provision of these public goods is left to the conventional market mechanism, less than socially optimal investment may occur. This study was designed to investigate whether aesthetic preferences related to water projects could be determined, and whether they differ among different groups of people. A Q sort of 44 photographs of a wide variety of water development projects was conducted with two groups, i.e., photographers (aesthetic man) and town assessors (economic man). The resultant analysis identified two significant factors. Factor 1 provided insight into a hypothesis of nature dominant or man dominant scenes. Factor 2 indicated that the respondents had a negative preference for projects which were in varying stages of completion or appeared to be polluted. Preferences were consistent between the two groups tested. The test revealed that people do not necessarily equate only naturalness with aesthetic appeal, but will accept development as aesthetic, provided that it is designed to complement the natural landscape.     

Availability and access of financial support for renewables: issues and an illustrative innovation

This paper examines issues related to increasing the market penetration of renewable forms of energy in developing countries. It particularly focuses on availability and access of financial support for investments relating to renewable energy and a case study is presented illustrating innovative financing. While the main focus of the discussion is on renewable energy (RE) attention is also devoted to energy efficiency (EE) projects and investment. An underlying premise is that, if RE projects are to reach their market potential, they must be fiscally sustainable and the appropriate promotion of such fiscally sustainable RE projects yields multiple environmental and developmental synergies. Commercial viability is not primarily a question of technology. There is a broad range of RE products with proven performance and commercial operation in selected market situations. The challenge of extending this market penetration is to establish the institutional, organizational and financial conditions under which a commercial market for these products can develop, particularly in developing countries. This article reflects current emphasis on increased private participation in the energy sector, as well as policy reform at the national level.     

Harnessing the bonanza: economic liberalization and capacity building in the mineral sector

Over the past decade many developing and transition economies have liberalized their investment regimes for mining and privatized formerly state-owned mineral assets. In response, these economies have witnessed increased foreign investment in exploration and development, growth in the number and diversity of mineral projects, and the opening up of new channels for harnessing increased economic and social benefits from development in the minerals sector. The restructuring of fiscal and regulatory regimes to encourage foreign investment, and the associated influx of mining capital, technology and skills, is transforming traditional relationships between mining firms, local communities and the government. This transformation necessitates a re-evaluation of the most effective policy approaches to capture increased economic and social benefits from mineral production. This article considers effective mechanisms for improving the capacity of developing and transition countries to maximize the economic and social benefits of mineral production. Common challenges associated with minerals economies are reviewed. Consideration is given to the opportunities for harnessing foreign direct investment and the possibilities for creating new partnerships between local communities, industry, government, and multilateral development agencies through social investment projects. The article concludes with a series of recommendations for the design and implementation of policy approaches towards harnessing mineral production for economic and social benefit following the liberalization of investment regimes for mining.     

INTEGRATING SOCIAL BENEFIT COST ACCOUNTING INTO WATERSHED RESTORATION AND PROTECTION PROGRAMS1

ABSTRACT: Successful watershed management requires consideration of multiple objectives and the efficient use of scarce public and private resources. One way to address these multi-faceted issues is through Social Benefit-Cost Accounting (SBCA). SBCA is a systematic method of addressing complex social and economic issues relevant to proposed watershed management projects. Benefits of using this technique include: benefits and costs of watershed projects are better understood; politically sensitive issues tend to be put into perspective; and stakeholders' interests are placed on a level playing field. An example from Bogota, Colombia demonstrates how SBCA can be used to value the benefits and costs of a proposed project. By addressing the benefits and costs to all stakeholders, the design of watershed management programs can be improved to achieve goals in a cost-effective manner.     

How can public–private partnerships contribute to security and human rights policy and practice in the extractive industries? A case study of The Democratic Republic of Congo (DRC)

Across sub-Saharan Africa, the presence of foreign large-scale mining companies is increasing. This is in part a result of depleting resources in countries such as Canada, United States and Australia, and in part from a more favorable national mine investment climate in several mineral-rich African countries. Their increased presence raises important questions around the potential role and function of Corporate Social Responsibility (CSR) in the sector. In post-conflict and/or fragile states, CSR has further implications for conflict and risk mitigation strategies to ensure the protection of human rights. One CSR approach increasingly being considered is the public–private partnership, whereby companies, public donors, and development agencies leverage their relationships for mutual benefit. There is merit in exploring its function in post-conflict fragile states, where socio-economic needs are high and the capacity of the state to respond to a variety of mine governance challenges is limited. Two case studies from the Democratic Republic of Congo (DRC) are presented, and their policy implications, discussed.     

Mining taxation issues for the future

During the 1970s and 1980s the main concern of mining policies was to attract investment whilst at the same time balancing the interests of governments and companies. By the turn of the century a new spectrum of challenges faces governments and companies in the mining sector. The need for fiscal regimes to adapt to price cyclicity is to some extent superseded by the requirement that they adapt to a long-term decline of metal prices. The growing importance of environmental and community affairs in the mining sector will force governments to design coherent and comprehensive tax regulations to complement the wide range of initiatives being taken in these fields. Finally, the age-old problem of tax collection continues to raise its head in transition and developing economies.