Volume 7, Number 4 – December 2010

Musings on the Green Economy

Over the past year, I’ve had the opportunity to work on several projects examining opportunities in the emerging green economy.   As is often the case, deeper immersion into this sector of the economy seems to raise more, not fewer, questions for me.  While I am up to speed on the latest trends and research, I still have lots of questions about some big issues related to the green economy.  Here are a few with which I’m currently wrestling:

Is there really a distinctive green economy?

When we think about the green economy, we often turn to new technologies like advanced batteries, clean cars, or new solar energy solutions.   Yet, when you examine various studies of green jobs or trends in the green economy, most of the identified occupations do not reside in what we might call the “pure-play” green economy.  Instead, they tend to be involved in developing sustainable products or services within an existing industry. For example, many statewide studies of green jobs, such as recent research in Oregon and California, have found that the highest numbers of green jobs are found in occupations such as carpenters, farmers, truck drivers, and landscapers.  

These patterns may shift as the green economy matures, but they may also suggest another conclusion:  many green economy industries may not represent unique industry clusters.  Instead, green or sustainable practices are more likely to be nestled within all industries.  If this is the case, green or sustainable practices will become much like information technology is today—a core part of every business. 

Where do good green jobs exist?

Depending on how you count, the green economy generates significant numbers of jobs.  The Commerce Department has estimated that green jobs account for anywhere from 1-2% of total US employment, and, in some states, such as California, this figure is much higher.   While these are impressive figures for a relatively new industry, they don’t indicate another important fact about the current state of the green economy.  Few of these jobs are what most consider to be “good” jobs, i.e. positions that provide relatively high wages, benefits, and a strong career ladder.

Most recent studies suggest that green jobs tend to pay below average wages and have limited training and education pre-requisites.  Lots of interesting work is underway to improve training programs, and to build career ladders in green occupations.  This is all very laudable, and needs to continue.  Yet, at the same time, we need to do a better job of identifying and developing green economy sectors that have the capacity to create large numbers of high-paying good jobs.  There are number of approaches that could help on this front.  At a minimum, policymakers should focus on helping American manufacturers, a traditional source of good jobs, succeed in entering green economy markets.

What about water?

It seems that the real “plays” in the green economy all relate to energy, food, or water.   We hear a lot about green energy and sustainable food, but we don’t seem to hear as much about water.  Water conservation and management is a huge market.  In 2008, the global water sector market generated $500 billion in sales.   We can expect this market to grow, as water scarcity increases and as older water infrastructure systems need repairs, upgrades, and replacements.

A few states and regions are focused on the water market as part of a broader cluster strategy.  For example, Michigan’s Green Jobs for Blue Waters initiative is targeting this sector based on Michigan’s location at the world’s largest source of freshwater—the Great Lakes.   Other states and regions should also consider targeting this sector as it offers huge opportunities in the development of new technologies, new products, and services.    

What’s the play for communities and regions?

Ten years ago, every state and region seemed to have a biotechnology strategy. Today, they all seek to develop a green economy strategy.  In many cases, this makes sense.  When a region has relevant natural assets, they can be used to competitive advantage.   Wind energy makes sense in Kansas and Texas; solar makes sense in Arizona; and tidal power is good option for Maine.  But what about regions and communities that lack some kind of competitive advantage, either based on natural assets, technologies, or industry strengths?   Should these communities simply focus their resources and attention elsewhere?   The jury is still out on this one.  But, what if I am correct in my suggestion that green and sustainable practices will become infused in all industries?  If that’s the case, few regions are going to prosper by ignoring the emerging green economy. 

As you can see, this note contains more questions than answers.  What do you think?  I’m sure others are struggling with understanding these and other issues related to the green economy.   The green economy presents many tremendous opportunities and many challenges as well.  But, it’s time that we move beyond the simple claim that the green economy is our future.  Let’s roll up our sleeves and figure out what that claim really means. I look forward to continuing the dialogue.

What’s New at EntreWorks Consulting?

We continue to provide more regular news and updates at the EntreWorks blog (http://blog.entreworks.net). Recent postings have focused on the recent blue ribbon panel reports on deficit reduction, sustainable community design, and new trends in on microfinance.