Strategic Environmental Assessment: Integrated Regional Water Management in Los Angeles

Source: California Water Plan 2009 update

To meet the demand for water in the Greater Los Angeles Area, the federal, state, and local government agencies have worked to develop a large system of infrastructure that brings water from all across the western part of the US to Southern California.

In the early 1900s, when the population of Los Angeles began to outgrow the water provided by the Los Angeles River, William Mulholland, Supervisor of the Los Angeles Department of Water and Power at the time, was commissioned to find a new source of water in order to supply the growing community. Between 1908 and 1913, the Los Angeles Aqueduct was constructed to bring water from Owens Valley to Los Angeles – a distance of 233 miles. Later projects commissioned by Mulholland would bring water form Mono Basin (338 miles away) and the Colorado River. These sources are all still currently supplying the majority of the water demanded within the Los Angeles area today.

With these projects, the Greater Los Angeles Area has been reliant for a majority of its water supply on far away water sources for nearly a century. This system poses huge risks on the city for the future; the population in the area is continuing to grow while these water sources will become continually less reliable due to issues like climate variation, water scarcity and even drought across the Western portion of the US. In addition, the local sources of water in Southern California are also threatened by environmental degradation, causing the quantity and quality of the water to be at risk.

To combat these issues, the State of California has created a state-wide water plan, which sets some major strategic goals for the State in terms of water management. Since the 2005 California Water Plan, the State has emphasized the importance of regional collaboration on the issue of water management. It has stressed the importance of hydro geological areas working in collaboration in order to create Integrated Regional Water Management (IRWM) Plans that provide a unified strategy for water management within the region. The IRWM region is meant to create a set of strategic goals that they will then use as a guide when approving water management projects and infrastructure. The State of California believes that the IRWM program “incorporates the physical, environmental, societal, economic, legal, and jurisdictional aspects of water management into regional solutions through open and collaborative stakeholder processes to promote sustainable water use.”

Source: Strategic Plan for the Future of Integrated Region Water Management in California


Since the passing of the IRWM Planning Act in 2002, the State of California has approved 48 IRWM Regions covering 87% of the state’s geographic area and 99% of the state’s population. The State of California is currently working on creating a state-wide strategy for all of the IRWM regions in order to build on the current and past successes of IRWM; further enable, empower, and support regional water management groups; better align state and federal programs to support IRWM; develop a shared vision for funding priorities and financing mechanisms; and inform and influence future water management policies and investments for California.

As mentioned in a previous post, the Greater Los Angeles Area has created an IRWM Region that covers roughly 10.2 million people, portions of 4 counties, and 92 cities. The region accounts for 28% of the population of California. Within the Los Angeles IRWM region, the area is divided into 5 sub-regions (as illustrated in the image below). The Los Angeles IRWM approved their first Integrated Regional Water Management Plan (IRWMP) in 2006 “following a multi-year effort among water retailers, wastewater agencies, stormwater and flood managers, watershed groups, the business community, tribes, agriculture, and non-profit stakeholders to improve water resources planning in the Los Angeles Basin.” Currently, the Los Angeles IRWM region is going through a process of stakeholder engagement and consultation in order to evaluate and revise this strategy by the end of the year.

Source: IRWMP for Greater Los Angeles County Region

According to the Greater Los Angeles IRWMP:

The purpose of this Integrated Regional Water Management Plan (IRWMP or Plan) is to define a clear vision and direction for the sustainable management of water resources in the Greater Los Angeles County Region (Region) for the next 20 years, present the basic information regarding possible solutions and the costs and benefits of those solutions, and to inspire the Region and potential funding partners outside this Region. Moreover, it is to adopt solutions that make sense, are good for the community, and are economically feasible.

Within the IRWMP, the plan provides information regarding the governance process of the association; the stakeholders involved and the types of engagement used; and data about the physical characteristics of the region including the geographical characteristics, population and governance information, water supply, demand, and quality characteristics, and social trends and concerns for the region. The plan also includes a description of the objectives and their related targets that form the Greater Los Angeles’ IRWM strategy. These objectives and targets are listed under 5 main categories:

Source: IRWMP for Greater Los Angeles County Region
Click to Enlarge Image

Strategic Assessment?

Although the Greater Los Angeles IRWM has created a plan that explains in detail the needs and opportunities for water management in the region, it is not evident that a strategic environmental assessment was implemented during the strategic planning of the objectives and targets, nor were used to determine the criteria for the selection of projects that will be implemented in order to reach these objectives.

Strategic Planning of Objectives and Targets:

According the IRWMP, in order to decide on the Plan’s objectives and targets, “An initial list of objectives was revised by a subcommittee of the Leadership Committee and then circulated for comment to the five Steering Committees, five Subregional stakeholder workshops, and one Regional stakeholder workshop. Stakeholder comments were reviewed and incorporated as appropriate into the objectives, which were then finalized by the Leadership Committee.” There is no mention of a strategic environmental assessment made in order to assess the impacts that may come from the different objective options. These goals were decided by stakeholder engagement and committee meetings, yet did not involve an assessment of the impacts associated with the possible objectives available.

Assessment of Potential Projects?:

The Plan discusses the process undertaken for a “call for proposals” in which the region requested that all stakeholders submit their proposals for projects and project concepts for consideration by the region in order to reach the Plan’s objectives. According to the IRWMP, stakeholders had identified 1,500 projects during this process. The report explains the efforts and analysis undertaken by the organization in order to find ways to integrate these projects, either geographically or strategically, and also discussed how these projects helped to develop the “vision for each subregion”. Additionally, the report identified new regional projects that could help “bridge the gap” between the proposed projects and the targets set within the IRWMP.

However, in terms of impact assessment of these proposed projects, the report states:

Although some conclusions may be possible from an analysis of the stated benefits provided for the projects and project concepts in the database, given the uncertain accuracy of the benefit information provided, an assessment of cumulative benefits of the stakeholder-identified projects and a comparison of the cumulative benefits to the planning targets was ultimately not included in this Plan.

In other words, given that the proposals lacked information regarding benefits and impacts of their projects, the IRWMP did not include this assessment within their plan.

What about an Impact Assessment of the IRWM Plan?

One of the chapters within the report does discuss the benefits and impacts involved in the implementation of the finished IRWM Strategy. While this chapter offers a rather in depth description of the benefits of implementing the plan, it does not provide significant information as to what the potential environmental impacts of implementing this strategy may entail. The report states:

Consistent with Section 15262 of the CEQA Guidelines, a project involving only feasibility or planning studies does not require the preparation of an Environmental Impact Report or Negative Declaration but does require consideration of environmental factors.

Therefore, given the fact that it is a strategy, and not a project, a full environmental impact assessment (in California, this assessment is called the California Environmental Quality Act (CEQA) Guidelines) was not done.

The report goes on to say that:

To consider potential environmental effects that could result from IRWMP implementation, the CEQA Initial Study Checklist contained in Appendix G of the CEQA Guidelines (OPR, 2003) was reviewed to identify whether the implementation of the Plan, which might include those project concepts identified in the Regional Planning Tools, could result in adverse affects.

The report states a “summary of potentially adverse project-specific and/or cumulative affects that could result” from the implementation of the plan. The list includes impacts such as visual impacts from the new installations, air and noise pollution during construction, soil erosion, and land change issues.  As a disclaimer to their analysis, the report states that “this review is not intended to replace or supplant detailed review of potential environmental impacts (at such time as specific projects are proposed)”.

The impact analysis of the IRWM Plan concludes by stating:

Any decision to implement any individual project or program identified in this plan would be subject to CEQA compliance at such time as any agency commits to fund or implement the project. It is assumed that the approving entity would comply with CEQA and identify appropriate mitigation measures to the extent that any significant impacts would result.

In other words, the plan was not given a full environmental impact assessment; however, if any portion of the plan were to be implemented through a specific project, that project would need to go through a proper environmental impact assessment.


While the Integrated Regional Water Management Plan for the Greater Los Angeles Area does consider the needs, opportunities, and potential benefits of the strategy within their report, there is little evidence that the potential environmental impacts were considered during the planning of the strategy. The brief impact assessment that was performed was done once the strategy had already been created.

Additionally, the IRWMP did not attempt to assess the cumulative impacts of the proposed projects that were submitted during the “call for proposals”, nor did they do a strategic environmental assessment based on the possible project opportunities.  The report simply states that once a given project has been chosen for implementation, the project will go through the standard Environmental Impact Assessment process required by the State of California in order to assess the impacts of the individual project.

Although the Los Angeles IRWM has examined the needs and opportunities of the region in detail and has succeeded in including their stakeholders within the creation of the plan, the process lacks the use of a strategic environmental assessment (SEA) as part of the strategic planning process. If the Los Angeles IRWM would have incorporated a SEA within their strategic planning, they would have had a better understand the impacts associated with the possible opportunities and solutions that they were considering for the final strategy.

Social Entrepreneurship: The New “Hybrid” Organization

Image from Flickr User: Kikemb CC Licensed.

Social Entrepreneurship and Social Innovation are the new “buzz words” when it comes to both the business and non-profit sectors.  Many people believe social enterprises to be a mix of both worlds, incorporating the social impact focus of non-profits, with the financial stability, or financial returns, of a business. Some are even calling these emerging social enterprises the beginning of a new fourth sector.

Fourth Sector?

Historically, we have seen three types of organizations in society: business, government, and non-profits.  These organizations have provided society with the products and services that make up the quality of life that that many people know today.

Yet, with all of the benefits that we have received from these three organizations, they have come with many costs. Our natural environment has suffered greatly for our economic benefit; its natural resources are now being consumed at the rate of 1.5 times the natural re-growth of the planet.  We face the threat of climate change.  Social capital has also suffered as economic globalization has brought wealth to few, yet has kept the majority of the world’s population in poverty.  The economic crisis we are living today has given us a glimpse into how “short-termism, corruption and greed threaten the security of our economic systems and the viability of our civic institutions”.

According to a paper, written by the Fourth Sector Network:

There is a growing recognition that these and other complex systemic problems are rooted in structural failures at the organizational level. Solving these problems requires new ways of thinking and acting on the part of individuals, along with new organizational designs that encourage stakeholder actions consistent with the long term welfare of our ecological, economic, and social systems.

In other words, the organizational models we have today are not properly serving the long term needs of the people and the planet. While the corporation may provide short term wealth to some (in terms of increased stock prices, quarterly gains, etc.) these benefits are coming at the long terms costs of society and the environment. Non-profits have been working to help “fill the gaps” left behind by corporations; yet their work, in many cases, often only fulfills the immediate needs of society. The non-profit sector and government are having a hard time efficiently tackling the systemic problems inherent in this three-sector organizational system.

There is a need for new types of organizations that better fit both the short and long term needs of the economy, society, and environment.  These organizations will give a larger priority to providing positive social and environmental impact, while still maintaining an income generating structure:

Image from the Fourth Sector Network. CC Licensed.
Click Image to Enlarge.

Social Entrepreneurship falls into this new category of organizations. According to Ashoka, “social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems.” They understand a social problem, and find an innovative solution to solve that problem.  For social entrepreneurs, financial income is just the means to the end.  The end itself is creating a sustainable solution to the social problem. Therefore, social enterprises do not measure their success in terms of profits or economic growth.  They measure their success in terms of the positive social impact that they have made on society.

While a business entrepreneur might create entirely new industries, a social entrepreneur comes up with new solutions to social problems and then implements them on a large scale.

Sounds great, right?  So how do these social enterprises function in the real world, if they are not using the same indicators that society and financial markets use to measure success?

Part of the territory that comes with a systems change is that it often takes time for the current system to recognize and understand the new paradigms being developed.

In many countries, these “hybrid” organizations do not yet have a complete supportive ecosystem – including regulatory frameworks, accounting systems, capital markets etc. – that promote their operation. Given that these enterprises are a mix between a fully for-profit and non-profit organization, current legal frameworks in may countries do not have the capacity to allow these organizations to act like both types of organizations. As the Skoll Foundation writes, “on the one hand a part of their activities often sit squarely in the public domain, while on the other, their commercial activities (by definition) would best be served by a more commercial format”. As an example, it may be hard for a social enterprise to be able to sell their innovative products or services to certain communities (like a for-profit enterprise), and receive donations or grants in order to provide these products and services to others who cannot afford them.

There is, however, some variance within the three historic organizations, and we have seen many companies move within this “wiggle room”. Many non-profits have started for-profit ventures in order to carry out their missions. Take for example, Story Pirates which has set up both a non-profit and for-profit under the same name in order to provide after-school writing and drama programs to under served schools and produce stage shows – for financial income – for the public. Additionally, many businesses have also created partnerships in order to promote positive social impact. For example, Danone and the Grameen Group have partnered together in order to work to provide nutrition to the largest amount of people as possible in Bangladesh. 

However, as these enterprises evolve, they are seeing a need for a more supportive ecosystem of frameworks and systems that are better tailored to their lines of work.

The UK government has been the leader in pioneering a framework tailored to for-benefit-businesses. The Community Interest Company (CIC) was introduced by the UK government in 2005 as a special type of legal company whose financial “profits” are principally re-invested in the business or in the community, rather that given to shareholders or owners. In the legislation, these companies must “create an ‘asset lock’- a legal promise stating that the company’s assets will only be used for its social objectives, and setting limits to the money it can pay to shareholders”.  With this framework, the “success” of these companies is measured by the social impact that they create, rather than the economic returns that they give to their shareholders.

In the arena of Social Entrepreneurship, we are seeing remarkable growth and significant interest by people from all sectors. Some of the biggest business schools have even begun to incorporate social entrepreneurship into their coursework. It will be interesting to see where, in the next decade, these new types of “hybrid” enterprises go, and how they will change the existing systems that we understand today.

Best Practices in Water Management: A look at LA

The city of Los Angeles is home to 3.8 million people living in 469 square miles. It is the second largest city in the US, behind New York City (which has a population of 8.2 million people that miraculously live in 302 square miles of land).

During the last few decades, the City of Los Angeles has been working diligently, and has seen significant results, in the area of water conservation. According to data collected in March 2012, Los Angeles uses less water today than 40 years ago, despite a population increase of over 1 million people:

Source: LADWP

That’s a rather significant achievement.

So, how has LA done it?

Water use in the City of Los Angeles peaked in 1986. The following five years saw severe drought, and therefore water shortages throughout the city. In 1990, the city passed The Emergency Water Conservation Plan Ordinance which established a list of water conservation actions that the city would enact depending on the severity of water scarcity at a given time. This ordinance was later amended in 2008 to make some of the measures mandatory at all times of the year – regardless of the current water situation – and expanded certain practices to the general public. The Emergency Water Conservation Plan Ordinance places restrictions on specific actions including using water for landscaping purposes (watering lawns, trees, flowers, etc.), cleaning sidewalks with water, and serving water to customers in restaurants unless asked. The ordinance also prohibits residents to leave water leaks unattended.

Additionally, since the mid 1980s the city has been investing a significant amount of money in rebate programs to help ease the costs related to installing water efficient appliances, such as low-flow toilets and shower heads. According to the Los Angeles Department of Water and Power (LADWP), as of March 2012 over 3.5 million indoor water efficient devices had been installed under rebate programs.

In 2008, Mayor Villaraigosa launched a long term strategy for water conservation. The strategy, titled “Securing LA’s Water Supply”, aimed to meet 100% of new water demand by 2030. The plan implemented strict enforcement of The Emergency Water Conservation Plan Ordinance, which had not been strongly enforced since 1992. This required a large awareness raising campaign in order to inform residents, restaurant owners and businesses about the conservation requirements listed within the ordinance. The Mayor’s strategy also included goals to increase the amount of recycled water “6-fold” within the city by 2019 and to implement storm water capture projects. Additionally, the San Fernando Aquifer would be cleaned up in order to better utilize the groundwater. According to the city, the “Securing LA’s Water Supply” strategy would reduce water imports by nearly 30% and would produce enough water to supply nearly half a million people by 2020.

According to a study conducted by the Sierra Club Angeles Chapter Water Committee, in 2011 Los Angeles was rated one of five “model cities” within Los Angeles and Orange Counties regarding water conservation programs. These five cities, which also included Burbank, La Palma, La Verne, and Mission Viejo, were considered to have “the best number of water conservation measures” out of all the cities within the two counties.

Is this success transferable to other cities?

The Sierra Club Angeles Chapter Water Committee stated within their report that the programs enacted by Los Angeles City “provide a roadmap for the remaining cities in Los Angeles County and Orange County to more effectively conserve local and imported urban water resources for the future.” Given the relative success of Los Angeles City’s water conservation efforts within the last few decades, these programs and policies could be considered a best practice for other large cities that also face water scarcity and drought.

Other “dry” cities around the world should be looking into the inititatives implemented by Los Angeles to see what “best practices” could also be used within their own cities and specific contexts.

Water Conservation in the Future?

Although Los Angeles City is considered one of the best cities in the LA and Orange County region in terms of water conservation efforts, the city still has room for improvement.

The water conservation strategy enacted by Mayor Villaraigosa was considered “reasonable and achievable” by Mark Gold, president of the non profit organization Heal the Bay. Yet, since the plan’s inauguration in March of 2008, critics have noted that only a portion of the initiatives have actually been implemented. In a 2011 article written for the Los Angeles Times, Mark Gold states:

The city has made some major strides on conservation, in large part thanks to restrictions on yard watering and economic incentives for water-efficient appliances and machinery. But we haven’t really begun to implement major components of the plan because [Los Angeles Department of Water and Power] leadership hasn’t made them a high priority.

In 2011, the LADWP had not yet invested in the installment of the reclamation plants required to increase the amount of recycled water used in LA City “six-fold”, nor had they invested in the storm water capture programs layed out in Villaraigosa’s plan. The LADWP described these programs as “extras”; they stated that since they were not essential, “the City Council should decide whether to fund them.”

This lack of political will has meant that much of the opportunity for significant reduction in water demand in Los Angeles City has not been realized. With the estimated increase in population and possible drought problems due to climate change in the future, LA needs to re-think the importance of these initiatives and explain the long term benefits of these programs to citizens. These investments will create a more reliable water supply in LA and will help stabilize pricing. The water management legislation and rebate programs implemented so far have shown great improvements in conservation; however, the city should be more proactive in implementing the remaining portions of Villaraigosa’s strategy.

Los Angeles City vs. The Greater Los Angeles Area

When we talk about Los Angeles, we tend to think about the LA Metropolitan Region as a whole. Citizens of the region often live within one city, yet work in another city within the Los Angeles Area. Therefore, the Los Angeles Metropolitan Area behaves more like a de facto city, rather than a de jure city.

De Facto and De Jure Cities in Urban Planning:

According to the publication Cities of Tomorrow, the de jure city is considered the “administrative city” that is limited to the activities within the clear, historic city borders. This contrasts the de facto city, which is defined as “physical or socio-economic realities which have been approached through either a morphological or a functional definition”.

In other words, de jure refers to the actual city of Los Angeles, whereas de facto refers to the entire “functioning city” of Los Angeles – regardless of the technical city jurisdiction that the area falls under.  The de facto Los Angeles, in terms of the functioning, morphological city unit, can be defined as (what Los Angelinos know as) the “Greater Los Angeles Area”:

Click Image to Enlarge

The Greater Los Angeles Area includes parts of Ventura, San Bernardino, Los Angeles, Orange and Riverside Counties. It is home to roughly 21 million people, living in 34,135 square miles.

With this in mind, it is important to think about the issues of water conservation as a de facto, rather than a du jure, issue. Given that the groundwater and aquifer sources for the region are the same, the problem should be managed by the region as a whole rather than simply considering the de jure boundary of Los Angeles City.  According to Cities of Tomorrow, “such inter-municipal cooperation is the basis for the creation of the new, more flexible functional urban area governance entities”.

To create this inter-municipal cooperation, the Greater Los Angeles County region has begun to collaborate in order to “develop an Integrated Regional Water Management Plan (IRWMP) that focuses on water resource management while creating a platform for future funding”.  The initiative encompasses several programs including initiatives to optimize local water resources, improve the quality of water sources, properly manage aquatic natural reserves, and reduce the region’s flood risk.

Initiatives such as the IRWMP are important in managing certain issues in the de facto Los Angeles. The IRWMP will help to ensure the water security of the entire region by guaranteeing that all municipalities are actively involved in water conservation and water quality measures. One de jure city in the Los Angeles region can not solve the problem alone.

With programs like the IRWMP, and the political will to back its initiatives, the Greater Los Angeles Area can make sure that the water resources in Southern California are properly managed and sustainable in the future.

Purpose, Values, and Action: Corporate Responsibility in SMEs

Multinational Corporations have been at the center of the discussion surrounding corporate responsibility.  This has occurred for two main reasons:

1. Multinationals have received a significant amount of “bad press” in recent years – from oil spills, to child labor scandals, to world financial meltdowns – pressuring them to “shape up”

2. Multinationals maintain significant power and influence over the global economy, providing “quick, meaningful wins” for environmental and social activists when they decide to “do better”.

Large multinational companies have the power to make a significant, individual impact in improving the conditions of communities and promoting environmental preservation. Although Large Enterprises (with 500 employees or more) totaled only 2% of companies that exported products in 2010 in the US, they accounted for 68% of the total value of exports – making them very powerful in terms of the amount of resources and products they manage.


However, we must not ignore the achievements of America’s Small and Medium Enterprises.

Small and Medium Enterprises (SMEs for short) have a much larger impact on society and the environment than most realize.

According to the US Census Bureau, in 2009, 99.6% of all firms in the US were SMEs.

75.7% of US firms were Micro Enterprises (with 1 to 9 employees)

22.2% were Small Enterprises (with 10 to 99 employees)

1.7% were Medium Enterprises (with 100 to 499 employees)

Only 0.4% of all firms in the US were considered Large Enterprises (with over 500 employees).

That same year, these more than 5 million SMEs in the US employed slightly over half of the employees working in private sector firms. They contributed to about 44% of the total private sector payroll and created about 65% of the new private sector jobs. In terms of US GDP, SMEs accounted for “more than half of the nonfarm private Gross Domestic Product”.

Needless to say, SMEs in America have a large collective influence on our environmental impact and what values we promote within society.

SMEs and Corporate Responsibility

So, how can SMEs act responsibly?

SMEs have several advantages over large corporations when it comes to acting as a responsible member of society. Given their small size, relationships between the owners and the employees are often closer and more personal than those in Large Enterprises, which facilitates the filtration of the company’s values throughout the company.  Also, SMEs tend to be less-bureaucratic, allowing them to more easily adapt to social and environmental demands from civil society.

What SMEs need in order to be able to act responsibly is a core set of values, and a clear purpose that focuses on responsible practices (not just sales and profit). A clear purpose can motivate the entire team to work toward the company’s common goals. Clearly defined values allow employees to understand the company’s principles and strategy in order to obtain these goals.

This Ted Talk given by Simon Sinek explains the power of having a clear purpose:


But actions speak louder than words.

Once the company’s purpose and values have been laid out, management will need to be the first to turn these values into behavior.

Providing employees with space to voice their opinions, ideas, and concerns regarding business activity shows them that they are vital to the company’s success. Offering employees work flexibility, when possible, and understanding their family and health responsibilities keeps employees happy and productive.  When they feel that they are appreciated and that their personal lives are being respected, they will be more committed to the company’s purpose.

Environmental concerns should also be part of an SMEs’ values – and can save the company significant expenses.  SMEs can take small steps toward creating awareness around environmental concerns related to business activities. They can also work with employees to discuss ways in which waste, electricity, water, etc. can be minimized. Employees know the daily activities of the business better than anyone. They are a business owner’s best source of ideas and innovationThere are thousands of examples in which employees have been the source of new ideas for product changes, streamlining processes, or even successful marketing strategies. They can be your best asset in order to promote a company’s “green” transformation.

Sounds Great! Easy! Right?

It is, as long as you remember: Purpose, Values, and then Actions.

Remember to clearly define the why.

(And it is not profit…)

The Carbon Capture and Storage Debate: Are we “Locking Out” the low carbon energies of the future?

Source: FreeFoto, Creative Commons Licensed

As explained in my previous post, Government policy can have enormous impact in shaping our technological base in the future by promoting the “locking in” or “locking out” of certain technological innovation.

Just as Governments can help incentivize the “lock in” of renewable energy technology into our energy future, their decisions can also play a large role in whether or not we can “kick the habit” for fossil fuels.

One example if this comes in the European Union’s support of Carbon Capture and Storage technology through the NER300 Programme.

Carbon Capture and Storage (CCS)

Carbon Capture and Storage is a technology meant to capture the CO2 emissions from coal, oil, or gas plants combustion and store it so that it is not emitted into the atmosphere, which would further aggravate climate change.

Sounds interesting right?

Some of the details still need to be resolved. For example, scientists are still working out where and how to store the CO2 once it has been captured. As of now, most scientific innovation is leading towards geological sequestration in saline aquifers in which the C02 is injected into these geological sites deemed safe for carbon sequestration. (For a more detailed explanation of CCS technology, visit this interactive website)

CCS and “Lock Out”

One of the main concerns regarding CCS is that it will likely promote the continued construction of fossil fuel plants in the future. Given that carbon plants have a lifespan of about 40 years, every new coal plant built this year will still be working, and polluting, in 2053.

If CCS technology becomes efficient and lucrative in the short term, it will quickly expand, therefore “locking us in” to carbon intensive energy production in the future. (With the additional process of storing that emitted carbon underground). Even worse, if CCS technology becomes widely adopted, some renewable energy technologies may be “locked out” of our technology base. Its implementation will likely cut funding towards renewable energy R&D projects – which may have been the future solutions to meet our energy demands.

CCS technology does not help the European Union reach its targets of becoming a truly low carbon economy in the future. It does not reduce CO2 production, but simply stores the CO2 being emitted. Carbon Capture and Storage may hinder us from fully reaching our low carbon economy potential.

So, why the interest in CCS?

Despite the fact that CCS technology is a “second best” option to curb CO2 emissions from being emitted into the atmosphere, there is a case to be made for its use – given our current political and energy situation. A prime example of the lack of political will in the international arena was seen last December at the Doha Climate conference.

The World Resources Institute identified that 1,200 new coal plants were in the planning stages in 59 countries last November – about three-quarters of those plants in China and India. These countries are “locking themselves in” to another 40 years of carbon intensive energy production. Without the interest and support of countries like the US, China and India, CCS may be the only way to avoid severe climate change.

Therefore, many argue that CCS technology would “buy us time” to allow political will to catch up and avoid a significant increase in climate change.

The global aspect of this issue makes the debate around CCS technology complicated:

May it keep us “hooked on” fossil fuels significantly longer that we should be?  – Yes.

But, might it be the only chance we have to keep the planet from warming more than the goal of 2 degrees Celsius? – From the looks of it, most likely.


In my opinion, CCS technology is a necessary evil. It is not a perfect solution, and will come with its own set of issues (possible leakages, geological disruptions, etc). However, with 1,200 new coal plants on their way, it may be the only option we have to avoid further climate change.

Given the current situation, James Smith, contributor for the Guardian, may be correct when he states:

We all must get real and get behind the [CCS] technology. Government and industry must work together urgently to build the essential demonstration projects over the next few years. The carbon market, post-2020, must be underpinned now with very strong signals for a carbon price that will stimulate all kinds of low-carbon investment, including CCS. And the government must continue with R&D to reduce costs and risks.

At least, in his promotion of CCS technology he also states the importance of strong carbon prices and “all kinds of” low carbon investments to compliment the continued use of fossil fuels…

The EU Emissions Trading System and the Complexities of Incentivizing a Clean Energy Future


Source: Pixaby User Steppinstars, CC Licensed

The European Union has been working diligently to promote the expansion of a low carbon economy. They have ratified the Kyoto Protocol, passed a relatively rigorous energy strategy for 2020, and created the largest Carbon Cap and Trade System in the World: the European Emissions Trading System (EU ETS).

To briefly explain how the EU ETS works, industries that are part of the trading scheme are given emissions allocations – or credits (the right to emit 1 ton of CO2 into the atmosphere). They must either reduce their emissions to the amount of credits allocated to them, or buy additional credits for every ton of CO2 over the allotted number of emissions allocations given to them. These emissions credits can be purchased on the EU ETS carbon market. Industries that reduce their emissions lower than the number of credits given to them will have a surplus of credits and can sell their extra emissions credits on the carbon market.

Each year, industries must hand over to the government the amount of emissions credits equal to the quantity of CO2 emissions they emitted within that year. The submission of credits to the government creates the necessity for some industries to buy emissions allocations if they have emitted more than they were allotted, and also gives the incentive for others to sell their surplus of credits if they have more allocations than they emitted. This supply and demand for credits creates the market for carbon.

The number of total emissions will always be at, or below, the “Cap” – the total number of credits in the system. The actual emitters will depend on each company’s decisions to either reduce their emissions or purchase additional credits from others. (Hence the name, Cap and Trade).

In the first two phases (2005 – 2012), most of the emissions credits were given by EU nation governments to industries without charge (with the exception of a few countries, like the UK and Germany which began to auction a portion of their allowances during phase 2). The third phase of the EU ETS began in January of this year and ends in 2020. In this phase, over 40% of total allocations will be auctioned. 100% of emissions allocations will be auctioned for the Power Generation Sector – creating a significant revenue stream for national governments.

The EU ETS and incentivizing Clean Energy Technology


Source: Flickr User Thinking Genuine, CC Licensed

The EU ETS was designed to be “technology neutral”, in that it does not favor one technology over another. One of the main goals of the system is to give a price to the environmental costs from emitting CO2 (contributing to climate change) that are not being paid by the emitting industries. The emission of CO2 by industries is a typical case of a negative externality: a cost resulting from one person’s activities which affects an otherwise uninvolved party. In other words, the one producing the “cost” is not paying the full price of that cost. In the case of CO2, without a carbon price, society is “paying” the costs of the additional carbon being emitted into the atmosphere by individual industries – as emitting CO2 into the atmosphere has traditionally been free for these companies.

The EU ETS puts a price on carbon emissions that companies must then factor into their cost of production. When the price of carbon is high, companies have a higher incentive to look into cleaner (or less carbon intensive) technologies. When the price is low, companies have less of an incentive to reduce their emissions, as the cost of emitting more CO2 is relatively low.

Unfortunately, currently the EU ETS has a large structural surplus of emissions (for several reasons), and therefore has a relatively low price for carbon. Therefore, the EU ETS is not properly incentivizing the investment in cleaner technologies; there is still need for the European Union to incentivize these technologies. To do this, the EU has created a programme within the EU ETS, called the NER300 Programe, which is meant to “boost the deployment of innovative low-carbon technologies and stimulate the creation of jobs in those technologies within the EU”.

NER300 Programme

As part of the EU ETS Directive (2009/29/EC), Article 10(a) 8 sets aside the funds raised from the auction of 300 million allowances in the New Entrants Reserve (NER) to be used to subsidize “commercial demonstration projects that aim at the environmentally safe capture and geological storage (CCS) of CO2 as well as demonstration projects of innovative renewable energy technologies, in the territory of the Union.” The New Entrants Reserve is a reserve of credits withheld in order to provide credits to possible new installations that may open during the current phase. According to the Directive, a maximum of 5 percent of the total quantity of allowances from 2013 to 2020 can be set aside for new entrants into the EU ETS.

The NER300 Programme assumes the role of choosing the clean energy programs that will receive the grants. In December 2012, 1.5 billion euros were raised from the auction of 200 million allowances earmarked for the NER300 Programme. The Programme awarded 1.2 billion Euros to 23 renewable energy projects under the first call for proposals. Regarding the grants, Climate Action Commissioner Connie Hedegaard stated:

This year Christmas has come early – today’s Decision is a major milestone in EU climate policy. The NER300 programme is in effect a ‘Robin Hood’ mechanism that makes polluters pay for large-scale demonstration of new low-carbon technologies. The €1.2 billion of grants – paid by the polluters – will leverage a further €2 billion of private investment in the 23 selected low-carbon demonstration projects. This will help the EU keep its frontrunner position on renewables and create jobs here and now, in the EU.

Programs and Policies like NER300 and the EU ETS are crucial to the success of renewable energy technologies; they are necessary in order to lock in clean energy technologies in the future.

“Locking In” Technologies?

“Lock in” is a phenomenon in which a certain technology is chosen over another; once this decision has been made, the chosen technology will be developed and implemented within society. After implementation of the chosen technology, society subsequently becomes locked in to that technology.

A simple example of this idea is demonstrated in the implementation of energy efficiency technologies when constructing a new building. If building owners do not take energy efficiency technology into account when designing the building, they will be locking themselves in to having a energy inefficient building once it is completed. Another example is the decision of whether or not to adopt Metro systems in certain cities.  Since Los Angeles did not invest well in developing a Metro in the early stages of development, Los Angelinos are  now “locked in” to using their vehicles to move around the city.

Regarding the “lock in” phenomenon:

It is not (always) because a particular technology is efficient that it is adopted, but (sometimes) because it is adopted that it will become efficient. (Arthur, 1989).

This idea is directly reflected in the current situation regarding renewable energies. Many countries are trying to incentivize the adoption of renewable energy technology at the moment, but not because it is cost efficient. In fact, renewable energy sources have historically been much more expensive to introduce into the electricity grid (although that is changing) and are not as reliable as conventional energy plants (the wind is not always blowing and the sun is not always shining). However, the act of investing in and adopting these technologies now will allow these technologies to become cost efficient, and therefore “locked in”, in the future.

Equally, “Lock In” can work in reverse:

Since our choices in the present directly impact the future path of technological advancement, technologies that have short-term advantages, yet long‐term disadvantages, can become “locked in” to society if we do not look at the long term effects of our decisions.

In the end, the European Union has taken tremendous strides in creating policies that help foster the innovation and implementation of cleaner technologies. Do they need to be improved? Yes. Currently, the European Union is working (with difficulty) on “fixing” the policy issues related to the structural surplus of emissions credits in the EU ETS.

If the EU ETS were able to send a credible long term signal to the market regarding the true social cost of CO2 emissions, companies would move towards cleaner technologies on their own, and complimentary policies like the subsidies from the NER300 Programme would not be necessary as an incentive to invest in clean energy.

However, in my opinion the NER300 Programme does serve its own purpose by helping stimulate development of new renewable energy technologies – “getting them off the ground” so that companies find an interest in investing in them.

Although there have been some bumps in the road, and some still to smooth out, when it comes to clean energy policy it is evident that the European Union is setting a strong example that the rest of the world should learn from and follow…  and soon.

Subsidies, Trade, and the Broken Food System

You have probably heard about it before: The Broken Food System. Our world’s ability to produce a surplus of food, juxtaposed with our inability to feed all the world’s people.

Roughly one-third of the food produced in the world every year intended for human consumption gets lost or wasted.

If just one-fourth of the food currently wasted globally could be saved, it would be enough to feed the 870 million hungry people in the world.

Source: Gates Foundation, Creative Commons Licensed

How does this happen?

In a recent report, Oxfam has laid out several reasons. These include the intense pressure on agriculture from climate change, ecological degradation, population growth, rising energy prices, rising demand for meat and dairy products, and competition for land from biofuels, industry, and urbanization.

Yet one specifically interesting reason for structural hunger and inequality in the food system comes from its design.  The unfair trade rules and domestic protectionist policies have “rigged” the rules of the game in favor of the rich, at the expense of the poor.  These unjust policies have brought the food system to its breaking point.


According to the neoliberal policies supported by organizations such as the World Trade Organization, the World Bank and the International Monetary Fund, developing markets have been pressured to open their agriculture sectors to international trade by removing import tariffs. This policy opens small farmers and markets up to the volatile global prices, increasing their vulnerability. This forced liberalization of trade in developing countries allows foreign companies to enter these small markets and compete with local suppliers and farmers.

If that weren’t unfair enough, many “rich” countries, like the US and the European Union, have continued to maintain very strong domestic subsidy programs in order to protect their agriculture businesses from competition in the global markets.

A bit ironic, don’t you think?


When “rich” countries heavily subsidize domestic agriculture, companies produce large surpluses of food stocks; the more they produce the more subsidy money they receive from the government. Often, the surplus of food is then “dumped” onto the global markets, bringing down the price of food in developing countries, and pushing local farmers out of a job. The price of the competing food coming from “rich” countries is too low for local farmers to make a profit. So, local farmers go out of business and become consumers of food, rather than producers.

Therefore, developing countries become increasingly dependent on food stocks from their “rich” neighbors. So, when the global food supply gets low – as it did in 2008 – and prices begin to rise, poor communities cannot afford to pay for basic food.

Add in the additional factors affecting food insecurity (bad weather, land degradation, increasing energy prices, population growth and competition for land) and poor communities can find themselves in a real state of vulnerability.

But, these policies have to be helping the “Rich” Countries, right?

On top of the fact that these subsidies and trade policies destroy food systems and security in developing countries, they are not actually benefiting many people in developed countries, either.

Citizens in the US and the EU are paying for these subsidies – twice. They first pay through their taxes, and then through higher food prices. According to an Oxfam report, in 2009 “the EU’s Common Agricultural Policy (CAP) added €79.5bn to tax bills and another €36.2bn to food bills. According to one calculation, it costs a typical European family of four almost €1,000 a year.”

So who is benefiting from this system?

In Europe, about 80% of government direct income support goes to the top 20% of the agricultural sector – mainly big landowners and agribusiness companies. In the USA, 4% of farm owners collectively own about half of the farm land. “A few hundred companies – traders, processors, manufacturers, and retailers – control 70% of the choices and decisions in the food system globally, including those concerning key resources such as land, water, seeds and technologies, and infrastructure.”:

Source: Growing a Better Future: Food justice in a resource-constrained world
Oxfam 2011. Click to Enlarge.

The future success of our global food system relies on our ability to correct these systemic issues and set the rules of the game so that everyone plays on a level playing field.

Without systemic change, the future will likely look very similar to the present.

Risk and Opportunity Management for Corporate Social Responsibility

Recently, we have been discussing the theory and importance of Risk Management in project planning and management. In order to manage risks in a project, there are several tools used to plan for all possible negative impacts on a project. Project managers fill out several charts, analyzing the likelihood, severity, impacts, warning signs for each possible risk. They construct a specific budget for necessary preventative measures and possible contingency plans required to mitigate these risks.

In Risk Management, some big questions have to be answered: whats the likelihood of this risk happening?  And how much (money, time, resources, etc) is it going to cost me?


Typical Tool Used in Risk Management

One interesting topic discussed was the recent emergence of opportunity management as a core strategy to help design a project. The conversation got me to thinking about the utility of managing your opportunities. Incorporating opportunity management in projects, specifically, in the analysis of Corporate Responsibility projects, could have a large positive impact in helping to change popular opinion surrounding the topic.

Often, Corporate Social Responsibility (CSR) is viewed by companies as an expense. CSR projects are added costs that must be undertaken in order to gain reputation in the market and/or in order allow a company to maintain “business as usual” practices.

The CSR sector is working to shift away from being thought of as “philanthropy”. CSR professionals are trying to make social and environmental responsibility part of the company’s main goals and core functions.

So, what if the idea of CSR being a “necessary expense” could be turned into a belief that CSR can, and does, bring added benefit to a company’s bottom line?  (and even more benefit if a company is considering its “triple bottom line“)

This is where opportunity management comes in. It answers the big question: what opportunities and benefits (time, money, reputation, environmental protection) can I gain from this project?


Risk Management Tool Transformed for Opportunity Management

Some companies are already thinking in terms of opportunity and benefits when creating and institutionalizing their Corporate Responsibility. Take Starbucks as an example, who has pledged to support fair trade coffee farmers and has been working on ways to decrease waste in their production lines and stores. Now, many customers see Starbucks as a company that is socially responsible and has better business practices. They are not perfect , but they have been able to improve their corporate practices and benefit from these effort.

Another really great example I read recently was by Libri, a Hungarian specialty book retailer looking to penetrate the book market in Romania. The company had several obstacles to face:

The language barrier – typically, book retailers stay within native language markets or distribute in other markets in their native language
The low book sales in Romania – only 17% of Romanian citizens bought books in 2006, compared to 54% in the US and 82% in Hungary
Strong competition – their main competitor already had 71 stores throughout the country
History – The two countries have a long history of border disputes over Transylvania.

So what did Libri do?  They put together a CSR project  dedicated to focusing on each group of stakeholders: suppliers, employees, and their customers/community. One specific project to note: the D.E.A.R. (drop everything and read) Program, in which employees took 2 hours out of their work week to go and read to children at local public schools.

In the end, through these projects the company was able to penetrate the market. They gained the reputation of being a company that had real and meaningful corporate responsibility.

Now that is true opportunity management.

Certification Schemes in Properly Managing our Environment

One major question I seem to struggle with all the time is how to know whether or not we are making smart choices as consumers.

How do we know whether or not the fish we are eating comes from an over fished lake or river? How do we know if the Ikea table we bought is made from wood sourced from a logging company contributing to deforestation?

To answer this question, lots of organizations have come up with certification schemes to help show customers, with a “seal of approval” label, that products are fair trade, sources responsibly, etc.  Unfortunately, not all of these certifications may be as credible as one would hope.

Here are a few things to look for:

Compatibility with international frameworks for certification accreditation and standard setting.

Accreditation Service International, for example, is a third party accreditation agency certifying the standards and integrity of other certification schemes.

Globally applicable principles that balance economic, ecological, and social principles.

This gives the standards a well rounded picture, and gives all stakeholders a balanced scheme taking into consideration everyone’s needs.

Meaningful and equitable participation of all major stakeholders in governance and standard setting.

This allows all stakeholders to have an equitable voice in standards and approve all decisions made to change these standards in the future.

Objective and measurable performance indicators that are adapted to the local conditions.

Transparency in decision making and reporting.

All reports should be made available online, but on the certifying organization’s website, and on the website of the corporation or land owner that has been audited.  This includes the full report given by the auditor, not just the certification grade, or seal granted.

A certification process that is free of conflicts of interest amongst parties involved.

Reliable assessment of the performance of the management of the natural resource and its “chain of custody”

Ensuring that the resource is not mixed with other non-certified resources before it makes it to its buyer.

Ease of access and cost-effectiveness for all parties involved in the certification process.

Voluntary participation.

Not all certification schemes  have rigorous standards, nor do they have proper auditing processes. One way to check the integrity of a certification scheme is to see whether or not its stakeholders approve of the scheme.

The Forest Stewardship Council (FSC), for example, has done a good job at making sure that they include all of their stakeholders throughout the process.  Stakeholders are a part of the decision-making process and the auditing process. FSC publicly announces expected audit dates one month prior to the actual assessment. This allows stakeholders to offer any information or concerns they may have regarding the company being audited to the auditor.  Sometimes, stakeholders are even invited along on the actual audit. This transparency allows the organization to maintain is credibility and rigor in the sector.  Here is Greenpeace’s opinion of FSC’s work.

Certification schemes can be a very useful tool in helping to sustainably manage natural resources, but they must be credible, equitable, transparent, and accountable.

We must be wary of the green labels we find on our products.  Not all of them may be as credible as we may hope.

Food For Thought on Natural Resource Management

Some food for thought from our recent Natural Resource Management Classes.

Biodiversity is crucial for the world’s viability.

Why does Biodiversity matter?
When elements of biodiversity are lost, ecosystems become less resilient and their services become threatened. Ecosystems are living cycles. When too many links in these cycles are taken out, the system itself collapses. 

Ecosystems offer humanity so many products and services that we are not able to live without. They provide us products and services that, even if replicable, would be much more expensive for us to recreate on our own.

Here in Madrid, for example, the forests outside of the city help filter and clean the water that is eventually piped into the city. Without these forests, the city would have to pay much more in order to clean and filter the water needed by its citizens. Why do we not properly value these natural services?

By polluting the rivers and lakes, cutting down trees in an unsustainable rate, and altering the climate temperature, we are negatively impacting the ecological systems that we desperately depend on.

We must be more cautious and conscious in managing our natural resources.

The WWF Living Planet Report for 2012 has shown that we are doing a poor job in terms of managing our natural resource banks and preserving biodiversity in most parts of the world. We have solutions to many of these problems, including curbing soil degradation, properly managing the quantity and quality of our fresh water, and sustainably extracting most natural resources; yet, in most parts of the world, we are not implementing these solutions. Without better care for our planet and management of the resources it offers us, we will be leaving our children with extremely difficult challenges to face.

We are the living “guinea pigs” – testing the body’s limits to chemical exposure.

The amount of chemicals and hazardous materials that are used today in pesticides, fertilizers, and industry processes is astounding. For many of them, we are not sure of the total affects they may have. We have seen in the past that some chemicals, like DDT , were at first believed to be safe, yet later determined to be extremely dangerous for our health and the well being of other species and ecosystems.

We are allowing these chemical cocktails to get into the environment, into our food and water supplies, and into our bodies. (Need an example? You can look to the poor storage and maintenance at the Love Canal Site on the eastern edge of Niagara Falls in New York State).

No one is sure how all these chemicals that are building up in our bodes will affect our health, and our genetic material. We may be leaving future generations to deal with whatever health issues and genetic modifications arise.

When we look for solutions towards sustainable systems, we must approach the issue from all sides.

When looking at ways to help manage natural resources and create sustainable lifestyles, we need to approach the issue from every direction:

Not only must we look toward governments to better regulate companies and public entities. We must also look at how we can better educate people to be aware of what they are consuming, where these products are coming from, and how citizens can help in the fight towards protecting our natural ecosystems and its inhabitants.

After all, we are just one specie in this world.

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