Environmental Management: Principles and practice

Industrial ecology
This is an approach which examines industrial, economic and resource activities
from a biological and environmental, rather than a monetary point of view (Frosch
and Gallopoulos, 1989). Allenby and Richards (1994) saw it as integrating
environmental concern into economic activity. Industrial ecology regards waste and
pollution as uneconomic and harmful, and seeks to ‘dovetail’ them with raw materials.
This means that wherever possible industry should use by-products, and go beyond
the reduction of wastes to make use of what remains by the producer or other bodies.
The product does not cause damage, and leads to a system of commerce where each
and every act is inherently sustainable and restorative (Hawken, 1993:xvi). Effectively,
the environmental price of a product is included in its retail price.
This application of the ecosystem concept to industry means linking the
‘metabolism’ of one company or body to that of others. This is not far-fetched: some
groupings of companies and settlements do it already. For example, Kalundborg
(Denmark) has a coal-fired power station, oil refinery, pharmaceutical companies,
concrete producer, sulphuric acid producer, fish farms, horticultural greenhouses
and district heating—which are well integrated. Kalundborg’s industrial ecology
has happened more or less spontaneously, as companies seek to minimize costs of
energy and raw materials and cut the output of waste. There are a number of similar
examples in Sweden (Hawken, 1993:62) and Denmark, where sewage, agricultural
waste and household refuse disposal are often integrated with district heating and
electricity generation.
Pigouvian taxes
Some people advocate going beyond the sort of industrial ecology-based strategy
adopted by Kalundborg to a fully cyclic economy, i.e. one which yields virtually no
waste because recycling and by-product recovery are complete. Making manufacturers
responsible for some or all of the costs of recycling or waste disposal is one way of
encouraging waste reduction and industrial ecology. There are various ways of doing
this: one is to levy Pigouvian taxes (see chapter 5). Named after the 1920s UK
economist Arthur Pigou, these aim to ensure a manufacturer pays all costs from raw
material and energy provision to final collection and recycling.
Pigouvian taxes may present problems: large companies may make sufficient
profits to afford fines, but small companies could be crippled. So, the ‘polluter-pays’
principle can be a virtual licence to pollute if the fines are not set high enough, and
that can damage small businesses (Beaumont, 1992). One way of avoiding such
problems is to use licences; for example, in Germany manufacturers pay a fee to the
government to display a green dot on packaging which authorizes (compulsory)
recycling. As the costs have to be passed on to the customer, this encourages companies
to reduce expensive packaging and use cheap, recyclable materials.

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CHAPTER THREE
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