CREATING SUSTAINABLE BUSINESS DISTRICTS

1. CREATINGSUSTAINABLE BUSINESS DISTRICTS JOSEPH E. STIGLITZ PARIS FEBRUARY 15, 2008

2. Sustainable business districts are not just desirable, they are essential Not only can sustainable business districts improve the environment and the quality of life of those who work and live in the district, but also they can increase the profitability of firms in the business district There are a few simple principles underlying the concept of sustainable business districts

3. The Importance of Sustainable Business Districts • We spend a large fraction of our lives in the places where we work—so the design of the work area makes a great deal of difference for the quality of life • The way businesses organize production has large consequences for the environment • Global warming is a serious global threat • It is a global problem that can only be addressed with global solutions

4. Global Warming is a Serious Global Threat • There are some uncertainties • But these relate mostly to the speed with which global warming has been occurring • It has been happening much faster than most had anticipated • Great risk should encourage us to be more cautious

5. Global Problems Require Global Solutions • Matter of global social justice • Getting cooperation from developing countries will require devising a fair solution • Fair solution will require massive cutbacks

6. These will require large changes in the way we live and work: New economic model May even improve quality of life GDP measure does not provide a good measure of economic performance or social progress If we do not achieve sustainability our successes will be a mirage We may get good GDP numbers for a few years, but those numbers will quickly evaporate Measurement is important because it affects behavior

7. More Sustainable Business Districts • Looking at the environmental footprint (especially energy usage) • From a life-cycle systemic point of view • Energy, environmental resources used in the production of goods • Bio-fuels that lead to destruction of forests • Energy, environmental resources consumed in life-time use • Looking at the business district itself from systemic perspective • Opportunities to use wastes of one business as inputs into another

8. Components • Buildings • Green architecture • Design of building • Choice of materials • Transportation within district and between district and other places of working and living • Public transportation can play an important role in energy saving • Landscaping • Carbon sequestration occurs everywhere, not just in tropical rainforests • Can have large effects on energy usage (demands on air conditioning, heating, etc.) • A side-benefit is to make the business district a more enjoyable place to work, helping create livable places within which to work • Problems are interconnected • May be optimal to have some housing within business district • Can design buildings to generate electricity as well as to be more efficient in the use of energy

9. Instruments • Regulations • Land usage • Building codes • Energy utilization • Conservation • Renewables — including on site • Infrastructure • Transportation systems • Common heating systems • Incentives • Carrots and sticks

10. Underlying Problem • Market failures • Market prices fail to provide accurate “signal” concerning scarcity of water, air, and full impact of various products • Many decisions are long-term decisions • Need knowledge of prices years into the future • Helping “guide” businesses to understand these long-term concerns, even through tough regulation, may be helpful in the long-run • For example, Detroit is suffering today because in the past, it ignored these future costs • But even without these market failures, there exists an important role for government in providing institutional and physical infrastructure

11. Why it’s AlsoGood Business • In long-run, prices will reflect these long-term scarcities • Those who plan these long-run considerations now will ultimately be more profitable: they will be ahead of the game • The process of making growth more sustainable will itself generate enormous economic opportunities, as we re-think the way we work and live

12. Necessity is the Mother of Innovation • Old economic model focused on saving labor, not on saving resources • New economic model will focus more on saving resources, less on saving labor • New problems stimulate new ideas; it can be a catalyst for innovation • Early researchers reap low-hanging fruit • And develop longer-term competitive advantage

13. Re-thinking Labor • Happier workers are more productive workers (the efficiency wage hypothesis) • Affected by quality of life • Quality of life is affected by attributes of the work environment • Creating “livable” and “enjoyable” cities and business districts • Affected by intrinsic rewards of work • Satisfaction of helping the world address critical needs • Excitement of innovation and of being at the forefront

14. Collaborative efforts within and among business districts may be particularly beneficial Not just sharing of knowledge A more effective way of creating knowledge Fostering a stronger sense of community, inspired by common purposes Among key determinants of individual happiness are: Health — affected by the quality of environment A sense of purpose A sense of community

15. Creating Sustainable Business Districts • Can be an important part of the global response to threat of global warming • Knowledge is a global public good • Especially when it is knowledge about the production of a global public good,i.e.,a better environment • This conference can play an important role in sharing best practices • And in initiating joint research programs • To develop our of knowledge about how to improve the sustainability of business districts

16. SUSTAINABLE DEVELOPMENT AGREEMENT FOR BUSINESS DISTRICTS Findings: • Because a major international trend is gathering strength and getting organised to save our planet; • Because we are now certain of the reasons for these serious malfunctions and about their consequences; • Because only a radical change in habits and lifestyles is likely to slow, and hopefully halt, this fatal trend; • Because individual and collective awareness is finally taking shape; • Because economic development can - and must - contribute to Sustainable Development…

17. SUSTAINABLE DEVELOPMENT AGREEMENT FOR BUSINESS DISTRICTS …The Business Districts: • Will move with determination to protect the environment, save on energy and upgrade the quality of life and living conditions in Business Districts • Want to become major players in Sustainable Development as sources of economic growth in the world's major cities

18. I wish to commend you for this initiative I look forward to watching your progress in achieving these goals Your success can have an enormous influence not only on business districts and the way we go about producing goods, but also in advancing the radical changes in habits and lifestylesthat are going to be absolutely necessary if the world is to meet this critical challenge